Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
MINUTES - 04141998 - C158
DATE: ITEM #♦ C i r3 A CONSIDEREDWITH. . . . . . . . . . . . . . . . . . . • . . LISTEDIN ERROR. . . . . . . . . . . . . . . . . . . . ♦ • DELETED. . . . Business Day by filling in the form of Notice of Claim and Certificate delivered with the .Bond Insurance Policy. (b) The Trustee shall establish a separate special purpose trust account for the benefit of the 1998 Series A Bondowners referred to herein as the "1998 Series A Policy Payments Account" and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amounts paid under the Bond Insurance Policy in trust on behalf of the Bondowners and shall deposit any amount paid under the Bond Insurance Policy in the 1998 Series A Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee in the same manner as principal and interest payments are to be made with respect to the 1998 Series A Bonds under the sections hereof regarding payment of 1998 Series A Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. However, the amount of any payment',of principal of or interest on the 1998 Series A Bonds to be paid from the 1998 Series A PolicyPayments Account shall be noted as provided in (d) below. Funds held in the 1998 Series A Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee or any other entity. In the event the 1998 Series A Bonds are subject to mandatory sinking fund redemption, upon receipt of the moneys due, affected Owners shall surrender'their Bonds to the Trustee who shall authenticate and deliver to such Owner a new Bond or Bonds in an aggregate principal amount equal to the unpaid portion of the Bond surrendered, and upon maturity or other advancement of maturity and receipt of the moneys due, Owners shall surrender their Bonds for cancellation. The Trustee shall designate any portion of payment of principal of 1998 Series A Bonds paid by the 1998 Series A Bond Insurer, whether by virtue of a mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of 1998 Series A Bonds registered to the then current Owner, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the 1998 Series A Bond Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Authority on any Bond or the subrogation rights of the 1998 Series A Bond Insurer. (c) Any funds remaining in the 1998 Series A Policy Payments Account following a Payment Date shall promptly be remitted to the 1998 Series A Band Insurer except for funds held for the payment of 1998 Series A Bonds pursuant to Section 10.02 hereof (d) The Trustee shall keep a complete and accurate record of all funds deposited by the 1998 Series A Bond Insurer into the 1998 Series A Policy Payments', Account and the allocation of such funds to payment of interest and principal in respect of any 1998 Series A Bonds, The 1998 Series A Bond Insurer shall have the right to inspect such records at reasonable times upon one Business Day's prior notice to the Trustee. DOCS81;2:249723.3 40511-108 50 (e) Subject to and conditioned upon payment of any interest or principal with respect to the 1998 Series A Bonds by or on behalf of the 1998 Series A Bond Insurer, each 1998 Series A Bondowner, by its purchase of 1998 Series A Bonds, hereby assigns to the 1998 Series A Bond Insurer, but only to the extent of all payments made by the 1998 Series A Bond Insurer, all rights to the payment of interest or principal with respect to 1998 Series A Bonds, including, without limitation, any amounts due to the 1998 Series A Bondowner in respect of securities law violations arising from the offer and sale of the 1998 Series A Bonds, which are then due for payment. The 1998 Series A Bond Insurer may exercise any option, vote, 'right, power or the like with respect to 1998 Series A Bonds to the extent it has made a principal payment pursuant to the Bond Insurance Policy. The foregoing assignment is in addition to, and not in limitation of, rights of subrogation otherwise available to the 1998 Series A Bond Insurer in respect of such payments or any other rights of the Bond Insurer hereunder. The Trustee shall take such action and deliver such instruments as may be reasonably requested or required by the 1998 Series A Bond Insurer to effectuate the purpose or provisions of this clause (e). (f) The Trustee shall promptly notify the 1998 Series A Bond Insurer of either of the following as to which a Responsible Officer has written notice or actual knowledge: (i) the commencement of any proceeding by or against the Authority or the County commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "insolvency Proceeding") and (ii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer (a "Preference Claim") of any payment of principal or interest with respect to the 1998 Series A Bonds, Each Owner, by its purchase of 1998 Serres A Bonds, and the Trustee hereby agree that the 1998 Series A Bond Insurer may at any time during the continuation of an Insolvency Proceeding direct all matters relating to such Insolvency Proceeding, including, without limitation, (i) all matters relating to any Preference Claim, (ii) the direction of any appeal of any order relating to any Preference Claim and (iii) the posting of any surety, supersedeas or performance bond pending any such appeal. In addition, and without limitation of the foregoing, the 1998 Series A Bond Insurer shall be subrogated to the rights of the Trustee and each Owner in any Insolvency Proceeding to the extent it is subrogated pursuant to Section 11.01(c) of the Trust Agreement, including, without limitation, any rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such insolvency Proceeding. (g) The Authority, as a limited obligation payable from Additional Payments and other funds held under the Trust Agreement, hereby agrees to pay or reimburse the 1998 Series A Bond Insurer any and all charges, fees, costs and expenses which the 1998 Series A Bond Insurer may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, in connection with (i) any accounts established to facilitate payments under the Bond Insurance Policy, (ii) the administration, enforcement, defense or preservation of any rights or security in respect of any of the Trust Agreement, the Facilities Lease or the Facilities Lease, including defending, monitoring or participating in any litigation or proceeding (including any bankruptcy proceeding in respect of the Authority or the County or any other lessee or any affiliate thereof) relating to the Trust Agreement, the Facilities Lease or the Facilities Lease, any party to any of IX)CSSF1:249723.3 51 such documents or the transaction contemplated by such documents (the "Transaction"), (iii) the pursuit of any remedies under any of the Trust Agreement, the Facilities Lease or the Facilities Lease or otherwise afforded by law or equity, or(iv)any amendment, waiver or other action with respect to, or related to any of such documents whether or not executed or completed, costs and expenses shall include a reasonable allocation of compensation and overhead attributable to time of employees of the 1998 Series A Bond Insurer spent in connection with the actions described in clauses (ii) - (iv) above; and the 1998 Series A Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent',proposed in respect of any such documents. (h) In addition to any and all rights of reimbursement, subrogation and any other rights pursuant hereto or under law or in equity, the Authority, as a limited, obligation payable from Additional Payments and other funds held under the Trust Agreement, to the extent permitted by law, agrees to pay or reimburse the 1998 Series A Bond Insurer any and all charges, fees, costs, claims, losses, liabilities (including penalties), judgments, demands, damages, and expenses which the 1998 Series A Bond Insurer or its officers, directors, shareholders, employees, agents and each Person, if any, who controls the 1998 Series A Bond Insurer within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, of any nature in connection with, in respect of or relating to the transactions contemplated by the Trust Agreement, the Facilities Lease or the Facilities Lease, by reason of (1) any omission or action (other than of or by the 1998 Series A Bond Insurer) in connection with the offering, issuance, sale, remarketing or delivery of the 1998 Series A Bonds; (2) the negligence, bad faith, willful misconduct, misfeasance, malfeasance or theft committed by any director, officer, employee or agent of the Authority or the County or any other lessee in connection with any transaction arising from or relating to the Trust Agreement, the Facilities Lease or the Facilities Lease; (3) the violation by the Authority or the County or any other lessee of any law, rule or regulation, or any judgment, order or decree applicable to it; (4) the breach by the Authority or the County of any representation, warranty or covenant under any of the Trust Agreement, the Site Lease or the Facilities Lease, or the occurrence, in respect of the Authority, the County or any other lessee, under any of such documents of any "event of default" or any event which, with the giving of notice or lapse of time or both, would constitute any "event of default", or (S) any untrue statement or alleged untrue statement of a material fact contained in the official statement relating to the 1998 Series A Bonds or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar DOCSSF1:244723.3 40511-108 52 as such claims arise out of or are based upon any untrue statement or omission in information included in the official statement and furnished by the 1998 Series A Bond Insurer in writing expressly for use therein. (i) The Authority, as a limited obligation payable solely from Additional Payments and other funds held under the Trust Agreement, shall pay to the 1998 Series A Bond Insurer interest on any and all amounts as are paid under the Bond Insurance Policy and as are described in Sections 11.01(d), 11.02(g) and II.02(h) from the date paid by the 1998 Series A Band Insurer until payment thereof in full at the Late Payment Rate. "Late Payment Rate" shall mean the lesser of(a) the greater of(i) the per annum rate of interest, publicly announced from time to time by The Chase Manhattan Bank, N.A. at its principal office in The County of New York, as its prime or base lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by The Chase Manhattan Bank, N.A.) plus 3%, and (ii) the then applicable highest rate of interest on the Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event The Chase Manhattan Bank, N.A. ceases to announce its Prime Rate, the Prime Rate shall be the prime rate of such national bank as the 1998 Series A Bond Ensurer shall designate. 0) Payments required to be made to the 1998 Series A Bond Insurer pursuant to Sections 11.01(d), 11.02(8), 11.02(h) and 11.02(i) shall be payable solely from Additional Payments and funds held under the Trust Agreement. The payment obligations of the Authority set forth in the immediately preceding sentence shall survive the discharge or termination of the Trust Agreement, the Facilities Lease or the Facilities Lease. (k) The 1998 Series A Bond Insurer shall be entitled to pay principal or interest with respect to the 1998 Series A Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Bond Insurance Policy) and any amounts due with respect to the 1998 Series A Bonds as a result of acceleration of the maturity thereof in accordance with the Trust Agreement, whether or not the 1998 Series A Bond Insurer has received a Notice (as defined in the Bond Insurance Policy) of Nonpayment, or a claim upon the Bond Insurance Policy. (1) Rights of the 1998 Series A Bond Insurer to direct or consent to actions under the Trust Agreement, the Facilities Lease or the Facilities Lease shall be suspended during any period in which the 1998 Series A Bond Ensurer is in default in its payment obligations under the Bond Insurance Policy (except to the extent of amounts previously paid by the 1998 Series A Bond Insurer and due and owing to the 1998 Series A Bond Insurer) and shall be of no force or effect in the event the Band Insurance Policy is no longer in effect or the 1998 Series A Bond Insurer asserts that the Bond Insurance Policy is not in effect. (m)Upon the occurrence and continuance of an Event of Default which would require the 1998 Series A Band Insurer to make payments under the 1998 Series A Bond Insurance Policy, the 1998 Series A Bond Insurer and its designated agent shall be provided with access to inspect and copy the registration books of the Authority. DOCSSF1:249723.3 41711.14$ 53 (n) The interest that the Authority must pay on defaulted interest on or principal of the 1998Series A Bonds shall not accrue to any 1998 Series A Bondholder except the 1998 Series A Bond Insurer so long as the 1998 Series A Bond Insurer is not in default in its payment obligations under the 1998 Series A Bond Insurance Policy. SECTION 11.03. 1998 Series A Bond Insurer to be Deemed Third Party Beneficiary. The 1998 Series A Bond Insurer is hereby included as a third party beneficiary to the Trust Agreement, ARTICLE XII MISCELLANEOUS SECTION 12.01. Liability of Authority Limited ' to Revenues. Notwithstanding anything contained herein, the Authority shall not be required to advance any money derived from any source other than the Revenues as provided herein for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds or for the performance of any agreements or covenants herein contained. The Authority may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose. The Bonds are limited obligations of the Authority and are payable, as to interest thereon, principal thereof and any premiums upon the redemption of any thereof, solely from the Revenues as provided herein, and the Authority is not obligated to pay them except from the Revenues. All the Bonds are equally secured by a pledge of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds as provided herein. The Bonds are not a debt of the County, the State or any of its political subdivisions, and neither the County, the State nor any of its political subdivisions is liable thereon, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Authority as provided herein. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction. SECTION 12.02. Benefits of this Trust Agreement Limited' to Parties, Bond Insurer and Third Party Beneficiaries. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the Trustee, any Bond Insurer, and the Bondholders any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the Authority or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Authority, the Trustee, any Bond Insurer, and the Bondholders. To the extent that the Trust Agreement confers upon or gives or grants to any Bond Insurer any right, remedy or claim under or by reason of the Trust Agreement, such Band Insurer is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right remedy or claim conferred, given or granted hereunder. IX)CSSFi:249723.3 40511-108 54 SECTION 12.03. Successor Is Deemed Included In All References To Predecessor. Whenever herein either the Authority or any member, officer or employee thereof or of the State is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions with respect to the Project that are presently vested in the Authority or such member, officer or employee, and all agreements and 'covenants required hereby to be performed by or on behalf of the Authority or any member, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 12,04. Execution of Documents by Bondholders. Any declaration, request or other instrument which is permitted or required herein to be executed by Bondholders may be in one or more instruments of similar tenor and may be executed by Bondholders in person or by their attorneys appointed in writing. The fact and date of the execution by any Bondholder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request 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 any Bonds and the amount, maturity, number and date of holding the same may be proved by the registration books relating to the Bonds at the Principal Office of the Trustee. Any declaration, request, consent or other instrument or writing of the Bondholder of any Bond shall bind all future Bondholders of such Bond with respect to anything done or suffered to be done by the Trustee or the Authority in good faith and in accordance therewith. SECTION 12.05. Waiver of Personal Liability. No member, officer or employee of the Authority or the County shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds by reason of their issuance, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by the Act or any other applicable provisions of law or hereby. SECTION 12,06. Acquisition of Bonds by Authority. All Bonds acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. SECTION 12,07. Destruction of Cancelled Bonds. Whenever'provision is made for the return to the Authority of any Bonds which have been cancelled pursuant to the provisions hereof, the Authority may, by a Written Request of the Authority, direct the Trustee to destroy such Bonds and furnish to the Authority a certificate of such destruction. SECTION 12.08. Content of Certificates. Every Certificate of the Authority with respect to compliance with any agreement, condition, covenant or provision provided herein shall include (a) a statement that the person or persons making or giving such certificate have read such agreement, condition, covenant or provision and the definitions herein relating thereto; €OCSSF1:249?23.3 40511-108 55 (b) a brief statement as to the nature and scope of the examination or investigation upon which. the statements contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or prevision has been complied with; and (d) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or provision has been complied with. Any Certificate of the Authority may be based, insofar as, it relates to legal matters, upon an Opinion of Counsel unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Authority, upona representation by an officer or officers of the Authority unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. SECTION 12.09. Publication for Successive Weeks. Any publication required to be made hereunder for successive weeks in a Financial Newspaper may be made in each instance upon any Business Day of the first week and need not be made on the same Business Day of any succeeding week or in the same Financial Newspaper for any subsequent publication, but may be made on different Business Days or in different Financial Newspapers, as the case may be. SECTION 12.10. Accounts and Funds. Any account or fund' required herein to be established and maintained by the Trustee may be established and maintained in the accounting; records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with corporate trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Bondholders. SECTION 12.11. Business Day. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day which is not a Business Day, such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed 'day or within the specified period. SECTION 12.12. Notices; Notices to Rating_Agencies. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely: I3eCSSF2:249723.3 40521-248 56 If to the Authority: County of Contra Costa Public Financing Authority c/o County Administrator County of Contra Costa County Administration Building 651 Fine Street Martinez, California 94553 If to the Trustee: BNY Western Trust Company 704 South Flower Street Fifth Floor Los Angeles, California 90017-4104 If to the County: County of Contra Costa c/o Clerk of the Board of Supervisors County of Contra Costa County Administration Building 651 Pine Street Martinez, California 94553 If to the Series 1998 Bond Insurer The Trustee shall give written notice to Moody's and S&P of the redemption or defeasance of any Bonds, the amendment of the Facilities Lease or Trust Agreement, any change in the Trustee, and the deposit of a surety bond, insurance policy, or letter of credit in the Reserve Fund in accordance herewith. SECTION 12.13. Article and Section Headings 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. 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 this Trust Agreement as a whole and not to any particular article, section, subdivision or clause hereof. SECTION 12.1.4. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity DOCSSF i:249723.3 4as� -tax 57 hereof or of the Bonds, and the Bondholders shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The Authority and the Trustee hereby declare that they would have executed and delivered this Trust Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 12.15. Governing Law. This Trust Agreement 'shall be governed exclusively by the provisions hereof and by the laws of the State as the same from time to time exist. SECTION 12.16. Execution in Several Countera�arts. This Trust Agreement may be executed in any number of counterparts and each of such counterparts shallfor all purposes be deemed to be an original, and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. DOCSSV I:249723.3 40511-108 58 IN WITNESS WHEREOF, the COUNTY OF CONTRACOSTA PUBLIC FINANCING AUTHORITY has caused this Trust Agreement to be signed in its name by its Executive Director, and BNY Western Trust Company, in token of its acceptance of the trusts created hereunder, has caused this Trust Agreement to be signed by one of the officers thereunder duly authorized, all as of the day and year first above written. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Executive Director Attest: Secretary BNY WESTERN TRUST COMPANY, as Trustee By: Acknowledged: Authorized Officer COUNTY OF CONTRA COSTA By: County Administrator I)oCSS 1;1:249723.3 40511-108 59 EXHIBIT A [FORM OF 1998 SERIES A BOND] No. $ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONUS (VARIOUS CAPITAL FACILITIES) 1998 REFUNDING SERIES A NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY NOR THE COUNTY OF CONTRA COSTA IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON N OR PRINCIPAL OF THE BONDS AND NO TAX OR OTHER SOURCE OF FUNDS OTHER THAN THE REVENUES HEREINAFTER REFERRED TO IS PLEDGED TO PAY THE INTEREST ON OR PRINCIPAL OF THE BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY OF CONTRA COSTA OR THE REDEVELOPMENT AGENCY OF THE COUNTY OF CONTRA COSTA. Interest Maturity Dated Rate Date Date CUSIP % August 1, May 1, 1998 REGISTERED OWNER- CEDE & CO. PRINCIPAL SUM: DOLLARS The COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly.organized and validly existing under and pursuant to the laws of the State of California (the "Authority"), for value received, hereby promises to pay (but only out of the Revenues hereinafter referred to) to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest on such principal sum from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is registered as of an interest payment date or during the period from the LDCs l,*1:244723.3 40511-108 A-I first day of the month containing an interest payment date to such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Band is authenticated prior to July 15, 1998, in which event it shall bear interest from the Dated Date specified above) until the principal hereof shall have been paid at the interest rate per annum specified above, payable on August 1, 1998, and semiannually thereafter on each August 1 and February 1. Interest due on or before the maturity or prior redemption of this Band shall be payable only by check mailed by first-class mail to the registered owner hereof, provided that upon the written request of a Bondholder of$1,000,000 or more in aggregate principal amount of Bonds of the Series of which this Bond is a part received by the Trustee (defined hereinafter) prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds. The principal hereof is payable in lawful money of the United States of America upon presentation of this Bond at the principal office of the Trustee. This Bond is one of a duly authorized issue of bonds of the Authority designated as its "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capitol Facilities)" (the `Bonds") unlimited as to principal amount and', is one of a duly authorized series of such Bonds known as "1998 Refunding Series A" (the "1998 Series A Bonds") issued in an aggregate principal amount of million hundred __,___ thousand dollars ($ ), all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions of a trust agreement, dated as of May 1, 1998 (as amended from time to time, the "Trust Agreement"), between the Authority and BNY 'western Trust Company, as trustee (together with any successor as trustee under the Trust Agreement, the "Trustee") (copies of the Trust Agreement are on file at the principal office of the Trustee in Los Angeles, California). The Bonds are issued to provide funds to refinance the acquisition, construction, improvement, equipping, remodeling and refinancing of certain public buildings and related facilities, located in the County of Contra Costa (as more fully defined in the Trust Agreement, the "Project"). The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from certain proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and the revenues (as more fully defined in the Trust Agreement, the "Revenues") derived from Base Rental Payments and other payments made by the County of Contra Costa (the "County'), and all interest or other investment income thereon, pursuant to the Facilities Lease (Various Capital Facilities), dated as of May 1, 1998 (as amended from time to time, the "Facilities Lease"), by and between the Authority and the County, and the Authority is not obligated to pay the interest or premium, if any, on and principal of the Bonds except from the Revenues. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Trust Agreement by a pledge and assignment of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest or premium, if any, on and principal of the Bonds as provided in the Trust Agreement. The full faith and credit of the Authority, the Contra Costa County Redevelopment Agency (the "Agency") and the County are not pledged for the payment of the interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of DOCssFI:249'723.3 40511-108 A-2 or charge or lien upon any property of the Authority or any of its income or receipts except the Revenues, and neither the payment of the interest on nor principal (or premium, if any) of the Bonds is a debt, liability or general obligation of the Authority, the County or any member of the Authority for which such entity is obligated to levy or pledge any form of taxation. Additional bonds payable from the Revenues may be issued which will rank equally as to security with the Bonds, but only subject to the conditions and upon compliance with the procedures set forth in the Trust Agreement. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds), and all the terms of the Trust Agreement are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof, agrees and consents. The Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations so that the aggregate annual principal amount of and interest on the Bonds which shall be payable after such redemption date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on the Bonds Outstanding prior to such redemption date, from prepayments of Base Rental Payments made by the County from the proceeds received by the County due to a taking of the Facilities or portions thereof under the power of eminent domain and from the net proceeds of title insurance or insurance received for material damage or destruction to the Facilities or portions thereof received by the Authority from the County, all as provided in and under the circumstances and terms prescribed in the Facilities Lease and the Trust Agreement, at the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium. The 1998 Series A Bonds are subject to optional redemption. [Redemption provisions to be added] Notice of redemption of this Bond shall be given by first-class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner of any Bond selected for redemption, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly givers as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Bond shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price, and from and after the date so designated, interest on this Bond shall cease to accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof If an Event of Default (as defined in the Trust Agreement) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Trust Agreement. The Trust Agreement provides that in certain DOCSS Fl:249723.3 40511-108 A-3 events such declaration and its consequences may be rescinded by the holders of not less than a majority in aggregate principal amount of the Bonds then outstanding or by the Trustee. This Bond is transferable only on a register to be kept for that purpose at the above-mentioned corporate trust office of the Trustee by the registered owner hereof in person or by the duly authorized attorney of such owner upon payment of the charges provided in the Trust Agreement and upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or the duly authorized attorney of such owner, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount in authorized denominations will be issued to the transferee in exchange therefor. The Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of this Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee. It is hereby certified and recited that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, farm and manner as required by the Act, and by the Constitution and laws of the State of California, that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or laws of the State of California and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. [FORM OF DTC LEGEND] Unless this Bond is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. DOCSS F 1:249723.3 40511.108 A-4 IN WITNESS WHEREOF, the County of Contra Costa Public Financing Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and countersigned by the manual or facsimile signature of the Secretary of said Authority, and has caused this Bond to be dated as of the Dated Date specified above. COUNTY OF CONTRA COSTA.PUBLIC FINANCING AUTHORITY By Chair Countersigned: Deputy Secretary I)OCSSFI:249723.3 40511-109 A_5 [FORM OF CERTIFICATE OF AUTHENTICATION TO APPEAR ON 1998 SERIES A BONDS] This is one of the Bonds described in the within-mentioned Trust Agreement which has been registered and authenticated on 1998. BNY WESTERN TRUST COMPANY, as Trustee By Authorized Signatory I)OCSS F I:249723.3 40511-108 A-6 ............................... [FORM OF ASSIGNMENT TO APPEAR ON 1998 SERIES A BONDS] For value received the undersigned hereby sells, assigns and transfers unto (Taxpayer Identification Number: ) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within bond on the books kept for registration thereof, with full power of substitution in the premises. NOTE: The signature to this Assignment must correspond with the name as written on the face of the Bond in every particular, without alteration or enlargement or any change whatever. Dated: PLEASE INSERT SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER IDENTIFYING-NUMBER OF ASSIGNEE: Signature Guaranteed: _. NOTE: Signature must be guaranteed by an eligible guarantor institution. STATEMENT OF INSURANCE 1:)OCSSF 2:243123.3 40511-109 A-7 ....... ......... ......... ......... ......... ......_.. ........ .............. ......... ......... ......... ......... ......... ......... ........ . ................._..................................................................... ............................... EXHIBIT B Schedule of Trustee Fees I)OCSSFI:249723.3 40511-108 B-I 01,59 $24,805,000* COUNTY OF CONTRA.COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL FACILITIES), 1998 SERIES A OFFICIAL NOTICE OF SALE NOTICE IS HEREBY GIVEN that sealed proposals will be received and opened by the County of Contra Costa Public Financing Authority (herein called the "Authority") at the offices of Orrick Herrington & Sutcliffe LLP, Old Federal Reserve Bank Building, 400 Sansome Street, San Francisco, California 94111, on Wednesday, April 22, 1998 at the hour of 10:00 a.m., California time, for the purchase of$24,805,000* principal amount of lease revenue bonds designated "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Series A" (herein called the `Bonds"), to be issued pursuant to a Trust Agreement, dated as of May 1, 1998 (herein called the "Trust Agreement"), by and between BNY Western Trust Company, as trustee (herein called the "Trustee") and the Authority. The Authority reserves the right to postpone to a later date said public sale date by announcing such postponement through ThomsonMunicipal News (Munifacts) and Bloomberg Business News not less than 48 hours prior to the time bids are to be received. If no legal bid or bids are received for the Bonds on April 22, 1998 (or such later date as is established as provided herein) at the time and place specified, bids will be received for the Bonds at the same place and time on such other date as shall be designated through Thomson Municipal News (Munifacts) and Bloomberg Business News. As an accommodation to bidders, telephonic or telecopied notice of the postponement of the sale date or dates will be given to any bidder requesting such notice to the Authority's Financial Advisor, C.M. de Crinis & Co., Inc., Attention: lean Buckley, (415) 339-8944. Failure of any bidder to receive such telephonic or telecopied notice shall not affect the legality of the sale. Bidders are referred to the Preliminary Official Statement for additional information regarding the Authority, the County of Contra Costa, California(the "County"), the Bonds and the security therefor, and other matters. See "OFFICIAL STATEMENT" below. TERMS RELATING TO THE BONDS SERIES: $24,$05,000* principal amount of Bonds, which are being issued as fully registered Bonds in denominations of$5,000 or multiples thereof, provided that no Bond shall represent principal maturing in more than one year, all dated May 1, 1998 and comprising all of the Bonds of said authorized issue. Additional series of bonds may be issued on a parity with the Bonds on the terms and subject to the conditions set forth in the Trust Agreement. * Preliminary,subject to change. DOCSSF1:248827.2 40511-108 INTEREST RATE: Interest is payable on August 1, 1998 and semiannually thereafter on February 1 and August 1 of each year. Bidders must specify the rate or rates of interest that the Bonds hereby offered for sale shall bear. Bidders will be permitted to bid different rates of interest; but (i) the maximum interest rate shall not exceed 12% and the maximum differential between the highest and lowest rates specified in any bid shall not exceed four percent (4%) per annum; (ii) each interest rate specified in any bid must be in a multiple of one-eighth or one-twentieth of one percent per annum and a zero rate of interest cannot be specified; (iii) no Bond shall bear more than one rate of interest; (iv) each Bond shall bear interest from its dated date to its stated payment date at the interest rate specified in the bid; (v) all Bonds payable at any one time shall bear the same rate of interest; (vi) any premium bid must be paid as part of the purchase price, and no bid will be accepted which contemplates the waiver of any interest or other concession by the bidder as a substitute for payment in full of the purchase price; (vii) any discount bid shall be stated as a specific sum not exceeding 1.0% of the par amount of the Bonds and (viii) the interest rate for the Bonds payable in each year must either be the same as or higher than the interest rate on the Bonds payable in the preceding years. BOOK-ENTRY ONLY: The Bonds shall be issued in registered formm by means of a boob-entry system with no distribution of Bonds made to the public. One Bond representing each Bond payment date will be issued to The Depository Trust Company, New York, New York ("DTC"), registered in the name of Cede & Co., its nominee. The book-entry system will evidence ownership of the Bonds in the principal amount of $5,000 or any integral multiple thereof, with transfers of ownership effected on the records of DTC. PAYMENT OF DTC FEES: The Authority will submit all requisite documents to DTC for DTC-eligibility purposes. However, the purchaser of the Bonds will be responsible for payment of all fees charged by DTC. MATURITY: The Bonds shall mature on August 1 in each of the years, and in the amounts, as follows: Au writ 1 Amount $ DOC'SSFI:248827.2 40511-108 2 ADJUSTMENT OF PRINCIPAL PAYMENTS: The principal amounts set forth in this Official Notice of Sale reflect certain estimates of the Authority with respect to the likely interest rates of the winning bid and the premium or discount contained in the winning bid. The Authority reserves the right to increase or decrease the aggregate principal amount of the Bonds and any maturity thereof by an amount not to exceed ten percent (10%) following the opening of the bids; provided, however, that the aggregate principal amount of the Bonds shall not exceed $29,000,000. Each principal payment is subject to increase or decrease in $5,000 increments. The aggregate price bid by the successful bidder will be adjusted by the Authority proportionately to any increase or decrease in the aggregate principal amount of the Bonds and without consideration for the reoffering price by the bidder to the public of any individual maturity of the Bonds. SERIAL BONDS AND/OR TERM BONDS: Bidders may provide that all the Bonds be executed and delivered as Serial Bonds or may provide that any one or more consecutive annual principal amounts be combined into one or more Term Bonds. REOFFERING PRICE CERTIFICATE: The successful bidder for the Bonds must deliver a certificate setting forth the expected final reoffering price of such Bonds to the public (the "Reoffering Price Certificate") to Orrick, Herrington & Sutcliffe LLP, Old Federal Reserve Bank Building, 400 Sansome Street, San Francisco, California 94111, Attention: Mary A. Collins, by the close of business not more than two business days after the award of the Bonds. The Reoffering Price Certificate shall set forth the maximum initial'bona fide offering prices and concessions to the public (excluding bond houses, brokers, or 'similar persons or organizations acting in the capacity of underwriters or wholesalers) of each maturity of the Bonds at which a substantial amount (at least 10%) of such maturity was sold. The form of the Reoffering Price Certificate appears as Appendix A to the Official Bid Form. For purposes of this paragraph, sales of Bonds to other securities brokers or dealers will not be considered sales to the general public. REDEMPTION: The Authority shall have the right, under the circumstances described in the Preliminary Official Statement, to redeem Bonds,upon the terms and conditions, and at the prices, set forth in the Preliminary Official Statement. PURPOSE: The Bonds are to be issued to (i) refund the outstanding County of Contra Costa, California, Certificates of Participation (Various Capital Facilities), Series of 1994, (ii) fund a reserve fund and (iii) pay costs of issuance. SECURITY: The Bonds are payable from, and are secured by a charge and lien on, Base Rental payments payable to the Authority by the County pursuant to a Facilities Lease (Various Capital Facilities), dated as of May 1, 1998. The County has covenanted under the Lease that as long as the Leased Facilities are available for the County's use, it will take such action as may be necessary to include the Base Rental payments in its annual budget and to make the necessary annual appropriations therefor. The Authority will pledge to the Trustee for the benefit of the owners of the Bonds the Authority's right to receive rental payments, and its right to receive and collect any proceeds of any insurance maintained under the Lease. As additional security for the Bonds, the County has elected to secure the payment of Base Rental payments DOCSSF 1:248827.2 40511-108 3 due by the County under the Facilities Lease by providing for the State Controller to make such payments to the Trustee from (and to the extent of) vehicle license fees held for the account of the County in the event the County fails to make such payments when due. To further secure the Bonds, a reserve fund will be established and funded from Bond proceeds as described in the Preliminary Official Statement. BOND INSURANCE POLICY: The Authority may purchase a municipal bond insurance policy to guarantee the scheduled payment of principal of and interest on the Bonds when due. Any such purchase, if it occurs, will be announced through Thomson Municipal News (Munifacts) and Bloomberg Business News to potential bidders no later than twenty-four (24)hours prior to the sale of the Bonds. TAX-EXEMPT STATUS: In the opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, interest on the Bonds, assuming compliance with certain covenants contained in the Lease, the Trust Agreement and the Tax Certificate, is excluded from gross income for federal income tax purposes under Section 143 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. See "TAX MATTERS" in the Preliminary Official Statement. In the event that prior to the issuance of the Bonds (a) the income received by private owners from Bonds of the same type and character shall be declared to be includable in gross income (either at the time of such declaration or at any future date) for purposes of federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or official which is followed by the Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is adopted that will have a substantial adverse tax effect upon owners of the Bonds as such, the successful bidder may, at its option, prior to the tender of said Bonds, be relieved of its obligation under the contract to purchase the Bonds, and in such case the deposit accompanying its bid will be returned. LEGAL OPINION: The legal opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California, approving the validity of the Bonds will be furnished to the successful bidder without cost. DISCLOSURE COUNSEL OPINION: The accepted bidder or bidders will receive a disclosure opinion from Fulbright & Jaworski L.L.P., Los Angeles, California, regarding the Official Statement. TERMS OF SALE BEST BID: The Bonds will be awarded to the bidder offering to purchase the Bonds at the lowest true interest cost to the Authority. The true interest cost for each bid will be determined on the basis of the aggregate present value of each semiannual payment. The present value will be calculated to the dated date of the Bonds and will be based on the bid amount (par value plus any premium or less any discount), excluding the accrued interest from the date of the Bonds to the date of the delivery of the Bonds. In the event two or more bids specify the same lowest true interest cost, then the selection for award of the Bonds will be made among such bidders by C. M. de Crinis & Co., Inc. by lot. The purchaser must pay accrued interest from the date of the Bonds to the date of delivery. All interest will be computed on a 360-day year 30-day nocssr1:248827.2 40511-108 4 month basis from the date of the Bonds. The cost of preparing the Bonds will be borne by the Authority. RIGHT OF REJECTION: The Authority reserves the right, in its discretion, to reject any and all proposals and to waive any irregularity or informality in any proposals. PROMPT AWARD: The Authority will take action awarding the Bonds or rejecting all bids not later than thirty (30) hours after the expiration of the time herein prescribed for the receipt of proposals unless such time of award is waived by the successful bidder. Notice of the award will be given promptly to the successful bidder. DELIVERY AND PAYMENT: Delivery of the Bonds will be made to the successful bidder through DTC as soon as the Bonds can be prepared and legally delivered, which it is estimated will be within 30 days from the date of sale. Payment for the Bonds must be made in immediately available funds. Any expense of providing immediately available funds, whether by transfer of Federal Reserve Bank funds or otherwise, shall be borne by the purchaser. RIGHT OF CANCELLATION: The successful bidder shall have the right, at his option, to cancel the contract of purchase if the Authority shall fail to issue the Bonds and tender the same for delivery within 60 days from the date of sale thereof, and in such event the successful bidder shall be entitled to the return of the deposit accompanying his bid. FORM OF BID: All bids must be for not less than all of the Bonds hereby offered for sale and accrued interest to date of delivery, plus such premium or less such discount as is specified in the bid. Each bid, together with the Deposit (see "GOOD FAITH DEPOSIT" below) must be enclosed in an envelope addressed to the Authority with the bid clearly marked "Proposal for Purchase of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Series A."All bids must be delivered to a representative of the Authority at the offices of Orrick Herrington & Sutcliffe LLP, Old Federal Reserve Bank Building, 400 Sansome Street, San Francisco, California, in time to be received by 10:00 a.m., California time, on April 22, 1998. A facsimile transmittal sent to (415) 7735879, Attention: Mary A. Collins, Esq., prior to the above referenced deadline will be acceptable (subject to the limitations set forth in "WARNINGS REGARDING FAX BIDS" immediately below). Please note that the facsimile telephone number for bids is a single line with no rollover or other storage capability.Bidders assume the risk that the line will be busy or otherwise unavailable at the time of submission of the facsimile bid. Each bid must be in accordance with the terms and conditions set forth in this Official Notice of Sale, and must be submitted on, or in the farm of, the attached Official Bid Form. WARNINGS REGARDING FAX BIDS: BIDS SUBMITTED BY FACSIMILE TRANSMISSION ARE DEEMED LATE AND WILL NOT BE ACCEPTEDOR EVALUATED UNLESS, AT PRECISELY THE TIME INDICATED ABOVE FOR SUBMISSION OF BIDS, THE ENTIRE BID FORM HAS BEEN FULLY EJECTED FROM THE RECEIVING FACSIMILE MACHINE AT THE PLACE OF THE BID OPENING, AND THE INTEREST RATES, TOTAL PURCHASE PRICE, AND NAME AND SIGNATURE OF THE BIDDER ARE CLEARLY READABLE BY THAT TIME. NEITHER THE AUTHORITY, THE AUTHORITY'S FINANCIAL ADVISOR NOR BOND COUNSEL WILL ACCEPT DOC:$sF1.248827.2 40511-108 5 .................................................I..................- ............................................................. ..................................... .......... RESPONSIBILITY FOR, AND THE BIDDER EXPRESSLY ASSUMES ALL RISK OF, ANY INCOMPLETE, ILLEGIBLE OR UNTIMELY BID SUBMITTED BY SUCH BIDDER BY FACSIMILE TRANSMISSION, INCLUDING BY REASON OF GARBLED TRANSMISSIONS, MECHANICAL FAILURE, ENGAGED TELEPHONE OR TELECOMMUNICATION LINES AT THE PLACE OF BID OPENING, OR ANY OTHER CAUSE FOR REJECTION ARISING OUT OF ANY BIDDER'S ELECTION TO DELIVER ITS BID BY MEANS OTHER THAN HAND DELIVERY. NO ATTEMPT WILL BE MADE PRIOR TO THE DEADLINE FOR OPENING BIDS TO INFORM ANY BIDDER THAT ITS BID WAS INCOMPLETE,ILLEGIBLE OR NOT RECEIVED. IN THE EVENT ANY BIDDER SUBMITS MORE THAN ONE BID (WHETHER BY FACSIMILE OR OTHERWISE), THE BID MOST RECENTLY RECEIVED IN ITS ENTIRETY PRIOR TO THE DEADLINE NOTED ABOVE WILL BE CONSIDERED THE OPERATIVE BID FOR SUCH BIDDER AND ALL PREVIOUS BIDS OF SUCH BIDDER WILL BE DISREGARDED. GOOD FAITH DEPOSIT: A Good Faith Deposit ("Deposit") in the form of a certified or cashier's check or a bid bond ("Financial Surety Bond") in the amount of$500,000, payable to the order of the Authority, must accompany each proposal as a guaranty that the bidder, if successful, will accept and pay for the Bonds in accordance with the terms of the bid. If a check is used, it must accompany the bid and be drawn on a bank or trust company having an office in San Francisco or Los Angeles, California. If a Financial Surety Bond is used, it must be from a pre-qualified insurance company whose claims paying ability is rated in the highest rating category by Moody's Investors Service or Standard &Poor's, and is licensed to issue such a bond in the State of California. The form of such Financial Surety Bond is subject to prior approval by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, bond counsel, and such form must be submitted to C. M. de Crinis & Co., Inc., the Authority's financial advisor, a minimum of 24 hours prior to the opening of proposals. Such Financial Surety Bond must provide that the surety shall make payment of the full amount of the Deposit by wire transfer to the Authority within 24 hours of the receipt of written notice from either the Authority or the Financial Advisor that the bidder has failed to submit the Deposit as required by this Official Notice of Sale. The Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder utilizing a Financial Surety Bond, then the purchaser ("Purchaser") is required to submit its Deposit to the Authority in the form of a certified or cashier's check or wire transfer not later than 3:30 p.m., California time, on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the Authority to satisfy the Deposit requirement. The Deposit will be applied to the purchase price of the Bonds. If after the award of the Bonds the successful bidder fails to complete its purchase on the terms stated in its proposal, the Deposit will be retained by the Authority. The certified or cashier's check accompanying an unaccepted proposal will be returned promptly. No interest on the Deposit will accrue to any bidder. STATEMENT OF TRUE INTEREST COST; REOFFERING YIELDS: Each bidder is requested, but not required, to state in his bid the percentage true interest cost to the Authority, which shall be considered as informative only and not binding on either the bidder or the Authority. The accepted bidder shall submit a Reoffering Price Certificate in the form DOCSSFI:248827.2 40511-108 6 attached as Appendix A to the Official Bid Form, all as described under "REOFFERING PRICE CERTIFICATE"herein. NO LITIGATION: There is no litigation pending concerning the validity of the Bonds, the existence of the Authority or the entitlement of the officers thereof to their respective offices, and the Authority will furnish to the successful bidder a no-litigation certificate certifying to the foregoing as of and at the time of the delivery of the Bonds. RESALE IN OTHER STATES: The purchaser will assume responsibility for taking any action necessary to qualify the Bonds for offer and sale in jurisdictions other than California, and for complying with the laws of all jurisdictions on resale of the Bonds, and shall indemnify and hold harmless the Authority, the County and its officers and officials from any loss or damage resulting from any failure to comply with any such law. CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Bonds, but neither failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms of this Official Notice of Sale. All expenses in relation to the printing of CUSIP numbers on the Bonds shall be paid for by the Authority; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of and shall be paid for by the purchaser, CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION FEE: Attention of bidders is directed to California Government Code Section 8856, which provides that the lead underwriter or the purchaser of the Bonds may be charged the California Debt and Investment Advisory Commission fee. OFFICIAL STATEMENT: A Preliminary Official Statement has been prepared, copies of which may be obtained upon request made to the .Authority or to the Authority's Financial Advisor, C. M. de Crinis & Co., Inc., 3000 Bri geway, Suite 206, Sausalito, California 94965. The Preliminary Official Statement shall be "deemed final"by the Authority prior to or on the sale date for purposes of Securities Exchange Commission Rule 15c2-12(b)(1), but is subject to revision, amendment and completionin a final Official Statement. The Executive Director of the Authority has reviewed and will further review the Official Statement and will certify that as of the date of the final Official. Statement, to the best of such officer's knowledge and belief, the Official Statement does not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. The Authority will deliver to the purchaser of the Bonds a certificate of the Authority as to the above, dated the date of delivery of the Bonds, and further certifying that the signatory knows of no material adverse change in the condition or affairs of the Authority that would make it unreasonable for the purchaser of the Bonds to rely upon the Official Statement in connection with the resale of the Bonds, and authorizing the purchaser of the Bonds to distribute copies of the Official Statement in connection with the resale of the Bonds. The Authority will furnish to the successful purchaser, at no expense to the successful purchaser, up to 150 copies of the Official Statement within seven (7) business days of the award date. Additional copies will be made available upon request, submitted to the Financial Advisor no later than twenty-four hours DOC.SSE 1:x48827.2 40511-108 7 after the time of receipt of bids, at the purchaser's expense, for use in connection with any resale of the Bonds. By making a bid for the Bonds, the successful bidder agrees (i) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any supplements prepared by the Authority, (ii) to promptly file a copy of the final Official Statement, including any supplements prepared by the Authority, with the Nationally Recognized Municipal Securities Information Repositories, and (iii) to take any and all other actions necessary to comply with applicable Securities and Exchange Commission and Municipal Securities Rulemaking Board rules governing the offering, sale and delivery of the Bonds to the ultimate purchasers. CONTINUING DISCLOSURE: In order to assist bidders in complying with Securities Exchange Commission Rule 15c2-12(b)(5), the County will undertake, pursuant to a Continuing Disclosure Certificate, to provide certain annual financial information relating to the County and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. ,See "CONTINUING DISCLOSURE" in the Preliminary Official Statement. RIGHT TO MODIFY OR AMEND: The Authority reserves the right to modify or amend this Official Notice of Sale in any respect; provided, however, that any such modification or amendment shall be made not later than twenty-four (24) hours prior to the time the bids are to be received and shall be communicated to potential bidders through Thomson Municipal News(Munifacts) and Bloomberg Business News. Dated: April 14, 1998. /s/Philp J. Batchelor Executive Director, County of Contra Costa Public Financing Authority DOC-SS F 1:248827.2 40511.108 8 BID FORM $24,805,000** County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Series A TO: COUNTY OF CONTRA COSTA DATE: APRIL 22, 1998 PUBLIC FINANCING AUTHORITY Ladies and Gentlemen: We offer to purchase all, but not less than all, of the $24,805,000* principal amount of the above described Lease Revenue Bonds, more particularly described in your Official Notice of Sale, dated April 14, 1998, all of the terms and conditions of which are made part hereof as though set forth in full in this proposal, at the par value thereof(together with a premium of$ ) (less a discount of$ l [strike out inapplicable clause] plus accrued interest to the date of delivery, said interest to be payable at the rates more particularly set forth in the Schedule below. Schedule of Bond Payment Dates,Amounts,and Interest hates (Check One) Maturity Mandatory* Date Principal Serial* Sinking Fund Interest August I Cornnonent Matlzrity Prepavment Rate $ • Place a check in the appropriate column indicating whether the principal component is a serial maturity or mandatory sinking fund prepayment. Preliminary, subject to change. ................ .. .. . ...... ....... NOTE: The interest rate bid represented by the Bonds payable in each year must either be the same as or higher than the interest rate bid represented by the Bonds payable in the preceding year. Our calculation of the true interest cost, which is considered to be informative only and not a part of the proposal,is as follows: The total amount of interest payable on the Bonds during the life of the issue under the attached bid is S The amount of premium or discount bid(specify which)is$ The true interest cost(determined as described in the section of the Official Notice of Sale entitled"Best Bid")is %. Check One: There is enclosed herewith a(certified)(cashier's)check for S payable to the order of the County of Contra Costa Public Financing Authority. We have provided the Authority with a pre-approved Financial Surety Bond as provided in the Official Notice of Sale. We agree that if we are the successful bidder for the Bonds we will provide the Authority with a Final Reoffering Price Bond in the form attached as Exhibit A hereto. We hereby represent that as of the date of award and as of the date of delivery of the Bonds, all members of our account either participate in DTC or clear through or maintain a custodial relationship with an entity that participates in said depository. Respectfully submitted, Firm: Account Manager By: Printed blame: Title: Address: Telephone No.: Fax No. DOCSSFI:248827.2 40511-108 2 Following is a list of the members of our account on whose behalf this hid is made. List of Members of Account: DOCSSFI:248827.2 40-511-108 3 APPENDIX A TO OFFICIAL BID FORINT REOFFERING PRICE CERTIFICATE* This certificate is being delivered by on behalf of the purchasers (the "Purchasers") of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Series A (the "Bonds"). Based upon its records and information available to it, which it believes to be correct, the undersigned hereby certifies that: 1. As of April 22, 1998 (the "Sale Date"), the Purchasers have offered or reasonably expected to offer all of each maturity of the Bonds listed below to the general public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices shown for each maturity. 2. The issue prices of the various maturities of the Bonds as shown do not exceed the fair market prices or yields as of the Sale Date. 3. As of the date of this certificate, all of the Bonds listed have actually been offered to the general public at such prices. 4. At least 10% of each maturity of the Bonds has been sold at the prices shown herein. Maturity Date 1 Price Dated: ' 1998 [Name of Purchaser] By: Title: * To be delivered by the successful bidder as described under"REOFFERING PRICE CERTIFICATE"in the Official Notice of Sale. ` NOTICE OF INTENTION TO SELL NOT TO EXCEED $29,000,000 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL FACILI'TIES), 1998 REFUNDING SERIES A NOTICE IS HEREBY" GIVEN that the County of Contra Costa Public Financing Authority(the "Authority"), intends to offer for public sale on Wednesday, April 22, 1998 at the hour of 10:00 a.m., California time, at the offices of Orri Authority's Financial Advisor, C. M. de Crinis & Co., Inc., Attention: Jean Buckley (415) 339-8944. Failure of any bidders to receive such telephonic or telecopied notice shall not affect the legality of the sale. NOTICE IS HEREBY FURTHER GIVEN that the Bonds will be offered for public sale subject to the terms and conditions of the Official Notice of Sale for the Bonds, and copies of the Official Notice of Sale and of a Preliminary Official Statement relating to the Bonds will be furnished upon request to C. M. de Crinis &Co., Inc., 3000 Bridgeway, Suite 206, Sausalito, California 94965, telephone number (415) 339-8944, telecopy number (415) 339-8945. Dated: April 7, 1998. Isl Philip J.Batchelor Executive Director County of Contra Costa Public Financing Authority 2 DOCSSF1:248728.2 40511-108 ........_........................................................................................................................................................... OH&S FIRST DRAFT 4/2/98 LETTER OF INSTRUCTIONS To: BNY WESTERN TRUST COMPANY, as trustee under a Trust Agreement, dated as of August 1, 1994,by and among Meridian Trust Company of California, as predecessor trustee, Contra Costa County Public Facilities Corporation and the County of Contra Costa(the"1994 Trust Agreement") Re: Defeasance of County of Contra Costa Certificates of Participation(Various Capital Facilities), Series of 1994 Ladies and Gentlemen: This Letter of Instructions, dated as of May 1, 1998, is from the County of Contra Costa, a political subdivision of the State of California(the"County"), to the BNY Western Trust Company, a state banking corporation duly organized and existing under and by virtue of the laws of the State of California(the "1994 Trustee") and pursuant to the 1994 Trust Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the 1994 Trust Agreement. RECITALS You are advised that the County of Contra Costa Public Financing Authority(the "Authority") duly issued$ of County of Contra Costa Public Financing Authority Lease Revenue Bonds, 1998 Refunding Series A(the"Refunding Bonds")under and pursuant to the Trust Agreement, dated as of May 1, 1998,by and between the Trustee and the Authority for the purpose, among others, of providing funds to you for the defeasance of the Outstanding County of Contra Costa Certificates of Participation(Various Capital Facilities), Series of 1994, delivered in the original principal amount of$23,090,000(the "1994 Certificates"). This letter of Instructions and the 1994 Trust Agreement provide for the creation of a fund to be known as the 1994 Certificates Escrow Fund(the `Escrow Fund")to be established and maintained by the 1994 Trustee, and provide for the deposit in the Escrow Fund of certain of the proceeds of the Refunding Bonds and other moneys. The County has taken action to cause to be issued to the 1994 Trustee for deposit in or credit to the Escrow Fund certain cash, securities and investments consisting of certain direct and general obligations of the United States of America, or obligations that are unconditionally guaranteed as to principal and interest by the United States of America, that are not subject to redemption prior to their respective stated maturities (the"Escrow Securities"). The initial Escrow Securities are listed on Schedule I attached hereto and made a part hereof, and are in an amount which, together with the income or increment to accrue on such Escrow Securities, will be sufficient, as certified by Deloitte &Touche LLP certified public accountants, to pay the amounts required pursuant to Section 3. Escrow Securities shall not include unit investment trusts or mutual funds. DocssF1.252888.1 40511-108 INSTRUCTIONS Section 1. Establishment and Maintenance of Escrow Fund. The 1994 Trustee shall establish and maintain pursuant to these irrevocable instructions the Escrow Fund until all amounts due as represented by the 1994 Certificates have been paid. The 1994 Trustee shall hold the securities, investments and moneys in the Escrow Fund at all times as a special fund and separate trust account. All securities, investments and moneys in the Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 and Section 7 hereof,to secure the payment of the 1994 Certificates. Section 2. Investment of Escrow Fund. (a) The County shall take all remaining necessary action to,enable the 1994 Trustee to register in the name of the 1994 Trustee, for the account of the Escrow Fund, the Escrow Securities. The 1994 Trustee shall use proceeds of the Refunding Certificates in the amount of$ and moneys held pursuant to the 1994 Trust Agreement in the amount of$ from the Acquisition and Construction Fund and the amount of$ from the Reserve Fund and deposited into the Escrow Fund to purchase the Escrow Securities. Other moneys held pursuant to the 1994 Trust Agreement and not required for the payment of the 1994 Certificates including the amount of$ remaining in the Reserve Fund shall be transferred to the Trustee. (b) [The 1994 Trustee is hereby instructed and agrees to reinvest on August 1, the cash portion of the Escrow Fund in the amount of$ in the Treasury Certificate identified in Schedule I bearing interest at 0.%. The Trustee shall prepare and file the subscription forms necessary for such reinvestment.] The 1994 Trustee shall [additionally] reinvest at the written direction of the County any cash portion of the Escrow Fund in Escrow Securities. Any such reinvestment shall be made in securities the principal of and interest on which is payable at such times and in such amounts as will be sufficient(together with the other securities, investments and moneys in the Escrow Fund)to pay the 1994 Certificates in accordance with Section 3 and consistent with the then currently applicable report of the nationally recognized firm of independent certified public accountants delivered with respect to the Escrow Fund. The 1994 Trustee shall not be liable or responsible for any loss resulting from any investment made pursuant to this Letter of Instructions and in full compliance with the provisions hereof. Section 3. PgMent and Prepayment of 1994 Certificates. The 1994 Trustee agrees to deposit, to the extent such funds are received in the Escrow Fund, the principal of and interest on all Escrow Securities held for the account of the Escrow Fund promptly as such principal and interest become due, and to apply such principal and interest,together with other moneys and the principal of and interest on other securities deposited in the Escrow Fund, to the payment of the principal and interest represented by the 1994 Certificates when due to and including August 1, 2044 and to the payment of the principal and prepayment premium represented by the 1994 Certificates on August 1,2004. Upon payment of all 1994 Certificates, the 1994 Trustee shall transfer any moneys or securities remaining in the Escrow Fund, to the extent not required for any fees or expenses of the 1994 Trustee, to the County. DOCSSF1:252888.1 40511-108 2 ......... ......... ..........._...111.1 ........ ........__... ........_ _._........ .__...... ......... ......... ......... _ __. .. ......... ......... ......... ......... . ............................................... Section 4. Notice ofPrenayment. The County hereby irrevocably directs the 1994 Trustee, and the 1994 Trustee agrees, to give notice of the prepayment of the 1994 Certificates on August 1, 2004 in the time, form and manner as specified by the 1994 Trust Agreement. Section 5. Possible Deficiencies. If at any time it shall appear to the 1994 Trustee that the moneys in the Escrow Fund, including the anticipated proceeds of the Escrow Securities, will not be sufficient to make all payments required by Section 3 hereof, the 1994 Trustee shall notify the County in writing as soon as reasonably practicable of such fact and the amount of such deficiency; provided,however, the 1994 Trustee shall have no liability whatsoever hereunder if it shall fail to give such notice as contemplated above. Thereupon the County shall use its best efforts to obtain and deposit with the 1994 Trustee for deposit in the Escrow Fund, from any legally available moneys, such additional moneys as may be required to meet fully the aggregate amounts to become due and payable on the 1994 Certificates as the same become due. The 1994 Trustee shall in no manner be responsible for the County's failure to make any such deposit. Section 6. Unclaimed Moneys. Any moneys held by the 1994Trustee in trust for the payment and discharge of any of the 1994 Certificates which remain unclaimed for two (2) years after the date when such 1994 Certificates are to have been retired or prepaid in accordance with Section 3 shall be repaid by the 1994 Trustee to the County as its absolute property free from trust, and the 1994 Trustee shall thereupon without further action on the part of the County be released and discharged with respect thereto and the owners of the 1994 Certificates shall look only to the County for the payment of such certificates; provided,however, that before being required to make any such payment to the County, the 1994 Trustee may, at the expense of the County, (1) cause to be published once a week for two (2) successive weeks in a financial newspaper a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than thirty(30)days after the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to the County, and(2) cause to be mailed, for and on behalf of the County, a copy of such notice,postage prepaid, not less than thirty(30)nor more than sixty(60) days prior to said date named in said notice, to the respective registered owners of any of said 1994 Certificates. The instructions herein shall constitute the Written Request of the County for purposes of Section 10.02 of the 1994 Trust Agreement. Section 7. Substitution of Securities. Upon the written request of the County, subject to the conditions and limitations hereinafter set forth and applicable government rules and regulations, the 1994 Trustee shall sell, redeem or otherwise dispose of the securities in the Escrow Fund, if there are substituted therefor, from the proceeds of such securities, other Escrow Securities as hereinafter provided. The County will not exercise any powers which would have the effect of causing any of the Refunding Bonds to be"arbitrage bonds"as defined in Section 148 of the Internal Revenue Code of 1986 and the regulations of the United States Department of the Treasury issued thereunder. The 1994 Trustee shall dispose of the securities in the Escrow Fund and purchase substitute Escrow Securities only upon receipt of-- (a) a written report of a nationally recognized firm of independent certified public accountants acceptable to the 1994 Trustee to the effect that the substitute Escrow DOCSSFl:252$8$.1 40511-1.08 3 ......... ......... ......... ......._. .._..._.. ...... ............ _.__....... ..._..._.. ...._._... . ......... ......... ......... ......... ................_. . ._.. .._...... ......... Securities will mature in such principal amounts and earn interest in such amounts and at such times so that sufficient moneys will be available to pay, as the same become due, all principal, premium, if any, and interest represented by the 1994 Certificates; and (b) a legal opinion of nationally recognized bond counsel to the effect that such disposition of the securities in the Escrow Fund and purchase of substitute Escrow Securities will not cause the Refunding Bonds or the 1994 Certificates to be "arbitrage bonds" as defined in Section 148(f)of the Internal Revenue Code of 1986 and the regulations of the United States Department of the Treasury issued thereunder. Section 8. Fees and Expenses of 1994 Trustee. The County by this Letter of Instructions, agrees to pay the fees and expenses of the 1994 Trustee incurred as a result of this Letter of Instructions and the acceptance thereof by the 1994 Trustee; provided, however, that in no event shall such fees or expenses incurred by the 1994 Trustee be deducted from, or constitute a lien against, the Escrow Fund. Section 9. Liabilities and Obligations of 1994 Trustee. The 1994 Trustee shall have no obligation to make any payments or disbursement of any type or incur any financial liability in the performance of its duties under this Letter of Instructions unless the County shall have deposited sufficient funds therefor with the 1994 Trustee. The 1994 Trustee may rely and shall be protected in acting upon the written instructions of the County or its agents relating to any matter or action as 1994 Trustee under this Letter of Instructions. The obligations hereunder shall not create any obligation upon the 1994 Trustee in excess of that provided under the Trust Agreement. The County, to the extent permitted by law, covenants to indemnify and hold harmless the 1994 Trustee against any loss, liability or expense, including legal fees, incurred in connection with the performance of any of its duties hereunder, except the 1994 Trustee shall not be indemnified against any loss, liability or expense resulting from its negligence or willful misconduct. The 1994 Trustee may consult with counsel of its own choice (which may be counsel to the County) and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action in accordance with such opinion of counsel. The 1994 Trustee shall not be responsible for any of the recitals or representations contained herein. The 1994 Trustee shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys or Escrow Securities deposited with it to pay the principal, interest or premiums, if any, represented by the 1994 Certificates. The 1994 Trustee shall not be liable for any action or omission'ofthe County under this Letter of Instructions or the 1994 Trust Agreement. Whenever in the administration of this Letter of Instructions the 1994 Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter(unless other evidence in respect thereof be herein DOCSSF1:252888.1 40511-108 4 specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the 1994 Trustee,be deemed to be conclusively proved and established by a certificate of an authorized representative of the County, and such certificate shall, in the absence of negligence or willful misconduct on the part of the 1994 Trustee,be full warrant to the 1994 Trustee for any action taken or suffered by it under the provisions of this Letter of Instructions upon the faith thereof The 1994 Trustee may conclusively rely, as to the truth or accuracy of the statements and correctness of the opinions and calculations provided, and shall be protected and indemnified, in acting, or refraining from acting, upon any written notice, instruction,request, certificate, document or opinion furnished to the 1994 Trustee signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. Section 10. Miscellaneous. This Letter of Instructions may not be amended by the parties hereto unless there shall first have been filed with the County and the 1994 Trustee(i) a written opinion of nationally recognized bond counsel stating that such amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest represented by the 1994 Certificates or on the Refunding Bonds, and(ii)unless such amendment is not materially adverse to the interests of the registered owners of the 1994 Certificates, the written consent of all the registered owners of the 1994 Certificates then outstanding. DOCSSF 1:252888.1 40511-108 5 Section 11. Severability. If any section,paragraph, clause or provision of this Letter of Instructions shall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Letter. COUNTY OF CONTRA COSTA By Chair of the Board of Supervisors of the County of Contra Costa, State of California Attest: Philip J. Batchelor, Clerk of the Board of Supervisors and County Administrator By: Chief Clerk Approved as to form: County Counsel BNY WESTERN TRUST COMPANY, as 1994 Trustee $y Authorized Officer DOCSSF1:252888.1 40511-108 6 SCHEDULEI Escrow Securities United States Treasury Obligations as set forth below: Cash in the amount of$ State and Local Government Series Purchase Type of Type of Maturity First Int Par Max Date Security SLGS Date Pmt Date Amount Rate Rate May 12, 1998 SLG Certificate 8/01/1998 8/01/1998 % % SLG Certificate 2/01/1999 % % SLG Note DOCSSF 2:252888.1 40511-108 I-1 C-1159 9 OH&S FIRST DRAFT 4/2/98 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement(the "Disclosure Agreement") is executed and delivered by the COUNTY OF CONTRA COSTA, California(the "County"),BNY WESTERN TRUST COMPANY, as trustee (the"Trustee"), and U.S. TRUST COMPANY OF CALIFORNIA,N.A., as dissemination agent(the"Dissemination Agent")in connection with the issuance by the County of Contra Costa Public Financing Authority(the"Authority")of $ Lease Revenue Bonds(Various Capital Facilities), 1998 Refunding Series A (the"Bonds"). The Bonds are being issued pursuant to a Trust Agreement dated as of May 1, 1998,between the Authority and the Trustee(the "Trust Agreement"). Pursuant to the Facility Lease (Various Capital Facilities), dated as of May 1, 1998 (the"Facilities Lease"), the County has covenanted to comply with its obligations hereunder and to assume all obligations for Continuing Disclosure with respect to the Bonds. The County,the Trustee and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the County, the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning the ownershipof any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Disclosure Representative" shall mean the County Administrator,Deputy County Administrator or his or her designee, or such other officer or employee as the County shall designate in writing to the Trustee from time to time. "Dissemination Agent"shall mean U.S. Trust Company of California,N.A., acting in its capacity as Dissemination Agent hereunder,or any successor Dissemination Agent designated in writing by the County and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories approved DOCSSF 1:253048.1 4051 t-108 by the Securities and Exchange Commission as of the date of this Agreement are set forth in Exhibit B. "Participating Underwriter"shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository„shall mean each National Repository and the State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State"shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as the state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Agreement, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The County shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the County's fiscal year(presently June 30), commencing with the report for the 1993-1998 Fiscal Year,provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the County may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the County's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(f). (b) Not later than fifteen(15)Business Days prior to the date specified in subsection(a) for providing the Annual Report to Repositories, the County shall provide the Annual Report to the Dissemination Agent and the Trustee(if the Trustee is not the Dissemination Agent). If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the County to determine if the County is in compliance with the first sentence of this subsection(b). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection(a), the Dissemination Agent shall send a notice to each Repository, the Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: DOC;SSF1:253048.1 40511-108 2 (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State',Repository, if any; and (ii) to the extent the County has provided the Annual Report to the Dissemination Agent, file a report with the County and(if the Dissemination Agent is not the Trustee)the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The County's Annual Report shall contain or include by reference the following: 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a),the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the finalOfficial Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS --RENTAL PAYMENT SCHEDULE" (changes in base rental payments due to unscheduled prepayments and defeasances); (b) "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS -- State Intercept Program"(update Summary of Motor Vehicle License Fees table); (c) "APPENDIX B -- COUNTY FINANCIAL INFORMATION -- County General Fund Budgets for Fiscal Years 1995-96; 1996-97; and 1997-98" (update General Fund Budgets table); (d) "APPENDIX B -- COUNTY FINANCIAL INFORMATION-- Ad Valorem Property Taxes" (update Summary of Assessed Valuations and Ad Valorem Property Taxation table); (e) "APPENDIX B -- COUNTY FINANCIAL INFORMATION --The Contra Costa County Investment Pool"(update tables); (f) "APPENDIX B -- COUNTY FINANCIAL INFORMATION-- Accounting Policies, Reports and Audits"(update General Fund Balance Sheet table); D04CSSF1:253048.1 44511-108 3 (g) "APPENDIX B -- COUNTY FINANCIAL INFORMATION-- Accounting Policies, Reports and Audits"(update Schedule of Revenues, Expenditures and Changes in Fund Balances table); (h) "APPENDIX B --COUNTY FINANCIAL INFORMATION-- Pension Plan"(update); and (i) "APPENDIX B -- COUNTY FINANCIAL INFORMATION-- Long Term Obligations -- General Obligation Debt"and "--Lease Obligations"(update). Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the County or related public entities,which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The County shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5,the County shall give,or cause to be given,notice of the occurrence of any of the following events with respect to the Bonds, if material: I. principal and interest payment delinquencies; 2. non-payment related defaults; 3. modifications to rights of Holders of Bonds; 4. optional, contingent or unscheduled bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds; 8. unscheduled draws on the debt service reserves reflecting financial difficulties; 9. unscheduled draws on credit enhancements reflecting financial difficulties; 10. substitution of credit or liquidity providers,or their failure to perforin; and 11. release, substitution or sale of property securing repayment of the Bonds. DOCSS 1:253048.1 40511-108 4 (b) The Trustee shall,promptly upon obtaining actual knowledge at its principal corporate trust office as specified in Section 12 hereof of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the County promptly notify the Trustee in writing whether or not to report the event pursuant to subsection(f); provided that, failure by the Trustee to so notify the Disclosure Representative and make such request shall not relieve the County of its duty to report Listed Events as required by this Section 5. (c) Whenever the County obtains knowledge of the occurrence of Listed Event, whether because of a notice from the Trustee pursuant to subsection(b)or otherwise, the County shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the County has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the County shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection(f). (e) If in response to a request under subsection(b), the County determines that the Listed Event would not be material under applicable federal securities laws, the County shall so notify the Trustee in writing and instruct the Trustee not to report the occurrence pursuant to subsection(f). (f) If the Trustee has been instructed by the County to report the occurrence of a Listed Event, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5)need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affectedBonds pursuant to the Trust Agreement. (g) The Trustee may conclusively rely on an opinion of counsel that the County's instructions to the Trustee under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. Each party's obligations under this Disclosure Agreement shall terminate upon the legal defeasance,prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the County shall give notice of such termination in the same manner as for a Listed Event under Section 5(f). SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the County pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the ryocssrl:253048.r 40511-108 5 ............................ . . .. . ...... ....... Dissemination Agent. The initial Dissemination Agent shall be U.S. Trust Company of California, N.A. SECTION 8. Amendment• Waiver. Notwithstanding any other provision of this Disclosure Agreement,the County, the Trustee and the Dissemination Agent may amend. this Disclosure Agreement(and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the County provided such amendment does not impose any greater duties,nor risk of liability,on the Trustee or the Dissemination Agent, as the case may be), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or S(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements,change in law, or change in the identity,nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver,would, in the opinion of nationally recognized bond counsel,have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either(i)is approved by the Holders of the Bonds in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the consent of Holders, or(ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this.Disclosure Agreement,the County shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the County. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i)notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and(ii) the Annual Report for the year in which the change is made should present a comparison(in narrative form and also, if feasible, in quantitative form)between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this:Disclosure Agreement or any other means of communication, or including any other information in any Annual.Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the County chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the DOCSS 1:253048.1 44511-108 6 County shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the County, the Trustee or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee (and, at the written request of any Participating Underwriter or the Molders of at least 25% aggregate principal amount of Outstanding Bonds, shall,but only to the extent indemnified to its satisfaction), or any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County, the Trustee or the Dissemination Agent, as the case may be,to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the County,the Trustee and the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the County, to the extent permitted by law, agrees to indemnify and save the Dissemination Agent and the Trustee,their officers,directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees)of defending against any claim of liability,but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or wilful misconduct. The obligations of the County under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the County: County of Contra Costa County Administrator's Office 651 Pine Street, 11th Floor Martinez, CA 94553-0063 Attention: Laura W. Lockwood, Director of Capital Facilities and Debt Management Telephone: (510) 335-1093 Fax: (510) 335-1098 If to the Trustee: BNY Western Trust Company 700 South Flower Street, 2"d Floor Los Angeles, CA 90017-4104 Attention: Corporate Trust Department Telephone: (213) 630-[6236] Fax: (213) 630-6442 DOCSS1!l:253448.1 40511-108 7 To the Dissemination: U.S. Trust of California,N.A. Agent 515 South Flower Street, Suite 2700 Los Angeles, CA 90071 Attention: Sandee Parks,Vice President Telephone: (213) 861-5066 Pax: (213)488-1370 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s)to which subsequent notices or communications should be sent. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the County, the Trustee, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. DOC'SSM253048.1 4051.1-108 8 SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Date: May 12, 1998. COUNTY OF CONTRA COSTA By Chair of the Board.of Supervisors of the County of Contra Costa, State of California Attest: Philip J. Batchelor, Clerk of the Board of Supervisors and County Administrator By: Chief Clerk Approved as to form: County Counsel BNY WESTERN TRUST COMPANY, as Trustee By Authorized Officer U.S. TRUST COMPANY OF CALIFORNIA, N.A., as.Dissemination Agent By Authorized Officer DOCS01:253048.1 40511-108 9 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of County: County of Contra Costa Name of Issue: County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A Date of Issuance: NOTICE IS HEREBY GIVEN that the County of Contra Costa has not provided an Annual Report with respect to the above-named Bonds as required by Section of the Trust Agreement dated as of May 1, 1998, by and among the County of Contra Costa Public Financing Authority and BNY Western Trust Company. The County of Contra Costa anticipates that the Annual Report will be filed by Dated: U.S TRUST COMPANY OF CALIFORNIA,N.A., on behalf of COUNTY OF CONTRA COSTA cc: County of Contra Costa DOCSS 1:2531748.1 4051 1-1 08 A-1 EXHIBIT B The Nationally Recognized Municipal Securities Information Repositories approved by the Securities and Exchange Commission as of the date of the Disclosure Agreement are as follows: Bloomberg Municipal Repository P.O.Box 840 Princeton,NJ 08542-0840 (609) 279-32001(609)279-3204 to order documents (609) 279-5962 or(609)279-5963 [FAX] Internet address: MUNIS& bloomberg.com Contact: Lena Panich JJ Kenny Information Services The Repository 65 Broadway, 16th Floor New York,NY 10006 (212) 770-4568 (212) 797-7994 [FAX] e-mail address:Joan horai@mcgrawhill.com Contact: Ms. Joan Horai,Repository Thomsen NRMSIR Secondary Market Disclosure 395 Hudson Street, 3rd Floor :New York,NY 10014 (212) 807-5001 (212) 989-2078 [FAX] Contact: Carolyn Chin e-mail address: DisclosureQmuller.com DPC Data,Inc. One Executive Drive Fort Lee,N.J. 07024 (201) 346-0701 (201) 947-0107 [FAX] Contact: NRMSIR Internet address: nrmsir@dpcdata.com ell Recording requested by and return to: COUNTY OF CONTRA COSTA c/o Orrick Herrington& Sutcliffe LLP Old Federal Reserve Bank Building 400 Sansome Street San Francisco, California 94111 Attention: Mary A. Collins, Esq. ASSIGNMENT.AGREEMENT by and among CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION and BNY WESTERN TRUST COMPANY and COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY Dated as of May 1, 1998 Relating to the FACILITY LEASE (VARIOUS CAPITAL FACILITIES) Dated as of August 1, 1994 DOCSS F i:253075.1 40511-83-AD1-04/2/98 12:04 PM ASSIGNMENT AGREEMENT Relating to the FACILITY LEASE (VARIOUS CAPITAL FACILITIES) Dated as of May 1, 1998 This ASSIGNMENT AGREEMENT, made and entered into as of May 1, 1998, by and among CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION, a nonprofit public benefit corporation organized under the laws of the State of California(the "Corporation"), BNY WESTERN TRUST COMPANY, a trust company organized and existing under the laws of the State of California, as Trustee (the "Trustee") and COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY(the "Authority") a joint powers agency organized and existing under the laws of the State of California; WITNESSETH: WHEREAS, $23,090,000 aggregate principal amount of certificates of participation (the "Certificates") were executed and delivered pursuant to a Trust Agreement (the "Trust Agreement"), dated as of August 1, 1994, by and among the County of Contra Costa(the "County"), the Corporation and Meridian Trust Company of California, as predecessor to the Trustee, for the purpose of financing the acquisition, construction, improvement and remodeling of public buildings and facilities for use by the County situated on that certain real property located in the County of Contra Costa, California described in Exhibit A to the Lease (as hereinafter defined) (collectively, the "Facilities"); WHEREAS, pursuant to a facility lease, dated as of August 1, 1994(the "Lease"), between the Corporation and the County, which lease or memorandum thereof was recorded in DOCSSFI:253075.1 40511-83-AI)1-04(2/98 12:04 PM 2 the Official Records of the County on August 31, 1994 in Book_ the Corporation leased the Facilities to the County, WHEREAS, pursuant to an assignment agreement, dated as of August 1, 1994, between the Corporation and the Trustee, the lease payments to be made by the County under the Facility Lease(the "Base Rental") were assigned to the Trustee to pay the principal and interest represented by the Certificates; WHEREAS, the Authority intends to assist the County in refinancing the Facilities by issuing its Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A (the "Bonds"); WHEREAS, pursuant to the Letter of Instructions from the County to the Trustee, dated as of May 1, 1998, certain proceeds of the Bonds together with certain funds held by the Trustee will be deposited into an escrow fund (the "Escrow Fund") and irrevocably pledged to repay the Base Rental and the Certificates, WHEREAS, pursuant to the terms of Article X of the Trust Agreement, following the deposit of such amounts in the Escrow Fund, no Certificates will remain Outstanding under the Trust Agreement, WHEREAS, as consideration for such deposit in the Escrow Fund, the Corporation and the Trustee (which is hereby requested to execute this Assignment Agreement), desire to assign all of their rights, title and interest in the Facility Lease (other than the right, title and interest in the.Base Rental to be paid from the Escrow Fund) to the Authority; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Assignment Agreement do exist, have happened and have been performed in DOCSSF1:253075.1 40511-83-ADI-04/2;98 12:04 PM 3 regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Assignment Agreement; NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: SECTION 1. Assignment. The Corporation and the Trustee for good and valuable consideration, the receipt of which is hereby acknowledged, do hereby unconditionally grant, transfer and assign to the Authority, without recourse, all their rights, title and interest under the FacilityLease, excepting only the right to receive Base Rental to be paid from the Escrow Fund, SECTION 2. Acceptance. The Authority hereby accepts the assignment set forth in Section 1 above. SECTION 3. California Law, This Assignment Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California. SECTION 4. Severability. If any agreement, condition, covenant or term hereof or any application hereof should be held by a court of competent jurisdiction to be invalid, void or unenforceable, in whole or in part, all agreements, conditions, covenants and terms hereof and all applications thereof not held invalid, void or unenforceable shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby. DOCSS F'1:253075A 40511-83-ADI-04/2/98 12:04 PM SECTION 5. Execution, This Assignment Agreement may be executed in any number or counterparts, each of which shall be deemed to be an original, by all together shall constitute but one and the same Assignment Agreement. DOCSS F 1;253075.1 40511-83-ADI-0412198 12:04 PM 5 IN WITNESS WHEREOF, the parties hereto have executed and attested this Agreement by their officers thereunto duly authorized as of the day and year first written above. CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION By President (SEAL) Attest Secretary BNY WESTERN TRUST COMPANY, as Trustee By Authorized Officer COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Chair Attest: Secretary DOCSSFI:253075.1 40511-83-ADI-04/2/98 12:04 PM 6 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: COUNTY OF CONTRA COSTA c/o Orrick, Herrington & Sutcliffe LLP 400 Sansome Street San Francisco, CA 941.11 Attention: Mary A. Collins, Esq. QUITCLAIM DEED THIS QUITCLAIM DEED (this "Deed") dated as of May , 1998, is entered by and between the CONTRA COSTA COUNTY PUBLIC FACILITIES CORPORATION, a nonprofit public benefit corporation duly organized and existing under and by virtue of the laws of the State of California (the "Corporation"), and the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint powers agency duly organized and existing under the laws of the State of California (the "Authority") WITNESSETH In consideration of the mutual covenants herein contained and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the County, the Corporation, and the Trustee do hereby agree as follows: 1. Quitclaim. The Corporation does hereby remise, release and forever quitclaim that certain real property located in the County of Contra Costa, California. 2. GoverningLaw. This Deed shall be governed by and construed in accordance with the laws of the State of California. 3. Counteroarts. This Deed may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. D0055F1:253081.1 40511-83-AD 1-04/2/98 12:06 PM IN WITNESS WHEREOF, the parties have executed this Deed as of the date first written above. COUNTY OF CONTRA COSTA PUBLIC FACILITIES CORPORATION By: President COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Chair DOCSSF1:253081.1 40511-83-ADi-0412198 12:06 PM 2 EXHIBIT A All that certain real property situated in the County of Contra Costa, State of California, described as follows: DOCSSF1:253081.1 40511-83-AD1-0412198 12:00 PM [NOTARY ACKNOWLEDGEMENTS TO BE ATTACHED] DOCSSF1:253081.1 40511-83-ADI-04/2/98 12:06 PM .............................................................1.111,11'', .............................................................................. ................ ACCEPTANCE This Acceptance dated as of May 1998 is entered into by the County of Contra Costa Public Financing Authority, a joint powers agency duly organized and existing under the laws of the State of California (the"Authority"), WITNESSETH In consideration of the covenants herein contained and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Authority does hereby accept that certain real property located in the County of Contra Costa, California, as more particularly described on Exhibit A attached hereto and incorporated herein by reference. IN WITNESS WHEREOF, the County has executed this Acceptance as of the date first written above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Title: DOCSSF I:148488-I.ten\4051 1\105\36k-01!.doc .............. ....... ........ ...................................... ........ ......................... .............................................................................................................................................................................................................. ................................. COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-BUDGETARY BASIS FISCAL YEARS 1992-93 THROUGH 1996-97 (IN THOUSANDS) 19" 1993-94 1994-95 199546 192 ,97 REVENUES Taxes $153,04 $97,743 $99,992 $95,773 $99,974 Licenses,permits&franchises 6,96 6,229 4,978 6,689 7,419 Fines,forfeitures&penalties 3,73 9,789 18,371 17,437 14,082 Use of money&property 14,87 12,279 12,693 13,406 12,062 Intergovernmental revenues 344,53 375,371 383,118 373,167 371,750 Charges for services 78,57 77,835 116,447 99,678 103,913 Other revenue 2.23. 10,446 11.635 17, - 456 18.198 TOTAL REVENUES 603,95 589,692 637,234 623,606 627,398 EXPENDITURES General government 63,389 63,890 67,825 82,256 77,199 Public protection 151,322 152,161 157,135 141,875 150,121 Health&sanitation 92,928 112,659 114,585 115,286 122,676 Public assistance 237,559 231,162 238,859 233,862 218,081 Education 101 102 122 130 133 Public ways and facilities 20,652 11,768 9,454 6,933 9,266 Recreation and culture 0 0 0 0 0 Interest 4,760 5,017 4,469 4,273 4,204 Capital ouday0) 773 3.384 3.477 4371 2,615 TOTAL EXPENDITURES 589,195 580,143 595,926 585,986 594,295 Excess(deficiency)of revenues over(under)expenditures 28,472 9,549 41,308 37,620 43,103 OTHER FINANCING SOURCES(USES) Operating transfers in 10,851 28,022 24,266 18,904 24,581 Operating transfers out (32,768) (37,405) (71,628) (50,911) (55,844) Capital lease financing(') 773 _1,.3M 3-477 -L371 2,615, TOTAL OTHER FINANCING SOURCES(USES) f2l.144 5 999) (43,885) (30,736 (28.648 Excess(deficiency)of revenues and other financing sources 7,328 3,550 (2,577) 6,984 14,455 over(under)expenditures and other financing uses FUND BALANCE AT BEGINNING OF YEAR,as 41,338 47,598 50,213 51,570 56,524 Previously Reported A(Utistment to beginning fund balance 0 (398 4.664 f410 FUND BALANCE AT BEGINNING OF YEAR,as Restated 41,338 47,200 54,877 51,152 56,524 Residual equity transfers in 0 5 Residual equity transfers out (1,068) J537) (7351 -15-12) (2 794) FUND BALANCE at end of year $47M S50.213 $_L.570 $jfi_.5L4 $68.:1$5 These entries are required by NCGA Statement 5 to disclose the value of fixed assets acquired during the year under lease purchase agreements. The County does not appropriate these amounts since they apply to future years. Source: County Auditor-Controller B-13 .................................................................................. County Employees A summary of County employment follows: COUNTY OR CONTRA COSTA COUNTY EMPLOYEES(r) Number of Number of As of Permanent As of Permanent June 30 Emplovees June 30 Employees 1980 5,960 1989 6,463 1981 6,052 1994 6,635 1982 6,063 1991 7,008 1983 5,915 1992 7,480 1984 5,743 1993 6,689 1985 5,791 1994 6,658 1986 5,968 1995 6,822 1987 6,111 1996 6,856 1988 6,317 1997 7,029 1998 7,246(2) {t} Excludes temporary or seasonal employees. (2) As of March 17, 1998. Source: County Personnel Department County employees are represented by 30 bargaining units of 11 labor organizations, the principal ones being Local 1 of the County Employees Association and the Clerical Employees union which, combined,represent approximately 34%of all County employees in a variety of classifications. The County has had a positive employee relations program,and has enjoyed successful negotiations of cost effective agreements over the years. The County completed its latest contractnegotiaitions with labor representatives in July 1996, with the agreement providing for, among other things, a 3% salary increase through September 30, 1997, a 2%salary increase effective October 1, 1997,and a 3 1/2°la salary increase effective October 1, 1998. The agreement covers approximately 75%of the County's employees and expires in September 1999. Pension Plan The Contra Costa County Employees`Retirement Association(CCERA)is a cost-sharing multiple- employer defined pension benefit plan governed by the County Employees' Retirement Law of 1937. The plan covers substantially all of the employees of the County,its special districts,the Housing Authority and thirteen other member agencies. The plan provides for retirement, disability, death and survivor benefits, in accordance with the County Employees'`Retirement Law. Annual cost-of-living adjustments to retirement benefits can be granted by the retirement Board as provided by State statutes. B-14 The CCERA is divided into three separate benefit sections of the 1937 Act. These sections are known as: General-Tier I,General-Tier II,and Safety. Tier I includes all General members hired before August 1, 1980 and electing not to transfer to Tier II. The Tier II section includes all employees hired on or after August 1, 1980 and all General members electing to transfer from Tier I. The Safety section covers all employees in active law enforcement, active fire suppression work or certain other "safety" classifications as designated by the CCERA's Retirement Board. Service retirement benefits are based on age, length of service and final average salary. For the Tier I and Safety sections, the retirement benefit is based on a one-year average salary, in accordance with Government Code Section 31462. For Tier 1I,the benefit is based on a three-year average salary. The CCERA issues a stand-alone financial report which is available at its office located at 1355 Willow Way,Suite 221,Concord,California 94520. For additional information on the County's pension plan, see "APPENDIX C-FINANCIAL STATEMENTS FOR THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 1997-Footnote 21." Long Term Obligations The County has never defaulted on the payment of principal or interest on any of its indebtedness. Following is a brief summary of the County's general obligation debt, lease obligations, and direct and overlapping debt. General Obligation Debt. The County has no direct general obligation bonded indebtedness, the last issue having been redeemed in fiscal year 1977-78. The County has no authorized and unissued debt. Lease Obligations. The County has made use of various lease arrangements with private financing entities, nonprofit corporations, and the County Employees' Retirement Associationfor the use and acquisition of capital assets. These capital lease obligations have terms ranging from 5t 30 years. The longest capital lease ends in 2023. For a complete summary of the County's lease obligations as of June 30, 1997,see "APPENDIX C-Audited Financial Statements of the County for the Year Ended June 30, 1997- Notes to General-Purpose Financial Statements- Note 6- Lease Commitments and Note 7- Long-term Obligations"attached hereto. Direct and Overlapping Debt. The County contains numerous municipalities,school districts and special purpose districts, as well as the overlapping Bay Area Rapid Transit District and the East Bay Municipal Utility District, which have issued general obligation bonded and lease indebtedness. Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics Inc. that summarizes such indebtedness as of April 1, 1998. The Debt report is included for general information purposes only. The County has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the County. Such long term obligations generally are not payable from revenues of the County (except as indicated) nor are they necessarily obligations secured by land within the County. In many cases, long-term obligations issued by a private agency are payable only from the general fund or other revenues of such public agency. B-15 CONTRA COSTA COUNTY ESTIMATED DIRECT AND OVERLAPPING BONDED DEBT AS OF APRIL 1,1998 1997-98 Assessed Valuation: $70,314,800,892(includes unitary utility valuation) Redevelopment Incremental Valuation: 5.687.404.922 Adjusted Assessed Valuation: $64,627,395,970 OVERLAPPING TAX AND ASSESSMENT DEBT: %Atmlicable Debt 4/1/98 San Francisco Bay Area Rapid Transit District 31.479°/a $ 26,694,192 East Bay Municipal Water District and Special District No. 1 48.743&5.893 6,755,545 Martinez Unified School District 100. 42,235,883 Pittsburg Unified School District 100. 15,000,000 Acalanes and Liberty Union High School Districts 100. 87,949,809 Lafayette School District 100. 27,300,000 Other School Districts 100. 44,034,699 Cities 100. 7,265,000 Sanitation and Sanitary Districts 100. 610,000 East Bay Regional Park District 45.348 68,414,260 Other Special Districts 100. 3,220,000 Community Facilities District 100. 170,520,000 1915 Act Assessment Bonds(Estimate) 100. 337,716,846 TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $837,716,234 Less: East Bay Municipal Utility District and Special District No. 1 (100%self-supporting) 6.755,545 TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $830,960,689 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Contra Costa County General Fund Obligations 100. % $273,887,000 (1) Contra Costa County Pension Obligations 100. 328,610,000 Contra Costa County Board of Education Certificates of Participation 100. 3,835,000 Contra Costa County Mosquito Abatement District Certificates of Participation 100. 1,885,000 Alameda-Contra Costa Transit District Certificates of Participation 11.983 2,909,316 Antioch Unified School District Certificates of Participation 100. 15,662,774 San Ramon Valley Unified School District Educational Facilities Corporation 100. 77,595,000 Other School Building Corporations and Certificates of Participation 100.(1) 49,309,604 City of Antioch General Fund Obligations 100. 17,464,092 City of Concord General Fund Obligations 100. 30,387,559 City of Pleasant Hill General Fund Obligations 100. 13,780,000 City of Richmond General Fund Obligations 100. 28,840,958 City of San Ramon General Fund Obligations 100. 23,845,200 Other City General Fund Obligations 100. 25,335,000 Hospital Authorities 100. 8,320,000 San Ramon Valley Fire Protection District Certificates of Participation 100. 11,515.000 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $913,181,503 Less: San Ramon Unified School District Certificates of Participation(self-supporting from GIC from Bayerische Landesbank) 14,850,000 City of Concord lease bonds(100%self-supporting) 1.605,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $896,726,503 GROSS COMBINED TOTAL DEBT $1,750,897,737 (2) NET COMBINED TOTAL DEBT $1,727,687,192 (1) Excludes lease revenue bonds to be sold. (2) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 1997-98 Assessed Valuation: Total Gross Direct and Overlapping Tax and Assessment Debt................................................................1.19% Total Net Direct and Overlapping Tax and Assessment Debt...................................................................1.18% Ratios to Adiusted Assessed Valuation: Combined Direct Debt($602,497,000) .............................................................. .......0.93% ................................. GrossCombined Total Debt........................................................................................................................2.71% NetCombined Total Debt............................................................................................................................2.67% B-16 Future Financings The County Capital Program includes long-range plans for additional and ;replacement court facilities for both the Superior and Municipal Courts in the County. Insurance and Self-Insurance Programs The County is self-insured for claims relating to public liability(excluding the airport), automobile accidents and medical malpractice. It is the County's policy to appropriate annually sufficient funds to cover the estimated liability of the County for self-insurance claims to be made during the upcoming fiscal year. Whenever a claim is made,the claim is evaluated and a portion of the appropriated funds is reserved to satisfy the County's estimated liability for such claim. Although the County believes that its past experience enables it to evaluate reasonably its liability for self-insurance claims,no assurance can be made that the amount reserved for such purpose will be adequate, nor can there be any assurance that the funds appropriated to satisfy claims arising during any fiscal year will be sufficient. For a detailed summary of the County's risk management programs,see Note 18 to the County's General Purpose Financial Statements which appear in Appendix C to this Official Statement. B-17 ................................................................................................................................................................................................................................... ........ .......... ........_...__........_.. ........ ..._.... ............. ....... ......... .......... ._........ ....... APPENDIX C FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 309 1997 ''I'll-, --I'll''..,............I.................I.......................................................................................................................................................... . .................................................................................................................................................................................................. • APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS ..............I............................................I....... ......................................................................................... APPENDIX E FORM OF OPINION OF BOND COUNSEL APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE i ......................................... APPENDIX G SPECIMEN MUNICIPAL INSURANCE POLICY • 1,6 ff Recording requested by OH&S SECOND DRAFT and return to: 4/2/98 COUNTY OF CONTRA COSTA c/o Orrick, Herrington& Sutcliffe LLP Old Federal Reserve Bank Building 400 Sansome Street San Francisco, California 94111 Attention: Mary A. Collins Free Recording Requested Pursuant to California Government Code Section 6103 FACILITY LEASE (VARIOUS CAPITAL FACILITIES) by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and the COUNTY OF CONTRA COSTA (Amending and Restating the Facility Lease (Various Capital Facilities) dated as of August 1, 1994, by and between the Contra Costa County Public Facilities Corporation and the County of Contra Costa) Dated as of May 1, 1998 DOCSSF1:247734.3 40511-105 TABLE OF CONTENTS Pages ARTICLEI DEFINITIONS .............................................................................................2 SECTION 1.01 Definitions............................................................. ...........................2 ARTICLE 11 LEASE OF DEMISED PREMISES AND PROJECT; TERM.......................8 SECTION 2.01 Lease of Facilities..............................................................................8 SECTION 2.02 Term; Occupancy..............................................................................8 SECTION 2.03 Substitution .......................................................................................8 ARTICLE III RENTAL PAYMENTS; USE OF PROCEEDS.............................................9 SECTION 3.01 Base Rental Payments .......................................................................9 SECTION 3.02 Additional Payments........................................................................ 10 SECTION 3.03 Fair Rental Value............................................................................A l SECTION 3.04 Payment Provisions......................................................................... I I SECTION 3.05 Appropriations Covenant; License Fee Revenues............................. 12 SECTION 3.06 Rental Abatement............................................................................ 13 SECTION 3.07 Use of Proceeds......................................................:........................ 13 ARTICLE IV MAINTENANCE; ALTERATIONS AND ADDITIONS .. ........................13 SECTION 4.01 Maintenance and Utilities................................................................ 13 SECTION 4.02 Changes to the Project..................................................................... 14 SECTION 4.03 Installation of County's Equipment ................................................. 14 ARTICLEV INSURANCE ............................................................................................. 14 SECTION 5.01 Fire and Extended Coverage Insurance............. ............. ................ 14 SECTION 5.02 Liability Insurance............... ....... ....... .......--.................. 16 SECTION 5.03 Rental Interruption or Use and Occupancy Insurance....................... 16 SECTION 5.04 Worker's Compensation..................................................................17 SECTION 5.05 Title Insurance................................................................................. 17 SECTION 5.06 Insurance Proceeds; Form of Policies ..............................................17 ARTICLE VI DEFAULTS AND REMEDIES ..................................................................18 SECTION 6,01 Defaults and Remedies.....................................:......:.......................18 SECTION6.02 Waiver.............................................................................................21 ARTICLE VII EMINENT DOMAIN; PREPAYMENT......................................................21 SECTION 7.01 Eminent Domain......................................................:.......................21 SECTION 7.02 Prepayment .....................................................................................21 SECTION 7.03 Option to Purchase; Sale of Personal Property.... ...... ...........23 ARTICLE VIII COVENANTS ., ..........................................,....,...............24 SECTION 8.01 Right of Entry..................................................................................24 SECTION 8.02 Liens ............................ ..,............24 SECTION 8.03 Quiet Enjoyment ......................................................:......................24 SECTION 8.04 Authority Not Liable .......................................................................24 SECTION 8.05 Assignment and Subleasing......................................:......................25 DOCSSFi:247734.3 40511-105 TABLE OF CONTENTS (continued) Page SECTION 8.06 Title to Facilities..............................................................................25 SECTION 8.07 Tax Covenants....................................................... .........................25 SECTION 8.08 Continuing Disclosure......................................................................26 SECTION8.09 Taxes...............................................................................................26 SECTION 8.10 Authority's Purpose.........................................................................27 SECTION 8.11 Purpose of Lease .............................................................................27 ARTICLE IX DISCLAIMER OF WARRANTIES; VENDOR'S WARRANTIES; USE OF THE FACILITIES ..................................................,.............,.......27 SECTION 9,01 Disclaimer of Warranties........ ...... .........---.....27 SECTION 9.02 Vendor's Warranties........................................................................27 SECTION 9.03 Use of the Facilities..—........ ......... ........ .......-28 ARTICLE, X MISCELLANEOUS ...................................................................................28 SECTION 10,01 Law Governing................................................................................28 SECTION10.02 Notices.................................................................... .......................28 SECTION 10,03 Validity and Severability...... ....... ...... ............. ............. .......... 29 SECTION 10,04 Net-Net-Net Lease...........................................................................29 SECTION 10.05 Section Headings....................................................:........................29 SECTION 10.06 Amendment or Termination.............. ................... ........-29 SECTION 10.07 Execution ............................................................ ......30 EXHIBIT A The Facilities EXHIBIT B Base Rental Payment Schedule EXHIBIT C Project Phases 1, 11, III and IV Facilities Project Phase V Acknowledgements DOCSSF i:247734.3 40511-105 X................ ................ FACILITY LEASE (VARIOUS CAPITAL FACILITIES) (Amending and Restating the Facility Lease (Various Capital Facilities), dated as of August 1, 1994, by and between the Contra Costa County Public Facilities Corporation and the County of Contra Costa) This Facility Lease, dated as of May 1, 1998, by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority"), a joint powers authority duly organized and existing under and by virtue of the laws of the State of California, as lessor, and the COUNTY OF CONTRA COSTA (the "County"), a body corporate and politic and a political subdivision of the State of California, as lessee; WITNESSETH : In consideration of the mutual covenants herein, the parties hereto agree as follows: WHEREAS, $23,090,000 aggregate principal amount of certificates of participation (the "Prior Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of August 1, 1994, by and among the County, the Contra Costa County Public Facilities Corporation (the "Corporation") and BNY Western Trust Company, as successor trustee to Meridian Trust Company of California (the "Prior Trustee), for the purpose of acquiring and improving the (1) Muir Station Office Park Building #1 located at 597 Center Avenue, Martinez, California ("Project Phase I"), (ii) Social Service Building located at 1305 MacDonald Avenue, Richmond, California ("Project Phase 11"), (iii)Social Service Building located at 151 Linus Pauling Drive, Hercules, California ("Project Phase IIT") and (iv) Health Services Building located at 205 41'R Street, Richmond, California ("Project Phase IV" and collectively with Project Phase 1, Project Phase 11 and Project Phase 111, the"1994 Project"), WHEREAS the Corporation acquired the 1994 Project and pursuant to a lease agreement, dated as of August 1, 1994 (the "Prior Facility Lease"), between the Corporation and the County, which lease or memorandum thereof was recorded in the office of the County Recorder of the County of Contra Costa on August 31, 1994 under Recorder's Serial Number 94- 216903, the Corporation leased the 1994 Project to the County; WHEREAS, pursuant to an assignment agreement, dated as of August 1, 1994, between the Corporation and the Prior Trustee, the lease payments made by the County under the Prior Facility Lease ("Prior Base Rental") were assigned to the Prior Trustee to pay the principal and interest represented by the Prior Certificates, WHEREAS, the Authority intends to assist the County in refinancing the acquisition and improvement of the 1994 Project by issuing the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A (the "1998 Series A Bonds"); DOCSSFI:2477343 40511-105 ............ -X:::.,.............. ..,...... ......... WHEREAS, pursuant to the Letter of Instructions to the Prior Trustee, dated as of May 1, 1998, certain proceeds of the 1998 Series A Bonds were deposited into an escrow fund (the "Escrow Fund") and irrevocably pledged to repay the Prior Base Rental and the Prior Certificates; WHEREAS, as consideration for such deposit in the Escrow Fund, the Corporation and Prior Trustee have conveyed or assigned all of their rights, title and interest in the 1994 Project and the Prior Facility Lease (other than the right, title and interest in the Prior Base Rental to be paid from the Escrow Fund) to the Authority; WHEREAS, the Authority and County desire to continue to lease the 1994 Project, pursuant to the terms of this Lease, which amends and restates in its entirety the Prior Facility Lease; WHEREAS, the Authority intends to assist the County by financing the construction, renovation and acquisition for the County of certain other County facilities together with site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities (the "Subsequent Phases of the Project," and collectively with Project Phases 1, 11, 111 and IV, the"Project"); and WHEREAS, under this Lease, the County will be obligated to make base rental payments to the Authority for the lease of the 1994 Property and such other facilities as may from time to time be leased hereunder(the"Facilities"); NOW, THEREFORE, in consideration of the mutual covenants herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified, which meanings shall be equally applicable to both the singular and plural forms of any of the terms herein defined. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement. Additional Payments The term "Additional Payments" means all amounts payable to the Authority or the Trustee or any other person from the County as Additional Payments pursuant to Section 3.02 hereof. DOCSSFI:247734.3 40511-105 2 Written Request of the Authority The term "Written Request of the Authority" means an instrument in writing signed by or on behalf of the Authority by its Chair, Vice-Chair, Executive Director, Assistant Executive Director or Deputy Executive Director or a designee of any such officer or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Board of Directors of the Authority to sign or execute such a document on its behalf; Written Request of the Countv The term "Written Request of the County" means an instrument in writing signed by the County Administrator of the County or his designee, or by the Director, Capital Facilities and Debt Management of the County, or by any other officer of the Countyduly authorized by the Board of Supervisors of the County in writing to the Trustee for that purpose. ARTICLE 11 LEASE OF DEMISED PREMISES AND PROJECT; TERM SECTION 2.01 Lease of Facilities. The Authority hereby leases to the County and the County hereby leases from the Authority the Facilities, including the Demised Premises and Project Phases 1, 11, III and IV located thereon, subject, however,' to all easements, encumbrances, and restrictions that exist at the time of the commencement 'of the term of this Lease. The County hereby agrees and covenants during the term of this Lease that, except as hereinafter provided, it will use the Facilities for public and County purposes',so as to afford the public the benefits contemplated by this Lease. SECTION 2.02 Term: Occupancy. The term of the Prior Facility Lease shall not terminate pursuant to Section 4.2 thereof and the term of this Lease as an amendment and restatement of the Prior Facility Lease shall commence on the date of recordation of this Lease in the office of the County Recorder of Contra Costa County, State of California,',or on July 1, 1998 whichever is earlier, and shall end on August 1, 2024, unless such term is extended or sooner terminated as hereinafter provided. If on August 1, 2024, the Bonds shall not be fully paid, or if the rental payable hereunder shall have been abated at any time and for any reason, then the term of this Lease shall be extended until ten (10) days after all Bonds shall be fully paid, except that the term of this Lease shall in no event be extended beyond August 1, 2034. If prior to August 1, 2024, all Bonds shall be fully paid, or provision therefor made, the term of this Lease shall end ten (10) days thereafter or ten (10) days after written notice by the County to the Authority, whichever is earlier. The County will continue in possession of Project Phases 1, 11, III and IV on the date of recordation hereof SECTION 2.03 Substitution. The County and the Authority may substitute real property as part of the Facilities for purposes of the Facility Lease, but only after the County shall have filed with the Authority and the Trustee, with copies to each rating agency then providing a rating for the Bonds, all of the following: DOCSSFi:247734.3 40511-105 :� Architects The term "Architects" means the architects, engineers or designers of any Subsequent Phase of the Project, and any successor or successors to any thereof Authoritv The term "Authority" means (i) County of Contra Costa Public Financing Authority, acting as lessor hereunder; (ii) any surviving, resulting or transferee entity; and (iii) except where the context requires otherwise, any assignee of the Authority. Base Rental Payments The terra "Base Rental Payments" means all amounts payable to the Authority from the County as Base Rental Payments pursuant to Section 3.011 hereof Base Rental Payment Schedule The term "Base Rental Payment Schedule" means the schedule of Base Rental Payments payable to the Authority from the County pursuant to Section 3.011 hereof and attached hereto as Exhibit B-11. Bond Insurer The term "Bond Insurer" means any insurance company or companies which has or have issued any Bond Insurance Policy (as such term is defined in the Trust Agreement) insuring the scheduled payment of principal of and interest on any outstanding Bonds or any series or portion thereof The Bond Insurer for the 1998 Series A Bonds is its successors and assigns. Bands The term "Bonds" means the bonds issued by the Authority under and pursuant to the Trust Agreement. Code The term "Code" means the Internal Revenue Code of 1986. Code The term "Contractors" means the construction contractor for any Subsequent Phase of the Project and any successor or successors to any thereof Continuing g_llisclosure Agreement The term "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement between the County and the Trustee, dated the date of issuance of the DOCSSF1:247734.3 44511-145 3 ................. ............... 1998 Series A Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Corporation The term "Corporation" means Contra Costa County Public Facilities Corporation. C-Ot!Plty The term "County" means the County of Contra Costa, California, a body corporate and politic and a political subdivision of the State of California. Defeased Base Rental Payments The term "Defeased Base Rental Payments" means the base rental payments set forth in Exhibit B-I hereto, which are evidenced and represented by the Prior Certificates and are payable solely from the Escrow Fund. Demised Premises The term "Demised Premises" means that certain real property situated in the County of Contra Costa, State of California, described in Exhibit A attached hereto and made a part hereof, together with any additional real property added thereto by any supplement or amendment hereto; subject, however, to any conditions, reservations, and easements of record or known to the County. Event of Default The term "Event of Default" shall have the meaning specified in Section 6,01 hereof Facilities The term "Facilities" means the Demised Premises and Project Phases 1, 11, 111 and IV or any County buildings, other improvements and facilities, added thereto or substituted therefor, or any portion thereof, in accordance with this Lease and the Trust Agreement; subject, however, to any conditions, reservations and easements of record known to the County. Lease The term "Lease" means this lease, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and of the Trust Agreement. License Fee Revenues The term "License Fee Revenues" means those amounts allocated to the County by the State Controller pursuant to California Revenue and Taxation Code Section 11001 et seq., I)OCSSFI:247734.3 40511-105 4 excluding that portion deposited to the Vehicle License Fee Account of the Local Revenue Fund and allocated to the County pursuant to Chapter 89 of the Statutes of 1991 (Welfare and Institutions Code§17604), enacted by the California State Legislature. Moody's Investors Service The term "Moody's Investors Service" means Moody's Investors Service, Inc., a corporation duty organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's Investors Service" shall be deemed to refer to any other nationally recognized securities rating agency selected by the County. 1994 Project The term "1994 Project" means Project Phases 1, It, 111 and IV described in Exhibit C hereto. 1998 Series A Bonds The term " 1998 Series A Bonds" means the Bonds designated "1998 Series A" issued by the Authority under and pursuant to Section 2.01 of the Trust Agreement. Permitted Encumbrances The term "Permitted Encumbrances" means (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the County may, pursuant to this lease, permit to remain unpaid; (2) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the date of recordation of this Lease in the office of the County Recorder of the County of Contra Costa and which the County certifies in writing will not materially impair the use of the Facilities; (3)this Lease, as it may be amended from time to time, (4)the Trust Agreement, as it may be amended from time to time: (5) any right or claim of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (6) easements, rights of way, mineral rights, drilling rights and other fights, reservations, covenants, conditions or restrictions to which the Authority and the County consent in writing and certify to the Trustee will not materially impair the leasehold interests of the Authority or use of the Facilities by the County, and (7) subleases and assignments of the County with respect to the Facilities which comply with Section 8.05 and which will not adversely affect the exclusion from gross income of interest on the Bonds. Permitted Investments The term "Permitted Investments" shall have the meaning ascribed to such term in the Trust Agreement. DOCSSFI:2477343 5 Reserve Fund The term "Reserve Fund" means the Reserve Fund established pursuant to Section 5.03 of the Trust Agreement. Standard & Poor's The term "Standard & Poor's" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term Standard & Poor's shall be deemed to refer to any other nationally recognized securities rating agency selected by the County. Subsequent Phase of the Project The term "Subsequent Phase of the Project" means any and all facilities and buildings for use by the County, whether within or without the County' and all additions, extensions or improvements thereto hereafter added to the Project and hereafter described by an amendment or supplement hereto. Supplemental Trust Agreement The term "Supplemental Trust Agreement" means any supplement or amendment to the Trust Agreement hereafter duty authorized and entered into between' the Authority, the County and the Trustee in accordance with the provisions of the Trust Agreement. Tax Certificate The term "Tax Certificate" shall have the meaning ascribed to such term in the Trust Agreement. Trust Agreement The term "Trust Agreement" means the trust agreement, dated as of May 1, 1998, by and among the Trustee, the Authority and the County, pursuant to which the Trustee will execute and deliver the 1998 Series A Bonds, as originally executed or as it may from time to time be supplemented, modified or amended by a Supplemental Trust Agreement entered into pursuant to the provisions of the Trust Agreement. Trustee The term "Trustee" means First Trust of California, National Association, appointed as trustee pursuant to the Trust Agreement, and any successor appointed under the Trust Agreement. DOC:SS F 1:247734.3 40511.105 7 ............. ............ Phase of the Project The term "'Phase of the Project" means Project Phase 1, 11, 111 or IV or such Subsequent Phase of the Project to which reference is made. Pro,e Mqt- The term "Project" means Project Phases 1, 11, 111 and IV and all Subsequent Phases of the Project. Project Phase 1. The term "Project Phase I" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Proiect Phase 11 The term "Project Phase 11" means those public facilities and building described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Project Phase III The term "Project Phase 111" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Project Phase IV The term "Project Phase IV" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Rental Payment Period The term "Rental Payment Period" means the twelve month period commencing August I of each year and ending the following July 31, and the initial period commencing on the effective date hereof and ending the following July 31. Reserve Facility The term "Reserve Facility" has the meaning given such term in Section 5.03(4) of the Trust Agreement. DOCSSFI:247734,3 40511-105 6 (a) Executed copies of the Facility Lease or amendments thereto containing the amended description of the Facilities, including the Demised Premises, including the legal description of the Demised Premises as modified if necessary. (b) A Certificate of the County with copies of the Facility Lease or a Site Lease, if needed, or amendments thereto containing the amended description of the Facilities stating that such documents have been duly recorded in the official records of the County Recorder of the County. (c) A Certificate of the County, evidencing that the annual fair rental value of the Facilities which will constitute the Facilities after such substitution will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current year ending August 1 or in any subsequent year ending August 1. (d) A Certificate of the County stating that, based upon review of such instruments, certificates or any other matters described in such Certificate of the County, the County has good merchantable title to the Facilities which will constitute the Facilities after such substitution. The term "Good Merchantable Title" shall mean such title as is satisfactory and sufficient for the needs and operations of the County. (e) A Certificate of the County stating that such substitution does not adversely affect the County's use and occupancy of the Facilities. (f) An Opinion of Counsel (as such term is defined in the Trust Agreement) stating that such amendment or modification (i) is authorized or permitted by the Constitution and laws of the State and this Trust Agreement; (ii) complies with the terms of the Constitution and laws of the State and of this Trust Agreement; (iii) will, upon the execution and delivery thereof, be valid and binding upon the Authority and the County, and (iv) will not cause the interest on the Bonds to be included in gross income for federal income tax purposes. ARTICLE III RENTAL PAYMENTS; USE OF PROCEEDS SECTION 3.01 Base Rental Payments. The County agrees to pay to the Authority, as Base Rental Payments for the use and occupancy of the Facilities, including the Demised Premises (subject to the provisions of Sections 3.04, 3.06 and 7.01 of this Lease) annual rental payments with principal and interest components, the interest components being payable semi-annually, in accordance with the Rental Payment Schedule attached hereto as Exhibit B and made a part hereof. Base Rental Payments shall be calculated on an annual basis, for the twelve-month periods commencing on August 1 and ending on July 3 I, and each annual Base Rental shall be divided into two interest components, due on February i and August 1 of each rental payment period, and one principal component, due on August, 1 of each rental payment period, except that the first Base Rental Payment period commences on the date of recordation of the Facility Lease and ends on July 31, 1998. Each Base Rental Payment installment shall be payable on the fifteenth (15th) day of the month immediately preceding its due date and any interest or other income with respect thereto accruing prior',to such due date. DOCSSF3:247734.3 44511-105 9 The interest components of the Base Rental Payments shall be paid by ,the County as and constitute interest paid on the principal components of the Base Rental Payments to be paid by the County hereunder, computed on the basis of a 360-day year composed of twelve 30-day months. Each annual payment of Base Rental (to be payable in installments as aforesaid) shall be for the use of the Facilities, including the Demised Premises. The Base Rental Payments set forth in the Rental Payment Schedule attached as Exhibit B-I to this Lease consist of the Defeased Base Rental Payments. ', The County shall remain liable for such Defeased Base Rental Payments, but only out of moneys or securities deposited with the Prior Trustee in the Escrow Fund. The Defeased Base Rental Payments shall not be subject to abatement or to the other provisions of Section 3.06, 7.01, 7.02(a) or 7.03 of this Lease or to any termination of this Lease but shall be special obligations of the County limited to the amounts on deposit in the Escrow Fund. If the term of this Lease shall have been extended pursuant to Section 2.02 hereof, Base Rental Payment installments shall continue to be due on February I and August I in each year, and payable prior thereto as hereinabove described, continuing to and including the date of termination of this Lease. Upon such extension of this Lease, the County shall deliver to the Trustee a Certificate setting forth the extended rental payment schedule, which schedule shall establish the principal and interest components of the Base Rental Payments so that the principal components will in the aggregate be sufficient to pay all unpaid principal components with interest components sufficient to pay all unpaid interest components plus interest on the extended principal components at a rate equal to the highest rate of interest applicable to the Base Rental. If at any time the Base Rental hereunder shall not have been paid by the County, for any reason whatsoever, and no ether source of funds shall have been available to make the payments of principal and interest on the Bonds, the principal and interest components of the Base Rental shall be recalculated by the County to reflect interest on the unpaid principal components at the rate or rates specified in the Trust Agreement, and a revised Exhibit B to this Facility Lease shall be prepared by the County and supplied to the Authority and the Trustee reflecting such reallocation. SECTION 3.02 Additional Payments. The County shall also pay such amounts (herein called the "Additional Payments") as shall be required by the Authority for the payment of all costs and expenses incurred by the Authority in connection with the execution, performance or enforcement of this Lease or any assignment hereof, the Trust Agreement, its interest in the Demised Premises and the lease of the Facilities to the County, including but not limited to payment of all fees, costs and expenses and all administrative casts of the Authority related to the Demised Premises, the Facilities and the Project, including, without limiting the generality of the foregoing, salaries and wages of employees, all expenses, compensation and indemnification of the Trustee payable by the Authority under the Trust Agreement, fees of auditors, accountants, attorneys or architects, and all ether necessary administrative costs of the Authority or charges required to be paid by it in order to maintain its existence'or to comply with the terms of the Certificates or of the Trust Agreement, but not including in Additional Payments amounts required to pay the principal of or interest on the Bonds. I OCSSFI:247734.3 405I1-105 10 Such Additional Payments shall be billed to the County by the Authority or the Trustee from time to time, together with a statement certifying that the amount billed has been paid by the Authority or by the Trustee on behalf of the Authority, for one or more of the items above described, or that such amount is then payable by the Authority or the Trustee for such items. Amounts so billed shall be paid by the County to the billing party within 30 days after receipt of the bill by the County. The County reserves the right to audit billings for Additional Payments although exercise of such right shall in no way affect the duty of the County to make full and timely payment for all Additional Payments. The Authority has issued and may in the future issue bonds and has entered into and may in the future enter into leases to finance facilities other than the Facilities and the Project. The administrative costs of the Authority shall be allocated among said facilities and the Facilities, as hereinafter in this paragraph provided. The fees of the Trustee under the Trust Agreement, and any other expenses directly attributable to the Facilities shall be included in the Additional Payments payable hereunder. The fees of any trustee or paying agent under any indenture securing bonds of the Authority or any trust agreement other than the Trust Agreement, and any other expenses directly attributable to any facilities other than the Facilities, shall not be included in the administrative costs of the Facilities and shall not be paid from the Additional Payments payable hereunder. Any expenses of the Authority not directly attributable to any particular project of the Authority shall be equitably allocated among all such projects, including the Project, in accordance with sound accounting practice. In the event of any question or dispute as to such allocation, the written opinion of an independent firm of certified public accountants, employed by the Authority to consider the question and render an opinion thereon, shall be a final and conclusive determination as to such allocation. The Trustee may conclusively rely upon the Written Request of the Authority, with the approval of the Assistant County Administrator - Finance of the County, or by a Director, Capital Facilities and Debt Management of the County, or a duly authorized representative of the County; endorsed thereon, in making any determination that costs are payable as Additional Payments hereunder, and shall not be required to make any investigation as to whether or not the items so requested to be paid are expenses of operation of the Facilities. SECTION 3.03 Fair Rental Value. Such payments of Base Rental Payments for each rental period during the term of this Lease shall constitute the total rental for said rental period and shall be paid by the County in each rental payment period for and in consideration of the right of use and occupancy of, and continued quiet use and enjoyment of, the Facilities, including the Demised Premises during each such period for which said rental',is to be paid. The parties hereto have agreed and determined that such total (excluding Defeased Base Rental Payments) rental payable for each twelve-month period beginning February I represents the fair rental value of the Facilities, including the Demised Premises for each such period. In making such determination, consideration has been given to costs of acquisition, design, construction and financing of the Facilities, other obligations of the parties under this Lease, the uses and purposes which may be served by the Facilities and the benefits therefrom which will accrue to the County and the general public. SECTION 3.04 Payment Provisions. Each installment of rental payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the corporate trust office of the Trustee in Los Angeles, California, or such other DOCSSFL247734.3 40511-145 1 .................. place as the Authority shall designate. Any such installment of rental accruing hereunder which shall not be paid when due and payable under the terms of this Lease shall bear interest at the rate of twelve percent (12%) per annum, or such lesser rate of interest as may be permitted by law, from the date when the same is due hereunder until the same shall be paid. Notwithstanding any dispute between the Authority and the County, the County shall make all rental payments when due without deduction or offset of any kind and shall not withhold any rental payments pending the final resolution of such dispute. In the event of a determination that the County was not liable for said rental payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent rental payments due hereunder or refunded at the time of such determination. Amounts required to be deposited by the County with the Trustee pursuant to this Section on any date shall be reduced to the extent of amounts on deposit in the Base Rental Payment Fund, the Interest Fund or the Principal Fund and available therefor, All payments received shall be applied first to the interest components of the Base Rental Payments due hereunder, then to the principal components of the Base Rental Payments due hereunder and thereafter to all Additional Payments due hereunder, but no such application of any payments which are less than the total rental due and owing shall be deemed a waiver of any default hereunder. Rental is subject to abatement as provided in Section 3.06. Nothing contained in this Lease shall prevent the County from making from time to time contributions or advances to the Authority for any purpose now or hereafter authorized by law, including the making of repairs to, or the restoration of, the Facilities in the event of damage to or the destruction of the Facilities. SECTION 3.05 Morooriations Covenant: License Fee Revenues, The County covenants to take such action as may be necessary to include all such Base Rental Payments and Additional Payments due hereunder in its annual budgets, to make necessary annual appropriations for all such Base Rental Payments and Additional Payments as shall be required to provide funds in such year for such Base Rental Payments and Additional Payments. The County will deliver to the Authority and the Trustee within sixty (60) days of adoption of the County budget a Certificate of the County stating that the budget as adopted appropriates all moneys necessary for the payment of Base Rental Payments and Additional Payments hereunder. The covenants on the part of the County herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the County 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 County to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the County, The Authority and the County understand and intend that the obligation of the County to pay Base Rental Payments and Additional Payments hereunder shall constitute a current expense of the County and shall not in any way be construed to be a debt of the County in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the County, nor shall anything contained herein constitute a pledge of the general tax revenues, 'funds or moneys of the County other than the DOCSSFI247734.3 40511-105 12 pledge of License Fee Revenues. Base Rental Payments and Additional Payments due hereunder shall be payable only from current funds which are budgeted and appropriated or otherwise legally available for the purpose of paying Base Rental Payments and Additional Payments or other payments due hereunder as consideration for use of the Facilities. This Lease shall not create an immediate indebtedness for any aggregate payments which may become due hereunder in the event that the term of the Lease is continued. The County has not pledged the full faith and credit of the County, the State of California or any agency or department thereof to the payment of the Base Rental Payments and Additional Payments or any tither payments due hereunder. The County hereby elects pursuant to Section 25350.55of the California Government Code to guarantee the Base Rental Payments payable hereunder by an apportionment of License Fee Revenues as provided in said Government' Code Section and Section 5.01 of the Trust Agreement. To the extent permitted by law, the County hereby pledges and grants a security interest in the License Fee Revenues to secure the timely payment, when due, of the Base Rental Payments. However, the County reserves the right', to guarantee other obligations of the County with the License Fee Revenues and to grant to the holders of such obligations a pledge and security interest in the License Fee Revenues on a parity basis with the pledge and security interest granted herein. SECTION 3.06 Rental Abatement. The Base Rental Payments (excluding Defeased Base Rental Payments) and Additional Payments shall be abated proportionately, during any period in which by reason of any damage or destruction (other than by condemnation which is hereinafter provided for) there is substantial interference with the use and occupancy of the Facilities by the County, in the proportion in which the initial cost of that portion of the Facilities rendered unusable bears to the initial cost of the whole of the Facilities, including the Demised Premises. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease shall continue in full force and effect and the County waives any right to terminate this Lease by virtue of any such damage or destruction. SECTION 3.07 Use of proceeds. The parties hereto agree that the proceeds of the 1998 Series A Bonds will be used to refinance the acquisition and renovation of the 1994 Project by defeasing the Prior Certificates, to finance Project Phase V, to establish the Reserve Fund referred to in the Trust Agreement and to pay the costs of issuing the 1998 Series A Bonds and incidental and related expenses. In consideration for entering into this Lease, the Authority hereby agrees to finance Project Phase V for the County, Project Phase V shall not be leased hereunder. ARTICLE YV MAINTENANCE; ALTERATIONS AND ADDITIONS' SECTION 4.01 Maintenance and Utilities. During such time as the County is in possession of the Facilities, all maintenance and repair, both ordinary and extraordinary, of the Facilities shall be the responsibility of the County, which shall at all times maintain or otherwise DOCSSFI:24"7734.3 4QSI I-IQS 13 11 11 11 -.................. ............... ...... ... X-.:..................... ................. arrange for the maintenance of the Facilities in first class condition, and the County shall pay for or otherwise arrange for the payment of all utility services supplied to the Facilities, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the Facilities resulting from ordinary wear and tear or want of care on the part of the County or any assignee or sublessee thereof or any other cause and shall pay for or otherwise arrange for the payment of all insurance policies required to be maintained with respect to the Facilities. In exchange for the rental herein provided, the Authority agrees to provide only the Facilities, including the Demised Premises. SECTION 4.02 Changes to the Project. Subject to Section 8.02 hereof, the County shall, at its own expense, have the right to remodel the Facilities or to make additions, modifications and improvements to the Facilities, including the Demised Premises. All such additions, modifications and improvements shall thereafter comprise part of the Facilities and be subject to the provisions of this Lease. Such additions, modifications and improvements shall not in any way damage the Facilities or cause them to be used for purposes other than those authorized under the provisions of state and federal law; and the Facilities, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value which is at least equal to the value of the Facilities immediately prior to the making of such additions, modifications and improvements. SECTION 4.03 Installation of Cougty.s Equipment. The County and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Facilities, including the Demised Premises. All such items shall remain the sole property of such party, in which neither the Authority nor the Trustee shall have any interest, and may be modified or removed by such party at any time provided that such party shall repair and restore any and all damage to the Facilities resulting from the installation, modification or removal of any such items. Nothing in this Lease shall prevent the County from purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase contract, or subject to a vendor's lien or security agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Facilities. ARTICLE V INSURANCE SECTION 5.01 Fire and Extended Coverage Insurance. The County shall procure or cause to be procured and maintain or cause to be maintained, throughout the term of this Lease, insurance against loss or damage to any structures constituting any part of the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance and earthquake insurance, if available on the open market from reputable insurance companies at a reasonable cost, as determined by the County. Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the DOCSSFI:247734.3 40511-105 14 replacement cost (without deduction for depreciation) of all structures constituting any part of the Facilities, excluding the cost of excavations, of grading and filling, and of the land (except that such insurance may be subject to deductible clauses for any one loss of not to exceed $50,000 or comparable amount adjusted for inflation or more in the case of earthquake insurance), or, in the alternative, shall be in an amount and in a form sufficient (together with moneys held under the Trust Agreement), in the event of total or partial loss, to enable all outstanding Bonds to be redeemed. In the event of any damage to or destruction of any part of the Facilities, caused by the perils covered by such insurance, the Authority, except as hereinafter provided, shall cause the proceeds of such insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion of the Facilities, and the Trustee shall'hold said proceeds separate and apart from all other funds, in a special fund to be designated the "Insurance and Condemnation Fund," to the end that such proceeds shall be applied to the repair, reconstruction or replacement of the Facilities to at least the same good order, repair and condition as they were in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The Trustee shall permit withdrawals of said proceeds from time to time upon receiving the Written Request of the Authority, stating that the Authority has expended moneys or incurred liabilities in an amount equal to the amount therein requested to be paid over to it for the purpose of repair, reconstruction or replacement, and specifying the items for which such moneys were expended, or such liabilities were incurred. Any balance of said proceeds not required for such repair, reconstruction or replacement shall be treated by the Trustee as Base Rental Payments and applied in the manner provided by Section 5.02 of the Trust Agreement. Alternatively, the Authority, at its option, with the written consent of the County, and if the proceeds of such insurance together with any other moneys then available for the purpose are at least sufficient to redeem an aggregate principal amount of outstanding Bonds, equal to the amount of Base Rental attributable to the portion of the Facilities so destroyed or damaged (determined by reference to the proportion which the cost of such portion of the Facilities bears to the cost of the Facilities), may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon shall cause said proceeds to be used for the redemption of outstanding Bonds pursuant to the provisions of the Trust Agreement, The Authority and the County shall promptly apply for Federal disaster aid or State of California disaster aid in the event that the Facilities are damaged', or destroyed as a result of an earthquake occurring at any time. Any proceeds received as a result of such disaster aid shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities, or, at the option of the County and the Authority, to redeem outstanding Bonds if such use of such disaster aid is permitted. As an alternative to providing the insurance required by the first paragraph of this Section, or any portion thereof, the County, with the written consent of the Authority, may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection shall afford reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the County. Before such other method or plan may be provided by the County, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of this DOCSS P 1:247734.3 40511-205 15 Lease, there shall be filed with the Trustee a certificate of an actuary, insurance consultant or other qualified person, stating that, in the opinion of the.signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford reasonable coverage for the risks required to be insured against. There shall also be filed a Certificate of the County setting forth the details of such substitute method or plan. In the event of loss covered by any such self insurance method, the liability of the County hereunder shall be limited to the amounts in the self insurance reserve fund or funds created under such method. SECTION 5.02 Liability Insurance. Except as hereinafter provided, the County shall procure or cause to be procured and maintain or cause to be maintained, throughout the term of this Lease, a standard comprehensive general liability insurance policy or policies in protection of the Authority and its members, directors, officers, agents and employees and the Trustee, indemnifying said parties against all direct or contingent loss or liability for damages for personal injury, death or property damage occasioned by reason of the operation of the Facilities, with minimum liability Iimits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event, and in a minimum amount of$200,000 for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of$3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance carried by the County. As an alternative to providing the insurance required by the first paragraph of this Section, or any portion thereof, the County, with the written consent of the Authority, may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection shall afford reasonable protection to the Authority, its members, directors, officers, agents and employees and the Trustee, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection' adopted by public entities in the State of California other than the County. Before such other method or plan may be provided by the County, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of this Lease, there shall be filed with the Trustee a certificate of an actuary, independent insurance consultant or other qualified person, stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford reasonable protection to the Authority, its members, directors, officers, agents and employees and the Trustee against loss and damage from the hazards and risks covered thereby. There shall also be filed a Certificate of the County setting forth the details of such substitute method or plan. SECTION 5.03 Rental Interruu ition or Use and Clccupancv Insurance. The County shall procure or cause to be procured and maintain or cause to be maintained, rental interruption or use and occupancy insurance to cover loss, total or partial, of the rental income from or the use of the Facilities as the result of any of the hazards covered by the insurance required by Section 5.01 hereof, in an amount sufficient to pay the part of the total rent hereunder attributable to the portion of the Facilities rendered unusable (determined by reference to the proportion which the cost of such portion bears to the cost of the Facilities) for a period of at least two years, except that such insurance may be subject to a deductible clause of not to exceed one hundred thousand dollars ($100,000) or a comparable amount adjusted for inflation. Any proceeds of such insurance shall be used by the Trustee to reimburse to the County any DOCSSF1:247734.3 40511-105 16 rental theretofore paid by the County under this Lease attributable to such structure for a period of time during which the payment of rental under this Lease is abated, and any proceeds of such insurance not so used shall be applied as provided in Section 3.01 (to the extent required for the payment of Base Rental) and in Section 3.02 (to the extent required for the payment of Additional Payments). SECTION 5.04 Worker's Compensation. The County shall also maintain worker's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure its employees against liability for compensationunder the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto. As an alternative, such insurance may be maintained as part of or in conjunction with any other insurance carried by the County. Such insurance may be maintained by the County in the form of self-insurance with the prior written consent of the Authority. SECTION 5.05 Title Insurance, The County shall obtain, for the benefit of the Authority and the Trustee, upon the execution and delivery of this Lease title insurance on the Demised Premises, in an amount equal to the aggregate principal amount of the 1998 Series A. Bonds, issued by a company of recognized standing duly authorized to issue the same, subject only to Permitted Encumbrances. SECTION 5.06 Insurance Proceeds. Form of Policies. All policies of insurance required by Sections 5.01 and 5.03 hereof shall provide that all proceeds thereunder shall be payable to the Trustee pursuant to a lender's loss payable endorsement substantially in accordance with the form approved by the Insurance Services Office and the California Bankers Association, The Trustee shall collect, adjust and receive all moneys which may become due and payable under any such policies, may compromise any and all claims thereunder and shall apply the proceeds of such insurance as provided in Sections 5.01 and 5.43. All policies of insurance required by this Lease shall provide that the Trustee shall be given thirty (30) days notice of each expiration thereof or any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the sufficiency of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee. The County shall pay when due the premiums for all insurance policies required by this Lease, and shall promptly furnish evidence of such payments to the Authority. The County will deliver to the Authority and the Trustee on or before September 15 in each year a written Certificate of an officer of the County stating whether such policies satisfy the requirements of this Lease, setting forth the insurance policies then in force pursuant to this Section, the names of the insurers which have issued the policies, the amounts thereof and the property and risks covered thereby, and, if any self-insurance program is being provided, the annual report of an actuary, independent insurance consultant or other' qualified person containing the information required for such self-insurance program and described in Sections 5.01, 5.02 and 5.04. Delivery to the Trustee of the certificate under the provisions of this Section shall not confer responsibility upon the Trustee as to the sufficiency of coverage or amounts of such policies. If so requested in writing by the Trustee, the County shall also deliver to the DOCSSFI:247734.3 40511-105 17 Trustee certificates or duplicate originals or certified copies of each insurance policy described in such schedule. ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01 Defaults and Remedies. (a) If the County shall fail to pay any rental payable hereunder when the same becomes due, time being expressly declared to be of the essence of this Lease, or the County shall fail to keep, observe or perform any other term, covenant or condition contained herein to be kept or performed by the County for a period of sixty (60) days after notice of the same has been given to the County by the Authority or the Trustee or for such additional time as is reasonably required, in the sole discretion of the Authority, to correct the same, or upon the happening of any of the events specified in subsection (b) of this Section (any such case above being an "Event of Default"), the County shall be deemed to be in default hereunder and it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to this Lease. Upon any such default, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following: (1) To terminate this Lease in the manner hereinafter provided on account of default by the County, notwithstanding any re-entry or re-letting of the Facilities as hereinafter provided for in subparagraph (2) hereof, and to re-enter the Facilities and remove all persons in possession thereof and all personal property whatsoever situated upon the Facilities and place such personal property in storage in any warehouse or other suitable place located within the County of Contra Costa, California. In the event of such termination, the County agrees to surrender immediately possession of the Facilities, without let or hindrance, and to pay the Authority all damages recoverable at law that the Authority may incur by reason of default by the County, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Facilities and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. Neither notice to pay rent or to deliver up possession of the Facilities given pursuant to law nor any entry or re-entry by the Authority nor any proceeding in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Facilities nor the appointment of a receiver upon initiative of the Authority to protect the Authority's interest under this Lease shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the County shall be or become effective by operation of law or acts of the parties hereto, or otherwise, unless and until the Authority shall have given written notice to the County of the election on the part of the Authority to terminate this Lease. The County covenants and agrees that no surrender of the Facilities or of the remainder of the term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the authority by such written notice. (2) Without terminating this Lease, (i) to collect each installment of rent as it becomes due and enforce any other terms or provision hereof to be kept or performed by the County, regardless of whether or not the County has abandoned the Facilities, or (ii) to DOCSSF1:247734.3 40511-105 18 ................ .............. exercise any and all rights of entry and re-entry upon the Facilities. In the event the Authority does not elect to terminate this Lease in the manner provided for in subparagraph (1) hereof, the County shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the County and, if the Facilities are not re-let, to pay the full amount of the rent to the end of the term of this Lease or, in the event that the Facilities are re-let, to pay any deficiency in rent that results therefrom; and further agrees to pay said rent and/or rent deficiency punctually at the same time and in the same manner as hereinabove provided for the payment of rent hereunder (without acceleration), notwithstanding the fact that the Authority may have received in previous years or may receive thereafter in subsequent years rental in excess of the rental herein specified, and notwithstanding any entry or re-entry by the Authority or suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such entry or re-entry or obtaining possession of the Facilities. Should the Authority elect to enter or re-enter as herein provided, the County hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the County to re-let the Facilities, or any part thereof, from time to time, either in the Authority's name or otherwise, upon such terms and conditions and for such use and period as the Authority may deem advisable, and to remove all persons in possession thereof and all personal property whatsoever situated l upon the Facilities and to place such personal property in storage in any warehouse or other suitable place located in the County of Contra Costa, California, for (to the extent permitted by law) the account of and at the expense of the County, and the County (to the extent permitted by law) hereby exempts and agrees to save harmless the Authority from any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon and re-letting of the Facilities and removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The County agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re-let the Facilities and to do all other acts to maintain or preserve the Facilities as the Authority deems necessary or desirable in the event of such re-entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re-letting shall constitute a surrender or termination of this Lease irrespective of the use or the term for which such re-letting is made or the terms and conditions of such re-letting, or otherwise, but that, on the contrary, in the event of such default by the County the right to terminate this Lease shall vest in the Authority to be effected in the sole and exclusive manner provided for in sub-paragraph (1) hereof. The County further waives the right to any rental obtained by the Authority in excess of the rental herein specified and hereby conveys and releases such excess to the Authority as compensation to the Authority for its services in re-letting the Facilities or any part thereof The County further agrees to the extent permitted by law to pay the Authority the reasonable cost of any alterations or additions to the Facilities necessary to place the Facilities in condition for re-letting immediately upon notice to the County of the completion and installation of such additions or alterations. The County hereby waives any and all claims for damages caused or which may be caused by the Authority in re-entering and taking possession of the Facilities as herein provided and all claims for damages that may result from the destruction of or injury to the Facilities and all claims for damages to or loss of any property belonging to the County, or any other person, that may be in or upon the Facilities, (b) If(1) the County's interest in this Lease or any part thereof be assigned or transferred, either voluntarily or by operation of law or otherwise, without the written consent of DOCSSF1147734.3 40511-105 19 the Authority, as hereinafter provided for, or (2) the County or any assignee shall file any petition or institute any proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby the County asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of the County's debts or obligations, or offers to the County's',creditors to effect a composition or extension of time to pay the County's debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of the County's debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character be filed or be instituted or taken against the County, or if a receiver of the business or of the property or assets of the County shall be appointed by any court, except a receiver appointed at the instance or request of the Authority, or if the County shall make a general or any assignment for the benefit of the County's creditors, or if ( ) the County shall abandon or vacate the Facilities, then the County shall be deemed to be in default hereunder. (c) The Authority shall in no event be in default in the performance of any of its obligations hereunder or imposed by any statute or rule of law unless and until the Authority shall have failed to perform such obligations within sixty (60) days or such additional time as is reasonably required to correct any such default after notice by the County to the Authority properly specifying wherein the Authority has failed to perform any such 'obligation. In the event of default by the Authority, the County shall be entitled to pursue any remedy provided by law. (d) In addition to the other remedies set forth in this Section, upon the occurrence of an event of default as described in this Section, the Authority shall be entitled to proceed to protect and enforce the rights vested in the Authority by this Lease or by law. The provisions of this Lease and the duties of the County and of its trustees, officers or employees shall be enforceable by the Authority by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the Authority shall have the right to bring the following actions: (1) Accounting. By action or suit in equity to require the County and its trustees, officers and employees and its assigns to account as the trustee of an express trust. (2) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Authority. (3) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority's rights against the County (and its board, officers and employees) and to compel the County to perform and carry out its dunes and obligations under the law and its covenants and agreements with the County as provided herein. The exercise of any rights or remedies under this Lease shall not permit acceleration of Base Rental Payments. DOCSS F 1:247734.3 40511-105 20 Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to other or further exercise thereof or the exercise of any or all other rights, powers or privileges. The term "re-let" or "re-letting" as used in this Section shall include, but not be limited to, re-letting by means of the operation by the Authority of the Facilities. If any statute or rule of law validly shall limit the remedies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law. In the event the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease, the County agrees to pay a reasonable', amount as and for attorney's fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder, whether or not a lawsuit has been filed and whether or not any lawsuit culminates in a judgment. SECTION 6.02 Waiver. Failure of the Authority to take advantage of any default on the part of the County shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of the Authority to insist upon performance by the County of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease. ARTICLE VII EMINENT DOMAIN; PREPAYMENT SECTION 7.01 Eminent Domain. If the whole of the Facilities, including the Demised Premises or so much thereof as to render the remainder unusable for the purposes for which it was used by the County shall be taken under the power of eminent domain, the term of this Lease shall cease as of the day that possession shall be so taken. If less than the whole of the Facilities shall be taken under the power of eminent domain and the remainder is usable for the purposes for which it was used by the County at the time of such taking, then this Lease shall continue in full force and effect as to such remainder, and the parties waive the benefits of any law to the contrary, and in such event there shall be a partial abatement',of the rental due hereunder in an amount equivalent to the amount by which the annual payments of principal and interest on the Outstanding Bonds will be reduced by the application of the award in eminent domain to the redemption of outstanding Bonds. So long as any of the Bonds shall be outstanding, any award made in eminent domain proceedings for taking the Facilities, including the Demised Premises or any portion thereof shall be paid to the Trustee and applied to the prepayment of the Base :Rental Payments as provided in Section 7.02. Any such award made after all of the Base Rental Payments and Additional Payments have been fully paid, or provision therefor made, shall be paid to the to the County. SECTION 7.02 Prepayment, (a) The County shall prepay on any date from insurance (including proceeds of title insurance) and eminent domain proceeds, to the extent DOCSSFI'247734.3 44511-105 21 provided in Sections 5.01 and 1.01 hereof(provided, however, that in the event of partial damage to or destruction of the Facilities caused by perils covered by insurance, if in the judgment of the Authority the insurance proceeds are sufficient to repair, reconstruct or replace the damaged or destroyed portion of the Facilities, such proceeds shall be held by the Trustee and used to repair, reconstruct or replace the damaged or destroyed portion of the Facilities, pursuant to the procedure set forth in Section 5.01 for proceeds of insurance), all or any part of Base Rental Payments then unpaid so that the aggregate annual amounts of Base Rental Payments which shall be payable after such prepayment date shall be as nearly proportional as practicable to the aggregate annual amounts of Base Rental Payments unpaid prior to the prepayment date (taking into account the reduction in Base Rental allocable to future interest on the Bonds that are redeemed), at a prepayment amount equal to the redemption payment of the maximum amount of Bonds, including the principal thereof and the interest thereon to the date of redemption, plus any applicable premium redeemable from such proceeds. (b) The County may prepay, from any source of available funds, all or any portion of Base Rental Payments by depositing with the Trustee moneys or securities as provided in Article X of the Trust Agreement sufficient to defease Bonds corresponding to such Base Rental Payments when due; provided that the County furnishes the Trustee with an Opinion of Counsel that such deposit will not cause interest on the Bonds to be includable in gross income for federal income tax purposes. The County agrees that if following such prepayment the Facilities are damaged or destroyed or taken by eminent domain, it is not entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and shall not be entitled to any reimbursement of such Base Rental Payments. (c) Before making any prepayment pursuant to this article, the County shall, within five (5) days following the event creating such right or obligation to prepay, give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be made, which date shall be not less than forty-five (45) days from the date such notice is given. (d) When (1) there shall have been deposited with the Trustee at or prior to the due dates of the Base Rental Payments or date when the County may exercise its option to purchase the Facilities or any portion or item thereof, in trust for the benefit of the Owners of the Bonds and irrevocably appropriated and set aside to the payment of the Base Rental Payments or option price, sufficient moneys and Permitted Investments described in subsection (1) of the definition thereof in the Trust Agreement, not redeemable prior to maturity, the principal of and interest on which when due will provide money sufficient to pay all principal, premium, if any, and interest on the Bonds to the due date of the Bonds or date when the County may exercise its option to purchase the Facilities, as the case may be; (2)all requirements of Section 10.01 of the Trust Agreement have been satisfied; and (3) an agreement shall have been entered into with the Trustee for the payment of its fees and expenses so long as any of the Bonds shall remain unpaid, then and in that event the right, title and interest of the Authority herein and the obligations of the County hereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied (except for the right of the Authority and the obligation of the County to have such moneys and such Permitted Investments applied to the payment of the Base Rental Payments or option price) and the Authority's interest in and title to the Project or applicable portion or item thereof shall be transferred and conveyed to the County. In such event, the DOCSSF1:247734.3 40511-105 22 Authority shall cause an accounting for such period or periods as may be requested by the County to be prepared and filed with the Authority and evidence such discharge and satisfaction, and the Authority shall pay over to the County as an overpayment of Base Mental Payments all such moneys or Permitted Investments held by it pursuant hereto other than such moneys and such Permitted Investments as are required for the payment or prepaymentof the Base Rental Payments or the option price and the fees and expenses of the Trustee, which moneys and Permitted Investments shall continue to be held by the Trustee in trust for the payment of Base Rental Payments or the option price and the fees and expenses of the Trustee, and shall be applied by the Authority to the payment of the Base Rental Payments or the option price and the fees and expenses of the Trustee. SECTION 7.03 Option to Purchase; Sale of Personal Property, The County shall have the option to purchase the Authority's interest in any part of Facilities, including the Dernised Premises upon payment of an option price consisting of moneys or securities of the category specified in clause (1) of the definition of the term Permitted Investments contained in Section 1.01 of the Trust Agreement (not callable by the issuer thereof prior to maturity) in an amount sufficient (together with the increment, earnings and interest on such securities) to provide funds to pay the aggregate amount for the entire remaining term of this Lease of the part of the total rent hereunder attributable to such part of the Facilities (determined by reference to the proportion which the cost of such part of the Facilities bears to the cost of all of the Facilities). Any such payment shall be made to the Trustee and shall be treated as rental payments and shall be applied by the Trustee to pay the principal of the Bonds and interest on the Bonds and to redeem Bonds if such Bonds are subject to redemption pursuant to the terms of the Trust Agreement. Upon the making of such payment to the Trustee and the satisfaction of all requirements set forth in Section 10.01 of the Trust Agreement, (a) the Base Rental thereafter payable under this Lease shall be reduced by the amount thereof attributable'to such part of the Facilities and theretofore paid pursuant to this Section, (b) Section 3.06 and this Section of this Lease shall not thereafter be applicable to such part of the Facilities, (c) the insurance required by Sections 5.01, 5.02 and 5.03 of this Lease need not be maintained as to such part of the Project, and (d)title to such part of the Facilities, including the portion of the Demised Premises upon which such part of the Facilities is located shall vest in the County and the term of this Lease shall end as to Facilities, including the portion of the Demised Premises upon which such part of the Facilities is located. The County, in its discretion, may request the Authority to sell or exchange any personal property which may at any time constitute a part of the Facilities, and to release said personal property from this Lease, if(a) in the opinion of the County the property so sold or exchanged is no longer required or useful in connection with the operation of the Facilities, (b) the consideration to be received from the property is of a value substantially equal to the value of the property to be released, and (c) if the value of any such property shall, in the opinion of the Authority, exceed the amount of$100,000, the Authority shall have been furnished a certificate of an independent engineer or other qualified independent professional consultant (satisfactory to the Authority) certifying the value thereof and further certifying that such property is no longer required or useful in connection with the operation of the Facilities. In the event of any such sale, the full amount of the money or consideration received for the personal property so sold and released shall be paid to the Authority. Any money so paid to the Authority may, so long as the County is not in default under any of the provisions of this Lease, be used upon the Written DOCSSF1:247734.3 40511-105 23 Request of the County to purchase personal property, which property shall become a part of the Facilities leased hereunder. The Authority may require such opinions, certificates and other documents as it may deem necessary before permitting any sale or exchange of personal property subject to this Lease or before releasing for the purchase of new personal property money received by it for personal property so sold. ARTICLE VIII COVENANTS SECTION 8,01 Right of Entu. The Authority and its assignees shall have the right to enter upon and to examine and inspect the Facilities, including the Demised Premises during reasonable business hours (and in emergencies at all times) (a) to inspect the same, (b) for any purpose connected with the Authority's or the County's rights or obligations under this Lease, and (c) for all other lawful purposes. SECTION 8.02 Liens. In the event the County shall at any time during the term of this Lease cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Facilities, the County shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the County in, upon or about the Facilities and shall keep the Facilities free of any and all mechanics' or materialmen's liens or other liens against the Facilities or the Authority's interest therein. In the event any such lien attaches to or is filed against the Facilities'or the Authority's interest therein, the County shall cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the County desires to contest any such lien it may do so in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the County shall forthwith pay and discharge said judgment. The County agrees to and shall, to the maximum extent permitted by law, indemnify and hold the Authority and the Trustee and their respective members, directors, agents, successors and assigns, harmless from and against, and defend each of them against, any claim, demand, loss, damage, liability or expense (including attorney's fees) as a result of any such lien or claim of lien against the Facilities or the Authority's interest therein. SECTION 8.03 Quiet Enjoyment. The parties hereto mutually covenant that the County, by keeping and performing the covenants and agreements herein contained and not in default hereunder, shall at all times during the term of this Lease peaceably',and quietly have, hold and enjoy the Facilities, including the Demised Premises without suit, trouble or hindrance from the Authoritv. SECTION 8.04 Authority Not Liable, The Authority and its members, directors, officers, agents and employees shall not be liable to the County or to any other party whomsoever !for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or about the Facilities. The County, to the extent permitted by law, shall indemnify and hold the Authority and its members, directors, officers, agents and DOCSSF1:24773=1.3 40511-105 24 employees, harmless from, and defend each of them against, any and all claims, liens and judgments arising from the construction or operation of the Facilities, including, without limitation, death of or injury to any person or damage to property whatsoever occurring in, on or about the Facilities regardless of responsibility for negligence, but excepting the active negligence of the person or entity seeping indemnity. SECTION 8.45 Assignment_ and Subleasing. Neither this Lease nor any interest of the County hereunder shall be mortgaged, pledged, assigned, sublet or transferred by the County by voluntary act or by operation of law or otherwise, except with the prior written consent of the Authority, which, in the case of subletting, shall not be unreasonably withheld; provided such subletting shall not affect the tax-exempt status of the interest on the Bonds. No such mortgage, pledge, assignment, sublease or transfer shall in any event affect or reduce the obligation of the County to make the Base Rental Payments and Additional',Payments required hereunder. SECTION 8.46 Title to Facilities. During the term of this Lease, the Authority shall hold title to the Facilities and any and all additions which comprise fixtures, repairs, replacement or modifications thereof, except for those fixtures, repairs, replacements or modifications which are added thereto by the County and which may be removed without damaging the Facilities, and except for any items added to the Facilities by the County pursuant to Section 4.02 hereof This provision shall not operate to the benefit of any insurance company if there is a rental interruption covered by insurance pursuant to Section 5.43 hereof Upon the termination or expiration of this Lease, the Authority shall execute such conveyances, deeds and other documents as may be necessary to evidence the ownership of the Facilities, including the Demised Premises by the County and to clarify the title of the County on the record thereof SECTION 8.07 Tax Covenants. The County and the Authority will not make any use of the proceeds of the obligations provided herein or any other fundi of the County or the Authority which will cause such obligations to be"arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code. The County and the Authoritywill not make any use of the proceeds of the obligations provided herein or any other funds of the County or the Authority which will cause such obligations to be "federally guaranteed" and subject to inclusion in gross income for federal income tax purposes by reason of Section 149(b) of the Code. To that end, so long as any rental payments are unpaid, the County and the Authority, with respect to such proceeds and such other funds, will comply with all requirements of such Sections 148 and 149(b) and all regulations of the United States Department of the Treasury issued thereunder to the extent that such requirements are, at the time, applicable and in effect. The County further covenants that it will not use or permit the use of the facilities financed or refinanced by the proceeds of the Bonds by any person not and "exempt person„ within the meaning of Section 141(a) of the Code or by an "exempt person" (including the County) in an "unrelated trade or business", in such manner or to such extent as would result in the inclusion' of interest ,received hereunder in gross income for federal income tax purposes under Section 1.43 of the Code. DOCSSPI:2477'34:3 40511-105 25 If at any time the County is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on or change in any way the investment of any moneys held by the Trustee or the County or the Authority under this Lease or the Trust Agreement, the County shall so instruct the Trustee or the appropriate officials of the County in writing, and the Trustee or the appropriate officials of the County, as the case may be, shall take such actions as may be necessary in accordance with such instructions. In furtherance of the covenants of the County set forth above, the County will comply with the Tax Certificate and will instruct the Trustee in writing as necessary to comply with the Tax Certificate. The Trustee and the Authority may conclusively rely on any such written instructions, and the County hereby agrees to hold harmless the Trustee and the Authority for any loss, claim, damage, liability or expense incurred by the Authority for any actions taken by the Authority in accordance with such instructions. The County and the Authority shall at all times do and perforin all acts and things permitted by law which are necessary or desirable in order to assure that the interest on the .bonds will be excluded from gross income for federal income tax purposes and shall take no action that would result in such interest not being excluded from gross income for federal income tax purposes. SECTION 8.08 Continuing_Disclosure. The County hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Lease, failure of the County to comply with the Continuing Disclosure Agreement shall not be considered an event of default hereunder; however, the Trustee may (and, at the request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Holders of at least 25% aggregate principal amount of 1998 Series A Bonds Outstanding and provided satisfactory indemnification;is provided to the Trustee, shall) or any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to compel the County to comply with its obligations under this Section 8.08. SECTION 8.09 Taxes. The County shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Facilities or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the County shall be obligated to pay only such installments as are required to be paid during the term of this Lease as and when the same become due. The County shall also pay directly such amounts, if any, in each year as shall be required by the Authority for the payment of all license and registration fees and all taxes (including, without limitation, income, excise, license, franchise, capital stock, recording, sales, use, value-added, property, occupational, excess profits and stamp taxes), levies, imposts, duties, charges, withholdings, assessments and governmental charges of any nature whatsoever, together with any additions to tax, penalties, fines or interest thereon, including, without limitation, penalties, fines or interest arising out of any delay or failure by the County to pay any of the foregoing or failure to file or furnish to the Authority or the Trustee for filing in a timely manner any returns, hereinafter levied or imposed against the Authority or the Facilities, the rentals and DOCSSFi:2#7734.3 40511-105 26 other payments required hereunder or any parts thereof or interests of the County or the Authority or the Trustee therein by any governmental authority. The County may, at the County's expense and in its name, in good faith contest any such taxes, assessments and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during; the period of such contest and any appeal therefrom unless the Authority or the Trustee shall notify the County that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Facilities will be materially endangered or the Facilities, or any part thereof, will be subject to loss or forfeiture, in which event the County shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss which may result from nonpayment, in form satisfactory to the Authority and the Trustee.. SECTION 8.10 Authority's Purpose. The Authority covenants that, prior to the discharge of this Lease, it will not engage in any activities inconsistent with the purposes for which the Authority is organized. SECTION 8.11 Purpose of Lease. The County covenants that during the term of this Lease, except as hereinafter provided, (a) it will use, or cause the use of, the Facilities for public purposes and for the purposes for which the Facilities are customarily used, (b) it will not vacate or abandon the Facilities or any part thereof, and (c) it will not make any use of the Facilities which would jeopardize in any way the insurance coverage required to be maintained pursuant to Article V hereof. ARTICLE IX DISCLAIMER OF WARRANTIES; VENDOR'S WARRANTIES, USE OF THE FACILITIES SECTION 9.01 Disclaimer of Warranties. THE AUTHORITY MAKES NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OR FITNESS FOR USE OF THE FACILITIES OR THE PROJECT, OR WARRANTY WITH RESPECT THERETO. THE COUNTY ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF THE FACILITIES OR THE PROJECT OR A DEALER THEREIN, THAT THE COUNTY LEASES THE FACILITIES A5-IS, IT BEING AGREED THAT ALL OF THE AFOREMENTIONED RISKS ARE TO BE BORNE BY THE COUNTY. In no event shall the Authority be liable for any incidental, indirect, special or consequential damage in connection with or arising out of this Lease' or the existence, furnishing, functioning or the County's use of any item or products or services provided for in this Lease. SECTION 9.02 Vendor's Warranties. The Authority hereby irrevocably appoints the County its agent and attorney-in-fact during the term of this Lease, so long as the County shall not be in default hereunder, to assert from time to time whatever'claims and rights, including warranties of the Facilities or the Project, which the Authority may have against the manufacturers, vendors and contractors of the Facilities or the Project. The County's sole €OCSSFi:247734.3 40511-105 27 1 11 11 ................................. ..............,--: remedy for the breach of such warranty, indemnification or representation shall be against the manufacturer or vendor or contractor of the Facilities or of the Project, and not against the Authority, nor shall such matter have any effect whatsoever on the rights and obligations of the Authority with respect to this Lease, including the right to receive full and timely payments hereunder. The County expressly acknowledges that the Authority makes, and has made, no representation or warranties whatsoever as to the existence or availability of such warranties of the manufacturer, vendor or contractor. SECTION 9.03 Use of the Facilities. The County will not install, use, operate or maintain the Facilities improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease. The County shall provide all permits and licenses,, if any, necessary for the installation and operation of the Facilities. In addition, the County agrees to comply in all respects (including, without limitation, with,respect to the use, maintenance and operation of the Facilities) with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Facilities; provided, however, that the County may contest in good faith the validity or application of any such law or rule in any reasonable manner which does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to the Facilities or its interest or rights under this Lease, ARTICLE X MISCELLANEOUS SECTION 10.01 Law Governing. This Lease shall be governed exclusively by the provisions hereof and by the laws of the State of California as the same from time to time exist. SECTION 10.02 Notices. All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests, agreements or promises or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered mail, return receipt requested, postage prepaid: N)CSSFI:247'734.3 40511-105 28 ............. ....... ............ ............ If to the County: County of Contra Costa c/o Clerk of the Board of Supervisors County Administration Building 651 Pine Street Martinez, California 94553 If to the Authority: County of Contra Costa Public Financing Authority c/o County Administrator County Administration Building 651 Pine Street Martinez, California 94553 If to the Trustee: BNY Western Trust Company 700 South Flower Street Fifth Floor Los Angeles, California 90017-4104 or to such other addresses as the respective parties may from time to time designate by notice in writing. A copy of any such notice or other document herein referred to shall also be delivered to the Trustee. SECTION 10.03 Validity and Severability. If for any reason this Lease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the Authority or by the County, or if for any reason it is held by such a court that any of the covenants and conditions of the County hereunder, including the covenant to pay rentals hereunder, is unenforceable for the full term hereof, then and in such event this Lease is and shall be deemed to be a lease under which the rentals are to be paid by the County annually in consideration of the right of the County to possess, occupy and use the Facilities, and all of the rental and other terms, provisions and conditions of this Lease, except to the extent that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect. SECTION 10.04 Net-Net-Net Lease. This Lease shall be deemed and construed to be a "net-net-net lease" and the County hereby agrees that the rentals provided for herein shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever. SECTION 10.05 Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease. SECTION 10.06 Amendment or Termination. The Authority and the County may at any time agree to the amendment or termination of this Lease; provided, however, that the Authority and the County agree and recognize that this Lease is entered into in accordance with the terms of the Trust Agreement, and accordingly, that any such amendment or termination DOCSSFI:247734,3 40511-105 29 shall only be made or effected in accordance with and subject to the terms of the Trust Agreement, SECTION 10.07 Execution. This Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Lease. It is also agreed that separate counterparts of this Lease may separately be executed by the Authority and the County, all with the same force and effect as though the same counterpart had been executed by both the Authority and the County. IN WITNESS WHEREOF, the Authority and the County have caused this Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, as Lessor Chair Deputy Secretary COUNTY OF CONTRA COSTA, as Lessee [SEAL] By Chair of the Board of Supervisors of the County of Contra Costa, State of California Attest: Philip I Batchelor, Clerk of the Board of Supervisors and County Administrator By: — Chief Clerk Approved as to form: County Counsel DOCSS F 1:247734.3 40511-105 30 EXHIBIT A The Facilities All that certain real property situated in the County of Contra Costa, State of California, described as follows: [legal description to come] DOCSSF1:247734.3 40511-105 A_1 EXHIBIT B Base Rental Payment Schedule Part I Defeased Base Rental Payments Base Rental Principal Prepayment Payment Date Principal Interest Prepaid Premium Total DOCSs x1:247734.3 40511-105 B-1 [Base Rental Schedules by Leased Assets] DOCSS F I:247734,3 40511-105 B-2 EXHIBIT C PROJECT PHASE I, II. III AND IV FACILITIES Project Phase I FaFacili1y Location Muir Station Office Park 597 Center Avenue Building #1 Martinez, CA Project Phase II Fa--cili1y Location Social Service Building 1305 Macdonald Avenue' Richmond, CA Project Phase III Facility Location Social Service Building 151 Linus Pauling Drive Hercules, CA Project Phase IV FacilityLocation Health Services Building 205 418' Street Richmond, CA C-1 _ . OH&S SECOND DRAFT TRUST AGREEMENT between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and BNY WESTERN TRUST COMPANY, as Trustee Dated as of May 1, 1998 County of Contra Costa Public Financing Authority Lease Revenue Bonds, 1998 Refunding Series A 170CSSP 1:249723.3 40511-108 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY...........................................................3 SECTION 1.01. Definitions.........................................................................................3 SECTION 1.02, Equal Security............................................................................._., 14 SECTION 1.03. Interpretation................................................................................... 14 ARTICLEIl THE BONDS..............................................................................................14 SECTION 2,01. Authorization of Bonds; 1998 Series A Bonds................................. 14 SECTION 2,02. Terms of the 1998 Series A Bonds................................................... 15 SECTION 2.03. Form of 1998 Series A Bonds.......................................................... 16 SECTION 2.04. Execution of 1998 Series A Bonds........ ................. ................ .... 16 SECTION 2.05, Transfer and Payment of Bonds....................................................... 17 SECTION 2.06. Exchange of Bonds.......................................................................... 17 SECTION 2.07, Bond Registration Books.................................................................17 SECTION 2.08, Mutilated, Destroyed, Stolen or Lost Bonds; Temporary Bonds....... 18 SECTION 2.09. Special Covenants as to Book-Entry Only System for 1998 SeriesA Bonds................................................................................................. 18 ARTICLE III ISSUANCE OF BONDS.............................................................................20 SECTION 3.01. Procedure for the Issuance of 1998 Serres A Bonds .........................20 SECTION 3.02. Trust Administration Fund...............-..............................................21 SECTION 3.03. Conditions for the Issuance of Additional Bonds ..,..........................21 SECTION 3.04. Proceedings for Authorization of Additional Bonds.........................22 SECTION 3.05. Limitations on the Issuance of Obligations Payable from Revenues 23 ARTICLE IV REDEMPTION OF BONDS............................................................._......._24 SECTION 4.01. Extraordinary Redemption...............................................................24 SECTION 4.02. Optional Redemption.......................................................................24 SECTION 4.03. Mandatory Sinking Fund Redemption .............................................25 SECTION 4.04. Selection of Bonds for Redemption ................. .............................25 SECTION 4.05. Notice of Redemption, Cancellation, Effect of Redemption.............25 ARTICLEV REVENUES ...............................................................................................26 SECTION 5.01. Pledge of Revenues .,......... ....... ...... ................... 26 SECTION 5.02. Receipt and Deposit of Revenues in the Revenue Fund...... ....—......27 SECTION 5.03. .Establishment and Maintenance of Accounts for Use,of Money in the Revenue Fund; Reserve Fund..................................................................27 SECTION 5,04, Application of Insurance Proceeds......................... ...... ....31 SECTION 5.05. Deposit and Investments of Money in Accounts and Funds..............32 ARTICLE VI COVENANTS OF THE AUTHORITY ......................................................32 SECTION 6.01. Punctual Payment and Performance.................................................32 I)OCSS F 1:249723.3 40511-108 i TABLE OF CONTENTS (continued) Page SECTION 6.02. Against Encumbrances ....................................................................32 SECTION 6.03, Tax Covenants; Rebate Fund.................................:.........................33 SECTION 6.04. Accounting Records and Reports.._ ......___34 SECTION 6.05. Prosecution and Defense of Suits_....... ....... 34 SECTION 6.06. Further Assurances..........................................................................35 SECTION 6.07. Maintenance of Revenues................................................................35 SECTION 6.08, Amendments to Facilities Lease ......... ...........__........ .........35 SECTION 6.09. Leasehold Estate..............................................................................36 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS ...........36 SECTION 7.01. Events of Default and Acceleration of Maturates.............................36 SECTION 7.02. Application of Funds Upon Acceleration.........................................38 SECTION 7.03. Institution of Legal Proceedings by Trustee.....................................38 SECTION 7.04. Non-Waiver................ ............ ............ ........ .................................39 SECTION 7.05. Actions by Trustee as Attorney-in-Fact............................................39 SECTION 7.06, Remedies Not Exclusive..................................................................39 SECTION 7.07. Limitation on Bondholders' Right to Sue..........................................39 ARTICLE VIII THE TRUSTEE........ ....... _.... ....... .........._40 SECTION 8.01. The Trustee.....................................................................................40 SECTION 8.02. Liability of Trustee..........................................................................41 SECTION 8.03. Compensation and Indemnification of Trustee.................................43 SECTION 8.04. Compliance with Continuing Disclosure Agreement........................43 ARTICLE IX AMENDMENT OF THE TRUST AGREEMENT ......................................44 SECTION 9.01. Amendment of the Trust Agreement................................................44 SECTION 9.02. Disqualified Bonds,......................... ................ ........... ....45 SECTION 9.03. Endorsement or Replacement of Bonds After Amendment ..............45 SECTION 9.04. Amendment by Mutual Consent ......................................................45 ARTICLEX DEFEASANCE ..........................................................................................46 SECTION 10.01. Discharge of Bonds .........................................................................46 SECTION 10.02. Unclaimed Money........ ...................................................... ......47 ARTICLE XI MUNICIPAL BOND INSURANCE...........................................................47 SECTION 11.01. Concerning the 1998 Series A Bond Insurer....................................47 SECTION 11.02, Payments Under the Bond Insurance Policy............... .....................49 SECTION 11.03. 1998 Series A Bond Insurer to be Deemed Third Party Beneficiary ........................................................................................................54 ARTICLE XII MISCELLANEOUS ............................................................_......................54 SECTION 12.01. Liability of Authority Limited to Revenues......................................54 DOCSSF 1:249723.3 40511-108 11 TABLE OF CONTENTS (continued) Page SECTION 12.02. Benefits of this Trust Agreement Limited to Parties; Bond Insurer and Third Party Beneficiaries.................... .............. .....54 SECTION 12.03. Successor Is Deemed Included In All References To Predecessor.......................................................................................................54 SECTION 12.04. Execution of Documents by Bondholders... ............. ............ ...55 SECTION 12.05. Waiver of Personal Liability...—........ ...55 SECTION 12.06. Acquisition of Bonds by Authority ..................................................55 SECTION 12.07. Destruction of Cancelled Bonds.......................................................55 SECTION 12.08. Content of Certificates................................ ........... ....... ...... ....-55 SECTION 12.09. Publication for Successive Weeks............. .........--......... ...56 SECTION 12.10. Accounts and Funds.........................................................................56 SECTION 12.11. Business Day...................................................................................56 SECTION 12.12. Notices; Notices to Rating Agencies................................................56 SECTION 12.13. Article and Section Readings and References..................................57 SECTION 12.14. Partial Invalidity...., .......... ........ ............ ........ ........ ........57 SECTION 12.15. Governing Law................................................................................58 SECTION 12.16. Execution in Several Counterparts...................................................58 Execution.................................................................................................................................57 Exhibit A Form of 1998 Series A Bond Exhibit B Schedule of Trustee Fees DOCSSF1:249723.3 4C1S3 3-3[IR 131 THIS TRUST AGREEMENT dated as of May 1, 1998 (the ",Trust Agreement"), by and between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority"), a joint powers agency and BNY Western Trust Company, a national trust association duly organized and existing under the laws of the United States of America, as trustee(the"Trustee"); WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article I of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California(hereinafter, the "Act"); WHEREAS, Article 4 of the Act authorizes and empowers the Authority to issue bonds to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, the County of Contra Costa has determined that the consummation of the transactions contemplated in the Facilities Lease (as such term is hereinafter defined) and this Trust Agreement will result in significant public benefits; WHEREAS, the Authority is empowered pursuant to the Facilities Lease and the aforementioned Article 4 of the Act to cause the lease of the Facilities (as hereinafter defined), and to cause the financing and the refinancing of the Project (as hereinafter defined) through the issuance of its bonds; WHEREAS, $23,090,000 aggregate principal amount of certificates of participation (the "Prior Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of August 1, 1994, by and among the County, the Contra Costa County Public Facilities Corporation (the "Corporation") and [BNY Western Trust Company], as successor trustee to Meridian Trust Company of California (the "Prior Trustee), for the purpose of acquiring and improving the (1) Muir Station Office Park Building 91 located at 597 Center Avenue, Martinez, California ("Project Phase I"), (ii) Social Service Building located at 1305 MacDonald Avenue, Richmond, California ("Project Phase 11"), (iii) Social Service Building located at 151 Linus Pauling Drive, Hercules, California ("Project Phase 111") and (iv) Health Services Building located at 205 40 Street, Richmond, California ("Project Phase IV" and collectively with Project Phase 1, Project Phase 11 and Project Phase 111, the"1994 Project")-, WHEREAS the Corporation acquired the 1994 Project and pursuant to a lease agreement, dated as of August 1, 1994 (the "Prior Facility Lease"), between the Corporation and the County, which lease or memorandum thereof was recorded in the office of the County Recorder of the County of Contra Costa on August 31, 1994 under Recorder's Serial Number 94- 216903, the Corporation leased the 1994 Project to the County; WHEREAS, pursuant to an assignment agreement, dated as of August 1, 1994, between the Corporation and the Prior Trustee, the lease payments made by the County under the Prior Facility Lease ("Prior Base Rental") were assigned to the Prior Trustee to pay the principal and interest represented by the Prior Certificates; I)OCSSF2:249723.3 40511-109 WHEREAS, the Authority intends to assist the County in refinancing the acquisition and improvement of the 1994 Project and in financing the acquisition and renovation of certain additional capital improvements ("Project Phase V") by issuing the County of Contra Costa Public Financing Authority Lease Revenue Bands (Various Capital Facilities), 1998 Refunding Series A(the"1998 Series A Bonds"); WHEREAS, pursuant to the Letter of Instructions to the Prior'Trustee, dated as of May 1, 1998, certain proceeds of the 1998 Series A Bonds will be deposited into an escrow fund (the "Escrow Fund") and irrevocably pledged to repay the Prior Base Rental and the Prior Certificates; WHEREAS, as consideration for such deposit in the Escrow Fund, the Corporation and Prior Trustee will convey or assign all of their rights, title', and interest in the 1994 Project and the Prior Facility Lease (other than the right, title and interest in the Prior Base Rental to be paid from the Escrow Fund) to the Authority; WHEREAS, the County will continue to lease the 1994 Project, pursuant to the terms of the Facility Lease, which amends and restates in its entirety the Prior Facility Lease; WHEREAS, the Authority intends to assist the County by financing the construction, renovation and acquisition for the County of certain other County facilities together with site development, landscaping, utilities, fixtures; furnishings, equipment, improvements and appurtenant and related facilities (the "Subsequent Phases of the Project," and collectively with Project Phases 1, 11, 111 and IV, the"Project"); and WHEREAS, the Authority has authorized the issuance of the 1998 Series A Bonds, in an aggregate principal amount not to exceed twenty-nine million dollars ($29,040,000) to assist in financing and refinancing the Project; WHEREAS, to reduce the borrowing costs of the Authority and the base rental payments of the County, and to help the financing of the Project from which significant public benefit will be achieved, the 1998 Series A Bonds shall be issued pursuant to Article 4 of the Act, WHEREAS, to provide for the authentication and delivery of the Bonds (as hereinafter defined), to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the full and timely payment of the principal thereof and premium, if any, and interest thereon, the Authority has authorized the execution and delivery of this Trust Agreement; WHEREAS, the Authority has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, 'authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Authority payable in accordance with their terms, and to constitute this Trust Agreement a valid and binding agreement of the parties hereto for the uses and purposes herein set forth, have been done and taken, and have been in all respects duly authorized; DOCSSP1:249723.3 4US11-IOf� 2 NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that in order to secure the full and timely payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Fonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Fonds by the holders thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I. DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise 'requires, the terms defined in this Section shall for all purposes hereof and of any Supplemental Trust Agreement and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified, unless otherwise defined in such other document.', Capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Facilities Lease. Act The term "Act" means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title I of the Government Code of the State, as amended) and all laws amendatory thereof or supplemental thereto. Authorii The term "Authority" means the County of Contra Costa Public Financing Authority created pursuant to the Act and its successors and assigns in accordance herewith. Authorized Denominations The terra "Authorized Denominations" means $5,000 or any integral multiple thereof Base Rental Payments The term "Base Rental Payments" shall have the meaning ascribed to such term in the Facilities Lease. Bond Counsel The term "Bond Counsel" means counsel of recognized national standing in the field of law relating to municipal bonds, appointed by the Authority. DOCSSF]:249 723.3 40511-108 3 Bond Insurance Policy The term "Bond Insurance Policy" means, with respect only to Bonds insured thereby, any policy or policies of insurance or financial guaranty bond insuring the scheduled payment of the principal of and interest on the Bonds when due and issued by,a Bond Insurer. Bond Insurer The term `Bond Insurer" means any insurance company or companies which has or have issued any Bond Insurance Policy insuring the scheduled payment of the principal of and. interest on any Outstanding Bonds or any series or portion thereof when due. The Bond Insurer for the 1998 Series A Bonds is a its successors and assigns. Bends,1998 Series A Bonds, Additional. Bonds, Serial Bonds Term Bonds The term "Bonds" means the 1998 Series A Bonds and all Additional Bonds, The term "1998 Series A Bonds" means all bonds of the Authority authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance with Section 2.02(x) and Section 3.01. The term "Additional Bonds" means all bonds of the Authority authorized by and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance with Article III. The term "Serial Bonds" means Bonds for which no sinking fund payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bend Year The term "Bond Year" means the twelve (12)-month period ending on August 1 of each year to which reference is made. Bondholder, OwnerOwner. The term "Bondholder," "Owner" or "Owner" means any person who shall be the registered owner of any Outstanding Bond. Business Day The term "Business Day" means a day that is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or California or the 1998 Series A Bond Insurer are authorized to remain closed, or a day on which the FederalReserve system is closed. Certificate of the Authority The term "Certificate of the Authority" means an instrument in writing signed by any of the following officials of the Authority: Chair, Vice-Chair, Executive Director, Assistant Executive Director or Deputy Executive Director or a designee of any such officer, or by any I)OCSS P 1:249723.3 40531-108 4 other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Authority for that purpose. Certificate of the County The term "Certificate of the County' means an instrument in writing signed by any of the following County officials: Chair of the Board of Supervisors, County Administrator of the County or Director, Capital Facilities and Debt Management or by any such officials' duly appointed designee, or by any other officer of the County duly authorized by the Board of Supervisors of the County for that purpose. ou my The term "County' means the County of Contra Costa, a County organized and validly existing under the Constitution and general laws of the State. Code The term "Code" means the Internal Revenue Code of 1986, as amended. Continuing Disclosure Agreement The term Continuing Disclosure Agreement shall mean that certain Continuing Disclosure Agreement executed by the County and the Trustee dated the date of issuance and delivery of the 1998 Series A Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof Costs of Issuance The term "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the County or the Authority and related to the authorization, execution and delivery of the Facilities Lease, this Trust Agreement and the issuance and sale of the Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, fees and charges of the Trustee, legal fees and charges, fees and disbursements of consultants and professionals, premiums of any Bond Insurer, fees and charges for preparation, execution and safekeeping of the Bonds, fees of the Authority and any other authorized cost, charge or fee in connection with the issuance of the Bonds. Costs of Issuance Fund The term "Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.01. Debt Service The term "Debt Service" means, for any Fiscal Year or other period, the sum of (1) the interest accruing during such Fiscal Year or other period on all Outstanding Bonds, DOCSSFI:249723.3 4�S12-3{8 5 assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds so long as such funded interest is in an amount equal to the gross amount necessary to pay such interest on the Bonds and is invested in Government Securities which mature no later than the related Interest Payment Date), (2) the principal amount of all Outstanding Serial Bonds maturing during such Fiscal Year or other period, and (3)the principal amount of all Outstanding Terris Bonds required to be redeemed or paid (together with the redemption premiums, if any, thereon) during such Fiscal Year or other period. Depository The term "Depository" means DTC or another recognized securities depository selected by the Authority which maintains a book-entry system for the Bonds.' Dissemination Agent The term "Dissemination Agent" means the Trustee or any successor appointed under the Continuing Disclosure Agreement, DTC The term "DTC" means The Depository Trust Company, New York, New York. Escrow Agent The term "Escrow Agent" ineans BNY Western Trust Company, Los Angeles, California, as Trustee for the Prior Certificates, or its successor thereto. Escrow Fund The term "Escrow Fund" means the fund of the same name defined in the Letter of Instructions. Event of Default The term "Event of Default" shall have the meaning specified in Section 7.01. Facilities The term "Facilities" means the Demised Premises and Project Phases 1, 11, 111 and IV or any County buildings, other improvements and facilities, added thereto or substituted therefor, or any portion thereof, in accordance with the Facilities Lease and the Trust Agreement, subject, however, to any conditions, reservations and easements of record known to the County. Facilities Lease The term "Facilities Lease" means that certain lease, entitled' "Facilities Lease (Various Capital Facilities)", by and between the County and the Authority, dated as of May 1, L)oCSSF 1:249723.3 40511-108 6 1998, which lease or a memorandum thereof was recorded in the office of the County Recorder of the County of Contra Costa on May , 1998 as document No. as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof: Financial Newspaper The term "Financial Newspaper" means The Wall Street Journal or The Bond Buyer, or any other newspaper or journal printed in the English language, publishing financial news, and selected by the Authority. Fiscal Year The term "Fiscal Year" means the twelve (12) month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Authority as its Fiscal Year in accordance with applicable law. Government Securities The term "Government Securities" means United States of America Treasury bills, nates, bonds or certificates of indebtedness, or obligations the timely payment of which is guaranteed directly by the United States of America, including evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations; provided that investments in such proportionate interests trust be limited to circumstances wherein (a) a bank or trust company acts as custodian and holds the underlying United States obligations; (b) the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor of the underlying United States obligations; (c) the underlying obligations are not redeemable prior to maturity, and (d)the underlying United States obligations are held in a special account, segregated from the custodian's general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated. Independent Certified Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State or a comparable successor, appointed and paid by the Authority, and who, or each of whom -- (1) is in fact independent according to the Statement of Auditing Standards No. 1 and not under the domination of the Authority or the County; (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority or the County; and (3) is not connected with the Authority or the County as a member, officer or employee of the Authority or the County, but who may be regularly retained to audit the accounting records of and snake reports thereon to the Authority or the County. DOCSSH:249723.3 40511-108 7 Interest Pavment Date The term "Interest Payment Date" means February I and August I in each year, commencing; August, 1998. Joint Powers Agreement The term "Joint Powers Agreement" means the Joint Exercise of Powers Agreement by and between the County and the Contra Costa County Redevelopment Agency, dated April 7, 1992, as originally executed and as it may from time to time be amended or supplemented pursuant to the provisions hereof and thereof. Letter of Instructions The term "Letter of Instructions" means that certain Letter of Instructions by and between the Escrow Agent and the County, dated as of May 1, 1998, providing for the defeasance, and prepayment of the Prior Certificates. Moody's The term "Moody's" means Moody's Investors Service a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the County and acceptable to each Bond Insurer. Dimon of Counsel The term "Opinion of Counsel" means a written opinion of Bond Counsel. Outstanding The term "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.02) all Bonds except (1) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of Section 10.01, and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Authority pursuant hereto. Permitted Encumbrances The term "Permitted Encumbrances" means (1) liens for general ad valorem taxes and assessments, if any, not then delinquent, or which the County may, pursuant to the Facilities r)OCSS P I:249723.3 40511-108 8 Lease, permit to remain unpaid; (2) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the date of recordation of the Facilities Lease in the office of the County Recorder of the County of Contra Costa and which the County certifies in writing will not materially impair the use of the Facilities; (3) the Facilities Lease, as it may be amended from time to time; (4) this Trust Agreement, as it may be amended from time to time; (5)any right or claire of any mechanic, laborer, materialman, supplier or vendor not filed or perfected in the manner prescribed by law; (6) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions to which the Authority and the County consent in writing and certify to the Trustee will not materially impair the ownership interests of the Authority or use of the Facilities by the County; and (7) subleases and assignments of the County which will not adversely affect the exclusion from gross income of interest on the Bonds. Permitted Investments The term "Permitted Investments" means any of the following, if and to the extent each is permissible for investment of funds of the Authority, as stated in its current investment policy and pursuant to applicable laws: (1) Government Securities; (2) Any obligations which are then legal investments for moneys of the County under the laws of the State of California; provided that such investments shall be rated in the highest short-term or one of the three highest long-term rating categories by Moody's and S&P; (3) Money markets or mutual funds which are rated by S&P "AAAm-G" or "AAAm" or higher and., if rated by Moody's, are rated "Aad" or higher, which funds may include funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services; and (4) The Local Agency Investment Fund of the State of California. The Trustee may conclusively rely on the written instructions of the Authority and the County that such investment is a Permitted Investment hereunder. Person The term "Person" means a corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof Phase of the.Proiect The term "Phase of the Project" means Project Phase I, II, III and IV or such Subsequent Phase of the Project to which reference is made. DOCSSF1:249723.3 40511-108 9 Principal Office The term "Principal Office" refers to the office of the Trustee noted in Section 12.12 and such other offices as the Trustee may designate from time to time. Principal Payment Date The term "Principal Payment Date" means any date on which principal of the Bonds is required to be paid (whether by reason of maturity, redemption or acceleration). Prior Certificates The term "Prior Certificates" means the $23,090,000 Certificates of Participation, dated August 1, 1994, evidencing proportionate ownership interest of the Owner thereof in payments to be made by the County as rental for certain land and facilities pursuant to a lease agreement, dated as of August 1, 1994, by and between the County and the Centra Costa County Public Facilities Corporation. Protect The term "Project" means Project Phases I, 11, III and IV and all Subsequent Phases of the Project. Project Phase I The term "Project Phase I" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Project Phase II The term "Project Phase II" means those public facilities and building described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. PIjoo ect Phase III The term "Project Phase III" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises. Project Phase IV The term "Project Phase IV" means those public facilities and buildings described in Exhibit C hereto, together with parking, site development, landscaping, 'utilities, fixtures, DOCSSFI:249723.3 40512-108 10 .............. ....... .......... furnishings, equipment, improvements and appurtenant and related facilities, located on the Demised Premises pursuant to Section 4.01 hereof. Rating Category The term "Rating Category" means one of the general long-term (or short-term, if so specifically provided) rating categories of either Moody's and S&P, without regard to any refinement or gradation of such rating category by a numerical modifier or otherwise. Redemotion Date The term "Redemption Date" shall mean the date fixed for redemption of any Bonds. Redemption Price The term "Redemption Price" means, with respect to any, Bond (or portion thereof), the principal amount of such Bond (or portion) plus the applicable premium, if any, payable upon redemption thereof pursuant to the provisions of such Bond and this Trust Agreement. Record Date The term "Record Date" means the close of business on the fifteenth (15th) calendar day (whether or not a Business Day) of the month preceding any Interest Payment Date. Representation Letter The term "Representation Letter" means the blanket letter of representation of the Authority to DTC or any similar letter to a substitute depository. Reserve Facility The term "Reserve Facility" has the meaning given such term in Section 5.03(d). Reserve Fund The term "Reserve Fund" means the fund of that name established pursuant to Section 5.03(d), Reserve Fund Requirement The term "Reserve Fund Requirement" means with respect to all Outstanding Bonds an amount equal to the lesser of(i) the maximum annual debt service attributable to the Outstanding Bonds and (ii) 125% of average annual debt service attributable to the Outstanding Bonds, provided that with respect to the calculation of the Reserve Fund Requirement upon the issuance of an Additional Series of Bonds the Reserve Fund Requirement shall be the least of(i) or (ii) above, or the amount derived by the addition of 10% of the proceeds from the sale of such Series of Additional Bonds to the Reserve Fund. DOCSSF1149723.3 40511-108 11 Resoonsible Officer The term "Responsible Officer" means any officer of the Trustee assigned to administer its duties under this Trust Agreement, Revenues The term "Revenues" means (i) all Base Rental Payments and other payments paid by the County and received by the Authority pursuant to the Facilities Lease (but not Additional Payments), and (ii) all interest or other income from any investment, pursuant to Section 5.05, of any money in any fund or account (other than the Rebate Fund) established pursuant to this Trust Agreement or the Facilities Lease. Series The term "Series," whenever used herein with respect to Bonds, means all of the Bonds designated as being of the same series, authenticated and delivered', in a simultaneous transaction, regardless of variations in maturity, interest rate, redemption and other provisions, and any Bonds thereafter authenticated and delivered upon transfer or exchange of or in lieu of or in substitution for(but not to refund) such Bonds as herein provided. 1998 Series A Bond Insurer The term "1998 Series A Bond Insurer" means a or any successor thereto. S&P The term "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term S&P shall be deemed to refer to any other nationally recognized securities rating agency selected by the County and acceptable to each Bond Insurer. State The term "State" means the State of California. State Controller The term "State Controller" means the Controller of the State. Subsequent Phase of the Project The term "Subsequent Phase of the Project" means any and all facilities and buildings for use by the County, whether within or without the County, and all additions, extensions or improvements thereto hereafter added to the Project and hereafter described by a Supplemental Trust Agreement. [()CSS F 1:249723.3 40511-108 12 SU le,. amental Trust Agreement The term "Supplemental Trust Agreement" means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory hereof or supplemental hereto; but only if and to the extent that, such Supplemental Trust Agreement is executed and delivered pursuant to the provisions hereof. Tax Certificate The term "Tax Certificate" means the Tax Certificate and Agreement delivered by the Authority and the County at the time of the issuance and delivery of a Series of Bonds, as the same may be amended or supplemented in accordance with its terms. Trust Administration Fund The term "Trust Administration Fund" means the fund by that name established in Section 3.02. Trust Agreement The term "Trust Agreement" means this Trust Agreement, dated as of May 1, 1998, between the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions hereof Trustee The term "Trustee" means BNY Western Trust Company, or any other association or corporation which may at any time be substituted in its place as provided in Section 8.01. Written Reauest of the Authort The term "Written Request of the Authority" means an instrument in writing signed by or on behalf of the Authority by its Chair, Vice-Chair, Executive Director, Assistant Executive Director or Deputy Executive Director or a designee of any such officer or by any other person (whether or not an officer of the Authority) who is specifically authorized by resolution of the Board of Directors of the Authority to sign or execute such'a document on its behalf. Written Request of the County The term "Written Request of the County" means an instrument in writing signed by the County Administrator of the County or his designee, or by the Director, Capital Facilities and Debt Management of the County, or by any other officer of the County duly authorized by the Board of Supervisors of the County in writing to the Trustee for that purpose. DOCSSF 1!249723.3 40511-108 13 SECTION 1.02. Equal Securitv. In consideration of the acceptance of the Bonds by the Bondholders thereof,, this Trust Agreement shall be deemed to be and shall constitute a contract among the Authority, the Trustee and the Bondholders from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full, timely and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and previsions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority shall be for the equal and proportionate benefit, protection and security of all Bondholders of the Bonds without distinction, preference or priority as to security or otherwise',of any Bonds over any other Bands by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein. SECTION 1.03. Interpretation. Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the l use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean or include the neuter, masculine or feminine gender, as appropriate. 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 shall not affect the meaning, construction or effect hereof ARTICLE II THE BONDS SECTION 2.01. Authorization ofBonds•. 1998 Series A Bands. (a) Bonds may be issued hereunder from time to time in order to obtain moneys to carry out the purposes of the Authority. The maximum principal amount of Bonds which may be issued hereunder is not limited. The Bonds are designated generally as "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital', Facilities)," each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds. The Bonds may be issued in such Series as from time to time shall be established and authorized by the Authority, subject to the covenants, provisions and conditions herein contained. (b) An initial Series of Bonds is hereby created and designated "County of Contra Costa Public Financing Authority Lease Revenue Bonds, 1998 Refunding Series A." The aggregate principal amount of 1998 Series A Bands which may be issued and Outstanding under this Trust Agreement shall not exceed twenty-nine million dollars ($29,000,000). (c) The Authority has reviewed all proceedings heretofore taken relative to the authorization of the 1998 Series A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist., to have happened and to have been performed precedent to and in the issuance of the 1998 Series A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every DOC:SSFt 249723.3 40511-108 14 requirement of the Act, to issue the 1998 Series A Bonds in the form and mariner provided herein for the purpose of providing funds to finance and refinance the Project, and that the 1998 Series A Bonds shall be entitled to the benefit, protection and security of the provisions hereof. (d) The validity of the issuance of the 1998. Series A Bonds shall not be dependent on or affected in any way by the proceedings taken by the Authority for the finance and refinancing of the Project or by any contracts made by the Authority or its agents in connection therewith, and shall not be dependent upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The recital contained in the 1998 Series A Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance, and all 1998 Series A Bonds shall be incontestable from and after their issuance. The 1998 Series A Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive 1998 Series A Bonds (or any temporary 1998 Series A Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. SECTION 2.02. Terms of the 1998 Series A Bonds. (a) The 1998 Series A Bonds shall be issued in the aggregate principal amount of million hundred thousand dollars The 1998 Series A Bonds shall be dated as of May 1, 1998, shall be issued only in fully registered form in Authorized Denominations (not exceeding the principal amount of 1998. Series A Bonds maturing at any one time), and shall mature in the years and in the principal amounts and bear interest at the rates as set forth in the following schedule, subject to prior redemption as described in Article TV hereof: 1998 Series A Bonds Principal Maturitv Date Amount Interest Rate [to come] % The 1998 Series A Bonds shall bear interest at the rates set forth above, payable commencing Augustl, 1998, and semiannually thereafter on February 1 and August 1 in each year. The 1998 Series A Bonds shall bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment t)OCSSFI:249723.3 40511-108 15 Date, in which event they shall bear interest from such date, or unless such date of registration is prior to the Record Date for the first Interest Payment Date, in which event they shall bear interest from their dated date. The amount of interest so payable on any Interest Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. (b) Payment of interest on the 1998 Series A Bonds due on or before the maturity or prior redemption thereof shall be paid by check mailed by first class mail on each Interest Payment Date to the person in whose name the Bond is registered as of the applicable Record Date for such Interest Payment Date at the address shown on the registration books maintained by the Trustee pursuant to Section 2.07; provided, however, that interest on any Series of Bonds shall be paid by wire transfer or other means to provide immediately available funds to any Owner of at least $1,000,000 in aggregate principal amount of such Series of Bonds, at its option, according to wire instructions given to the Trustee in writing for such purpose and on file prior as of the applicable Record Date preceding the Interest Payment Date. (c) Interest on any Bond shall cease to accrue (i) on the maturity date thereof, provided that there has been irrevocably deposited with the Trustee an amount sufficient to pay the principal amount thereof, plus interest accrued thereon to such date; or (ii) on the redemption date thereof, provided there has been irrevocably deposited with the Trustee an amount sufficient to pay the Redemption Price thereof, plus interest accrued thereon to such date. The Owner of such Bond shall not be entitled to any other payment, and such Bond shall no longer be Outstanding and entitled to the benefits of this Trust Agreement, except for the payment of the principal amount or Redemption Price, of such Bond, as appropriate, from moneys held by the Trustee for such payment. (d) The principal of the Bonds shall be payable by check in lawful money of the United States of America at the Principal Office of the Trustee. No payment of principal shall be made on any Bond unless and until such Bond is surrendered to the Trustee for cancellation. (e) The Trustee shall identify all payments (whether made by check or by wire transfer) of interest, principal, and premium by CUSIP number of the related Bonds. SECTION 2.03. Form of 1998 Series A Bonds. The 1998 Series A Bonds and the authentication and registration endorsement and assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto attached and by this reference herein incorporated. SECTION 2.04. Execution of 1998 Series A Bonds. The Chair or the Executive Director of the Authority is hereby authorized and directed to execute each of the 1998 Series A Bonds on behalf of the Authority and the Secretary or Assistant Secretary of the Authority is hereby authorized and directed to countersign each of the 1998 Series A Bonds on behalf of the Authority. The signatures of such officers may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the 1998 Series A Bonds shall cease to be such officer before the delivery of the 1998 Series A Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the 1998 Series A Bonds. z5orssrz X249723.3 40531-108 16 Only these 1998 Series A Bonds bearing thereon a certificate of authentication in the form hereinbefore recited, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the 1998 Series A Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof SECTION 2.05. Transfer and Payment of Bonds. Any Bond may, in accordance with its terms, be transferred in the books required to be kept pursuant to the provisions of Section 2.07 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 duly executed written instrument of transfer in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of the same Series and maturity for a like aggregate principal amount of Authorized Denominations, The Trustee shall require the payment by the Bondholder requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. The Authority and the Trustee may, except as otherwise provided herein, deem and treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of receiving payment thereof and for all other purposes, whether such Bond shallbe overdue or not, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of and redemption premium, if any, on such Bond shall be made only to such registered owner, which payments ,shall be valid and effectual to satisfy and discharge liability on such Bond to the extent of the sum or sums so paid. The Trustee shall not be required to register the transfer of or exchange any Bonds which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redemption in whole or in part as provided in Section 4.04 or during the period established by the Trustee for selection of Bonds for redemption. SECTION 2.06. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other authorized denominations. The Trustee shall require the payment by the Bondholder requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange as a condition precedent to the exercise,of such privilege. The Trustee shall not be required to exchange any Bond which has been selected for redemption in whole or in part, from and after the day of mailing of a notice of redemption of such Bond selected for redemption in whole or in part as provided in Section 4.04 or,during the period established by the Trustee for selection of Bonds for redemption. SECTION 2.07. Bond registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Bonds, which during normal business hours shall be open to inspection by the Authority, and upon presentation for such purpose the DOCSSF I:249723.3 40511-108 17 Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds in such books as hereinabove provided. SECTION 2.08, Mutilated, Destroyed. Stolen or Lost Bonds: Temoorary Bonds. If any Bond shall become mutilated, the Trustee, at the expense of the Bondholder, shall thereupon authenticate and deliver a new Bond of like tenor and amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory'to the Trustee and indemnity satisfactory to the Trustee and the 1998 Series A Bond Insurer 'shall be given, the Trustee, at the expense of the Bondholder, shall thereupon authenticate and deliver a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or sullen. The Trustee may require payment of a reasonable sum for each new Bond issued under this Section 2.08 and of the expenses which may be incurred by the Authority and the Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Bonds of the same Series secured by this Trust Agreement. Neither the Authority nor the Trustee shall be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. The Bonds issued under this Trust Agreement may be initially issued 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 Authority, shall be in fully registered form and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Bond shall be executed and authenticated as authorized by the Authority, in accordance with the terms of the Act. If the Authority 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 Trustee, and the Trustee shall 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 Trust Agreement as definitive Bonds delivered hereunder. SECTION 2.09. Special Covenants as to Book-Entry Onlv System for 1998 Series A Bonds. (a) Except as otherwise provided in subsections {b} and (c) of this Section 2.09, all of the 1998 Series A Bonds initially issued shall be registered in the name of Cede & Co., as nominee for DTC, or such other nominee as DTC shall request pursuant to the Representation Letter, Payment of the interest on any 1998 Series A Bond registered in the naive of Cede & Co. DOCS8171:249723.3 40511-108 shall be made on each Interest Payment Date for such 1998 Series A Bonds to the account, in the manner and at the address indicated in or pursuant to the .Representation Letter. (b) The 1998 Series A Bonds initially shall be issued in the form of a single authenticated fully registered bond for each stated maturity of such 1998 Series A Bands, representing the aggregate principal amount of the 1998 Series A Bonds of such maturity. Upon initial issuance, the ownership of all such 1998 Series A Bonds shall be registered in the registration records maintained by the Trustee pursuant to Section 2.07 in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation better. The Trustee, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the 1998 Series A Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such 1998 Series A Bonds, selecting the 1998 Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders hereunder, registering the transfer of 1998 Series A Bonds, obtaining any consent or other action to be taken by Bondholders of the 1998 Series A Bonds and for all other purposes whatsoever, and neither the Trustee nor the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility or obligation to any "Participant" (which shall mean, for purposes of this Section 2.09, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the 1998 Series A Bonds under or through DTC or any Participant, or any other person which is not shown on the registration records as being a Bondholder, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the 1998 Series A Bonds, (iii) any notice which is permitted or required to be given to Bondholders' of 1998 Series A Bonds hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the 1998 Series A Bonds, or(v) any consent given or other action taken by DTC as Bondholder of 1998 Series A Bonds. The Trustee shall pay all principal of and premium, if any, and interest on the 1998 Series A Bonds only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the Authority's obligations with respect to the payment of the principal of and premium, if any, and interest on the 1998 Series A Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the 1998 Series A Bonds will be transferable to such new nominee in accordance with subsection (e) of this Section 2.09. (c) In the event that the Authority determines that the 1998 Series A Bonds should not be maintained in book-entry form, the Trustee shall, upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants'of the availability through DTC of bond certificates. In such event, the 1998 Series A Bonds will be transferable in accordance with subsection (e) of this Section 2.09. DTC may determine to discontinue providing its services with respect to the 1998 Series A Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the Authority or the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the 1998 Series A Bonds will be transferable in accordance with subsection (e) of this Section 2.09. If at any time DOCSSF 1:249723.3 40511-108 19 DTC shall no longer be registered or in good standing under the Securities Exchange Act. or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then this Section 2.09 shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the 1998 Series A :Bonds as provided below. Whenever DTC requests the Authority and the Trustee to do so, the Trustee and the Authority will cooperate with. DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custodyof all certificates evidencing the 1998 Series A Bonds then Outstanding. In such event, the 1998 Series A Bonds will be transferable to such securities depository in accordance with subsection (e)of this Section 2.09, and thereafter, all references in this Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate. (d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all 1998 Series A Bonds Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal of and premium, if any, and interest on each such 1.998 Series A Bond and all notices with respect to each such 1998 Series A Bond shall be made and given, respectively, to DTC as provided in or pursuant to the Representation Letter. (e) In the event that any transfer or exchange of 1998 Series A Bonds is authorized under subsection (b) or (c) of this Section 2.09, such transfer or; exchange shall be accomplished upon receipt by the Trustee from the registered owner thereof of the 1998 Series A Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.05 and 2.06. In the event 1998 Series A Bond certificates are issued to Bondholders other than Cede & Co., its successor as nominee for DTC as holder of all the 1998 Series A Bonds,', another securities depository as holder of all the 1998 Series A Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.05 and 2.06 shall also apply to, among other things, the registration, exchange and transfer of the 1998 Series A Bonds and the method of payment of principal of, premium, if any, and interest on the 1998 Series A Bonds. ARTICLE III ISSUANCE OF BONDS SECTION 3.01. Procedure for the Issuance of 1998 Series A Bonds. At any time after the sale of the 1998 Series A Bonds in accordance with the Act, the Authority shall execute the 1998 Series A Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the 1998 Series A Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request of the Authority and upon receipt of payment therefor from the purchaser thereof Upon receipt of payment for the 1998 Series A Bonds from the purchaser thereof, the Trustee shall, unless otherwise instructed by the Authority, transfer or deposit the proceeds received from such sale to the following respective accounts or funds, in the fallowing order of priority. DOCSSI;l:249723.3 40511-108 20 (i) deposit in the Interest Account created pursuant to Section 5.03 hereof, the amount equal to interest accrued on the 1998 Series',A Bonds from their dated date to the date of issuance thereof,; (ii) deposit the sum of$ in the Reserve Fund created pursuant to Section 5.03 hereof, being the amount equal to the Reserve Fund Requirement for the 1998 Series A Bonds; (iii) deposit the sum of $ to the Costs of Issuance Fund, which fund is hereby created and which fund the Trustee hereby covenants and agrees to maintain. All money in the Costs of Issuance Fund 'shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the 1998 Series A Bonds upon receipt of a Written Request of the Authority, filed with the Trustee, each of which shall be sequentially numbered and shall state the person(s) to whom payment is to be made, the amount(s) to be paid, the purpose(s) for which the obligation(s) was incurred and that such payment is a proper charge against said fund. On February 1,', 1999, or upon the earlier Written Request of the Authority, any remaining balance in the Costs of Issuance Fund shall be transferred to the Revenue Fund and the Costs of Issuance Fund shall be closed; (iv) Deposit the sum of $5,000 in the Trust Administration Fund; and (v) transfer the sum of$ to the Escrow Agent for deposit in the Escrow Fund. SECTION 3.02, Trust Administration Fund. The Trustee shall deposit in the Trust Administration Fund (the initial payment into which is provided for in Section 3.01(iv) and which fund the Trustee hereby agrees to establish and maintain so long as any Bonds are Outstanding) all amounts received from the County to be applied as Additional Payments under the Facility Lease, to be held by the Trustee for the benefit of the County until disbursed. The moneys in the Trust Administration Fund shall be disbursed by the Trustee upon the Written Request of the Authority, with the approval of the Assistant County Administrator —Finance of the County, or the Director, Capital Facilities and Debt Management of the County, or the duly authorized representative or representatives of any of the above, endorsee) thereon, for the payment of administrative costs of the Authority, including salaries, wages, all expenses, compensation and indemnification of the Trustee payable by the Authority under this Trust Agreement, fees of the auditors, accountants, attorneys or architects and all other necessary administrative costs of the Authority or charges required to be paid by it in order to maintain its existence or to comply with the terms of the Bonds or of this Trust Agreement. The Trustee shall, from time to time and as often as necessary to replenish and maintain al minimum balance of five thousand dollars ($5,000) in said Fund, give notice to the County and such Additional Payments required to be paid pursuant to the Facility Lease. SECTION 3.03. Conditions for the Issuance of Additional Bonds. The Authority may at any time, with the consent of each Bond Insurer, issue 'Additional Bonds pursuant to a Supplemental Trust Agreement, payable from the Revenues as provided herein and DOCSSF 1:249723.3 40511-108 21 secured by a pledge of and charge and lien upon the Revenues as provided herein equal to the pledge, charge and lien securing the Outstanding Bonds theretofore issued hereunder, but only subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Additional Bonds: (a) The Authority shall be in compliance with all agreements and covenants contained herein. (b) The Supplemental Trust Agreement shall require that the proceeds of the sale of such Additional Bonds shall be applied to the acquisition (by purchase or lease) of facilities to be added to the Facilities or for the refunding of Outstanding Bonds. (c) The Supplemental Trust Agreement shall provide, if necessary, that from such proceeds or other sources an amount shall be deposited in the Reserve Fund so that following such deposit there shall be on deposit in the Reserve Fund an amount at least equal to the Reserve Fund Requirement. (d) The aggregate principal amount of Bonds issued and at any time Outstanding hereunder shall not exceed any limit imposed by law, by this Trust Agreement or by any Supplemental Trust Agreement. (e) The Facilities Lease shall have been amended, if necessary, so that the Base Rental Payments payable by the County thereunder in each Fiscal Year shall at least equal Debt Service, including Debt Service on the Additional Bonds, in each Fiscal Year, (f) The Facilities Lease shall have been amended so as to lease to the County the project being financed from the proceeds of such Additional Bonds or facilities of comparable worth and economic life and such facilities shall be ready for immediate use and occupancy by the County. (g) If the proceeds of such Additional Bonds are to be used, in whole or in part, to finance construction on real property not described in the Facilities Lease or the additional Facilities to be leased are not situated on property described in the Facilities Lease, (1)a site lease shall have been executed so as to lease to the Authority such additional',real property; and (2) the Facilities Lease shall have been amended so as to lease to the County such additional real property. (h) To the extent practicable the principal payments shall be August 1. SECTION 3.04. Proceedings for Authorization of Additional Bonds. Whenever the Authority and the County shall determine to execute and deliver any Additional Bonds pursuant to Section 3.03, the Authority and the Trustee shall enter into a Supplemental Trust Agreement providing for the issuance of such Additional Bonds, specifying the maximum principal amount of such Additional Bonds and prescribing the terms and conditions of such Additional Bonds, The Supplemental Trust Agreement shall prescribe the form',or forms of such Additional Bonds and, subject to the provisions of Section 3.03, shall provide'for the distinctive DOCSSF1:249723.3 40511-108 22 designation, denominations, method of numbering, dates, payment dates, interest rates, interest payment dates, provisions for redemption (if desired) and places of payment of principal and interest_ Before such Additional Bonds shall be issued, the County and the Authority shall file or cause to be filed the following documents with the Trustee: (a) An Opinion of Counsel setting forth that (1) such Counsel has examined the Supplemental Trust Agreement and the amendment to the Facilities Lease and the site lease required by Section 3.03(e), (f) and (g); (2) the execution and delivery of the Additional Bonds have been sufficiently and duly authorized by the County and the Authority; and (3) said amendment to the Facilities Lease and the site lease if any, when duly executed by the County and the Authority, will be valid and binding obligations of the County and the Authority. (b) A Certificate of the Authority stating that the requirements of Section 3.02 have been met and the approval of each Bond Insurer has been obtained. (c) A certified copy of a resolution or ordinance of the County authorizing the execution of the amendments to the Facilities Lease required by Section 3.03(e), (f) and (g). (d) An executed counterpart or duly authenticated copy of any amendment to the Facilities Lease required by Section 3.03(e), (f) and (g). (e) A Certificate of the County stating that the insurance required by Sections 5.01, 5.02 and 5.03 of the Facilities Lease is in effect. (f) If the proceeds of such Additional Bonds are to be used, in whole or in part, to finance construction or acquire facilities on real property not then described in the Facilities Lease, an executed counterpart or duly authenticated copy of the site lease required by Section 3,03(g). (g) A title insurance policy insuring the Authority's leasehold or fee title in the real property on which the Facilities are located, and, if the proceeds of such Additional Bonds are to be used to finance construction on real property not then described in the Facilities Lease, a title insurance policy insuring the Authority's leasehold or fee title in such real property, or, at the option of the Authority, an opinion of counsel or Certificate of the County or such other evidence of the Authority's or County's leasehold or fee interest in such real property as shall be acceptable to the Authority. (h) The written consent(s) of the Bond Insurer(s). Upon the delivery to the Trustee of the foregoing instruments and upon the Trustee's receipt of Certificates of the County and of the Authority stating that all applicable provisions of this Trust Agreement have been complied with (so as to permit the issuance of the Additional Bonds in accordance with the Supplemental Trust Agreement then delivered to the Trustee), the Trustee shall execute and deliver said Additional. Bonds in the aggregate principal amount specified in such,Supplemental Trust Agreement to, or upon the Written Request of, the Authority. DOCSSFI:24972 i.3 40511-108 23 SECTION 3.05. Limitations on the Issuance of Obligations Payable from Revenues. The Authority will not, so long as any of the Bonds are {outstanding, issue any obligations or securities, however denominated, payable in whole or in part from Revenues except the following: (a) Bonds of any Series authorized pursuant to Section 3,04.- (b) .04;(b) Obligations owing with respect to a Reserve Facility, including principal, interest and fees relating thereto; provided such obligations shall be payable on a subordinate basis to principal and interest on the Bonds. (c) Obligations which are junior and subordinate to the payment of the principal, premium, interest and reserve fund requirements for the Bonds and which subordinated obligations are payable as to principal, premium, interest and reserve fund requirements, if any, only out of Revenues after the prior payment of all amounts then required to be paid hereunder from Revenues for principal, premium, interest and reserve fund requirements for the Bonds, as the same become due and payable and at the times and in the manner as required in this Trust Agreement. ARTICLE IV REDEMPTION OF BONDS SECTION 4.01. Extraordinary Redemption. The 1998 Series A Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations, from prepayments made by the County pursuant to Section 7.02 of the Facilities Lease, at a redemption price equalto the sum of the principal amount thereof, without premium, plus accrued interest thereon to the Redemption Date. Whenever less than all of the Outstanding Bonds are to be redeemed on any one date, the Trustee shall select, in accordance with written directions from the Authority, the Bonds to be redeemed in part from the Outstanding Bonds so that the aggregate annual principal amount of and interest on Bonds which shall be payable after such Redemption Date',shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on Bonds Outstanding prior to such Redemption Date, SECTION 4.02. O_ otional Redemption. The 1998 Series A Bonds maturing on or prior to August 1, 2008 are not subject to optional redemption. The 1998 Series A Bonds maturing on or after August 1, 2009 are subject to redemption prior to their respective stated maturities at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after August 1, 2008, at the following',redemption prices (expressed as percentages of the principal amount of 1998 Series A Bonds called for redemption), together with accrued interest to the date fixed for redemption. DOCSSF1:249723.3 40511--108 24 Redemption Period (dates inclusive) Redemption Price August 1, 2008 through July 31, 2009 101% August 1, 2009 through July 31, 2010 100.5 August 1, 2010 and thereafter 100 SECTION 4.03, Mandatory Sinking Fund Redemption. The 1998 Series A Bonds maturing on August 1, 2018, August 1, 2022, and August 1, 2028, respectively, upon notice as hereinafter provided, shall also be subject to mandatory sinking fund redemption prior to maturity, in part on August 1 of each year on and after August 1, 2015, August 1, 2019, and August 1, 2023, respectively, by lot, from and in the amount of the mandatary sinking account payments set forth in Section [5.03] at a redemption price equal to the sum of the principal amount thereof plus accrued interest thereon to the redemption date,without premium. SECTION 4.04. Selection of Bonds for Redemption. The Authority shall designate which maturities of Bonds are to be redeemed. If less than all Outstanding 1998 Series A Bonds of the same Series maturing by their terms on any one date are to be redeemed at any one time, the Trustee shall select the 1998 Series A Bonds of such maturity date to be redeemed by lot and shall promptly notify the Authority in writing of the numbers of the 1998 Series A Bonds so selected for redemption. For purposes of such selection, 1998 Series A Bonds shall be deemed to be composed of multiples of minimum Authorized Denominations and any such multiple may be separately redeemed. In the event 1998 Series A Term Bonds are designated for redemption, the Authority may designate which sinking account payments are allocated to such redemption. SECTION 4.05. Notice ,of Redemption; Cancellation, Effect of Redemption. Notice of redemption shall be mailed by first-class mail by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective Bondholders of the 1998 Series A Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, (ii) the Securities Depositories and (iii) one or more Information Services. Notice of redemption to the Securities Depositories and the Information Services shall be given by registered mail or overnight delivery or facsimile transmission. Each notice of redemption shall state the date of such notice, the date of issue of the Bonds, the Series, the redemption date, the Redemption Price, the place or places of redemption (including the name and appropriate address of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the 1998 Series A Bonds of such maturity, to be redeemed and, in the case of 1998 Series A Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said 1998 Series A Bonds the redemption price thereof, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such 1998 Series A Bonds be then surrendered at the address of the Trustee specified in the redemption notice. ;Failure to receive such notice shall not invalidate any of the proceedings taken in connection with such redemption. DOCSSF1:249723.3 40511-108 25 The Authority may, at its option, prior to the date fixed for redemption in any notice of redemption rescind and cancel such notice of redemption by Written Request to the Trustee and the Trustee shall mail notice of such cancellation to the recipients of the notice of redemption being cancelled. If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the :Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice Bonds so called for redemption shall become due and payable, and from and after the date so designated interest on such Bonds shall cease to accrue, and the Bondholders of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof: All 1998 Series A Bonds redeemed pursuant to the provisions of this Article shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued. ARTICLE V REVENUES SECTION 5.01. Pled e of Revenues. (a) All Revenues, any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established hereunder (other than amounts on deposit in the Rebate Fund created pursuant to Section 6.03) and any other amounts (excluding Additional Payments) received by the Authority in respect of the Facilities are hereby irrevocably pledged and assigned to the payment of the interest and premium, if any, on and principal of the Bonds as provided herein, and the Revenues and other amounts pledged hereunder shall not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted hereunder. This pledge shall constitute a pledge of and charge and first lien upon the Revenues, all other amounts pledged hereunder and all other moneys on deposit in the funds and accounts established hereunder (excluding amounts on deposit in the Rebate Fund created pursuant to Section 6.03) for the payment of the interest on and principal of the Bonds in accordance with the terms hereof and thereof (b) At least three (3) Business Days prior to each date on which a Base Rental Payment is due, pursuant to the Facilities Lease, the Trustee shall notify the County of the amount of the installment of Base Rental Payment needed to pay the principal of and interest on the Bonds due on the next following Interest Payment Date. Any failure to send such notice shall not affect the County's obligation to make timely payments of installments of Base Rental Payments. Pursuant to Section 25350.55 of the California Government Code, the County has elected to guarantee Base Rental Payments paid by the County under the Facility Lease. On or before each Interest Payment Date, if the County has insufficient funds to make the installment of Base Rental Payment due on such Interest Payment Date, the County shall so notify the DOCSSF'I:249723.3 4051 1.108 26 Trustee. Upon receipt of such notification, the Trustee shall immediately notify the State Controller and shall request from the State Controller the amount by which the Base Rental Payment due on such Interest Payment Date exceeds the amount on deposit in the Revenue Fund. The Trustee is hereby instructed and hereby agrees to receive such moneys transferred by the State Controller and to the extent moneys on deposit in the Reserve Fund were used in lieu of such Base Rental Payments, to replenish the Reserve Fund and otherwise to deposit the funds into the Revenue Fund. SECTION 5.012. Receipt and Deposit of Revenues in the Revenue Fund. In order to carry out and effectuate the pledge, assignment, charge and lien contained herein, the Authority agrees and covenants that all Revenues and all other amounts pledged hereunder when and as received shall be received by the Authority in trust hereunder for the benefit of the Bondholders and shall be transferred when and as received by the Authority to the Trustee for deposit in the Revenue Fund (the "Revenue Fund"), which fund is hereby',created and which fund the Trustee hereby agrees and covenants to maintain in trust for Bondholders so long as any Bonds shall be Outstanding hereunder. The County has been directed to pay all Base Rental Payments directly to the Trustee. If the Authority receives any Base Rental Payments, it shall hold the same in trust as agent of the Trustee and shall immediately transfer such Base Rental Payments to the Trustee. All Revenues and all other amounts pledged and assigned hereunder shall be accounted for through and held in trust in the Revenue Fund, and the Trustee shall have no beneficial right or interest in any of the Revenues except only as herein provided. All Revenues and all other amounts pledged and assigned hereunder, whether received by the Authority in trust or deposited with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely to the purposes and uses hereinafter in this Article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the Trustee. SECTION 5.03. Establishment and Maintenance of Accounts for Use of Monev in the Revenue Fund: Reserve Fund. (a) Subject to Section 6.03, all money in the Revenue Fund shall be set aside by the Trustee in the following respective special accounts or fiends within the Revenue Fund (each of which is hereby created and each of which the Trustee hereby covenants and agrees to cause to be maintained) in the following order of priority: (1) Interest Account, and (2) Principal Account. All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this Section. On each Principal Payment Date, following payment of principal of and interest on the Bonds, any excess amount on deposit in the Revenue Fund shall be transferred to the Reserve Fund to the extent necessary to increase the amount therein to the Reserve Fund Requirement and any excess shall be deposited in the Trust Administration Fund to the extent necessary to increase the amount therein to $5,000 and any excess shall be returned to the County as an excess payment of Base Rental Payments. CXCSSFI:249723.3 44511-108 27 (b) Interest Account. On or before each Interest Payment Date, the Trustee shall set aside from the Revenue Fund and deposit in the Interest Account that amount of money which is equal to the amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. No deposit need be made in the Interest Account if the amount contained therein and available to pay interest on the Bonds is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such Interest Payment Date. All money in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (c) Principal Account. On or before each August 1, commencing August 1, 1999, the Trustee shall set aside from the Revenue Fund and deposit in the Principal Account an, amount of money equal to the amount of all sinking fund payments required to be made on such August l into the respective sinking fund accounts for all Outstanding Term Bonds and the principal amount of all Outstanding Serial Bonds maturing on such August 1. No deposit need be made in the Principal Account if the amount contained therein and available to pay principal of the Bonds is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds maturing by their terms on such',August I plus the aggregate amount of all sinking fund payments required to be made on such August I for all Outstanding Term Bonds. The Trustee shall establish and maintain within the Principal Account a separate subaccount for the Term Bonds of each Series and maturity, designated as the " Sinking Account" (the "Sinking Account"), inserting therein the Series and maturity (if more than one such account is established for such Series) designation of such Bonds. With respect to each Sinking Account, on each mandatory sinking account payment date established for such Sinking Account, the Trustee shall apply the mandatory sinking account payment required on that date to the redemption (or payment at maturity, as the case may be) of Term Bonds of the Series and maturity for which such Sinking Account was established, upon the notice and in the manner provided in Article IV, provided that, at any time prior to selection of Bonds for redemption, the Trustee may, upon the Written Request of the Authority, apply moneys in such Sinking Account to the purchase of Term Bonds of such Series and maturity at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account), as may be directed by the Authority, except that the purchase price (excluding accrued interest) shall not exceed the redemption price that would be payable for such Bonds upon redemption by application of such mandatory sinking account payment. If, during the twelve (12)-month period immediately preceding said mandatory sinking account payment date, the Trustee has purchased Term Bonds of such Series',and maturity with moneys in such Sinking Account, such Bonds so purchased shall be applied, to the extent of the full principal amount thereof, to reduce said mandatory sinking account payment. [The following Section to be revised following Award of Bonds as appropriate.] DOCSSP1:249723.3 40511-108 28 ................. -:.:........ :-XX............ The Trustee shall establish and maintain within the Principal Account separate Sinking Accounts for the 1998 Series A Term Bonds maturing on August 1, 2018, August 1, 2022 and August 1, 2028. Subject to the terms and conditions set forth in this Section and Section 4.03, the Term Bonds maturing on August 1, 2018, August 1, 2022 land August 1, 2028 shall be redeemed (or paid at maturity, as the case may be) by application of mandatory sinking account payments in the amounts and upon the dates as follows: 2018 Term Bonds Sinking Account Mandatory Sinking Account Mandatory Sinking Payment Date(August 1) Account Payments 2015 2016 2017 2018* 2022 Term Bonds Sinkinsa Account Mandatory Sinking Account Mandatory Sinking Payment Date (Ausaust 1) Account Payments 2019 2020 2021 2022* 2028 Term Bonds Sinkiniz Account Mandatory Sinking Account Mandatory Sinking Payment Date(August 1) Account Payments 2023 2024 2025 2026 2027 2028* maturity All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds as it shall become due and payable, whether at maturity or redemption, except that any money in any Sinking Account shall be used and withdrawn by the Trustee only to purchase or to redeem or to pay Term Bonds for which such Sinking Account was created. DOCSSFI:2497233 40511-108 29 (d) Reserve Fund. The Authority hereby agrees to establish a separate fund titled the "Reserve Fund" to be held by the Trustee. All money in the Reserve Fuad shall be deposited with, used and withdrawn by the Trustee solely for the purpose of funding the Interest Account or the principal Account, in that order, in the event of any deficiency in either of such accounts on a Principal payment Date or Interest Payment Date, except that so long as the Authority is not in default hereunder, any cash amounts in the Reserve Fund in excess of the Reserve Fund Requirement shall be withdrawn from the Reserve Fund and transferred to the Revenue Fund on each Interest Payment Date, following the payment of any amounts due on such date. The Trustee shall notify the County and each Bond Insurer if any withdrawal is made from the Reserve Fund for the purpose of funding the Interest Account or the Principal Account. If the Reserve Fund Requirement is satisfied by a Reserve Facility, the Trustee shall draw on such Reserve Facility in accordance with its terms, in a timely manner, to the extent necessary to fund any such deficiency in the Interest Account or the principal Account. The Authority may, with the consent of each :Bond Insurer, 'satisfy the Reserve Fund Requirement at any time by the deposit with the Trustee for the credit of the Reserve Fund of a surety bond, an insurance policy or letter of credit as described below (each a "Reserve Facility") or any combination thereof (i) Surety Bond or Insurance Policy. A surety ',bond or insurance policy issued to the Trustee, on behalf of the Bondholders, by a company licensed to issue an insurance policy guaranteeing the timely payment of the principal of and interest on the Bonds (a "municipal bond insurer") may be deposited in the Reserve Fund to meetthe Reserve Fund Requirement if such municipal bond insurer shall be rated in one of the two highest rating categories issued by Moody's and by S&P. The term of such surety bond or insurance policy shall be equal to the term of the Series of Bonds which it secures. In the event a surety bond or insurance policy is deposited in the Reserve Fund in accordance with this Section, notice of that. event shall be given to Moody's and to S&P by the Authority. (ii) Letter of Credit. A letter of credit may be deposited in the Reserve Fund to meet the Reserve Fund Requirement, provided that any such letter of credit must be issued or confirmed by a state or national bank, or a foreign bank with an agency or branch located in the continental United States, which has outstanding an issue of unsecured long term debt securities rated at least equal to the second highest rating; category by Moody's and S&P. In the event a letter of credit is deposited in the Reserve Fund in accordance'with this Section, notice of that event shall be given to Moody's and to S&P by the Authority. In the event that the rating on the unsecured long-term debt securities of the bank which has issued or confirmed any letter of credit is withdrawn or reduced by Moody's or S&P to a rate below the requirements set forth above, the Authority will obtain a substitute or replacement letter of credit within thirty (34) days from the date of such reduction or withdrawal from a state, national or foreign bank meeting the requirements set forth above to the extent that, in the judgment of the Authority, such a substitute or replacement letter of credit is available upon reasonable terms and at a reasonable cost, or will deposit into the Reserve Fund a replacement surety bond or insurance policy meeting the requirements of this Section 5.43, or the Authority shall deposit cash or other Permitted Investments meeting the requirements of Section DOCSSF1:249723.3 40511-108 30 set forth in this Section 5.04 to redeem the Bonds in part due to damageor destruction of a portion of the Facilities unless the Base Rental Payments on the undamaged portion of the Facilities will be sufficient to pay the initially-scheduled principal and interest on the Bonds remaining unpaid after such redemption. SECTION 5.05. Deposit and Investments of Money in Accounts and Funds. Subject to Section 6.03, all money held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested in Permitted Investments at the Written Request of the Authority or, if no instructions are received, in money market funds described in paragraph 3 of the definition of Permitted Investments. Such investments shall, as nearly as practicable, mature on or before the dates on which such money is anticipated to be needed for disbursement hereunder, provided, however, that, moneys in the Reserve Fund shall be invested in Permitted Investments with a term to maturity not exceeding five(5) years. For purposes of this restriction, Permitted Investments containing a repurchase option or put option by the investor shall be treated as having a maturity of no longer than such option. All interest or profits received on any money so invested shall be deposited first in the Reserve Fund, to the extent necessary to make amounts on deposit in the Reserve Fund equal to the Reserve Fund Requirement, and then in the Revenue Fund. The Trustee and its affiliates may act as principal, agent, sponsor or advisor with respect to any investments. The Trustee shall not be liable for any losses on investments made in accordance with the terms and provisions of this Trust Agreement. If at any time after investment therein an investment in a particular fund or account hereunder ceases to meet the criteria set forth in the definition of Permitted Investments and such obligation, aggregated with other non-conforming investments in such fund or account, exceeds ten percent (10%)of all invested funds in such fund or account, such investment shall be sold or liquidated unless otherwise approved by the 1998 Series A Bond Insurer. Investments purchased with funds on deposit in the Revenue'Fund shall mature not later than the payment date or redemption date, as appropriate, immediately succeeding the investment. Subject to Section 6.03, investments in any and all funds and accounts except for the Rebate Fund may be commingled for purposes of making, holding', and disposing of investments, notwithstanding provisions herein for transfer to or holding in particular funds and accounts amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Trust Agreement. ARTICLE VI COVENANTS OF THE AUTHORITY SECTION 6.01. Punctual Pavment and Performance. The Authority will punctually pay out of the Revenues the interest on and principal of and redemption premiums, if any, to become due on every Bond issued hereunder in strict conformity with the terms hereof and of the Bonds, and will faithfully observe and perform all the agreements and covenants to be observed or performed by the Authority contained herein and in the Bonds. DOCSSF I:249'723.3 40511-108 32 SECTION 6.02, Against Encumbrances, The Authority will not make any pledge or assignment of or place any charge or lien upon the Revenues except as provided in Section 5.01, and will not issue any bunds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except as provided in Section 3.04, SECTION 6.03. Tax Covenants. Rebate Fund. (a) In addition to the accounts created pursuant to Section 5.03, the Trustee shall establish and maintain a fund separate from any other fund or account established and maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Sections 5.01, 5.02, 5.05, 9.01 and 10.01 relating to the pledge of Revenues, the allocation of money in the Revenue Fund, the investments of money in any fund or account, the application of funds upon acceleration and the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section 6.03 and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority with the terms of the Tax Certificate. (b) Any funds remaining in the Rebate Fund with respect to a Series of Bonds after redemption and payment of all such Series of Bonds and all other amounts due hereunder or under the Facilities Lease relating to such Series of Bonds, or provision made therefor satisfactory to the Trustee and the 1998 Series A Bond Insurer, including accrued interest and payment of any applicable fees and expenses of the Trustee and satisfaction of the Rebate Requirement (as defined in the Tax Certificate), shall be withdrawn by the Trustee and remitted to or upon the Written Request of the Authority. (c) The Authority shall not use or permit the use of any proceeds of the Bonds or any funds of the Authority, directly or indirectly, to acquire any securities or obligations, and shall not tape or permit to be taken any other action or actions, which would cause any of the Bonds to be an"arbitrage bond" within the meaning of Section 148 of the Code, "private activity bond" within the meaning of Section 141(a) of the Code, or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements;,promulgated from time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as amended. The Authority shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Authority shall comply with all requirements of Sections 148 and 149(b) of the Code to the extent applicable to the Bonds. In the event that at any time the Authority is of the opinion that for purposes of this Section 6.03(c) it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under this Trust Agreement, the Authority shall so instruct the Trustee under this Trust Agreement in writing, and the Trustee shall take such action as may be necessary in accordance with such',instructions. DOCSSFI:249723,3 4{35 i i-108 33 1 11 -_-.1-.................. ...... ............... ....... 5.05 (to the extent the same are available from Revenues), in order to provide that there will be on deposit in the Reserve Fund an amount equal to the Reserve Fund Requirement. Unless the Bonds have been fully paid and retired, the Trustee shall draw the full amount of any letter of credit credited to the Reserve Fund for such Bonds on the third Business Day preceding the date such letter of credit (taking into account any extension, renewal or replacement thereof) would otherwise expire, and shall deposit moneys realized pursuant to such draw in the Reserve Fund. (iii) Release of Moneys in Reserve Fund. If the Authority causes a cash-funded Reserve Fund to be replaced with a Reserve Facility meeting the requirements of either (i) or (ii) above, amounts on deposit in the Reserve Fund shall, upon Written Request of the Authority to the Trustee, be transferred, subject to the receipt by the Authority of an Opinion of Counsel that such transfer will not cause the interest on the Bonds to be included in gross income for purposes of federal income taxation, to the County and applied for any lawful purpose. SECTION 5.04. Application of Insurance Proceeds, In the event of any damage to or destruction of any part of the Facilities covered by insurance, the Authority, with the consent or at the direction of the Bond Insurers, shall cause the proceeds of such insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion of the Facilities, and the Trustee shall hold said proceeds in a fund established by the Trustee for such purpose separate and apart from all other funds designated the "Insurance and Condemnation Fund", to the end that such proceeds shall be applied to the repair, reconstruction or replacement of the Facilities to at least the same good order, repair and condition as it was in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The County shall file a Certificate of the County with the Trustee that sufficient funds from insurance proceeds or from any funds legally available to the County, or from any combination thereof, are available in the event it elects to repair, reconstruct or replace the Facilities. Unless such requirement is waived in writing by the Bond Insurers the Trustee shall invest said proceeds in Permitted Investments pursuant to the Written Request of the County, as agent for the Authority under the Facilities Lease, and withdrawals of said proceeds shall be made from time to time upon the filing with the Trustee of a Written Request of the County, stating that the County has expended moneys or incurred liabilities in an amount equal to the amount therein stated for the purpose of the repair, reconstruction or replacement of the Facilities, and specifying the items for which such moneys were expended, or such liabilities were incurred, in reasonable detail. Any balance of such proceeds not required for such repair, reconstruction or replacement and the proceeds of use and occupancy insurance shall be paid to the Trustee as Base Rental Payments and applied in the manner provided by Section 5.01. Alternatively, the County, with the consent or at the direction of the Bond Insurers, if the proceeds of such insurance together with any other moneys then available for such purpose are sufficient to prepay all, in case of damage or destruction in whole of the Facilities, or that portion, in the case of partial damage or destruction of the Facilities, of the Base Rental Payments and all other amounts relating to the damaged or destroyed portion of the Facilities, may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon shall cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the applicable provisions of Section 4.01 The County shall not apply the proceeds of insurance as DICYC'SS F 1:2497233 40511-108 31 I - -.................... .......................... .......... .............- (d) The Authority and the Trustee (as directed by the Authority) specifically covenant to comply with the provisions and procedures of the Tax Certificate; provided that the Trustee shall not be bound by this covenant if an Event of Default has occurred and is continuing. (e) The Authority shall not use or permit the use of any proceeds of the Bonds or any funds of the Authority, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code, (f) Notwithstanding any provisions of this Section 6.03, if the Authority shall provide to the Trustee an Opinion of Counsel that any specified action required under this Section 6.03 or the Tax Certificate is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee and the Authority may conclusively rely on such opinion in complying with the requirements of this Section, and, notwithstanding Article IX hereof, the covenants hereunder shall be deemed to be modified to that extent. (g) The foregoing provisions of this Section 6.03 shall not be applicable to any Series of Bonds or the proceeds thereof that the Authority determines upon the issuance thereof are to be taxable bonds, the interest on which is intended to be included in the gross income of the Owner thereof for federal income tax purposes. (h) The County has represented that the reasonably anticipated amount of qualified tax-exempt obligations which has been and will be issued by the Authority, the County, or any related party of the County, in 1996 does not exceed $10,000,000, and the Authority hereby designates the 1998 Series A Bonds to be qualified tax-exempt obligations pursuant to Section 265(b)(3)(B) of the Code. SECTION 6.04. Accounting Records and Reports. The Trustee will keep or cause to be kept proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocation and application of the Revenues, and such books shall be available for inspection by the Authority at reasonable hours and under reasonable conditions, The Trustee shall provide to the Authority monthly statements covering the funds and accounts held pursuant to the Trust Agreement. Not more than one hundred eighty (180) days after the close of each Fiscal Year, the Trustee shall furnish or cause to be furnished to the Authority a complete financial statement covering receipts, disbursements, allocation and application of Revenues for such Fiscal Year. The Authority shall keep or cause to be kept such information as is required under the Tax Certificate. SECTION 6.05. Prosecution and Defense of Suits. The Authority will defend against every suit, action or proceeding at any time brought against the Trustee upon any claim to the extent arising out of the receipt, application or disbursement of any of the Revenues or to the extent involving the failure of the Authority to fulfill its obligations hereunder; provided, that the Trustee or any affected Bondholder at its election may appear in and defend any such suit, action or proceeding. The Authority will indemnify and hold harmless the Trustee against any and all liability claimed or asserted by any person to the extent arising out of such failure by the DOCSSF1:2497233 40511-108 34 Authority, and will indemnify and hold harmless the Trustee against any reasonable attorney's fees or other reasonable expenses which it may incur in connection with any litigation to which it may become a party by reason of its actions hereunder, except for any loss, cost, damage or expense resulting from the negligence or willful misconduct by the Trustee. Notwithstanding any contrary provision hereof, this covenant shall remain in full force and effect even though all Bonds secured hereby may have been fully paid and satisfied_ SECTION 6.06. Further Assurances. 'Whenever and so often as reasonably requested to do so by the Trustee or any Bondholder, the Authority will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Bondholders all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby. SECTION 6.07. Maintenance of Revenues. The Authority will promptly collect all rents and charges due for the occupancy or use of the Facilities as the same become due, and will promptly and vigorously enforce its rights against any tenant or other person who does not pay such rents or charges as they become due. The Authority will at all times maintain and vigorously enforce all of its rights under the Facilities Lease. SECTION 6.08. Amendments to Facilities Lease. The Authority shall not supplement, amend, modify or terminate any of the terms of the Facilities Lease, or consent to any such supplement, amendment, modification or termination, without the prior written consent of the Trustee and each Bond Insurer. The Trustee shall give such written consent if such supplement, amendment, modification or termination (a) will not materially adversely affect the interests of the Bondholders or result in any material impairment of the security hereby given for the payment of the Bonds (provided that such supplement, amendment or modification shall not be deemed to have such adverse effect or to cause such material impairment solely by reason of providing for the payment of Additional Bonds as required by Section 3.03(e) or substitution of real property pursuant to Section 2.03 of the Facilities Lease), (b) is to add to the agreements, conditions, covenants and terms required to be observed or performed thereunder by any party thereto, or to surrender any right or power therein reserved to the Authority or the County, (c) is to cure, correct or supplement any ambiguous or defective provision contained therein, (d) is to accommodate any substitution in accordance with Section 2.03 under the Facilities Lease, (e) is to -modify the legal description of the Facilities to conform to the requirements of title insurance or otherwise to add or delete property descriptions to reflect accurately the ';description of the parcels intended or preferred to be included therein, or substituted for the Facilities pursuant to the provision of Section 2.04 of the Facilities Lease, or (f) if the Trustee first obtains the written consent of the Bondholders of a majority in principal amount of the Bonds then Outstanding to such supplement, amendment, modification or termination; provided, that no such supplement, amendment, modification or termination shall reduce the amount of Base Rental Payments to be made to the Authority or the Trustee by the County pursuant to the Facilities Lease, or extend the time for malting such payments, or permit the creation of any lien prior to or on a parity with the lien created by this Trust Agreement on the Base Rental Payments (except as expressly provided in the Facilities Lease), in each case without the written consent of all of the Bondholders of the Bonds then Outstanding. nocssl I1 249123.3 40511-108 35 Any supplement, amendment or modification entered into pursuant to clause (a) of the immediately preceding paragraph shall not, for purposes of this Section 6.08, be deemed to materially adversely affect the interest of the.Bondholders or result in any material impairment of the security given for the payment of the Bonds so long as (i) all Bonds are insured by a Bond Insurance Policy, (ii) each Bond Insurer shall have given its written consent to such supplement, amendment or modification, and (iii) each Bond Insurer shall at the time of such consent be rated in the highest Rating Category by S&P and Moody's. SECTION 6.09. Leasehold Estate. The Authority will be on the date of the delivery of the Bonds the owner and lawfully possessed of the leasehold estate described in the Facilities Lease, and the Facilities Lease will be on the date of delivery of the Bonds a valid subsisting demise for the term therein set forth of the property which it purports to demise. At the time of the delivery of the Bonds the Authority will be the owner in fee simple of the premises described therein, and the Facilities Lease will be lawfully made by the County, and the covenants contained in the Facilities Lease on the part of the County will be valid and binding. At the time of the delivery of the Bonds, the Authority will have good right, full power and lawful authority to lease said leasehold estate, in the manner and form provided in the Facilities Lease, and the Facilities Lease will be duly and regularly executed. Without allowance for any days of grace which may or might exist or be allowed by law or granted pursuant to any terms or conditions of the Facilities Lease, the Authority will in all respects promptly and faithfully keep, perform and comply with all the terms, provisions, covenants, conditions and agreements of the Facilities Lease to be kept, performed and complied with by it. The Authority will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for declaring a forfeiture of the Facilities Lease, or would or might be a ground for cancellation or termination of the Facilities Lease by the lessee thereunder. The Authority will promptly deposit with the Trustee (to be held by the Trustee until the title and rights of the Trustee under this Trust Agreement shall be released or reconvened) any and all documentary evidence received by it showing compliance with the provisions of the Facilities Lease to be performed by the Authority. The Authority, immediately upon its receiving or giving any notice, communication or other document in any way relating to or affecting the Facilities Lease, or the leasehold estate thereby created, which may or can in any manner affect the estate of the lessor or of the Authority in or under the Facilities Lease, will deliver the same, or a copy thereof, to the Trustee. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 7.01. Events of Default and Acceleration of Maturates. If one or more of the following events(herein called "events of default") shall happen, that is to say: (a) if default shall be made by the Authority in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; DOCSSFI:249723.3 40511-108 36 (b) if default shall be trade by the Authority in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed or by proceedings for redemption, (c) if default shall be made by the Authority in the performance of any of the other agreements or covenants required herein to be performed by the Authority, and such default shall have continued for a period of sixty (60) days or such additional time (with respect to agreements or covenants that cannot be corrected or performed within such sixty (60) day period but the correction of which is being diligently pursued by the Authority) as is reasonably required to correct any such default after the Authority shall have been given',notice in writing of such default by the Trustee or by the applicable Bond Insurer, (d) if the Authority shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shallapprove a petition filed with or without the consent of the Authority seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States'of America or any state therein, 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 Authority or of the whole or any substantial part of its property, or (e) if an Event of Default has occurred under Section 6.01 of the Facilities Lease, then and in each and every such case during the continuance of such event of default the Trustee may, with the consent of each Bond Insurer and upon the written request of the Bondholders of not less than a majority in aggregate principal amount of the Bonds then Outstanding and with the prior written consent of each Bond Insurer, shall, by notice in writing to the Authority, declare the principal of all Bonds then Outstanding and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become due and payable, anything contained herein or in the Bonds to the contrary notwithstanding. The Trustee shall promptly notify all Bondholders by first class mail of any such event of default which is continuing of which a Responsible Officer has actual knowledge or written notice. This provision, however, is subject to the condition that if at any time after the principal of the Bonds then Outstanding shall have been so declared due and payable and before any judgment or decree for the payment of the money due shall have been obtained or entered the Authority shall deposit with the Trustee a sum sufficient to pay all matured interest on all the Bonds and all principal of the Bonds matured prior to such declaration, with 'interest at the rate borne by such Bonds on such overdue interest and principal, and the reasonable fees and expenses of the Trustee and each Bond Insurer, and any and all other defaults known to the Trustee (other than in the payment of interest on and principal of the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee and each Bond Insurer or provision deemed by the Trustee and by each Bond Insurer to be adequate shall have been made therefor, then and in every such case the Trustee or the Bondholders of not less than a majority in aggregate principal amount of Bonds then Outstanding, by written notice to the Authority and to the Trustee with the written consent or at the direction of each Bond Insurer, may on behalf of the Bondholders of all the Bonds then DOCSSF I:249723.3 4051I-�oR 37 Outstanding rescind and annul such declaration and its consequences; but no such rescission and annulment shall extendto or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. No acceleration of the Bonds (or annulment thereof) may be made without obtaining the prior written consent of each Bond Insurer. In the event the maturity of the Bonds is accelerated, each Bond Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued or accreted, as applicable, on such principal to the date of acceleration (to the extent unpaid by the Authority) and the Trustee shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, such respective Bond Insurer's obligations under the corresponding Bond Insurance Policy shall be fully discharged. SECTION 7.02. An 1p ication of Funds Upon Acceleration. All moneys in the accounts and funds provided in Sections 3.01, 3.02, 5.42, 5.03 and 5.05 upon the date of the declaration of acceleration by the Trustee as provided in Section 7.01 and all Revenues (other than Revenues on deposit in the Rebate Fund) thereafter received by the Authority hereunder shall be transmitted to the Trustee and shall be applied by the Trustee in the following order-- First, to the payment of the reasonable fees, costs and expenses of the Trustee in providing for the declaration of such event of default and carrying out its duties under this Agreement, including reasonable compensation to their accountants and counsel together with interest on any amounts advanced as provided herein and thereafter to the payment of the reasonable costs and expenses of the Bondholders, if any, in carrying out the provisions of this Article, including reasonable compensation to their accountants and counsel; Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with (to the extent permitted by law) interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and (to the extent permitted by law) interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal; and Third, to the payment of all amounts payable to each Bond Insurer. SECTION 7.43. Institution of Legal Proceedings by Trustee.', If one or more of the events of default shall happen and be continuing, the Trustee may, and upon the written request of the Bondholders of a majority in principal amount of the Bonds then Outstanding, and in each case upon being indemnified to its reasonable satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Bondholders of Bonds under this Trust Agreement and under Article VI of the Facilities Lease by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall, with the consent or at DOC SSF1:249723,3 4{)511-tffs 38 the direction of each Band Insurer, deem most effectual in support of any of its rights and duties hereunder. SECTION 7.04. Non-Waiver. Nothing in this Article or in any other provision hereof or in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Bondholders of the Bonds at the respective dates of maturity or upon prior redemption as provided herein from the Revenues as provided herein pledged for such payment, or shall affect or impair the right of such Bondholders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the Bonds. No waiver of an Event of Default shall be granted without 'obtaining the prior written consent of each Bond Insurer. A waiver of any default or breach of duty or contract by the Trustee or any Bondholder shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or any Bondholder to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty', or contract or an acquiescence therein, and every right or remedy conferred upon the Bondholders by the Act or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bondholders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned, the Authority, the Trustee and any Bondholder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. SECTION 7.05. Actions by Trustee as Attorney in-:pact. Any action, proceeding or suit which any Bondholder shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Bondholders, whether or not the Trustee is a Bondholder, and the "Trustee is hereby appointed (and the successive Bondholders, by taking and holding the Bonds issued hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attorney-in--fact of the Bondholders for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Bondholders as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attorney- in-fact. SECTION 7.06, Remedies Not Exclusive. No remedy herein',conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. SECTION 7.07. Limitation on Bondholders' Right to Sue. No Bondholder of any Bond issued hereunder shall have the right to institute any suit, action or(proceeding at law DOCSSF1149723.3 40511-108 or equity, for any remedy under or upon this Trust Agreement, unless (a) such Bondholder shall have obtained the prior written consent of the applicable Bond Insurer and shall have previously given to the Trustee written notice of the occurrence of an event of default as defined in Section °7.01; (b) the Bondholders of at least a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name and the Bond Insurer, if any, shall have consented to such request; (c) said Bondholders shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Bondholder of Bonds of any remedy hereunder; it being understood and intended that no one or more Bondholders of Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Trust Agreement shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Bondholders of the Outstanding Bonds. ARTICLE VIII THE TRUSTEE SECTION 8.01, The Trustee, BNY Western Trust Company shall serve as the initial Trustee for the Bonds for the purpose of receiving all money which the Authority is required to deposit with the Trustee hereunder and for the purpose of allocating, applying and using such money as provided herein and for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds presented for payment, with the rights and obligations provided herein. The Authority agrees that it will at all times maintain a Trustee having a principal office in California. The Authority, unless there exists any Event of Default as defined in Section 7.01, may at any time and, at the request of a Bond Insurer for any breach of the trusts set forth herein, shall remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a bank, banking institution, or trust company, having (or whose parent holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by federal or state authority and acceptable to the Bond Insurer. If such bank, banking institution, or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capital and surplus of such bank, banking institution, or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and the Bond Insurer, and by mailing by first class mail to the Bondholders notice of such nocssrl:249723.3 40511-108 40 resignation. Upon receiving such notice of resignation, the Authority shall',promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. The successor Trustee shall send notice of its acceptance by first class mail to the Bondholders. If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a. successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. Each Bond Insurer shall have the right to remove the Trustee without cause following any Event of Default or any draw on the Reserve Fund. The Trustee is hereby authorized to pay or redeem the Bonds when duly presented for payment at maturity or on redemption prior to maturity. The Trustee shall cancel all Bonds upon payment thereof or upon the surrender thereof by the Authority and shall destroy such Bonds and a certificate of destruction shall be delivered to the Authority upon its request. The Trustee shall keep accurate records of all Bonds paid and discharged and cancelled by it. The Trustee shall, prior to an event of default, and after the curing of all events of default that may have occurred, perform such duties and only such duties as are specifically set forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust Agreement. The Trustee shall, during the existence of any event of default',(that has not been cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. SECTION 8.02. Liability of Trustee. The recitals of facts, agreements and covenants herein and in the Bonds shall be taken as recitals of facts, agreements and covenants of the Authority, and the Trustee assumes no responsibility for the correctness of the same or makes any representation as to the sufficiency or validity hereof or of the Bonds, or shall incur any responsibility in respect thereof other than in connection with the rights or obligations assigned to or imposed upon it herein, in the Bonds or in law or equity. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Trustee shall not be bound to recognize any person as the Bondholder of a Bond unless and until such Bond is submitted for inspection, if required, and such Bondholder's title thereto satisfactorily established, if disputed. The Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of any Bond Insurer and the Bondholders of not less than a majority (or any lesser amount that may direct the Trustee in accordance with this Agreement) in aggregate principal amount of the Bonds at the time D)C:S F 1:249?23.3 40511-108 41 Outstanding, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Trust Agreement. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request, order or direction of any of the Bondholders pursuant to the provisions of this Trust Agreement unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the reasonable costs, expenses and liabilities that may be incurred therein or thereby. The Trustee has no obligation', or liability to the Bondholders for the payment of the interest on, principal of or redemption premium, if any, with respect to the Bonds from its own funds; but rather the Trustee's obligations shall be limited to the performance of its duties hereunder. The Trustee shall not be deemed to have knowledge of any event of default (except payment defaults) unless and until a Responsible Officer shall have actual knowledge thereof or a Responsible Officer of the Trustee shall have received written notice thereof at its Principal Office, including, but not limited to, written notice from the Bond Insurer, if any. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Bonds, or as to the existence of a default or event of default thereunder, The Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it. The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, but shall be answerable for the negligence or misconduct of any such attorney-in-fact; agent or receiver. The Trustee shall be entitled to advice of counsel and other professionals concerning all matters of trust and its duty hereunder, but the Trustee shall not be answerable for the professional malpractice of any attorney-in-law or certified public accountant in connection with the rendering of his professional advice in accordance with the terms of this Trust Agreement, if such attorney-in-law or certified public accountant was selected by the Trustee,with due care. The Trustee shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof Whether or not therein expressly so provided, every provision of this Trust Agreement, the Facilities Lease or related documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article. The Trustee makes no representation or warranty, express or 'implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose for the use contemplated by the Authority or County of the Facilities or the Project. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Facilities Lease or this Trust Agreement for the existence, furnishing or use of the Facilities or the Project. DOCSSF1:249723.3 40511-148 42 The Trustee shall be protected in acting upon any notice, resolution, requisition, request (including any Written Request of the Authority or the County), consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Before the Trustee acts or refrains from acting, the Trustee may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a Certificate of the Authority, which certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem reasonable. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. In determining whether the rights of the Bondholders will be adversely affected by any action taken pursuant to the terms and provisions of this Trust Agreement, the Trustee shall consider the effect on the Bondholders as if there were no Bond Insurance Policy, unless the Bond Insurer consents to such action. SECTION 8.03. Compensation and Indemnification of Trustee. The Authority covenants to pay(but solely from Additional Payments)to the Trustee from time to time, and the Trustee shall be entitled to, compensation upon the terms set forth in Exhibit B hereto for all services rendered by it in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Authority will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee, in accordance with any of the provisions of this Trust Agreement (including the reasonable compensation and the reasonable expenses and disbursements of their counsel (including the allocated reasonable fees and disbursements of in-house counsel) and of all persons not regularly in their employ) except any such expense, disbursement or advance as may arise from their negligence or willful misconduct. The Authority, to the extent permitted by law, shall indemnify, defend and hold harmless the Trustee against any loss, damage, liability or expense incurred without negligence or willful misconduct on the part of the Trustee arising out of or in connection with the acceptance or administration of the trusts created 'hereby, including reasonable costs and expenses (including reasonable attorneys' fees and disbursements) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the Authority under this Section 8.03 shall survive the discharge of the Bonds and this Trust Agreement and the resignation or removal of the Trustee. DOCSS171:249723.3 40511-108 43 SECTION 8.04. Compliance with Continuing Disclosure A&reement. Pursuant to Section 8.08 of the Facilities Lease, the County has undertaken all responsibility for compliance with continuing disclosure requirements, and the Authority shallhave no liability to the Owners of the Bonds or any other person with respect to S.E,C. Rule 15c2-12. The County has agreed that so long as it shall act as the Dissemination Agent under the Continuing Disclosure Agreement, it will perform all of the provisions thereof to be performed by the Dissemination Agent. Notwithstanding any other provision of this Trust Agreement, failure of the County to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations under Section 8.08 of the Facilities Lease or under this Section 8.04. For purposes of this Section, "Beneficial Owner means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries)." ARTICLE IX AMENDMENT OF THE TRUST AGREEMENT SECTION 9.01. Amendment of the Trust Agreement. (a) This Trust Agreement and the rights and obligations of the Authority and of the Bondholders may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Bond Insurers and the Bondholders of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.02, are filed with the Trustee; provided that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any particular maturity or Series remain Outstanding, the consent of the Owners of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Bonds Outstanding under this Section. No such amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on any Bond without the express written consent of the applicable Bond Insurer and the Bondholder of such Bond, or(2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or on a parity with the pledge, charge and lien created hereby for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify any rights or obligations of the Trustee, the Authority, or the County without their prior written assent thereto, respectively. It shall not be necessary for the consent of the Bondholders to approve the particular form of any Supplemental Trust Agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental Trust Agreement pursuant to this subsection (a) the Trustee shall mail a notice on behalf of the Authority, setting forth in general terms the substance of such Supplemental Trust Agreement to the Bondholders at the addresses shown on the registration books maintained by the Trustee. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Trust Agreement. DOCSSPl:249723.3 40511-108 44 (b) The Trust Agreement and the rights and obligations of the Authority and of the Bondholders may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption, with the consent of each Bond Insurer, but without the consent of any Bondholders, for any purpose that will not materially adversely affect the interests of the Bondholders, including (without limitation) for any one or more of the following purposes — (i) to add to the agreements and covenants required herein to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority, or to surrender any right or power reserved herein to or conferred herein on the Authority; (ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained',herein or in regard to questions arising hereunder which the Authority may deem desirable or necessary; (iii) to provide for the issuance of any Additional Bonds and to provide the terms of such Additional Bonds, subject to the conditions and upon compliance with the procedure set forth in Article III (which shall be deemed not to adversely affect Bondholders); (iv) to add to the agreements and covenants required herein, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939, or (v) to add any provisions required by the provider of a surety bond, insurance policy or letter of credit under Section 5.03(d). Any Supplemental Trust Agreement entered into pursuant to this paragraph shall not, for purposes of this paragraph, materially adversely affect the interest of the Bondholders so long as (w) all Bonds are insured by a Bond Insurance Policy, (x) each Bond Insurer shall have given its written consent to such Supplemental Trust Agreement, and (y) each Bond Insurer shall at the time of such consent be rated in the highest Rating Category by S&P and Moody's. SECTION 9.02. Disqualified Bonds. Bonds owned or held by or for the account of the Authority shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article. SECTION 9.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Bonds may bear a notation by endorsement in form approved by the Authority as to such action, and in that case upon demand of the Bondholder of any Outstanding Bonds and presentation of his Bond for such purpose at the office of the Trustee a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Bondholder of any Outstanding rX)CSSF#:249723.3 40511-108 45 Bond a new Bond or Bands shall be exchanged at the office of the Trustee without cost to each Bondholder for its Bond or Bonds then Outstanding upon surrender of such Outstanding Bonds. SECTION 9.04. Amendment by Mutual Consent. The provisions of this Article shall not prevent any Bondholder, with the consent of the applicable Bond Insurer from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. ARTICLE X DEFEASANCE SECTION 10.01. Discharge of Bonds. (a) If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Bondholders of all Outstanding Bonds the interest thereon and principal thereof and redemption premiums, if any, thereon at the times and in the manner stipulated herein and therein, and the Authority shall pay in full all other amounts due hereunder and under the Facilities Lease, then the Bondholders of such Bonds shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided herein, and all agreements, covenants and other obligations of the Authority to the Bondholders of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the "Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds and for the payment of all other amounts due hereunder and under the Facilities Lease. (b) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this Section if(1) in case any of such Bonds are to be redeemed on any date prior to their maturity slate,the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with Section 4.05, (2) there shall have been deposited with the Trustee (A) money in an amount which shall be sufficient and/or (B) noncallable Government Securities, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an Independent Certified public Accountant, to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Bondholders of such Bonds that the deposit required by clause(2) above has been matte with the Trustee and that such Bonds are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bands. DOCSSFI.249723.3 40511-108 46 (c) In the event of an advance refunding (i) the Authority shall cause to be delivered, on the deposit date and upon any reinvestment of the defeasanceamount, a report of an independent firm of nationally recognized certified public accountants ("Accountants") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity date or redemption date ("Verification"), (ii) the escrow agreement shall provide that no (A) substitution of a defeasance obligation shall be permitted except with another defeasance obligation and upon delivery of a new Verification and (B) reinvestment of a defeasance obligation shall be permitted except as contemplated by the original Verification or upon delivery of a new Verification, and (iii) there shall be delivered an Opinion of Bond Counsel to the effect that the Bonds are no longer "Outstanding" under the Trust. Agreement; each. Verification and defeasance opinion shall be addressed to the Authority, each applicable Bond Insurer and the Trustee. In the event a forward purchase agreement is to be used in connection with such escrow such agreement shall be subject to the approval of each Bond Insurer. (d) Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Bonds shall be paid by a Bond Insurer pursuant to its Bund Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Authority, and the assignment;and pledge of the Revenues and all covenants, agreements and other obligations of the Authority to the Owners shall continue to exist and shall run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such Owners. SECTION 10.02, Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or interest thereon which remains unclaimed for two (2)years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds have become due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee and the applicable Bond Insurers shall thereupon be released and discharged with respect thereto and the Bondholders shall not look to the Trustee or the applicable Bond Insurer for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee may, and at the request of the Authority shall, at the expense of the Authority, cause to be published once a week for two (2) successive weeks in a Financial Newspaper of general circulation in Los Angeles and in San Francisco, California, and in the same or a similar Financial Newspaper of general circulation in New York, New York, a notice that, such money remains unclaimed and that, after a date named in such notice, which date shall not be less than thirty (30) days after the date of the first publication of each such notice, the balance of such money then unclaimed will be returned to the Authority. ARTICLE XI MUNICIPAL BOND INSURANCE [to be revised as appropriate] DOCSSFI:249723.3 40511-108 47 SECTION 11.0 1. Concerning the 1998 Series A Bond Insurer. Notwithstanding any other provision hereof, so long as the Bond Insurance Policy shall be in full force and effect, the Authority and the Trustee hereby agree to comply with the following provisions: (a) The 1998 Series A Bond Insurer shall be deemed to be the sole Owner of the 1998 Series A Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the 1998 Series A Bonds are entitled to take pursuant to Article VII and Article VIII hereof. The 1998 Series A Bond Insurer shall have the exclusive right to initiate or direct proceedings upon an Event of Default and shall be entitled to request the Trustee to intervene in judicial proceedings that affect the 1998 Series A Bonds or the security therefor; provided that the Trustee shall have the right in its sole discretion to commence an action to enforce the payment of its fees and expenses hereunder. Bondholder's direction or institution of remedies upon an Event of Default shall be subject to the prior written consent of the 1998 Series A Bond Insurer. (b) Copies of any modification or amendment to the Trust Agreement, the Facilities Lease or the Facilities Lease, shall be sent by the Authority to S&P and Moody's at least ten (10) days prior to the effective date thereof (c) The 1998 Series A. Bond Insurer shall, to the extent it makes any payment of principal of or interest on the 1998 Series A Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy. (d) The 1998 Series A Bond Insurer shall have the right to advance any payment required to be made by the County or the Authority in order to prevent an Event of Default under the Trust Agreement and the Trustee shall be required to accept such advance. The Authority shall be required to reimburse the 1998 Series A Bond Insurer for any such advance, (e) The rights granted under the Trust Agreement and the Facilities Lease to the 1998 Series A Bond Insurer to request, consent to or direct any action are rights granted to the 1998 Series A Bond Insurer in consideration of its issuance of the Bond Insurance Policy. Any exercise by the 1998 Series A Bond Insurer of such rights is merely an exercise of the 1998 Series A Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the 1998 Series A Bondowners, nor does such action evidence any position of the 1998 Series A Bond Insurer, positive or negative, as to whether 1998 Series A Bondowners' consent is required in addition to consent of the 1998 Series A Bond Insurer. (f) Amounts paid by the 1998 Series A Bond Insurer under the Bond Insurance Policy shall not be deemed paid for purposes of the Trust Agreement and the 1998 Series A Bonds relating to such amounts shall remain Outstanding and continue to be due and owing until paid in accordance with the Trust Agreement. The Trust Agreement shall not be discharged unless all amounts due or to become due to the 1998 Series A Bond Insurer have been paid in full. (g) The 1998 Series A Bond Insurer shall be provided by the Authority or the Trustee(with respect to items (i) to (iv) only) with the following information: DOCSSFI:2497233 49 .................... ...........- ..........1.,.......,.,.,:.:.:.:.:.:.:...... (i) Notice of any draw upon, or deficiency due to market fluctuation in the amount on deposit in, the Reserve Fund within two Business Days after knowledge thereof other than(i) withdrawals of amounts in excess of the Reserve Fund Requirement and(ii) withdrawals in connection with a refunding of 1998 Series A Bonds; (ii) Notice of any failure of the Authority to make any required deposit into the Revenue Fund within two Business Days of knowledge thereof, notice of any other Event of Default known to the Trustee within five Business Days after knowledge thereof, (iii) Prior notice of the advance refunding or redemption of any of the 1998 Series A Bonds, including the principal amount, maturities and CUSIP numbers thereof, (iv) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto', (v) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Trust Agreement; (vi) All reports, notices and correspondence to be delivered under the terms of the Trust Agreement; and (vii) Such additional information as the 1998 Series A Bond Insurer from time to time may reasonably request. (h) The 1998 Series A Bond Insurer shall have the right to give notice of an Event of Default. SECTION 11.02. Pavinents Under the Bond Insurance Policy. Notwithstanding any other provision hereof, so long as the Bond Insurance Policy shall be in full force and effect, the Authority and the Trustee hereby agree to comply with the following provisions: (a) If, on the third Business Day prior to the related scheduled interest payment date or principal payment date or the date to which Bond maturity has been accelerated ("Payment Date")there is not on deposit with the Trustee, after making all transfers and deposits required under the Trust Agreement, moneys sufficient to pay the principal of and interest on the 1998 Series A Bonds due on such Payment Date, the Trustee shall give notice to the 1998 Series A Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York County time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the 1.998 Series A Bonds due on such Payment Date, the Trustee shall make a claim under the Bond Insurance Policy and give notice to the 1998 Series A Bond Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount,of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the 1998 Series A Bonds and the amount required to pay principal of the 1998 Series A Bonds, confirmed in writing to the 1998 Series A Bond Insurer and the Bond Insurer's Fiscal Agent by 12:00 noon, New York County time, on such second DOCSSFI;2497233 40511-108 49 RESOLUTION NO. 98/ 169 OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA CALIFORNIA A RESOLUTION APPROVING THE ISSUANCE BY THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY OF NOT TO EXCEED$29,000,000 AGGREGATE PRINCIPAL AMOUNT OF LEASE REVENUE BONDS(VARIOUS CAPITAL FACILITIES), 1998 REFUNDING SERIES A FOR THE REFUNDING AND DEFEASANCE OF THE COUNTY'S CERTIFICATES OF PARTICIPATION (VARIOUS CAPITAL PROJECTS),SERIES 1994,AUTHORIZING THE FORMS OF AND DIRECTING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, A FACILITY LEASE VARIOUS CAPITAL FACILITIES),A LETTER OF INSTRUCTIONS AND A CONTINUING DISCLOSURE AGREEMENT;APPROVING FORM.OF AND DISTRIBUTION OF THE OFFICIAL STATEMENT,OFFICIAL NOTICE OF SALE AND NOTICE OF INTENTION TO.SELL FOR.SAID BONDS; ELECTING TO GUARANTEE THE LEASE PAYMENTS WITH MOTOR VEHICLE LICENSE FEES;AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OF NECESSARY CERTIFICATES IN CONNECTION THEREWITH WHEREAS,the County of Contra Costa(the"County")and the Contra Costa County Redevelopment Agency(the"Agency")have heretofore entered into a Joint Exercise of Powers Agreement,dated as of April 7, 1992(the"Joint Powers Agreement"),which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority(the "Authority"); WHEREAS,pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California(the"Marks-Roos Local Bond Pooling Act of 1985") and the Joint Powers Agreement,the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; WHEREAS,pursuant to a Trust Agreement dated as of August 1,11994 (the"1994 Trust Agreement"),among the Meridian Trust Company of California,the Contra Costa County Public Facilities Corporation(the"Corporation")and the County,the County has heretofore caused to be executed and delivered its Certificates of Participation(Various Capital Facilities),Series of 1994(the"1994 Certificates"),in the aggregate principal amount of$23,090,000,for the acquisition and improvement of various County facilities(the"1994 Project ); WHEREAS,pursuant to a Facility Lease(Various Capital Facilities),dated as of August 1, 1994by and between the Corporation and the County(the"1994 Facility Lease"),the Corporation has leased the 1994 Project to the County; WHEREAS,under the 1994 Facility Lease,the County is obligated to make base rental payments to the Corporation, DC)CSSFI 250102.2 40511-148 WHEREAS,the County was advised that in a favorable interest rate market, it was possible for the County to reduce the interest rates on its debt by the issuance of refunding bands, thereby reducing the rent payable by the County under the 1994 Facility Lease for the lease of the 1994 Project or generate funds for other capital projects,resulting in significant public benefits; WHEREAS,this Board of Supervisors has heretofore determined that it would be in the best interest of the County to proceed with a lease revenue financing for the refunding of the outstanding 1994 Certificates and the financing of additional capital projects; ATHEREAS,it is proposed that the County enter into a"Facility Lease(Various Capital Facilities)„(the"Facility Lease")with the Authority,which amends and restates the 1994 Facility Lease, WHEREAS, under the Facility Lease,the County would be obligated to make rental payments to the Authority; WHEREAS, it is further proposed that the Authority and BNY"Western Trust Company, as trustee(the"Trustee"), enter into a trust agreement(the"Trust Agreement") acknowledged by the County,pursuant to which the Authority will issue not to exceed $29,000,000 aggregate principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A(the"Bonds"), and will use the proceeds to defense the 1994 Certificates; WHEREAS, a form of Official Statement describing the Bonds and a form of Official Notice of Sale inviting bids to purchase the Bonds will be distributed to potential purchasers of the Bonds and a form of Notice of Intention to Sell the Bonds has been published in THE BOND BUYER; WHEREAS, a form of Continuing Disclosure Agreement and a forin of Letter of Instructions are on file with the Clerk of the Board of Supervisors; WHEREAS,this Board has been presented with the form of each document hereinafter referred to relating to the Bonds,and the Board has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; WHEREAS,the County has full legal right,power and authority,under the Constitution and the laws of the State of California to enter into the transactions hereinafter authorized; and NOW,THEREFORE,BE IT RESOLVED by the Board of Supervisors of the County of Contra Costa,as follows: Seclion. 1. The County hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the Countyand that the statements, findings and determinations of the County set forth above are true and correct. IX7cssr 1:250102.2 2 40511-108 ,Seeclign 2. The Board of Supervisors hereby approves the issuance of the Bonds by the Authority,in an aggregate principal amount of not to exceed$29,000,000 for the refunding and defeasance of the 1994 Certificates. g t;ion 3. The form of Facility Lease,on file with the Clerk of the Board of Supervisors, is hereby approved, and the Chairman of the Board of Supervisors and the Clerk of the Board of Supervisors or their designees are hereby authorized and directed to execute and deliver the Facility Lease in substantially said form,with such changes therein as such officers may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof;provided, however,that the aggregate principal component of base rental payments payable under the Facility Lease shall not exceed$29,000,000,the maximum annual base rental payments payable under the Facility Lease shall not exceed$2,000,000,the term of the Facility Lease(including any extensions)shall not exceed August 1,2038 and the true interest cost("TIC")of the interest component of base rental payments payableunder the Facility Lease shall not exceed eight percent(8%). Among the changes authorized to be made to such Facility Lease are such changes as are necessary in the event the County Administrator or his designee, upon consultation with the Financial Advisor,determines it is desirable to obtain municipal bond insurance. eetion 4. The Board hereby elects,pursuant to government Code Section 25350.55, to guarantee lease payments to be made by the County under the Facility Lease and authorizes and directs the County Administrator of the County or his designee to notify the Controller of the State of California of such election,which notice shall include a schedule of lease payments to be made by the County under the Facility Lease and shall identify a trustee appointed by the County to effectuate the payment provisions pursuant to such guarantee. For purposes of effectuating the payment provisions pursuant to government Code Section 25350.55, the Board hereby appoints the Trustee for the Bonds as trustee. „S ce t on 5. The form of Trust Agreement by and between the Trustee and the Authority and acknowledged by the County,on file with the Clerk of the Board of Supervisors, is hereby approved. The Chairman of the Board of Supervisors and the Clerk of the Board of Supervisors or their designees are hereby authorized and directed to execute and deliver the Trust Agreement in substantially said farm,with such changes therein as such officers may require or approve,such approval to be conclusively evidenced by the execution and delivery thereof: Among the changes authorized to be made to such Trust Agreement are such changes as are necessary in the event the County Administrator or his designee,upon consultation with the Financial Advisor,determines it is desirable to obtain municipal bond insurance for the Bonds. ",tion 6. The form of Official Statement describing the Bonds,on file with the Clerk of the Board of Supervisors, is hereby approved and the County Administrator or his designee is hereby authorized and directed to execute and deliver a final Official Statement is substantially said form with such additions,corrections and revision as may be determined to be necessary or desirable by the Financial Advisor,Bond Counsel or the County Counsel's Office. The Financial Advisor is hereby authorized and directed to cause to be supplied to prospective purchasers of the Bonds copies of a preliminary official statement in such form, and to supply the purchaser of the Bonds with copies of a final official statement,completed to include, among other things the interest rate or rates, and final sale information. The County Administrator or DOCssF 1:250102.2 3 40511-148 his designee is hereby authorized and directed to execute a certificate confirming that the Preliminary Official Statement has been"deemed final"by the County for purposes of Securities and Exchange Commission Rule I5c2-12. Section.7. The form of proposed Official Notice of Sale inviting bids for the Bonds on file with the Clerk of the Board of Supervisors is hereby approved and adopted as the Official Notice of Sale inviting bids for the Bonds,with such additions, changes and corrections thereto as the County Administrator or his designee shall rewire or approve, such approval to be conclusively evidenced by the execution thereof. Sgct n 8. The proposed form of Letter of Instructions,by and between the County,the Authority and the Trustee for the 1994 Certificates,on file with the Clerk of the Board of Supervisors, is hereby approved. The Chairman of the Board of Supervisors and the Clerk of the Board of Supervisors or their designees are hereby authorized and directed to execute and deliver the Letter of Instructions in substantially said form,with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. ,Sectio., 9. The proposed form of Continuing Disclosure Agreement, to be dated the date of issuance of the Bonds,by and among the County,the Authority and the Trustee, on file with the Clerk of the Board of Supervisors, is hereby approved. The County Administrator or his designee is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement in substantially said form,with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 10. The officers of the County are hereby authorized and directed,jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give'effect to and comply with the terms and intent of this Resolution. The Chairman of the Board of Supervisors, the Clerk of the Board of Supervisors, the County Administrator,the Director, Capital Facilities and Debt Management of the County and the officers of the County are hereby authorized and directed to execute and deliver any and all certificates and representations, signature certificates, no-litigation certificates, tax and rebate certificates and certificates concerning the contents of the Official Statement distributed in connection with the sale of the Bonds,necessary and desirable to accomplish the transactions set forth above. DtcssF1:250102.2 4 40511-108 Sg_c_tion 11. All actions heretofore taken by the officers and agents of the County with respect to the issuance and sale of the Bonds are hereby approved and confirmed. Section 12. This Resolution shall take effect from and after its date of adoption. PASSED AND ADOPTED this 14th day of April , 1998. Chairm i' of the Boar4f f Supervisors County f Contra Costa, California [Seal] ATTEST: Philip J. Batchelor, Clerk of the Board of Supervisors and County Administrator By IL � , , w� eputy Clerk of the Board of Supervisors of the County of Contra Costa, State of California DOCSSF i:2SO l 02.2 5 aos��.ros CLERK'S CERTIFICATE I, Ann Cervelli ,Deputy Clerk w1rJ)6hkJof the Board of Supervisors of the County of Contra Costa,hereby certify as fellows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Supervisors of said County duly and regularly held at the regular meeting place thereof on the 14th day of April, 1998, of which meeting all of the members of said Board of Supervisors had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following vote: APES- Supervisors Uilkema, Gerber, DeSaulnier and. Rogers NOES: None ABSENT: Supervisor Canciamilla An agenda of said meeting was posted at least 72 hours before said meeting at 651 Pine Street , Martinez,California, a location freely accessible to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office;the foregoing resolution is a full,true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and said resolution has not been amended,modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand and the seal of the County of Contra Costa this 14th day of April, 1998. 7 (Seal] Deputy Clerk of the Board of Supervisors of the County of Contra Crista, State of California DOCssF 1:250102,2 g 40511-108 RESOLUTION NO. 98/170 OF THE BOARD OF DIRECTORS OF THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF NOT TO EXCEED $29,004,000 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL FACILITIES), 1998 REFUNDINGSERIES A; APPROVING FORMS OF AND EXECUTION OF A FACILITY LEASE (VARIOUS CAPITAL FACILITIES), A TRUST AGREEMENT, A LETTER OF INSTRUCTIONS AND A CONTINUING DISCLOSURE AGREEMENT; APPROVING FORMS OF AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT FOR THE SALE OF SAID BONDS, OFFICIAL NOTICE OF SALE AND NOTICE OF INTENTION TO SELL SAID BONDS; DELEGATING TO EXECUTIVE DIRECTOR OF THE AUTHORITY OR HIS DESIGNEE AUTHORIZATION TO AWARD BID FOR SAID BONDS, AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OF NECESSARY DOCUMENTS AND CERTIFICATES. WHEREAS, the County of Contra Costa(the`Count3)and the County of Contra Costa Redevelopment Agency(the"Agency)have heretofore executed a Joint Exercise of Powers Agreement, dated as of April 7, 1992(the`Joint Powers Agreement), which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority(the"Authorit}),and WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California(the`Nbrks-Roos Local Bond Pooling Act of 1985)and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; and WHEREAS, pursuant to a Trust Agreement dated as of August 1, 1994(the`Trust Agreement), among the Meridian Trust Company of California, the Contra Costa County Public Facilities Corporation(the"Corporatiod)and the County, the County has heretofore caused the execution and delivery of the Contra Costa County Certificates of Participation(Various Capital Facilities), Series of 1994(the"1994 Certificates), in the aggregate principal amount of$23,090,000, for the acquisition and improvement of various County facilities (the"1994 Project); and WHEREAS, pursuant to a Facility Lease(Various Capital Facilities), dated as of August 1, 1994 , by and between the Corporation and the County(the"1994 Facility Lease),the Corporation has leased the 1994 Project to the County, and WHEREAS, under the 1994 Facility Lease,the County is obligated to make base rental payments to the Corporation;and WHEREAS,the Authority has been advised that a favorable interest rate market, would make it possible for the County to reduce the interest rates on its debt by the issuance of refunding bonds, thereby reducing the rent payable by the County under the 1994 Facility Lease for the lease of the 1994 Project or provide for the financing of additional capital projects and resulting in significant public benefits; and DOCSSF1:250118.2 40511-108 WHEREAS, in order to achieve such significant public benefits, the Authority desires to assist the County in refunding the 1994 Certificates by the issuance and sale of its County of Contra Costa Public Financing Authority Lease Revenue Bonds(Various Capital Facilities), 1998 Refunding Series A (the`Bond.9), pursuant to a Trust Agreement, dated as of May 1, 1998, between the Authority and BNY Western Trust Company, as trustee(the"Trusted); and WHEREAS, a form of Official Statement describing the Bonds and a form of Official Notice of Sale inviting bids to purchase the Bonds will be distributed to potential purchasers of the Bonds and a form of Notice of Intention to Sell the Bonds has been or will be published in THE BOND BUYER; and WHEREAS, pursuant to a Letter of Instructions to the 1994 Trustee from the County and the Authority, dated as of May 1, 1998, certain proceeds of the 1994 Certificates will be deposited into an escrow fund (the"Escrow Fund)and irrevocably pledged to repay the Base Rental under the 1994 Facility Lease; and WHEREAS, as consideration for such deposit in the Escrow Fund, the Corporation and 1994 Trustee will convey and assign all of their rights, title and interest in the 1994 Project and the 1994 Facility Lease (other than the right, title and interest in the Base Rental to be paid from the Escrow Fund) to the Authority; and WHEREAS, it is proposed that the Authority enter in a Facility Lease(Various Capital Facilities) with the County (the"Facility Leasd),which will amend and restate the 1994 Facility Lease, and WHEREAS, under the Facility Lease, the County will be obligated to make base rental payments to the Authority for the lease of the 1994 Project; and WHEREAS, all rights to receive such base rental payments will be pledged by the Authority to the Trustee under the Trust Agreement; and WHEREAS, this Board has been presented with the forms of the Official Statement, the Official Notice of Sale and the Notice of Indention to Sell, and the proposed forms of the Facility Lease, the Trust Agreement,the Letter of Instructions and a Continuing Disclosure Agreement, and WHEREAS, the Authority has full legal right, power and authority under the Constitution and the laws of the State of California to enter into the transactions hereinafter authorized; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the County of Contra Costa Public Financing Authority, as follows: Section 1. The foregoing recitals are true and correct and the Authority hereby so finds and determines. DOCSSFI:250118.2 40511-108 2 Section 2. The issuance and sale of the County of Contra Costa Public Financing Authority Lease Revenue Bonds(Various Capital Facilities), 1998 Series A, in the aggregate principal amount of not to exceed $29,000,000, is hereby approved and ratified . Section 3.. The proposed form of Facility Lease, dated as of May '1, 1998 (the `Facility Leasd), by and between the Authority and the County, on file with the Secretary of the Board of Directors, is hereby approved and the Chair of the Board of Directors and the Secretary of the Board of Directors or their designees are hereby authorized and directed to execute and deliver the Facility Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the term of the Facility Lease (including any extensions) shall not exceed August 1, 2038. Section 4. The form of Trust Agreement by and between BNY Western Trust Company, as trustee, and the Authority, and acknowledged by the County, on file with the Secretary of the Board of Directors, is hereby approved. The Chair of the Board of Directors and the Secretary of the Board of Directors or their designees are hereby authorized and directed to execute and deliver the Trust Agreement in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof Among the changes authorized to be made to such Trust Agreement are such changes as are necessary in the event the Executive Director or his designee, upon consultation with the Financial Advisor, determines it is desirable to obtain municipal bond insurance. Section 5. The form of Preliminary Official Statement describing the Bonds, on file with the Secretary of the Board of Directors, is hereby approved. The Financial Advisor is hereby authorized and directed to cause to be supplied to prospective purchasers of the Bunds copies of a preliminary official statement in such form, with such additions, corrections and revisions as may be determined to be necessary or desirable by the Financial Advisor,Bond Counsel, or the County Counsel's Office, and to supply the purchaser for the Bonds with copies of final official statement, completed to include, among other things, the interest rate or rates, and final sale information. The Executive Director of the Authority, or his designee, is authorized to certify on behalf of the Authority that the preliminary form of the official statement is deemed final as of its date,within the meaning of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934(except for the omission of certain pricing, rating and related information as permitted by said Rule). The Executive.Director of the Authority, or his designee, is hereby authorized and directed to execute and deliver a final Official Statement in substantially said form, with such additions thereto or changes therein as the Financial Advisor, County Counsers Office or Bond Counsel, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof Section 6. The form of proposed Official Notice of Sale inviting bids for the Bonds on file with the Secretary of the Board of Directors is hereby approved and adopted as the Official Notice of Sale inviting bids for the Bonds,with such additions, changes and corrections thereto as the Executive Director of the Authority or his designee shall require or approve, such approval to be conclusively evidenced by the execution thereof. Sealed proposals shall be received up to the hour of 10:00 a.m. California time on April 22, 1998, or on such other date as shall be selected by the Executive Director of the Authority or his designee, for the purchase of the Bonds. DOCSSFi_250118.2 40511-108 3 The Executive Director of the Authority or his designee is herebyauthorized to accept the best responsive bid, so long as such bid shall provide a true interest cost to the Authority of not to exceed eight percent(8%) per annum, and the price to be paid to the Authority for the Bonds shall not be less than the par value thereof, less a discount of not to exceed two percent(2%), or to reject all bids, and if such true interest cost and price are acceptable,the Executive Director of the Authority or his designee is hereby authorized and directed to accept, on behalf of the Authority, the best responsive bid. The Financial Advisor is hereby authorized and directed to cause to be distributed to prospective bidders for the Bonds copies of said Official Notice of Sale, subject to such corrections,revisions or additions as may be acceptable to the Executive Director of the Authority. Section 7. The form of Notice of Intention to Sell,on file with the Secretary of the Board of Directors, is hereby adopted, ratified and approved as the Notice of Intention to Sell, and was or is to be published once at least fifteen days before the date of sale in THE BOND BUYER, Section 8. The proposed form of Letter of Instructions, dated as of May 1, 1998(the `Letter oflnstructions),from the County and the Authority to BYN Western Trust Company, on file with the Secretary of the Authority, is hereby approved. The Chair of the Board of Directors and the Secretary of the Board of Directors or their designees are hereby authorized'and directed to execute and deliver the Letter of Instructions in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof Section 9. The proposed form of Continuing Disclosure Agreement, dated as of the date of issuance of the Bonds(the"Continuing Disclosure Agreement),by and among the Authority, the County and the Trustee, on file with the Secretary of the Authority, is hereby approved. The Chair of the Board of Directors and the Secretary of the Board of Directors or their designees are hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 10. The officers of the Authority are hereby authorized and directly,jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. The Chair of the Board of Directors, the Secretary of the Board of Directors, the Executive Director of the Authority or their designees and the officers of the Authority be and they are hereby authorized and directed to execute and deliver any and all certificates and representations, signature certificates, no-litigation certificates, tax and rebate certificates, any documents relating to the conveyance of the 1994 Project to the Authority by the Corporation, and certificates concerning the contents of the Official Statement distributed in connection with the sale of the Bonds, necessary and desirable to accomplish the transactions set forth above. Section 11. All actions heretofore taken by the officers and agents of the Authority with respect to the sale and issuance of the Bonds are hereby approved and confirmed. Section 12, This Resolution shall take effect from and after its date of adoption. DocssFI:250118.2 40511-108 4 PASSED AND ADOPTED this 14th day of April, 1998, by the following vote: AYES: Supervisors Uilkema, Gerber, DeSaulnier, and Rogers NOES: None ABSENT: Supervisor Canciamilla ABSTAIN: None J' 44 Z,141- Chair oft Board py Directors �f Secretary of the Board of Directors CERTIFICATE OF TBE SECRETARY OF THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY I, f l Wwb2ic- Secretary of the County of Contra Costa Public Financing Authority(the"Authorigj hereby certify that the foregoing is a full,true and correct copy of resolution duly adopted at a meeting of the Board of Directors of said Authority duly and regularly held in Martinez, California,on April 14, 1998 of which meeting all of the members of said Authority had due notice. I further certify that I have carefully compared the foregoing copy with the original minutes of said meeting on file and of record in my office;that said copy is a full,true and correct copy of the original resolution adopted at said meeting and entered in said minutes;and that said resolution has not been amended, modified,rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect. I further certify that an agenda of said meeting was posted at least 72 hours before said meeting at a location in Martinez, California, freely accessible to the public and a brief general description of the resolution to be adopted at said meeting appeared on said agenda. IN WITNESS VTMREOF, I have executed this certificate hereto as of this 14thtiay of _APRIL , 1998. By Secretary DocSSF1:230118.2 40311-108 6 s Draft#2,4/5138 PRELIMINARY OFFICIAL STATEMENT DATED , 1998 NEW ISSUE-BOOK ENTRY ONLY RATINGS: S&P: _ Moody's: _ In the opinion of Orrick,Herrington&Sutcliffe LLP,Bond Counsel,based upon existing laws,regulations,rulings and court decisions and assuming, among other matters,compliance with certain covenants,interest on the 1998 Series.4 Bonds is excluded from gross incomefor federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes.In the further opinion of Bond Counsel,interest on the 1998 Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes,although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tar consequences related to the ownership or disposition of or the accrual or receipt of the interest on the 1998 Series A Bonds. See"TAX MATERS"herein. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL FACILITIES) 1998 REFUNDING SERIES A Dated:May 1,1998 Due.,August 1,as shown on inside cover The 1998 Refunding Series A Bonds(the"1998 Series A Bonds")are being issued to finance the advance refunding and defeasance of the County of Contra Costa Certificates of Participation(Various Capital Facilities),Series of 1994(the"Prior Certificates"). See"THE PLAN OF FINANCE"and"ESTIMATED SOURCES AND USES OF FUNDS." The Prior Certificates were issued to finance the acquisition,renovation,and refurbishing of certain County buildings. Interest with respect to the 1998 Series A Bonds will be payable on February t and August I of each year,commencing August 1,1999. The 1998 Series A Bonds will be initially delivered in book-entry form,registered in the name of Cede&Co.as nominee of The Depository Trust Company,New York,New York("DTC'). Principal,prepayment premium,if any,and interest with respect to the 1998 Series A Bonds will be paid by BNY Western Trust Company,as Trustee,to DTC. DTC is required to remit such principal and interest to its Participants for disbursement to the beneficial owners of the 1998 Series A Bonds. See"THE 1998 SERIES A BONDS-Book-Entry-Only System." The 1998 Series A Bonds are subject to optional and mandatory prepayment as described herein. The 1998 Series A Bonds are being issued pursuant to a Trust Agreement,dated as of May 1, 1998,between the County of Contra Costa Public Financing Authority(the"Authority")and the Trustee. The 1998 Series A Bonds are limited obligations of the Authority payable solely form revenues of the Authority,consisting primarily of base rental payments to be made by the County of Contra Costa(the"County")to the Authority,pursuant to a Facility Lease(Various Capital Facilities),dated as of May 1,1998, between the Authority and the County,amending and restating the Facility Lease(Various Capital Facilities),dated as of August 1,1994,by and between the Contra Costa County Public Facilities Corporation and the County(as amended and restated,the"Facility Lease"). Pursuant to the Facility Lease,the County will lease the Facilities(defined herein)and the Demised Premises(defined herein)from the Authority. The County has coverantod in the Facility Lease to take such action as may be necessary to include Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. The County has agreed in the Facility Lease to make all Base Rental Payments, subject to abatement in the event of material damage to or destruction or condemnation of the Facilities. THE 1998 SERIES A BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF,OR CHARGE OR LIEN UPON,ANY PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS,EXCEPT THE REVENUES(AS DESCRIBED HEREIN). NEITHER THE FULL FAITH AND THE CREDIT OF THE AUTHORITY NOR THE COUNTY IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE 1998 SERIES A BONDS NOR FOR THE PAYMENT OF BASE RENTAL PAYMENTS. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 1998 SERIES A BONDS NOR THE OBLIGATION TO MAKE BASE RENTAL PAYMENTS UNDER THE FACILITY LEASE CONSTITUTES A DEBT,LIABILITY OR OBLIGATION OF THE AUTHORITY OR THE COUNTY FOR WHICH ANY SUCH ENTITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH ANY SUCH ENTITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER. Maturity Schedule,CUSIP Numbers,Principal Amounts,Interest Rates,Prices and Yields (see Inside cover) The 1998 Series A Bonds will be awarded via a competitive bidding to be held on April 22, 1998. The 1998 Series A Bonds will be offered when,as and if executed and delivered by the County,subject to approval of validity by Orrick Herrington&Sutcliffe LLP, San Francisco, California, Bond Counsel. Certain other legal matters will be passed upon for the County and the Authority by County Counsel. The 1998 Series A Bonds,in book-entry form,will be available for delivery through DTC on or about May I2, 1998. For further information regarding the competitive sale of the 1998 Series A Bonds,contact the Financial Advisor to the County. C.M. DE CRINIS& CO.,INC. THIS COVER PAGE CONTAINS INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS TRANSACTION. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAILING OF AN INFORMED INVESTMENT DECISION. Dated: 1998 *Preliminary,subject to change. _ ........................................_.................................................................................................................. .__........................ ._._.__.. ........ ....__.... ...._..... .._...... ......... ......._.................. ........... MATURITY SCHEDULE (Rase CUSIP Number:21223T) S Serial Bonds Maturity Date CUSIP Principal Interest Price or Maturity Date CUSIP Principal Interest Price or (August 1) Number . Amount Rate Yield (August t) Number Amount Rate Yield $ _°1a Term Bond due August 1, ,Yield %,CUSIP Number Term Bond due August 1, ,Yield %,CUSIP Number (Plus Accrued Interest from May 1,149$ No dealer, broker,salesperson or other person has been authorized by the County,the Authority, or the Underwriter to give any information or to make any representation other than those contained herein and,if given or made,such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the 1998 Series A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 1998 Series A Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the County and from other sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the date hereof. This Official Statement is submitted in connection with the sale of the 1998 Series A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose,unless authorized in writing by the County. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. All capitalized terms used herein,unless noted otherwise,shall have the meanings prescribed in the Trust Agreement and the Facility Lease. This Official Statement, including any supplement or amendment hereto,is intended to be deposited with one or more nationally recognized municipal securities information repositories. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 1998 SERIES A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. .... .................................................................................................................................................................................... _. __.. .....__...... ........._. ........ . ..... ......_..... ........ ......... ....... ........ ....... COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY Jim Rogers Joe Canciamilla Chair Vice-Chair Philip J.Batchelor Kenneth J.Corcoran Executive Director and Secretary Treasurer COUNTY OF CONTRA COSTA,CALIFORNIA BOARD OF SUPERVISORS OF THE COUNTY Jim Rogers (District 1) Chair Gayle B.Uilkema Donna Gerber (District 2) (District 3) Mark DeSaulnier Joe Canciamilla (District 4) (District 5) COUNTY OFFICIALS Philip J.Batchelor Clerk of the Board and County Administrator Laura W.Lockwood Director,Capital Facilities and Debt Management Kenneth J.Corcoran Alfred P.Lomeli Auditor-Controller Treasurer-Tax Collector Victor J.Westman Stephen L.Weir County Counsel County Clerk-Recorder SPECIAL SERVICES BOND COUNSEL FINANCIAL ADVISOR Orrick,Herrington&Sutcliffe LLP C.M.de Crinis&Co.,Inc. San Francisco,California Sausalito,California VERIFICATION AGENT TRUSTEE,ESCROW AGENT, DISCLOSURE COUNSEL Deloitte&Touche LLP AND DISSENUNATION AGENT Fulbright&Jaworski L.L.P. Houston,Texas BNY Western Trust Company Los Angeles,California Los Angeles,California TABLE OF CONTENTS Page INTRODUCTION........................................................................................................ ..................................... I PLANOF FINANCE......................................................................................................................................... 3 ESTIMATED SOURCES AND USES OF FUNDS.......................................................................................... 3 THEPROJECT.................................................................................................................................................. 4 THE1998 SERIES A BONDS........................................................................................................................... 5 GeneralProvisions................................................................................................................................ 5 Book-Entry Only System...................................................................................................................... 6 RedemptionProvisions................................................................................. ..................................... 8 Noticeof Redemption............................................................................................................................ 9 Selection of 1998 Series A Bonds for Redemption............................................................................... 9 Effectof Redemption............................................................................................................................. 9 SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS..................................... 10 General ........................................................................................................... .....................................10 BaseRental Payments.......................................................................................................................... I I Pledgeof Revenues.............................................................................................................................. 13 StateIntercept Program........................................................................................................................ 13 ReserveFund Requirement............................................................................ ..................................... 15 Insurance ...................................................................................... ..................................... 15 BONDINSURANCE........................................................................................................................................ 16 RISKFACTORS........................................................................................................ ................................... 17 LimitedObligation............................................................................................................................... 17 BaseRental Payments...........................................................................................................................17 Abatement........................................................................................................................................... 17 Substitution.................................................................................................... ..................................... 18 Defaultand Remedies.......................................................................................................................... 118 Limitationon Remedies................................................................................. ..................................... 19 Riskof Earthquake....................................................................................... ............................... 19 HazardousSubstances.................................................................................... ..................................... 19 Riderv. The City of San Diego.............................................................................................................20 Year2000 Risk......................................................................................................................................20 Motor Vehicle License Fees..................................................................................................................20 CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ...................................................................................21 Article XIII A of the California Constitution....................................................................................... 21 Legislation Implementing Article XIII A............................................................................................. 21 Article XIII B of the California Constitution....................................................................................... 21 Article XIII C and Article XIII D of the California Constitution........................................................ 22 i - ........................................................................................................................._................._......... _.__._...... ....._... ............_......... ............._......... ............ ........ ........ ...... . Proposition62 ................................................................................................................ 23 Proposition187............................................................................................... ................................. 23 FutureInitiatives.................................................................................................................................. 24 THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY............................................. 24 THECOUNTY............................................................................................................... ............................... 25 RATINGS....................................................................................................................... ............................... 25 LITIGATION.................................................................................................................................................... 25 TAXMATTERS........................................................................................................... ................................... 26 LEGALMATTERS.......................................................................................................................................... 27 CONTINUINGDISCLOSURE.................................................................................... ................................... 27 VERIFICATION OF MATHEMATICAL COMPUTATIONS........................................................................27 MISCELLANEOUSINFORMATION......................................................................... ................................... 28 APPENDIX A- GENERAL COUNTY,ECONOMIC,AND DEMOGRAPHIC INFORMATION ..................................................................... .............................. A-1 APPENDIX B- COUNTY FINANCIAL INFORMATION ................................................................... B-1 APPENDIX C - FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 1997.................................................................. C-1 APPENDIX D- SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGALDOCUMENTS...............................................................................................D-1 APPENDIX E- FORM OF OPINION OF BOND COUNSEL................................ ............................... E-1 APPENDIX F- FORM OF CONTINUING DISCLOSURE AGREEMENT .......................................... F-1 APPENDIX G- SPECIMEN MUNICIPAL INSURANCE POLICY ...................................................... G-1 ii PRELIMINARY OFFICIAL STATEMENT COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (VARIOUS CAPITAL FACILITIES) 1998 REFUNDING SERIES A INTRODUCTION This Official Statement (which includes the cover page and Appendices hereto) (the "Official Statement") provides certain information concerning the issuance of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Facilities), 1998 Refunding Series A (the "1998 Series A Bonds"), in an aggregate principal amount of$ * by the County of Contra Costa Public Financing Authority(the"Authority'). The Bonds are limited obligations of the Authority payable solely from revenues(as hereinafter described)consisting primarily of base rental payments to be made by the County of Contra Costa(the "County"), as rent for the Facilities(as defined herein). The Facilities will be leased by the County pursuant to a Facility Lease(Various Capital Facilities), dated as of May 1, 1998(the"Facility Lease"),between the County,as lessee,and the Authority,as lessor,amending and restating the Facility Lease (Various Capital Facilities), dated as of August 1, 1994 by and between the Contra Costa County Public Facilities Corporation (the "Corporation") and the County (the "Prior Facility Lease"). All real property leased by the County to the Authority under the Facility Lease in connection with the Facilities is herein referred to as the "Demised Premises." The 1998 Series A Bonds are being executed and delivered to advance refund and defease the County's Certificates of Participation (Various Capital Facilities), Series of 1994 (the "Prior Certificates"). In addition, the Authority will utilize proceeds of the 1998 Series A Bonds to fund a [Reserve Fund] [surety bond, in lieu of a cash Reserve Fund] and to pay certain costs of issuance associated with the execution and delivery of the 1998 Series A Bonds. See"PLAN OF FINANCE"and"ESTIMATED SOURCES AND USES OF FUNDS." The Prior Certificates were executed and delivered on August 31, 1994 in the original aggregate principal amount of$23,490,004 to finance the acquisition, renovation and refurbishing of(i) the Muir Street Office Part Building #1 located at 597 Center Drive, Martinez, California ("Project Phase V), (ii) the Social Service:Building located at 1345 MacDonald Avenue, Richmond, California ("Project Phase li"), (iii) the Social Service Building located at 151 Linus Pauling:Drive, Hercules,California("Project Phase III"),and(iv)the Health Services Building located at 245 41st Street, Richmond,California("Project Phase IV"and collectively with Project Phase 1,Project Phase 1I and Project Phase III,the "1994 Project"). The 1994 Project and the Demised Premises on which it is located are called the "Facilities" and are leased by the County pursuant to the Facility Lease. The 1998 Series A Bonds will be executed and delivered pursuant to a Trust Agreement,dated as of May 1, 1998, between the Authority and BNY Western Trust Company(the"Trustee"). Pursuant to the Trust Agreement,the Authority will pledge to the Trustee, for the benefit of the Bondholders, all of its Revenues, consisting primarily of base rental payments(the"Base Rental Payments")made by the County to the Authority under the Facility Lease and assign its right, as may be necessary,to enforce payment of Base Rental Payments. In connection with the Prior Certificates, the County leased the Facilities from the Corporation pursuant to the Prior Facility Lease with the Corporation. Pursuant to an assignment agreement between the Corporation and BNY Western Trust Company, as successor to Meridian Trust of California (collectively, the "Prior Trustee"), the lease Preliminary, subject to change. I payments to be made by the County under the Prior Facility Lease (the "Prior Base Rental") were assigned to the Prior Trustee to pay the principal and interest represented by the Prior Certificates. Pursuant to the Letter of Instructions to the Prior Trustee,dated as of May 1, 1998,certain proceeds of the 1998 Series A Bonds will be deposited into an escrow fund (the "Escrow Fund") for the prepayment of the Prior Base Rental and the Prior Certificates, fallowing which no Prior Certificates will remain outstanding. As consideration for such deposit in the Escrow Fund and pursuant to the Assignment Agreement, dated as of May 1, 1998, between the Corporation, the Prior Trustee and the Authority, the Corporation and the Prior Trustee will unconditionally grant, transfer and assign to the Authority without recourse all of their right,title and interest in the Project and the Prior Facility Lease,excepting only the right to receive Base Rental to be paid from the Escrow Fund. The Authority may in the future issue Additional Bonds under the Trust Agreement (the "Additional Bonds"), secured on a parity with the 1998 Series A Bands,to finance rebuilding or replacement of the Project following a casualty loss or for the refunding or repayment of any 1998 Series A Bonds then Outstanding or to finance additional capital improvements. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS- Additional Bonds." The 1998 Series A Bonds,together with any Additional Bonds issued pursuant to the Trust Agreement,are herein referred to as the`Bonds." The County has covenanted under the Facility Lease that as long as the Facilities are available for the County's use and occupancy, it will take such action as may be necessary to include all Base Rental Payments and Additional Payments (as defined below) in its annual budgets and to make the necessary annual appropriations therefor. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS." As additional security for the 1998 Series A Bonds, the County has elected to guarantee the payment of Base Rental Payments due by the County under the Facility Lease by providing a mechanism pursuant to which the State Controller will make payments to the Trustee from (and to the extent of)vehicle license fees held for the account of the County in the event and to the extent that the County fails to make Base Rental Payments when due. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS- State Intercept Program." Base Rental Payments are subject to complete or partial abatement resulting from substantial interference with the use and possession by the County of the Facilities caused by damage to or destruction or condemnation of the Project or the Demised Premises. See "RISK FACTORS." Abatement of Base Rental Payments under the Facility Lease could result in 1998 Bondholders receiving less than the full amount of principal and interest on the 1998 Series A Bonds,except to the extent proceeds of insurance are available or there are moneys in the Reserve Fund (as described herein) to make payments of principal of or interest on the 1998 Series A Bonds(or a portion thereof)during periods of abatement of Base Rental. The County of Contra Costa lies northeast of San Francisco and is the ninth most populous county in California. The County seat is in the City of Martinez. Major industries in the County include oil refining and telecommunications. The fiscal year 1997-98 General Fund Budget of the County totals approximately$725 million. Summaries of certain provisions of the principal legal documents relating to the 1998 Series A Bonds and the Facility Lease are contained in Appendix D. The summaries and descriptions in this Official Statement of the Trust Agreement,the Facility Lease,the Continuing Disclosure Agreement,the Assignment Agreement,the Escrow Agreement and other agreements relating to the 1998 Series A Bonds are qualified in their entirety by reference to such documents, and the descriptions herein of the 1998 Series A Bonds are qualified in their entirety by the form thereof and the information with respect thereto included in such documents. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Trust Agreement and the Facility Lease. 2 . . .................................................................................................................................................................................................................... _ ........ ........._.. ..........__............_. ........ ....................... ........... ........ .............._...................... PLAN OF FINANCE Concurrently with the delivery of the 1998 Series A Bonds,the Prior Certificates will be advance refunded and defeased. The moneys required to advance refund the Prior Certificates will come from the net proceeds of the 1998 Series A Bonds and certain other available funds. Such funds will be applied to purchase direct obligations of the United States of America(the"Government Securities"). The Government Securities will be held by the Trustee,and will mature at such times and in such amounts so that, together with an initial cash deposit, sufficient moneys will be available(i)to pay,when due,the principal and interest with respect to the Prior Certificates to and including August 1, 2004, and(ii)to prepay the Prior Certificates on August 1, 2004 at a prepayment price equal to the principal amount of the Prior Certificates then outstanding plus a prepayment premium of 2°lo of such principal amount. See "VERIFICATION of MATHEMATICAL COMPUTATIONS." Neither the maturing principal of such Government Securities nor the interest income thereon will be available to pay the principal of or interest on the 1998 Series A Bonds. The County will utilize the net debt service savings due to the refunding of the Prior Certificates for various County purposes. ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds related to the execution and delivery of the 1998 Series A Bonds. Sources 1998 Series A Bond Proceeds................................................................. Less: Original Issue Discount......................................................... Less: Underwriters'Discount.......................................................... Funds related to the Prior Certificates(l) AccruedInterest(2).................................................................................. TotalSources............................................................................. Uses EscrowFund............................................................................................ Reserve Fund(3) Interest Account(4).................................................................................. Costs of Issuance Fund(5)....................................................................... TotalUses.................................................................................. (1) Represents balances in the Reserve Fund. (2) Represents interest on the 1998 Series A Bonds from their dated date to their delivery date. (3) Reserve Fund Requirement. (4) .Represents interest on the 1998 Series A Bonds from their dated date to their delivery date. (5) Includes legal and professional fees,title insurance,printing costs,and other costs of issuance. 3 . ......................................................................................................................................................................................................................... __ ........_. ........ ........._........................_......... __.......... ..................._................._.. ._........ ..._..... ......... THE PROSECT The Authority has elected to provide funds for the advance refunding and defeasance of the Prior Certificates (see"THE PLAN of FINANCE'). Pursuant to the Facility Lease,the County will lease the Facilities from the Authority. The Facilities consist of the four properties described below. Project Phase I: The Muir Station Office Park, Building#1, which is located at 597 Center Avenue in the City of Martinez. In 1994 the County entered into a lease with option to purchase agreement(the"Project Phase I Agreement")to lease a portion of Project Phase I. Project Phase I was completed in 1986,contains three stories,and comprises approximately 51,630 square feet on a lot size of approximately 90,605 square feet that is adjacent to a building (Building#2) that is also owned by the County. County health-related departments are currently housed in Project Phase I and occupy approximately 65% of rentable office space. The County intends to occupy additional space in Project Phase I as vacancies occur. The Corporation utilized a portion of the proceeds of the Prior Certificates (i) to exercise the option to purchase Project Phase 1, including land, at a purchase price of$5.5 million, and(ii)to fund[$300,000]of renovations to Project Phase I that were completed in The Authority will lease Project Phase I and the renovations to the County pursuant to the Facility Lease. The County estimates that annual base rental payments associated with Project Phase I will be approximately [$490,000] and annual rental income from private tenants will be approximately[$178,500]. Project Phase 1�: The Social Service Building located at 1305 Macdonald Avenue in the City of Richmond. In June 1980, the County entered into a lease with option to purchase agreement (the "Project Phase II Agreement")to lease Project Phase II. Project Phase II is a three-story structure that was completed in 1972 containing approximately 49,897 square feet on a lot size of approximately 62,489 square feet. Project Phase II is currently being utilized by the County as the West County District Office for delivery of income maintenance and social services to residents of the City of Richmond and the unincorporated area of North Richmond. The Corporation utilized a portion of the proceeds of the Prior Certificates (i) to exercise the option to purchase Project Phase II, including land, at a total purchase price of$4.15 million, and (ii)to fund [$2.6] million of renovations to Project Phase 11 that were completed in The Authority will lease Project Phase 11 and the renovations to the County pursuant to the Facility Lease. The County estimates that annual base rental payments associated with Project Phase II will be approximately [$600,000]. Project Phase III: The Social Service Building,which is located at 151 Linus Pauling Drive in the City of.Hercules. Project Phase III is a building comprised of approximately 41,295 square feet that was completed by September 1994 on a lot size of approximately 152,379 square feet. The County owns approximately 119,000 square feet of additional land (which is not subject to the Facility Lease) on the property as a site for future development. Project Phase III is utilized by the County as the Social Service Department-Northwest County District Office where child welfare and social services are provided to West County residents and income maintenance services are provided to residents of the cities of San Pablo,Pinole,Hercules,EI Cerrito,and the unincorporated areas of EI Sobrante,Rodeo, Port Costa,Crockett,and Kensington. The Corporation utilized a portion of the proceeds of the Prior Certificates (i) to acquire Project Phase 111, including land,at a purchase price of$6.0 million,and(ii)to fund [$1.0] million of interior and exterior improvements to Project Phase III that were completed in 4 . ... _............._............................................................................................................................................................................. ........ ........_._. ._........... .......__... ......._._. ....... .........................._. ......._......-__...._.. ....._......_....... The Authority will lease Project Phase Ill and the improvements to the County pursuant to the Facility Lease. The County estimates that annual base rental payments associated with Project Phase Ill will be approximately [$607,000]. Project Phase IV: The Health Services Building, which is located at 205 41st Street in the City of Richmond. In February 1994,the County entered into a lease with option to purchase agreement(the "Project Phase IV Agreement") to lease Project Phase IV. Project Phase IV is a one-story structure containing approximately 6,600 square feet on a lot size of approximately 17,500 square feet that was completed in 1975 and is adjacent to three other County-owned properties. The County currently utilizes this Project for delivery of health department services in conjunction with the County's general assistance program. The Corporation utilized a portion of the proceeds of the Prior Certificates (i) to acquire Project Phase IV, including land, at a purchase price of$600,000, and(ii)to fund [$0,2] million of renovations to Project Phase IV that were completed in The Authority will lease Project Phase 11 and the improvements to the County pursuant to the Facility Lease. The County estimates that annual base rental payments associated with Project Phase IV will be approximately [$69,300]. The County estimates that the market value of Project Phase IV is approximately$`million. Pursuant to the Facility Lease, the County and the Authority will agree and determine that the annual Base Rental Payments required to be made under the Facility Lease represent the fair rental value of the Facilities. In making such determination, consideration was given to a valuation of the Facilities prepared by the Principal Real Property Agent of the County in March and April, 1998, that addressed the uses and purposes which might be served by the Project and the potential benefits therefrom accruing to the County, its residents, and the general public. Such valuation equals the principal amount of the 1998 Series A Bonds to be issued,as indicated in the following table. Location Valuation Estimate Project Phase I Project Phase II [to come from County] Project Phase III Project Phase IV Total Pursuant to the Facility Lease, the County may substitute other properties for the Facilities. See "RISK FACTORS-Substitution". THE 1998 SERIES A BUNDS General Provisions The 1998 Series A Bonds are limited obligations of the Authority payable solely from Revenues consisting primarily of Base Rental Payments to be made by the County under the Facility Lease. The 1998 Series A Bonds will be prepared in the form of fully registered certificates and, when executed and delivered, will be registered in the name of Cede&Co.,as nominee of The Depository Trust Company,New York,New York("DTC"). DTC will act as securities depository of the 1998 Series A Bonds. Ownership interests in the 1998 Series A Bonds may be purchased in book-entry form only, in the denominations hereinafter set forth. See "Book-Entry Only System"below. 5 ..........11........................................................................................................................................................... .......................................................................................................................................................................................... Ownership interests in 1998 Series A Bonds will be in $5,000 denominations or any integral multiple thereof. Interest on the 1998 Series A Bonds will be calculated on the basis of a 360-day year composed of twelve 30-day months and is payable on February I and August I (each an"Interest Payment Date")of each year,commencing August 1, 1998. The 1998 Series A Bonds will bear interest from May 1, 1998. The 1998 Series A Bonds will mature on the dates(each a "Maturity Date") and in the principal amounts, and the interest payable thereon shall be computed at the rates, all as set forth on the inside cover page of this Official Statement. Book-Entry Only System DTC will act as securities depository for the 1998 Series A Bonds. The 1998 Series A Bonds will be executed and delivered as fully-registered 1998 Series A Bonds registered in the name of Cede&Co.(DTC's partnership nominee). One fully-registered certificate will be executed and delivered for each Maturity Date of the 1998 Series A Bonds,each in the aggregate principal amount due on such Maturity Date,and will be deposited with DTC. DTC is a limited purpose trust company organized under the New York Banking Law,a"banking organization" within the meaning of the New York Banking Law,a member of the Federal Reserve System,a"clearing agency" within the meaning of the New York Uniform Commercial Code,and a"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions,such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange,Inc.,the American Stock Exchange,Inc.and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks,and trust companies that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly("Indirect Participants"). The Rules applicable to DTC and its participants are on file with the Securities and Exchange Commission. Purchases of 1998 Series A Bonds under the DTC system must be made by or through Direct Participants,which will receive a credit for the 1998 Series A Bonds on DTC's records. The ownership interest of each actual purchaser of each 1998 Series A Bond("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 1998 Series A Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests, except in the event that use of the book-entry system for the 1998 Series A Bonds is discontinued. To facilitate subsequent transfers, all 1998 Series A Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee,Cede&Co. The deposit of 1998 Series A Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 1998 Series A Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 1998 Series A Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. will consent or vote with respect to the 1998 Series A Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of the securities as soon as possible after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting fights to those Direct Participants to whose accounts the 1998 6 ..............................................................................................................I..................................................................... ............................................................. Series A Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy). Principal and interest payments with respect to the 1998 Series A Bonds will be made to DTC. DTC`s practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC,the Trustee,the Authority or the County,subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Authority or the Trustee, fiscal agent or other designated agent,disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the 1998 Series A Bonds at any time by giving reasonable notice to the Trustee and the County. Under such circumstances, in the event that a successor securities depository is not obtained,physical certificates are required to be printed and delivered as described in the Trust Agreement. In the event the Authority and the Trustee determine not to continue the DTC book-entry only system or DTC determines to discontinue its services with respect to the 1998 Series A Bonds and the Authority does not select another qualified securities depository, the Authority shall deliver one or more 1998 Series A Bonds in such principal amount or amounts,in authorized denominations,and registered in whatever name or names, as DTC shall designate. In such event, transfers and exchanges of 1998 Series A Bonds will be governed by the provisions of the Trust Agreement. AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 1998 SERIES A BONDS, THE TRUSTEE WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO HOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY PARTICIPANT, OR OF ANY PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE 1998 SERIES A BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. THE COUNTY, THE TRUSTEE, THE AUTHORITY AND THE UNDERWRITERS HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO BENEFICIAL OWNERSHIP OF INTERESTS IN THE 1998 SERIES A BONDS. THE COUNTY, THE TRUSTEE, THE AUTHORITY AND THE UNDERWRITERS CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS TO DTC PARTICIPANTS OR THAT PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE 1998 SERIES A BONDS RECEIVED BY DTC OR ITS NOMINEES AS THE HOLDER THEREOF OR ANY REDEMPTION NOTICES OR OTHER NOTICES TO THE BENEFICIAL HOLDERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS,OR THAT DTC WILL SERVICE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. The foregoing description of the procedures and record keeping with respect to beneficial ownership interests in the 1998 Series A Bonds,payment of principal,redemption premium,if any,and interest with respect to the 1998 Series A Bonds to DTC, its Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 1998 Series A Bonds and other related transactions by and between DTC, its Participants and the Beneficial Owners is based solely on the County's and the Trustees understanding of such procedures and record keeping from information provided by DTC. Accordingly, no representations can be made concerning these matters and neither DTC, its Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should 7 instead confirm the same with DTC or its Participants,as the case may be. The County and the Trustee understand that the current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and that the current "Procedures" of DTC to be followed in dealing with Participants are on file with DTC. Redemption Provisions Optional Redemption. The 1998 Series A Bonds maturing on or prior to August 1 2008 are not subject to optional redemption . The 1998 Series A Bonds maturing on or after August 1, 2009 are subject to redemption prior to their respective Maturity Dates,at the option of the Authority,as a whole,or in part from the Maturity Dates specified by the Authority,and by lot within any such Maturity Date if less than all of the 1998 Series A Bonds of such Maturity Date are redeemed, from any source of available funds, on any date on or after August 1, 2008 at the following redemption prices (expressed as a percentage of the principal amount thereof) plus accrued interest thereon to the date fixed for redemption,as follows: Redemption Dates Redemption Price August 1,2008 through duly 31,2009 101.0% August 1,2009 through July 31,2010 100.5 August 1,2010 and thereafter 100.0 Mandatory Sinking Fund Redemption. The 1998 Series A Bonds maturing on August 1, and August 1, respectively, are also subject to mandatory sinking fund redemption prior to their stated maturity, in part on August 1 of each year on or after August 1, and August 1, , respectively, by lot, from and in the amount of the mandatory sinking account payment due and payable on such dates,at a redemption price equal to the sum of the principal amount thereof,plus accrued interest thereon to the redemption date,without premium,in the amounts and on the dates set forth below: 1998 Series A Bonds with a Maturity Date of 1998 Series A Bonds with a Maturity Date of August 1. August 1, Sinking Fund Payment Date Sinking Fund Payment Date a-UnAt—D Amount (August 1) Amount *Maturity. 8 ............. ............ ......... .............................................................................................................................................................................................. . ................................................................................. ...... ... . ....... .. ........ Extraordinary Redemption. The 1998 Series A Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as provided in the Trust Agreement asa whole, or in part by lot within each stated maturity of the 1998 Series A Bonds in Authorized Denominations, from prepayments made by the County from the net proceeds received by the County due to the taking of the Facilities or portions thereof under the power of eminent domain, or from the net proceeds of insurance received for material damage to or destruction of the Facilities or portions thereof, under the circumstances described in the Trust Agreement and the Facility Lease. The redemption price will be equal to the principal amount of the 1998 Series A Bonds to be redeemed and accrued interest thereon to the date of redemption,without premium. Whenever less than all of the Outstanding Bonds are to be redeemed on any one date, the Trustee must select such Bonds, including any Additional Bonds, to be redeemed so that the aggregate annual amounts of principal and interest represented by the Bonds, including any Additional Bonds,which will be payable after such redemption date will be as nearly proportional to the aggregate annual amounts of principal and interest represented by the Bonds, including any Additional Bonds, outstanding prior to such redemption date. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS-Insurance." Notice of Redemption So long as the Book-Entry System is used for the 1998 Series A Bonds, the Trustee will give any notice of redemption or any other notices required to be given to Owners only to DTC. Any failure of DTC to advise any DTC Participant,or of any DTC Participant to notify the Beneficial Owner,of any such notice and its content or effect will not affect the validity of the redemption of the 1998 Series A Bonds called for redemption or any other action premised on such notice. Beneficial Owners may desire to make arrangements with a DTC Participant so that all notices of redemption or other communications to DTC which affect such Beneficial Owners,including notification of all interest payments,will be forwarded in writing by such DTC Participant. See "THE 1998 SERIES A BONDS- Book-Entry Only System" herein. In the event that the Book-Entry System shall no longer be used, notice of redemption is to be mailed, first class postage prepaid, to the respective Owners of any 1998 Series A Bonds designated for redemption at their addresses appearing on the registration books required to be kept by the Trustee not less than 30 nor more than 60 days prior to the redemption date. Each notice of redemption shall state the redemption date, the redemption place and the redemption price,shall designate the serial numbers of the 1998 Series A Bonds to be redeemed,and in the case of each 1998 Series A Bond called for redemption in part,state the amount which is to be redeemed. Any notice mailed as provided in the Trust Agreement shall be conclusively presumed to have been given,whether or not such Owner receives the notice. Selection of 1998 Series A Bonds for Redemption The Authority will designate which maturities of Bonds are to be redeemed. Whenever less than all the Outstanding 1998 Series A Bonds maturing on any one Maturity Date are to be redeemed on any one date, the Trustee shall select the 1998 Series A Bonds of such Maturity Date to be redeemed from the Outstanding 1998 Series A Bonds payable on such Maturity Date by lot in any manner that the Trustee deems fair. For purposes of such selection, 1998 Series A Bonds shall be deemed to be composed of$5,000 portions,and any such portion may be separately redeemed. In the event 1998 Series A Bonds are designated for redemption, the Authority may designate which sinking account payments are allocated to such redemption. Effect of Redemption From and after the date of redemption of the 1998 Series A Bonds in accordance with the Trust Agreement, interest on the 1998 Series A Bonds called for redemption shall cease to accrue,such 1998 Series A Bonds shall cease to be entitled to any benefit or security under the Trust Agreement, and the Owners of such 1998 Series A Bonds shall have no rights in respect thereof except to receive payment of the redemption price represented thereby. The Trustee shall, upon surrender for payment of any of the 1998 Series A Bonds to be redeemed, pay such 1998 Series A Bonds at the redemption price thereof. All 1998 Series A Bonds redeemed pursuant to the provisions of the Trust Agreement shall be canceled by the Trustee and shall not be redelivered. 9 __ _......_ ......... ......... ......... ......... ......... ......... ......... ._.. .._........ . ................._...... ......... ......... ._._..._._...._........ .. ......... .......... ......... .......... ........ .......... SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS General The Bonds are secured by the Revenues of the Authority,which consist primarily of Base Rental Payments to be made by the County under the Facility Lease. Pursuant to the Facility Lease, the Authority leases the Facilities to the County. As rental for the use and occupancy of the Facilities,the County covenants to pay Base Rental Payments to the Trustee. The Base Rental Payments,subject to abatement,are calculated to be sufficient to pay principal of and interest on the Bonds when due The County has covenanted in the Facility Lease to include all Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. The Trustee will receive such Base Rental Payments for the benefit of the 1998 Series A Bondholders. Additionally,the Authority will assign all of its rights to receive Base Rental Payments to the Trustee for the benefit of the Owners of the 1998 Series A Bonds. By the 15th day of the month immediately preceding each Interest Payment Date, the County must pay to the Trustee Base Rental Payments(to the extent required under the Facility Lease) which will be sufficient to pay, when due, the principal of and interest on the 1998 Series A Bonds. Under the Facility Lease, the County agrees to pay Additional Payments for the payment of all expenses and all costs of the Authority and the Trustee related to the Facilities,including expenses of the Trustee payable by the Authority under the Trust Agreement, and fees of accountants, attorneys and consultants. A Trust Administration Fund is established under the Trust Agreement for the payment of all administrative costs of the Authority and the County is obligated under the Facility Lease to maintain a minimum balance of$5,000 in the Trust Administration Fund. The County is responsible for repair and maintenance of the Project during the term of the Facility Lease. Except to the extent of amounts held by the Trustee in the Revenue Fund or in the Reserve Fund are otherwise available to the Trustee for payments in respect of the 1998 Series A Bonds, the Base Rental Payments shall be abated proportionately, during any period in which by reason of any damage to or destruction of the Facilities (other than by condemnation), there is substantial interference with the use and occupancy of the Facilities by the County, in the proportion in which the initial cost of that portion of the Facilities rendered unusable bears to the initial cost of the whole of the Facilities. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction,the Facility Lease shall continue in full force and effect and the County waives any right to terminate the Facility Lease by virtue of any such damage or destruction. In the event of a taking of less than the whole of the Facilities by condemnation or eminent domain,there will be a partial abatement of the rental due under the Facility Lease in an amount equivalent to the amount by which the annual payments of principal of and interest on the 1998 Series A Bonds then Outstanding will be reduced by the application of the award to the redemption of Outstanding 1998 Series A Bonds. Should the County default under the Facility Lease, the Trustee, as assignee of the Authority under the Facility Lease,may seek to recover certain damages from the County,or may retain the Facility Lease and hold the County liable for all Rental Payments thereunder(without acceleration)on an annual basis. See"APPENDIX D-SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS- Facility Lease - Default; Remedies." Rental Payments may not be accelerated. See"RISK FACTORS." 10 ............................................ .. .............................. _. _.._......................................................................................................................................................................... Base Rental Payments Base Rental is calculated on an annual basis, for twelve-month periods commencing on August 1 and ending on July 31, and each annual Base Rental Payment will be divided into two interest components, due on February I and August I of each rental payment period and one principal component, due on August I except that the first Base Rental Payment period will commence on the date of recordation of the Facility Lease and end on July 31, 1998. The Base Rental evidenced and represented by the Prior Certificates will be defeased and payable solely from the Prior Certificates Escrow Fund on the due date or prepayment date thereof. Each Base Rental Payment installment with respect to the 1998 Series A Bonds shall be payable on the 15th day of the month immediately preceding its due date and any interest or other income with respect thereto accruing prior to such due date shall belong to the County and shall be returned by the Authority to the County on February I and August I of each year. Each annual Base Rental Payment(to be payable in installments as aforesaid)shall be for the use of the Facilities for the twelvemonth period commencing on August 1 of the period in which such installments are payable. The Trust Agreement requires that Base Rental Payments be deposited in the Revenue Fund maintained by the Trustee. In accordance with the Trust Agreement,the Trustee will transfer such amounts as are necessary to the Interest Account,the Principal Account or the Prepayment Account,as the case may be,to pay principal and interest with respect to the 1998 Series A Bonds as the same shall become due and payable. See"APPENDIX D - SUMMARY OF CERTAIN PR©VISIONS OF PRINCIPAL LEGAL DOCUMENTS - THE TRUST AGREEMENT —REVENUES - Receipt and Deposit of Revenues in the Revenue Fund." THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS IS A GENERAL FUND OBLIGATION OF THE COUNTY, AND DOES NOT CONSTITUTE A DEBT OF THE:COUNTY OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR AN OBLIGATION FOR WHICH THE COUNTY MUST LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, ANY FORM OF TAXATION. The following page shows the debt service schedule relating to the 1998 Series A Bonds. 11 DEBT SERVICE SCHEDULE Total Annual Semi-Annual Semi-Annual Rerruirent Payment Date PrinoinalPavments August 1, 1998 Interest Payments February 1, 1999 August 1 1999 February 1,2000 August 12000 February 12001 August 1,2001 February 1,2002 August 12002 February 1,2003 August 1,2003 February 1,2004 August 1,2004 February 1,2005 August 1,2005 February 1,2006 August 1,2006 February 1,2007 August 1,2007 February 1,2008 August 1,2008 February 1,2009 August 1,2009 February 1,2010 August 1,2010 February 1,2011 August 1,2011 February 1,2012 August 1,2012 February 1,2013 August 1,2013 February 1,2014 August 1,2014 February 1,2015 August 1,2015 February 1,2016 August 1,2016 February 1,2017 August 1,2017 February 2018 August 1,2018 February 1,2019 August 1,2019 February 1,2020 August 1,2020 February 1,2021 August 1,2021 February 1,2022 August 1,2022 February 1,2023 August 1,2023 February 1,2024 August 1,2024 TOTAL 12 1.11........................................................................................................................................................................... ........................................................................................................................................................................................... Pledge of Revenues The Revenues of the Authority consist primarily of the Base Rental Payments made by the County to the Authority. In accordance with the Trust Agreement, all Revenues are irrevocably pledged to and shall be used for the punctual payment of the principal of and interest on the 1998 Series A Bonds and the Revenues shall not be used for any other purpose while any of the 1998 Series A Bonds remain Outstanding; provided, however,that out of the Revenues may be applied such sums that permitted under the Trust Agreement. This pledge constitutes a first lien on the Revenues in accordance with the terms of the Trust Agreement. The County has directed that all Base Rental Payments be paid directly to the Trustee to beheld in trust by the Trustee in the Revenue Fund for the benefit of the Bondholders. The County has covenanted under the Facility Lease that as long as the Facilities are available for the County's use and occupancy, it will take such action as may be necessary to include all Base Rental Payments and Additional Payments for such properties in its annual budgets and to make the necessary annual appropriations therefor. State Intercept Program Pursuant to the provisions of the California Government Code (Section 25350.55) (herein the "State Intercept Program"), the County has elected to guarantee the payment of Base Rental Payments under the Facility Lease by providing a mechanism by which the State Controller will make payments directly to the Trustee from the portion of vehicle licensing fees deposited in the Motor Vehicle License Fee Account in the Transportation Tax Fund (the "Account") to which the County is entitled pursuant to California Revenue and Taxation Code (Sections 11001-11005) (herein the "Vehicle License Fee Allocation Statute") in the event that the County does not make sufficient Base Rental Payments. The amount in the Account does not include that portion deposited to the Vehicle License Fee Account of the Local Revenue Fund and allocated for the County pursuant to California Welfare and Institutions Code Section 17604. Under the provisions of the State Intercept Program, the County must notify the State Controller of the election, which notice must include a payment schedule and designation of a trustee appointed for the purpose of implementing the payment procedures. On or before each Payment Date, if the County has insufficient funds to make the installment of Base Rental Payment due on such date,the County is required to notify the Trustee. Upon receipt of such-notification, the Trustee is required to immediately notify the State Controller and to request from the State Controller the amount by which the Base Rental Payment due exceeds the amount on deposit in the Revenue Fund. The State Controller is required to make such apportionment to the Trustee from moneys credited to the Account to which the County is entitled at that time pursuant to the Vehicle License Fee Allocation Statute and will thereupon reduce, by the amount so transferred, the subsequent allocation or allocations to which the County would otherwise be entitled under that statute. While this payment mechanism is intended to facilitate a county's timely payment of lease payments, it does not obligate the County(or the State Controller)to make any payment in the event of a situation giving rise to an abatement of obligations under the Facility Lease. See"RISK FACrORS-Abatement" below. The County has secured its$145,340,000 Certificates of Participation (Merrithew Memorial Hospital Replacement Project), Refunding Series of 1997 and its $34,910,000 Certificates of Participation (Capital Projects Program), Series of 1997 and in the future may elect to have additional obligations secured under the provisions of the State Intercept Program. Vehicle license fees imposed for the operation of vehicles on State highways are collected by the State Department of Motor Vehicles. These license fees are deposited monthly in the State Treasury:twenty-four and one-third percent of the fees are transferred to the credit of the Local Revenue Fund and the remainder to the credit of the Account. Pursuant to the Vehicle License Fee Allocation Statute, moneys in the Account are statutorily appropriated to cities and counties in accordance with a formula provided in the California Government Code, which is generally based upon population. In the last seven fiscal years,the County received the following amounts as its share of motor vehicle license 13 .....I...................................................................................................................................................................................... ................................................................................................................................................................................................... fees from the Account in accordance with the Vehicle License Fee Allocation Statute: COUNTY OF CONTRA COSTA SUMMARY OF MOTOR VEHICLE LICENSE FEES Maximum Annual Total Portion Deposited to Vehicle Portion Deposited to Debt Service for Issues Fiscal Vehicle License License Fee Account of the Motor Vehicle Secured by Motorvehicle Year Fee Revenues Local Revenue Fund License Fee Account(l) License Fee Account(2) 1991-92 $47,168,660 $15,212,932 $31,955,728 Not applicable 1992-93 49,727,432(3) 16,363,405(3) 33,364,027(3) Not applicable 1993-94 49,573,511 16,617,120 32,956,391 Not applicable 1994-95 52,110,707 17,600,024 34,510,683 Not applicable 1995-96 53,802,289 17,192,050 36,610,239 Not applicable 1996-97 58,088,000 19,000,000 39,088,000 Not applicable 1997-98(4) 59,250,000 19,400,000 39,850,000 $ 1,198,626.58 1998-99(4) 13,836,457.52 (1) Subject to the State Intercept Program. (2) Includes Certificates of Participation-Refunding Series of 1997,Certificates of Participation—Series of 1997,and the 1998 Series A Bonds. (3) As a result of change in accounting methodology,reflects 13 months rather than 12 months. (4) Maximum annual debt service for fiscal year 1997-98 reflects debt service for the Certificates of Participation— Series of 1997 only. Payment of debt service on the Certificates of Participation-Refunding Series of 1997 will be made from capitalized interest until fiscal year 1998-99,when approximately$10.6 million of fiscal year debt service payments will be made annually until the end of fiscal year 2021-22. Maximum annual debt service for fiscal year 1998-99 reflects debt service for the Certificates of Participation—Series of 1997 and the Certificates of Participation-Refunding Series of 1997 and estimated debt service for the Series A Bonds. The maximum annual debt service for all issues secured by the Motor Vehicle License Account is expected to occur in 2006-07 at a level of approximately$15.3 million. ARTICLE XI, SECTION 15 OF THE CALIFORNIA CONSTITUTION REQUIRES THAT VEHICLE LICENSE FEES BE ALLOCATED TO CITIES AND COUNTIES. THE RELATIVE PERCENTAGES IN WHICH VEHICLE LICENSE FEES ARE ALLOCATED TO CITIES AND COUNTIES UNDER THE VEHICLE LICENSE FEE ALLOCATION STATUTE MAY BE MODIFIED BY THE STATE LEGISLATURE IN ITS DISCRETION,AND SUCH MODIFICATION MAY REDUCE AMOUNTS DEPOSITED TO THE ACCOUNT FOR THE BENEFIT OF THE COUNTY. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT LICENSE FEE REVENUES HELD IN THE ACCOUNT WILL BE SUFFICIENT TO MAKE BASE RENTAL PAYMENTS WITH RESPECT TO THE 1998 SERIES A BONDS. Assembly Bill No. 1776 and Senate Bill No. 1723 were introduced in the State Legislature in February 1998 calling for a ballot initiative to abolish the annual vehicle license fee and to replace license fee revenues to local jurisdictions such as the County with certain State sales tax revenues. The County is unable to predict with certainty whether either bill will result in an actual ballot measure being placed before voters in a future State election, nor is the County able to definitively assess the impact,if any,that such a measure would have on the net revenues derived from the shift of annual license fee revenue to sales tax revenue. Nevertheless, the County anticipates that its ability and commitment to repay the 1998 Series A Bonds will not be impaired by the proposed legislation as it is currently drafted. 14 .. ............. _ _. .. _.. .. ......... ......... ......... ......... ......... ......... ......... ......... ._-........._._. . _ ....... .........__.. ......._. ......... ......... _........ ............ ......... ......... ......... .......... ........ ......... Reserve Fund Requirement Pursuant to the Trust Agreement,a portion of the proceeds in the amount of$ will be deposited in the Reserve Fund following delivery of the 1998 Series A Bonds. Moneys in the Reserve Fund will be applied solely for the purpose of funding the Interest Account or the Principal Account, in that order, in the event of any deficiency in either of such accounts on an Interest Payment Date or a Principal Payment Date;provided that,so long as the Authority is not in default under the Trust Agreement, certain excess amounts in the Reserve Fund will be transferred to the Trust Administration Fund up to its required level and, provided that if the Trust Administration Fund is at the required level, any excess will be transferred to the Revenue Fund. The Trust Agreement requires that, as a condition to the issuance of Additional Bunds, an amount shall be deposited in the Reserve Fund so that following such deposit there shall be on deposit in the Reserve Fund an amount at least equal to the Reserve Fund Requirement. For the definition of the term "Reserve Fund Requirement," see "APPENDIX D- SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS-Definitions." The Reserve Fund Requirement may be satisfied,in whole or in part, by a surety bond issued by a municipal bond insurance company whose long-term obligations have a rating by Moody`s Investors Service and by Standard&Pooes Ratings Services which is in one of the two highest ratings then issued by said rating agencies or by a Letter of Credit issued by a bank qualified under the terms of the Facility Lease. Insurance The Facility Lease requires the County to maintain or cause to be maintained,throughout the term of the Facility Lease, insurance against loss or damage to any structures constituting any part of the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance, and earthquake insurance, if available on the open market from reputable insurance companies at a reasonable cost as determined by the County. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount equal to the replacement cost(without deduction for depreciation)of all structures constituting any part of the Facilities, excluding the cost of excavations, of grading and filling, and of the land (except that such insurance may be subject to deductible clauses for any one loss of not to exceed$50,000 or comparable amount adjusted for inflation or more in the case of earthquake insurance), or in the alternative,shall be in an amount and in a form sufficient(together with moneys held under the Trust Agreement), in the event of total or partial loss, to enable all Bonds then Outstanding to be redeemed. In the event of any damage to or destruction of any part of the Facilities caused by the perils covered by such insurance, the Authority, except as hereinafter provided, shall cause the proceeds of such insurance to be utilized for the repair,reconstruction or replacement of the damaged or destroyed portion of the Facilities,to at least the same condition as they were in prior to the damage or destruction,insofar as the same may be accomplished by the use of said proceeds. The Trustee shall hold such proceeds in the Insurance and Condemnation Fund and shall permit withdrawals upon written request for such purposes. Any balance of said proceeds not required for such repair,reconstruction or replacement shall be treated by the Trustee as Base Rental Payments. Alternatively,if the proceeds of such insurance together with any other moneys then available for the purpose are at least sufficient to redeem an aggregate principal amount of Outstanding Bonds equal to the amount of Base Rental attributable to the portion of the Facilities so destroyed or damaged(determined by reference to the proportion which the cost of such portion of the Facilities bears to the cost of the Facilities), the Authority,with the written consent of the County,may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon shall cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the provisions of the Trust Agreement. The Authority and the County covenant to promptly apply for federal disaster aid or State disaster aid in the event that the Facilities are damaged or destroyed as a result of an earthquake occurring at anytime. Any proceeds received as a result of such disaster aid shall be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities,or,at the option of the County and the Authority,to redeem Outstanding Bonds if such use of such disaster aid is permitted. 15 The Facility Lease requires the County to maintain or cause to be maintained, rental interruption or use and occupancy insurance to cover loss,total or partial,of the rental income from or the use of the Facilities as the result of any of the hazards covered by the fire and extended coverage insurance required by the Facility Lease described in the preceding paragraphs, in an amount sufficient to pay the part of the total rent attributable to the portion of the Facilities rendered unusable (determined by reference to the proportion which the cost of such portion bears to the cost of the Facilities) for a period of at least two years, except that such insurance may be subject to a deductible clause of not to exceed $100,000 (or comparable amount adjusted for inflation). Any proceeds of such insurance shall be used by the Trustee to reimburse to the County any rental theretofore paid by the County under the Facility Lease attributable to such structure for a period of time during which the payment of rental under the Facility Lease is abated, and any proceeds of such insurance not so used shall be applied to pay Base Rental Payments and Additional Payments. As an alternative to providing the fire and extended coverage insurance, or any portion thereof, required by the Facility Lease, the County, with the written consent of the Authority, may provide a self insurance method or plan of protection if and to the extent such self insurance method or plan of protection shall afford reasonable coverage for the risks required to be insured against, in light of all circumstances,giving consideration to cost,availability and similar plans or methods of protection adopted by public entities in the State other than the County. Before such method or plan may be provided by the County, and annually thereafter so long as such method or plan is being provided to satisfy the requirements of the Facility Lease,there shall be filed with the Trustee a certificate of an actuary, insurance consultant or other qualified person,stating that,in the opinion of the signer,the substitute method or plan of protection is in accordance with the requirerrients of the Facility Lease and,when effective,would afford reasonable coverage for the risks required to be insured against. There shall also be filed a certificate of the County setting forth the details of such substitute method or plan. In the event of loss covered by any such self-insurance method,the liability of the County under the Facility Lease shall be limited to the amounts in the self-insurance reserve fund or funds created under such method. The County also agrees to deliver to the Trustee title insurance on the Demised Premises in an amount equal to the aggregate principal amount of the 1998 Series A Bonds. The County is not required under the Facility Lease to purchase commercial insurance to cover damage due to earthquake. However,the County has purchased an earthquake insurance policy for all of its estimated[$543.6 million]of property, including the Facilities, through the California State Association of Counties Excess Insurance Authority. The current earthquake insurance policy has a one-year term that expires on March 31, 1999 and has a deductible equal to 5% per insured unit,subject to a$100,000 minimum and a$20 million maximum per occurrence. No assurance can be given that the County will continue to maintain earthquake insurance. See "APPENDIX B- County Financial Information- Insurance. The County is also required to obtain certain liability insurance coverage in protection of the Authority and the Trustee as described under "APPENDIX D- SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS Facility Lease." BOND INSURANCE THE COUNTY EXPECTS TO PURCHASE A MUNICIPAL BOND INSURANCE POLICY THAT WILL GUARANTEE THE SCHEDULED PAYMENT OF PRINCIPAL AND INTEREST IN RESPECT OF THE 1998 SERIES A BONDS WHEN DUE. THE COUNTY WILL PROVIDE PROSPECTIVE BIDDERS WITH DETAILS REGARDING THE MUNICIPAL BOND INSURANCE POLICY THROUGH THOMPSON MUNICIPAL NEWS (MUNIFACTS)AND BLOOMBERG BUSINESS NEWS PRIOR TO THE COMPETITIVE BIDDING OF THE 1998 SERIES A BONDS DESCRIBED IN THE OFFICIAL NOTICE OF SALE. 16 RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of 1998 Series A Bonds. However,the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 1998 Series A Bonds. In addition,the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Limited Obligation The obligation of the County to pay Base Rental Payments when due is a General Fund obligation of the County. The obligation of the County to make Base Rental Payments under the Facility Lease does not constitute an obligation of the County for which the County is obligated to levy or pledge any form of taxation or for which the County has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the County to make Base Rental Payments under the Facility Lease constitute a debt or indebtedness of the Authority, the County, the State or any of its political subdivisions,within the meaning of any constitutional or statutory debt limitation or restrictions. Base Rental Payments General. The Base Rental Payments due under the Facility Lease (including insurance, payment of costs of repair and maintenance of the Facilities, taxes and other governmental charges and assessments levied against the Facilities) are not secured by any pledge of taxes or any other revenues of the County but are payable from any funds lawfully available to the County. The County will incur other obligations in the future payable:form the same sources as the Base Rental Payments. In the event the County's revenue sources are less than its total obligations,the County could choose to fund other municipal services before making Base Rental Payments. The same result could occur if,because of State constitutional limits on expenditures, the County is not permitted to appropriate and spend all of its available revenues.The County's appropriations,however,have never exceeded the limitations on appropriations under Article XIII B of the California Constitution. Covenant to Budget and Appropriate. Pursuant to the Facility Lease,the County covenants to take such action as may be necessary to include Base Rental Payments due in its annual budgets and to make necessary appropriations for all such payments. Such covenants are deemed to be duties imposed by law, and it is the duty of the public officials of the County 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 County to carry out and perform such covenants. A court,however, in its discretion may decline to enforce such covenants. Upon issuance of the 1998 Series A Bonds,Bond Counsel will render its opinion(substantially in . the form of Appendix E—FORM OF OPINION OF BOND COUNSEL"herein)to the effect that, subject to the limitations and qualifications described therein, the Facility Lease constitutes a valid and binding obligaiton of the County. As to the Trustee's practical realization of remedies upon default by the County, see "Default and Remedies" and"Limitations on Remedies"below. Abatement In the event of loss or substantial interference in the use and occupancy of the Facilities by the County caused by damage or destruction or condemnation of the Facilities,Base Rental Payments will be subject to abatement. In the event that the Facilities, if damaged or destroyed by an insured casualty, could not be replaced during the period of time that proceeds of the County's rental interruption insurance will be available in lieu of Base Rental Payments plus the period for which funds are available from the Reserve Fund or the Revenue Fund,or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such component of the Facilities or redemption of the 1998 Series A Bonds, there could be insufficient funds to make payments to Owners in full. See Appendix D—"SUMMARY OF CERTAIN PROVISIONS OF LEGAL.DOCUMENTS—Facility Lease—Fire and Extended Coverage Insurance and Rental Interruption or Use and Occupancy Insurance"herein. 17 --I.-.-................................................................................................................................................................................................. . ..................................................................................................... Substitution The County and the Authority may substitute other improved real property as part of the Demised Premises and the Facilities for purposes of the Facility Lease provided there is no abatement of the County's use and occupancy of the Substituted Facilities and provided that the County shall have filed with the Authority and the Trustee,with copies to each rating agency then providing a rating for the Bonds,all of the following: (a) Executed copies of the Facility Lease or amendments thereto containing the amended description of the Facilities including the Demised Premises, including the legal description of the Demised Premises as modified, if necessary. (b) A Certificate of the County with copies of the Facility Lease or a Site Lease, if needed, or amendments thereto containing the amended description of the Facilities stating that such documents have been duly recorded in the official records of the County Recorder of the County. (c) A Certificate of the County,evidencing that the annual fair rental value of the Facilities which will constitute the Facilities after such substitution will be at least equal to 100%of the maximum amount of Base Rental Payments becoming due in the then current year ending August I or in any subsequent year ending August 1. (d) A Certificate of the County stating that, based upon review of such instruments, certificates or any other matters described in such Certificate of the County, the County has good merchantable title to the Facilities which will constitute the Facilities after such substitution. The term "Good Merchantable Tide" shall mean such title as is satisfactory and sufficient for the needs and operations of the County. (e) A Certificate of the County stating that such substitution does not adversely affect the County's use and occupancy of the Facilities. (f) An Opinion of Counsel (as such term is defined in the Trust Agreement) stating that such amendment or modification(i) is authorized or permitted by the Constitution and laws of the State and the Trust Agreement(ii) complies with the terms of the Constitution and laws of the State and of the Trust Agreement;(iii)will,upon the execution and delivery thereof, be valid and binding upon the Authority and the County, and(iv)will not cause the interest on the Bonds to be included in gross income for federal income tax purposes. There is no requirement that any Substitute Facilities be of the same or a similar nature or function as the then existing facilities. See Appendix D-"SUMMARY OF CERTAIN PROVISIONS OF LEGAL DOCUMENTS -Lease of Demised Premises and Project-Substitution"herein. Default and Remedies Upon the occurrence of one of the"events of default"described below,the County will be deemed to be in default under the Facility Lease and the Trustee as assignee of the Authority may exercise any and all remedies available pursuant to law or granted pursuant to the Facility Lease. Upon any such default, including a failure to pay Base Rental Payments, the Trustee as assignee of the Authority may either (i) terminate the Facility Lease and recover certain damages or (2) without terminating the Facility Lease, (1) continue to collect rent from the County on an annual basis by seeking a separate judgment each year for that year's defaulted Base Rental Payments and/or(ii)reenter the Facilities and relet them. In the event of default, there is no right to accelerate the total Base Rental Payments due over the term of the Facility Lease,and the Trustee is not empowered to sell the Facilities and use the proceeds of such sale to prepay the Bonds or pay debt service thereon. 18 .............................. Events of default under the Facility Lease include(i)the failure of the County to make rental payments under the Facility Lease when the same becomes due and payable, (ii) the failure of the County to keep, observe or perform any term,covenant or condition of the Facility Lease to be kept or performed by the County after notice and the elapse of a 30- day grace period and(iii)the bankruptcy or insolvency of the County. Limitations on Remedies The rights and remedies provided in the Trust Agreement and Facility Lease may be limited by,and are subject to, the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors rights. In addition,judicial action against public agencies in California is subject to certain limitations. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), whichgoverns the bankruptcy proceedings for public agencies such as the County,there are no involuntary petitions in bankruptcy. If the County were to file a petition under Chapter 9 of the Bankruptcy Code,the Bondholders,the Trustee and the Authority could be prohibited from taping any steps to enforce their rights under the Facility Lease, and from taking any steps to collect amounts due form the County under the Facility Lease. All legal opinions with respect to the enforcement of the Facility Lease and the Trust Agreement will be expressly subject to a qualification that such agreements may be limited by bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors' rights generally and by applicable principles of equity if equitable remedies are sought. Risk of Earthquake There are several earthquake faults in the greater San Francisco Bay Area that potentially could result in damage to buildings,roads,bridges,and property within the County in the event of an earthquake. fast experiences, including the 1989 Loma Prieta earthquake, have resulted in minimal damage to the infrastructure and property in the County. Earthquake faults that could affect the County are the San Andreas and Hayward Faults west of the County and the Calaveras Fault within portions of the County. The Facility Lease does not require the County to maintain insurance on the Facilities against certain risks such as earthquakes. However,the County has purchased a commercial earthquake insurance policy to cover all County property, including the Facilities. See "Insurance." If the Facilities were damaged or destroyed due to flood or other catastrophic events which are not otherwise covered under the hazard or rental interruption insurance required by the Facility Lease,an abatement of Base Rental Payments would likely occur and continue until the Facilities were repaired or replaced. See "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS-General"above. Hazardous Substances Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well known and widely applicable of these laws,but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner(or operator)is obligated to remedy a hazardous:substance whether or not the owner(or operator)has anything to so with creating or handling the hazardous substance. Further,such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly and adversely affect the operations and finances of the County. The County knows of no existing hazardous substances which require remedial action on or near the Demised Premises. However,it is possible that such substances do currently or potentially exist and that the County is not aware of them. 19 Rider v.The City of San Diego(the"Rider Case") In May 1996, a taxpayer filed an action against the City of San Diego ("San Diego") and the San Diego Convention Center Expansion Authority(the"San Diego Authority")challenging the validity of a lease revenue financing involving a lease having features similar to the Facility Lease of the County. In the Rider Case,the Plaintiffs maintain that voter approval is required for the San Diego lease (a) since the lease constituted indebtedness prohibited by Article XVI, Section 18 of the California Constitution without a two-thirds vote of the electorate, and (b) since San Diego was prohibited under its charter from issuing bonds without a two-thirds vote of the electorate,and the power of the San Diego Authority,a joint powers authority,one of the members of which is San Diego,to issue bands is no greater that the power of San Diego. In response to San Diego's motion for summary judgment,the trial court rejected the Plaintiff s arguments and ruled that the lease was constitutionally valid and that the San Diego Authority's related lease revenue bonds did not require voter approval. The Plaintiffs appealed the matter to the Court of Appeals for the Fourth District, which likewise affirmed the validity of the lease and of the lease revenue bond financing arrangements. The Plaintiff's then filed a petition for discretionary review with the California State Supreme Court, and, on April 2, 1997, the California Supreme Court granted the Plaintiffs' petition for review. No decision from the State Supreme Court is expected until sometime during the 1998 calendar year. Orrick, Herrington& Sutcliffe LLP,Bond Counsel, is delivering its Final Opinion in the Form of Appendix E to the Official Statement incident to the delivery of the 1998 Series A Bonds. The Opinion is based on existing laws, regulations,rulings and court decisions. However, no assurance can be given, and Bond Counsel is rendering no opinion that,the Supreme Court will not decide that the San Diego lease and San Diego Authority lease revenue bonds are invalid, or that the decision of the Supreme Court could not or will not adversely affect the 1998 Series A Bonds. Year 2000 Risk The year 2000 presents potential problems for computerized data files and computer programs that capture and process date information. Many computer applications were written with the year represented by the last two digits of the year and the first two digits were implied, thus conserving data storage space. When developed, these applications were not expected to be in operation at the end of the century; however, many of these applications continue to be used by governments and businesses. The County's operations could be adversely impacted by its computer applications as well as those of its vendors,contractors and other organizations. In recognition that the year 2000 problem could adversely impact its delivery of services to County residents and its internal operations, the County conducted a "Year 2000" assessment in June, 1995. The county's internal systems portion of the"Year 2000 Project" is currently 80% complete and will be finished by December 1998. The County has also notified all known business partners and is in the process of defining compatible external interfaces. Despite these measures,the County cannot guarantee that its business partners will have addressed their year 2000 problems. Potential risk factors associated with year 2000 issues include the possibility of a disruption or delay of revenues to the County and the possibility of delayed payments to Bondholders as a result of the potential disruption in the banking industry. Motor Vehicle License Fees Proposed legislation regarding the placement of a ballot initiative on a future State ballot to abolish the annual motor vehicle license fee and to replace the fee with certain State sales tax revenues has been introduced in the State Assembly and the State Senate in February 1998. . The County is unable to predict with certainty whether either bill will result in an actual ballot measure being placed before voters in a future State election,nor is the County able to definitively assess the impact, if any,that such a measure would have on the net revenues derived from the shift of annual license fee revenue to sales tax revenue. Nevertheless,the County anticipates that its ability and commitment to repay the 1998 Series A Bonds will not be impaired by the proposed legislation as it is currently drafted. See "SEcuRiTY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS—State Intercept Program." 20 ...................... CONSTITUTIONAL ANIS STATUTORY LIMITATIONS ON TAXES ANIS APPROPRIATIONS Article XIII A of the California Constitution In 1978 California voters approved Proposition 13, adding Article XIII A to the California Constitution. Article XIII A was subsequently amended in 1986,as discussed below. Article XIII A limits the amount of any ad valorem tax on real property to I%of the full cash value thereof,except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters voting on such indebtedness. Article XIII A defines full cash value to mean"the county assessor's valuation of real property as shown on the 1975/76 tax bill under "full cash" or thereafter, the appraised value of real property when purchased, newly constructed,or a change in ownership have occurred after the 1975 assessment." This full cash value may be increased at a rate not to exceed 2%per year to account for inflation. Article XIII A has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage,destruction or other factors,to provide that there would be no increase in the "full cash value"base in the event of reconstruction of property damaged or destroyed in a disaster. Legislation Implementing Article XIII A Legislation has been enacted and amended a number of times since 1978 to implement Article XIII A. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The l%property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1979. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2%annual adjustment are allocated among the various jurisdictions in the"taxing area"based upon their respective"situs." Any such allocation made to a local agency continues as part of its allocation in future years. Article XIII B of the California Constitution On October 6, 1979,California voters approved Proposition 4,known as the Gann Initiative,which added Article XIII B to the California Constitution. Propositions 98 and 111, approved by the California voters in 1988 and 1990, respectively, substantially modified Article XIII B. The principal effect of Article XIII B is to limit the annual; appropriations of the State and any city, county,school district, authority, or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living and population. The initial version of Article XIII B provided that the"base year"for establishing an appropriations limit was the 1978179 fiscal year, which was then adjusted annually to reflect changes in population, consumer prices and certain increases in the cost of services provided by these public agencies. Proposition I I I revised the method for making annual adjustments to the appropriations limit by redefining changes in the cost of living and in population. It also required that beginning in fiscal year 1990/91 each appropriations limit must be recalculated using the actual 1986/87 appropriations limit and making the applicable annual adjustments as if the provisions of Proposition 1 I 1 had been in effect. Appropriations subject to limitations of a local government under Article XIII B include generally any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of certain State subventions to that entity, exclusive of refunds of taxes. Proceeds of taxes include, but are not limited to all tax revenues plus the proceeds to an entity of government from(1)regulatory licenses, user charges and user fees(but only to the extent such proceeds exceed the cost of providing the service or regulation),(2)the investment of tax revenues,and(3) certain subventions received from the State. Article XIII B permits any government entity to change the appropriations 21 limit by a vote of the electors in conformity with statutory and constitutional voting effective for a maximum of four years. As amended by Proposition 111,Article XIII B provides for testing of appropriations limits over consecutive two- year periods. If an entity's revenues in any two-year period exceed the amounts permitted to be spent over such period,the excess has to be returned by revising tax rates or fee schedules over the subsequent two years. As amended by Proposition 98,Article XIII B provides for the payment of a portion of any excess revenues to a fund established to assist in financing certain school needs. Appropriations for"qualified capital outlays" are excluded from the limits of Proposition 111. The County is of the opinion that debt service on the 1998 Series A Bonds and capital outlays for the Project are excluded from the limits imposed by Proposition 111. The County's Article XIII B limit for the 1997/98 Fiscal Year budget is$2,625,039,191 and 1997/98 Fiscal Year budget appropriations subject to limitation are $146,404,119. For Fiscal Year 1997/98, the County therefore anticipates that it will be under its limit by$2,478,635,072. The County has never exceeded its Article XIII B appropriations limit. The Base Rental Payments to be made by the County pursuant to the Facility Lease with respect to the 1998 Series A Bonds are not subject to an appropriations limit. Article XIII C and Article XIII D On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to Vote on Taxes Act." Proposition 218 adds Articles XIII C and XIII D to the California Constitution and contains a number of interrelated provisions affecting the ability of the County to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussedbelow, and it is not possible at this time to predict with certainty the outcome of such determination. Proposition 218 (Article XIII C) requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the County require a majority vote and taxes for specific purposes, even if deposited in the County's General Fund, require a two-thirds vote. Further, any general purpose tax which the County imposed, extended or increased without voter approval after December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which must be held within two years of November 5, 1996. The County believes that no existing County imposed taxes deposited into its General Fund will be affected by the voter approval requirements of Proposition 218, although as indicated below certain tax levies may be affected by Proposition 62. The voter approval requirements of Proposition 218 reduce the flexibility of the County to raise revenues for the General Fund,and no assurance can be given that the County will be able to impose,extend or increase such taxes in the future to meet increased expenditure needs. Proposition 218(Article XIII D)also adds several provisions making it generally more difficult for local agencies to levy and maintain fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i)a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii)a requirement that assessments must confer a "special benefit," as defined in Article XIII D, over and above any general benefits conferred, (iii)a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel,a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv)a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. The County estimates that in fiscal year 1997-98 it will collect approximately $18.6 million in fees and assessments which could be subject to the provisions of Article XIII D. However, none of these fees or assessments are deposited in the County's General Fund. If the County is unable to continue to collect these revenues,the services and programs funded with these revenues would have to be curtailed and/or the County General Fund might have to be used to support them. The County is unable to predict whether or not in the future it will be able to continue all existing services and programs funded by the fees,charges and assessments in light of Proposition 218 or,if these services and programs are continued,what amounts(if 22 _ _ ............................................. _.....__ ......... ......... ......... ......... ......... .........._.. .......... ...._......... ....._... ......... ......... .._...... ......... ......... ......... ......... ......... ......... _.................................. any)would be used from the County's General Fund to continue to support these activities. Proposition 218 (Article XIII C) also removes limitations on the initiative power in matters of reducing or repealing local taxes,assessments,fees or charges. No assurance can be given that the voters of the County will not,in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the County's General Fund. If such repeal or reduction occurs,the County's ability to pay Base Rental Payments under the Facility Lease could be adversely affected. Proposition 62 On September 28, 1995, the California Supreme Court affirmed the lower court decision in Santa Clara County Local Transportation Authority v. Guardino, I 1 Cal. 4th 220(1995)(the "Santa Clara Case"). The action held invalid a half-cent sales tax to be levied by the Santa Clara County Local Transportation Authority because it was approved by a majority but not two-thirds of the voters in Santa Clara County voting on the tax. The California Supreme Court decided the tax was invalid under Proposition 62, a statutory initiative adopted at the November 4, 1986 election that(a)requires that any new or higher taxes for general governmental purposes imposed by local governmental entities be approved by a majority vote of the voters of the governmental entity voting in an election on the tax, (b)requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax,(c)restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed, (d)prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIII A of the California Constitution,(e)prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, (f)required that any tax imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the voters voting in an election on the tax within two years of November 5, 1986 or be terminated by November 15, 1988 and(g)requires a reduction of ad valorem property taxes allocable to the jurisdiction imposing a tax not in compliance with its provisions equal to one dollar for each dollar of revenue attributable to the invalid tax,for each year that the tax is collected. In deciding the Santa Clara Case on Proposition 62 grounds, the Court disapproved the decision in City of; Woodlake v. Logue, 230 Cal.App.3d 1058 (1991) ("Woodlake"), where the Court of Appeal had held portions of Proposition 62 unconstitutional as a referendum on taxes prohibited by the California Constitution. The California Supreme Court determined that the voter approval requirement of Proposition 62 is a condition precedent to the enactment of each tax statute to which it applies,while referendum refers to a process invoked only after a statute has been enacted. Numerous taxes to which Proposition 62 would apply were imposed or increased without any voter approval in reliance on Woodlake. The Court noted as apparently distinguishable, but did not confirm, the decision in City of Westminster v. County of Orange, 204 Cal.App.3d 626 (1988), that held unconstitutional the section of Proposition 62 requiring voter approval of taxes imposed during the "window period" of August 1, 1985 until November 5, 1986. Proposition 62 as an initiative statute does not have the same level of authority as a constitutional initiative,but is akin to legislation adopted by the State Legislature. The County has two taxes to which Proposition 62 could apply: a business license tax, enacted in 1991, that generates approximately$800,000 per year and a transient occupancy tax, an increase in which was enacted in 1990,that generates approximately $800,000 per year(approximately $120,000 per year of which is from the 1990 increase). The County has joined with other counties that have similar taxes in pursuing legislation that would require that only future such taxes be subject to Proposition 62 and that prior taxes be given legislative relief. Proposition 187 At the November 8, 1994 General Election, California voters approved Proposition 187, an initiative statute,; which makes illegal aliens ineligible for public social services,public health care services(unless emergency under federal law), and public school education at elementary, secondary and post=secondary levels. Among other things, Proposition 187 also requires state and local agencies to report persons who are suspected illegal aliens to the California 23 ........................................... Attorney General and the United States Immigration and Naturalization Service(the"INS"). The Legislative Analyst estimated the most significant fiscal effects of Proposition 187 would fall into the following three categories: Program Savings. The State and local governments (primarily counties) would realize savings from denying certain benefits and services to persons who cannot document their citizenship or legal immigration status. The savings to State and local governments statewide could be in the range of$200 million annually, based on the current estimated use of these services and benefits by illegal immigrants. Verification Costs. The State, local governments, and schools would incur significant costs to verify citizenship or immigration status of students, parents, persons seeking health care or social services, and persons who are arrested. Ongoing annual costs could be in the tens of millions of dollars, with first-year costs considerably higher(potentially in excess of$100 million). Potential Losses of Federal Funds. Proposition 187 places at risk up to$15 billion annually in federal funding for education,health and welfare programs due to conflicts with federal requirements. Following the adoption of Proposition 187 by California voters, numerous suits were filed in federal courts challenging the constitutionality of Proposition 187. Orders have been issued by the federal district court to restrain the State from implementing Proposition 187. The Attorney General of the State has stated that the State will appeal the decision of the federal district court. Due to uncertainties surrounding the future legal interpretations and court decisions with respect to the constitutionality of Proposition 187,the County is not able to estimate the fixture fiscal and operational impacts of this initiative statute on the County. [needs update from Orrick regarding recent court decision in Los Angeles] Future Initiatives Article XIII A, Article XIII B, Article XIII C, Article XIII D, Proposition 62,and Proposition 187 were adopted as measures that qualified for the ballot through California's initiative process. From time to time other initiative measures could be adopted,further affecting the County's revenues. THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY The Authority is a joint powers authority,organized pursuant to a Joint Exercise of Powers Resolution,dated as of April 7, 1992 (the "JPA Resolution), between the County and the Contra Costa County Redevelopment Agency. The JPA Resolution was entered into pursuant to the Government Code of the State of California, commencing;with Section 6500. The Authority is a separate entity constituting a public instrumentality of the State of California and was formed for the public purpose of assisting in financing and refinancing projects for the benefit of the County. The Authority is governed by a five member board of directors. The Executive Director and Secretary of the Authority is the County Administrator and Clerk of the Board of Supervisors, the Assistant Executive Director is the County Community Development Director,the Deputy Executive Director is the County Deputy Director-Redevelopment, and the Treasurer is the County's Auditor-Controller. The Board of Supervisors of the County constitutes the Board of Directors of the Authority. The Authority's powers include, but are not limited to, the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise the powers common to its members and necessary to accomplish the purposes for which it was formed. These powers include the power to make and enter into contracts; to employ agents and employees; to acquire, construct, manage, maintain and operate buildings, works or improvements; to acquire, hold or,dispose of property within the County;and to incur debts, liabilities or obligations. 24 ......... ......... ......... ......... ......... ......... ......... .............111.1. ... .... ....... ........... .__.._._.. ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... .1111.. . ......... . ........ ......... THE COUNTY Contra Costa County was incorporated in 1850 as one of the original 27 counties of the State, with the City of Martinez as the County Seat. It is one of the nine counties in the San Francisco-Oakland Bay Area. The County covers about 733 square miles and extends from the northeastern shore of San Francisco Bay easterly about 50 miles to San Joaquin County. The County is bordered on the south and west by Alameda County and on the north by Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized, while the interior sections are suburban/residential,commercial and light industrial. The County has a general law form of government. A five-member Board of Supervisors, each of whom is elected to a four-year term, serves as the County's legislative body. Also elected are the County Assessor, Auditor Controller, Clerk-Recorder, District Attorney-Public Administrator, Sheriff-Coroner and Treasurer-Tax Collector. A County Administrative Officer appointed by the Board of Supervisors oversees the day-to-day business of the County. For certain economic, demographic and financial information with respect to the County, see Appendix A - - "GENERAL COUNTY, ECONOMIC AND DEMOGRAPHIC INT OR ATION,n Appendix B - "COUNTY FiNANCtAL NFoORMAnow and Appendix C-"FINANCIAL STATEMENTS OF THE COUNTY FOR.THE FISCAL YEAR.ENDED JUNE 30, 1997." RATINGS Moody's Investors Service and Standard& Poor's have assigned the 1998 Series A Bands the ratings of and " ,1/ respectively. Certain information was supplied by the Authority and the County to the rating agencies to be considered in evaluating the 1998 Series A Bonds. Such ratings express only the views of the rating agencies and are not a recommendation to buy,sell or hold the 1998 Series A Bonds. There is no assurance that such ratings will continue for any given period of time or that they will not be reduced or withdrawn entirely by the rating agencies,or either of them, if in their,or its,judgment,circumstances so warrant. The Authority, the County and the Trustee undertake no responsibility to oppose any such revision or withdrawal, and the County will covenant in the Continuing Disclosure Agreement to provide notice of any rating changes to the Repositories (as defined herein). Any such downward revision or withdrawal may have an adverse effect on the market price of the 1998 Series A Bonds. LITIGATION At the time of delivery of and payment for the 1998 Series A Bonds, the County and the Authority will each certify that there is no action, suit, litigation, inquiry or investigation before or by any court,governmental agency, public board or body served, or to the best knowledge of the County or the Authority threatened, against the County or the Authority in any material respect affecting the existence of the County or the Authority or the titles of their officers to their respective offices or seeking to prohibit, restrain or enjoin the sale or delivery of the 1998 Series A Bonds, the Trust Agreement, the Facility Lease, the Assignment Agreement, or the payment of Base Rental Payments or challenging, directly or indirectly,the location of the Facilities,or the proceedings to lease the Facilities from the Authority. The aggregate amount of the uninsured liabilities of the County which may result from all legal claims pending against it will not, in the opinion of the County,materially affect the County's finances or impair its ability to make Base Rental Payments under the Facility Lease. 25 TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the 1998 Series A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986(the"Code")and is exempt from State of California personal income taxes. Bond Counsel is further of the opinion that interest on the 1998 Series A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix E hereto. The difference(if any)between the issue price of any maturity of the 1998 Series A Bonds and the amount to be paid at maturity of such 1998 Series A Bonds(excluding amounts stated to be interest and payable at least annually over the term of such 1998 Series A Bonds)constitutes "original issue discount," the accrual of which,to the extent properly allocable to each owner thereof,is treated as interest which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose,the issue price of a particular maturity of the 1998 Series A Bonds is the first price at which a substantial amount of such maturity of the 1998 Series A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the 1998 Series A Bonds accrues daily over the term to maturity of such 1998 Series A Bands on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 1998 Series A Bonds to determine taxable gain or loss upon disposition(including sale,prepayment, or payment on maturity)of such 1998 Series A Bonds. Owners of the 1998 Series A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 1998 Series A Bonds with original issue discount,including the treatment of purchasers who do not purchase such 1998 Series A Bonds in the original offering to the public at the first price at which a substantial amount of such 1998 Series A Bonds are sold to the public. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 1998 Series A Bonds. The Authority and the County have covenanted to comply with certain restrictions designed to assure that interest on the 1998 Series A Bonds will not be included in gross income for federal income tax purposes. Failure to comply with these covenants may result in interest on the 1998 Series A Bonds being included in federal gross income, possibly from the date of issuance of the 1998 Series A Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 1998 Series A Bonds may adversely affect the value of the 1998 Series A Bonds or the tax status of interest on the 1998 Series A Bonds. Further,no assurance can be given that pending or future legislation or amendments to the Code,if enacted into law,or any proposed legislation or amendments to the Code will not adversely affect the value of,or the tax status of interest on the 1998 Series A Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Certain agreements, requirements and procedures contained or referred to in the Trust Agreement, the Facility Lease,the Tax Certificates, and other relevant documents may be changed and certain actions(including, without limita- tion,defeasance of the 1998 Series A Bonds)may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any 1998 Series A Bond or the interest thereon if any such change occurs or action is taken upon the advice or approval of counsel other than Bond Counsel 26 _... ......... ......... ......... ......... ........._........ ... ........__.. ......... .......... ........ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Although Bond Counsel has rendered an opinion that interest on the 1998 Series A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of the 1998 Series A Bonds,or the accrual or receipt of interest on the 1998 Series A Bonds,may otherwise' affect a Bondholder's federal or State tax liability. The nature and extent of these other tax consequences will depend upon; the Bondholder's particular tax status and the Bondholder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. LEGAL MATTERS The statements of law and legal conclusions set forth in this Official Statement under the headings "THE 1998 SERIES A BONDS", "SECURITY AND SOURCES OF PAYMENT FOR THE 1998 SERIES A BONDS", "TAx MATTERS", and "LEGAL MATTERS"have been reviewed by Bond Counsel. Orrick,Herrington&Sutcliffe LLP,San Francisco,California, Bond Counsel, will render an opinion with respect to the validity of the County's obligations under the Facility Lease. Copies of such approving opinion will be available at the time of delivery of the 1998 Series A>Bonds. The form of the legal opinion proposed to be delivered by Bond Counsel is included as Appendix E to this Official Statement. Bond Counsel undertakes no responsibility for the accuracy, completeness,or fairness of this Official''Statement. Certain legal matters will be passed upon for the County and the Authority by County Counsel. Fulbright & Jaworski L.L.P., Los Angeles,California,served as Disclosure Counsel to the County on the 1998 Series A Bonds. CONTINUING DISCLOSURE The County will undertake all responsibilities for any continuing disclosure to Owners of the 1998 Series A Bonds as described below. The County and the Dissemination Agent will enter into a Continuing Disclosure Agreement,to be dated the date of delivery of the 1998 Series A Bands (the "Continuing Disclosure Agreement"), which provides for certain disclosure obligations on the part of the County. Under the Continuing Disclosure Agreement, the County will covenant for the benefit of Owners and Beneficial Owners of the 1998 Series A Bonds to provide certain financial information and operating data relating to the County by not later than nine months after the end of its fiscal year (which fiscal year currently ends on June 30), commencing with the report for the fiscal year ending June 30, 1998 (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events (the "Listed Events"), if material. The Annual Report will be filed with each Nationally Recognized Municipal Securities Information Repository and with any then- existing State Repository for the State of California (collectively, the "Repositories"). Currently, there is no State Repository for the State of California. The notices of material events will be filed with the Municipal Securities Rulemaking Board. These covenants will be made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5)(the"Rule"). The Dissemination Agent of the County with respect to the 1998 Series A Bonds is BNY Western Trust Company. The County has not failed to comply with any prior such undertaking under the Rule. For a form of the Continuing Disclosure Agreement, see Appendix F- "FORM OF CONTINUING DISCLOSURE AGREEMENT." VERIFICATION OF MATHEMATICAL COMPUTATIONS The accuracy of(a) the mathematical computations of the adequacy of the maturing principal of and interest earned on the direct obligations of the United States of America to provide for(i)the payment, when due,of the principal and interest with respect to the Prior Certificates to and including August 1, 2004, (ii)the prepayment of the Prior Certificates on August 1, 2004 at a prepayment price equal to the principal amount of the Prior Certificates then 27 outstanding plus a prepayment premium of 2% of such principal amount, and (b)the mathematical computations of the actuarial yield on such direct obligations and on the 1998 series A Bonds,which computations support the conclusion by Bond Counsel that the 1998 Series A Bonds are not "arbitrage bonds" under Section 148 of the Code will be verified by Deloitte&Touche LLP, independent accountants. Deloitte &c Touche LLP will verify from the information provided to them the mathematical accuracy as of the date of the closing on the 1998 Series A Bonds of(1)the computations contained in the provided schedules to determine that the anticipated receipts from the securities and cash deposits listed in the financial advisor's schedules, to be held in escrow, will be sufficient to pay, when due, the principal, interest and call premium payment requirements, if any, of the Prior Certificates, and (2) the computations of yield on both the securities and the 1998 Series A Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest on the 1998 Series A Bonds is excluded from gross income for federal income tax purposes. Deloitte &Touche LLP will express no opinion on the assumptions provided to them,nor as to the exemption from taxation of the interest on the 1998 Series A Bonds. MISCELLANEOUS INFORMATION References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Any statements in this Official Statement involving matters of opinion, whether or riot expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to.be construed as a contract or agreement between the County and the purchasers or Owners of any of the 1998 Series A Bonds. The execution and delivery of this Official Statement has been duly authorized by the County. COUNTY OF CONTRA COSTA By: Philip J.Batchelor County Administrator and Cleric of the Board 28 APPENDIX A GENERAL COUNTY, ECONOMIC AND DEMOGRAPHIC INFORMATION APPENDIX A GENERAL COUNTY,ECONOMIC AND DEMOGRAPHIC INFORMATION General Contra Costa County(the "County")was incorporated in 1850 as one of the original 27 counties of the State of California(the "State"), with the City of Martinez as the County Seat. It is one of the nine counties in the Sart Francisco-Oakland Bay Area. The County covers about 733 square miles and extends from the northeastern shore of San Francisco Bay easterly about 50 miles to San Joaquin County. The County is bordered on the south and west by Alameda County and on the north by Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized,while the interior sections are suburban/residential, commercial and light industrial. A large part of the interior of the County is served by the Bay Area Rapid Transit District("BART"), a situation that has encouraged the expansion of both residential and commercial development. In addition, economic development along the Interstate 680 corridor in the County has been substantial and accounted for significant job creation in the Cities of Concord,Walnut Creek and San Ramon. County Government The County has a general law form of government. A five-member Board of Supervisors, each of whom is elected to a four-year term, serves as the county's legislative body. Also elected are the County Assessor, Auditor-Controller, Clerk-Recorder, .District Attorney-Public Administrator, Sheriff-Coroner and Treasurer-Tax Collector. A County Administrative Officer appointed by the Board of Supervisors runs the day-to-day business of the County. Population The County's population grew 21.5% during the 1989s, a moderate acceleration from the 17.7% growth rate achieved in the decade of the 1979s. The County's population growth ranked first among the nine Bay Area counties for the 1980 - 1990 period and was slightly below the 24.9% growth rate for the entire State of California. As detailed in the table below,population growth within the County was positive during the 1980's in every city except Orinda. Cities experiencing the strongest growth include Hercules,Brentwood,Clayton, Antioch,Pleasant Hill, San Ramon and Martinez. Population growth in Concord, the Countys largest city, was relatively static by comparison during the 1980's. Of particular significance is the population increases in the western portion of the County, particularly in Pinole, Richmond and San Pablo. Each of these older cities experienced population declines during tate 19701s,but a number of factors have gradually reversed the population erosion. The availability of rapid transit, close proximity to the major employment hubs in San Francisco and Oakland, and relatively affordable existing and new housing have combined to attract more residents to these cities. The unincorporated regions of the County registered a 17.811/a increase in population during the 1980's after having dropped by 22.2%during the 1970's. The California State Department of Finance reported that the County's population stood at 879,206 as of January 1997, an increase of 10% since 1990. The strongest growth is concentrated in the eastern portions of the County,particularly in Clayton,Antioch and Brentwood,although strong growth was noted in Hercules and Richmond in the western part of the County. A-1 COUNTY OF CONTRA COSTA POPULATION.. Special Census 1964 1970 1975 1980 1990 197 Antioch 17,305 28,060 33,215 42,683 60,900 76,538 Brentwood 2,186 2,649 3,662 4,434 7,500 14,493 Clam -- 1,385 1,790 4,325 7;150 10,029 Concord 36,208 85,164 94,673 103,763 110,900 111,837 Danville` - -- -- 26,143 31;200 38,104 El Cerrito 25,437 25,190 22,950 22,731 22,850 23,275 Hercules 310 252 121 5,963 16;400 18,787 Lafayette -- 20,484 19,628 20,837 23,450 23,597 Martinez 9,604 16,506 18,702 22,582 31,700 35,360 Moraga -- 14,205 14,418 15,014 15;850 16,330 Via` __ __ __ 17,070 16;650 16,900 Pinole 6,064 15,850 15,337 14,253 17,400 18,167 Pittsburg 19,062 20,651 24,347 33,465 47,250 50,832 Pleasant Hill -- 24,610 25,398 25,547 31;550 31,455 Richmond 71,584 79,043 70,126 74,676 86;640 91,252 San Pablo 19,687 21,461 19,392 19,750 25;000 25,906 San Ramon` __ __ - 20,511 35,100 41,930 Walnut Creek 9,903 39,844 46,034 54,033 60x400 62,205 Unincorporated 191,680 163.035 173.03 128.551 150x100 172,206 Total 449,030 558,389 582,829 656,331 797,600 879,206 California 15,717,204 18,136,045 21,185,400 23,668,145 28,558 000 32,609,000 tt� Totals may not equal sums due to independent rounding. Dates of incorporation:Danville(7/1!82),Orinda(7!1!85); San Ramon(7/1/83). The 1990 Census Report created 1980 population levels for these cities prior to official incorporation. Source: United States Census: 1960-1990,State Department of Finance: 1997. Industry and Employment The County has one of the fastest-growing work forces among Bay Area counties,with growth in its employment base being driven primarily by the need to provide services to an increasing local population. The County has experienced an immigration of white-collar jobs due to the relocation of companies from costlier locations in the Bay Area. The combined impact of population growth and immigration has resulted in significant job creation in the County,with the 1996 job base of 298,300 having grown about 4%since 1992. As shown below, the County's labor farce stood.at 472,700 in 1997. With average 1997 unemployment rates of 4.1%o and 6.3%for the County and the State,respectively,the County has achieved a lower unemployment rate than the State in each of the past six years. A-2 COUNTY OF CONTRA COSTA EMPLOYMENT AND UNEMPLOYMENT OF RESIDENT LABOR FORCE WAGE AND SALARY WORKERS BY INDUSTRY ANNUAL AVERAGES(IN THOUSANDS) 1992 1993 199 1995 1996 1997 Civilian Labor Force(') 436.0 440.0 454.0 456.0 458.1 472.7 Employment 409.8 410.9 426.0 430.5 435.5 453.1 County Unemployment 26.2 29.1 28.0 26.1 22.6 19.6 Unemployment Rate: County 6.0% 6.6% 6.2% 5.7% 4.9% 4.1% State of California 8.5% 9.2% 8.6010 7.No 7.2% 6.3% Wage and Salary Employment(2) 1992 1993 1994 1995 1996 Agriculture 1.3 1.3 1.2 1.0 1.2 Mining and Construction 19.6 19.8 19.8 19. 20.6 Manufacturing 30.1 27.3 27.2 26.6 26.1 Transportation and Public Utilities 18.6 19.2 20.2 20.3 19.8 Wholesale Trade 11.0 10.6 10.5 10.6 12.0 Retail Trade 56.3 56.1 56.2 56.1 57.0 Finance,Insurance,and Real Estate 27.5 27.7 28.4 26.7 26.1 Services 78.5 80.2 81.0 86.7 90.3 Government 44.1 43.0 44.8 45.1 45.3 TOTAL(3) 287.0 285.2 289.3 292.7 298.3 (') Based on place of residence.Data for 1995 and 1996 are based upon the March 1997 benchmark and are not comparable to other years, as the revised benchmarked data for those years are not yet available. (2) Based on place of work. (3) "Total"may not be precise due to independent rounding. Source: State of California,Employment Development Department,Labor Market Information Division. Major Employers Major industries in the County include petroleum refining,steel manufacturing,prefabricated metals, chemicals,electronic equipment, paper products,services and food processing. Most of the County's heavy manufacturing is located along the County's northern boundary fronting on the Suisun and San Pablo Bays leading to San Francisco Bay and the Pacific Ocean. Descriptions of major employers in selected industries follow. Petroleum and Petroleum Products. The production of petroleum products formed the initial basis of industrial development in the County. Currently,four companies manufacture products from crude oil. The largest in terms of capacity is Chevron Corporation's Richmond Refinery, which began operations in 1902 and is the company's oldest and third-largest refinery. The Richmond refinery,located on 3,000 acres,has a capacity of 365,000 barrels per day. The refinery produces a complete line of petroleum products and imports the bulk of the crude oil from Alaska. Shipping facilities include the company's own wharf,which is capable of handling four tankers at a time,making it the largest in the Ray Area in terms of tonnage. Chevron operates a fleet of 37 tankers, of which seven are for intrastate business. Petroleum products are also shipped by truck and by two railroad carriers as well as distributed by pipeline. The A-3 company has completed construction of a$160 million natural-gas-fired cogeneration plant to fulfill its own requirements for electricity and steam. A number of Chevron's divisions are located throughout the County. Chevron Research and Technology Company is in Richmond and is the only non-geological research arm of the company. This facility is used by Chevron Research in its continuing program to improve the efficiency of conventional auto, aircraft and marine fuels. Chevron Accounting Division is located in a 400,000 square foot building in Concord and serves as a finance and computer center for Chevron's entire domestic operations. Chevron also operates a facility in San Ramon where 3,900 employees are involved in computer, marketing, consumer services and other administrative functions. Chevron is the third largest company in the San.Francisco Bay Area as measured by market value and is the largest employer in-the County,reporting approximately 45,758 people on its worldwide payrolls as of December, 1995. The company has nearly 10,000 employees located among its variousfacilities in the County. Shell Oil Company ("Shell") began operating in Martinez in 1915. The Shell Oil and Chemical Martinez Manufacturing Complex,located on 1,100 acres,is a combined oil refinery and industrial chemical production plant. It is one of three Shell facilities on the West Coast which supply all Shell products to the western states. The complex currently has the capacity to process about 145,000 to 160,000 barrels of crude oil per clay. About 70-80°r'cs of this crude oil is transferred via the company's pipeline from California oil fields,while the remainder is shipped from Alaska. Shell's docking facilities can handle two tankers and two barges simultaneously. Finished petroleum products are shipped via a company owned pipeline, Southern Pacific Railroad's pipeline,and by rail car and truck. Shell is in the construction phase of a$1 billion upgrade to the Martinez complex that will enable it to produce cleaner burning gasoline in compliance with new federal and state laws. Shell employees in the County total approximately 930, of whom approximately 880 work at the Martinez complex and 50 work at a retail district office in Concord. Union tail Company ("Unocal")operates an oil refinery at Rodeo between the cities of Richmond and Martinez,and a distribution terminal for Northern California at Richmond. The oil refinery,which began operations in 1896,occupies 1,100 acres and processes up to 100,000 barrels of raw materials per day. There are 600 full-time employees at the refinery and 75 at the distribution terminal. Unocal also operates a chemical plant on Franklin Canyon Road near Highway 4 in the County. Tosco Refining Company,a wholly owned subsidiary of Tosco Corporation,operates a refinery with a capacity of 150,000 barrels per day. The refinery,which has been in operation since 1913,uses crude oil from the North Slope of Alaska,as well as the heaviest crude oil from Califorriia oil fields,and refines it into high grade light fuel products. It is located on a 2,200-acre site and employs approximately 800 people. Tosco moven its corporate headquarters to Concord in the fall of 1990. The relocation added another 135 employees to payrolls in the County. In order to comply with State and federal clean air laws,the County's major oil refineries have built new facilities to produce cleaner gasoline and other products. The refinery projects are known as "Clean Fuels Projects". Following are the locations and sizes of each of the six Clean Fuels Projects that employ a significant number of County residents. A-4 Investment Comttanv Cid ( mil—ho-0) Chevron Corp. Richmond $ 500 Tosca Corp. Avon 400 Shell Oil Co. Martinez 1,300 Tesco Corp. Rodeo 30 Total $2,500 Health Care. One of the Bay Area`s largest private employers,Kaiser Permanente Medical Group has approximately 3,300 employees in the County. Kaiser provides medical coverage to about onie in three Bay Area residents and operates hospital and clinic facilities in Richmond, Martinez, Antioch and Walnut Creek and is exploring other sites in the County for future construction. Telephone Services. SBC, the Bay Area's ninth largest company as treasured by market value, reported 49,000 worldwide employees as of December 1995. The company has been trimming its worldwide workforce over the past five years as a result of cost reductions,restructuring,and buyouts. The San Ramon Chamber of Commerce reported in early 1995 that the company's employment totals approximately 7,500 at its Bishop Ranch offices in the County. The following table provides a listing of large companies located or headquartered in the County and their recent employment levels. COUNTY OF CONTRA COSTA MAJi3R CUMPAms LocA TED OR HEADQUARTERED IN THE COUNTY AND EMPLOYERS WITH MORE THAN 1,000 EMPLOYEES Finn Primary Loci tionsProduct Etnolovment Bank of America Concord Financial Services 20,095 SBC San Ramon Telecommunications 16,832 Safeway Countywide Retail Food Outlets 15,800 Chevron Corporation Richmond,Concord,San Ramon Petroleum Products 9,078 County of Contra Costa() Martinez County Government 7,246 Longs Drugs Storerza Walnut Creek Drug Stores 5,000 Kaiser Permanente Medical Group Martinez,Walnut Creek Health Care Service 3,300(3) Fibreboard(z) Concord Wood Products 3,000 Bio-Rad(2} Hercules Clinical Testing Equipment 2,300 Village Resorts Lafayette Resort Condominiums 1,800(3) Centred Garden Supply Lafayette Wholesale Garden Supplies 1,450 TakeCare(2) Concord Health Maintenance 1,403 Knight-Ridder Walnut Creek Newspapers 1,267(3) Naval Weapons Station(�) Concord Munitions Depot 1,175 North American Title Co. Walnut Creek Title Insurance 1,14013) Fresenius USA#�l Walnut Creek Medical supplies 1,100 City of Concord(2) Concord City Government 1,025 (1) Estimates;may include entire Bay Area workforce. (2) Headquartered in the County (3) As of April,1993. Source. The San Francisco Chronicle, "The Chronicle 100 April 1997; San Ramon Chamber of Commerce; Contra Costa Times,'Top 50",July, 1992. Impact of N1111tary Base Closings The U.S. Congress enacted legislation in 1990 to close a number of domestic and international military bases, including several in the Bay Area. A total of four rounds of base closures were announced between 1988 and March, 1995. The list of bases in Northern California with scheduled closure dates A-5 __ . .................................................................................................................................................................._................._. _.. . ....... .......................... ......... ....._.. ......... ......... ......_. ....._.. .......... ........ ............. ..... ......... included Presidio Army Base, Letterman Hospital, Treasure Island Naval Station, and Hunter's Point Annex of Treasure Island Naval Air Station (San Francisco County), East Fort Baker (Marin County), Alameda Naval Air Station,Oakland Naval Hospital,Alameda Naval Aviation Depot,and Naval Public Works Center (Alameda County), Fort Ord (Monterey County), Moffett Field Naval Air Station (Santa Clara County), Sacramento Army Depot and Mather Air.Force Base(Sacramento County), Mare Island Shipyard (Solan County),and Castle Air Force Base(Merced County). According to the 1993 Report of the California Military published by the Base Reuse Task Force, approximately 42,000 military positions and 26,000 civilian jobs are expected to be lost in Northern California as these facilities are gradually closed. In Southern California, approximately 34,000 military positions and 9,000 civilian jobs are expected to be lost at seven military bases in Los Angeles, Orange, San Diego, Imperial,and.San Bernardino Counties. The cumulative impact of the defense cutbacks- including defense contractors, civilian workers, and jobs that depend on military spending- includes the loss:of an estimated 200,000 to 300,000 jobs in California at a cost of$5 billion to$7 billion,although this cost is expected to be offset by the privatization and conversion of the closed military facilities to commercial use over a period of time. The cutbacks in nearby Northern California facilities are not expected to significantly affect the County's economy. The only military installation located in Contra Costa County is the Naval Weapons Station in Concord,a facility that is not slated for closure. Median Income As a consequence of its strong employment sector, the County achieves high rankings among all California counties on a variety of income measurements. For example, as reported in the 1997 Sales and Marketing Management Survey of8uying Power,the County's median household effective baying income for the 1996 calendar year was$48,648. This ranked the County in third place among all California counties. A-6 ................I.......................................................... Commercial Activity Commercial activity forms an important part of Contra Costa County's economy, with dollars generated by taxable transactions totaling approximately$8.6 billion in 1996. COUNTY OF CONTRA COSTA TAXABLE TRANSACTIONS 1992 To 19%) (IN THOUSANDS) 1992 1993 1994 1995 1996 Apparel Stores $ 273,892 $ 276,507 $ 263,835 $ 246,879 $ 261,695 General Merchandise Stores 1,201,982 1,156,050 1,166,204 1,223,187 1,213,152 Specialty Stores 702,994 720,715 754,092 817,531 890,623 Food Stores 512,195 435,502 428,585 433,694 458,877 Packaged Liquor Stores 50,195 40,707 38,242 39,972 42,925 Eating and Drinking Places 546,431 549,473 563,770 591,767 625,283 Home Furnishings and Appliances 265,447 273,110 270,691 283,020 323,400 Building Materials and Farm Implements 432,665 461,036 492,850 493,436 543,324 Service Stations 519,478 510,835 507,073 551,686 538,940 Automotive and Vehicle Dealers,Parts and Supplies 795,286 842,469 868.095 927.563 1,046,980 Total Retail Outlets $5,300,555 $5,266,404 $5,353,437 $5,608,735 $5,945,099 Business and Personal Services $ 308,261 $ 313,314 $ 326,664 $ 330,063 $ 365,029 All Other Outlets 1956 354 $1,896,702 Q139,06440$2 095. 22 , _ $ 65,576 Total All Outlets $7,565,170 $7,476,420 $7,818,165 $8,339,755 $8,575,704 Source: State Board of Equalization Much of the County's commercial activity is concentrated in central business districts of the cities and unincorporated towns. In addition, four regional shopping centers and numerous smaller centers serve County residents. The regional centers located in the cities of Richmond, Concord, Walnut Creek and Antioch each are anchored by at least three major department stores. The largest regional shopping center in the County is Sun Valley Shopping Center, which features 130 stores including Macy's, Seam, Penney's and Mervyn's. In addition,Price Costco!s large warehouse stores are located in Richmond and Martinez. The County is served by all major banks including Bank of America NT&SA and Wells Fargo Bank. In addition there are numerous local banks and branches of smaller California and foreign banks. There are over 30 savings and loan associations in the County, including Home Savings,Great Western,San Francisco Federal and California Federal. Construction Activity The value of residential building activity decreased slightly in 1997,although it remains above the lowest level reached in 1991 while the recent California recession was at its deepest point. The overall decline was a result of decreased multi-family unit construction, while the single-family sector posted a marginal gain. Within cities in the County, Brentwood accounted for the largest percentage (18.2%) of total valuation growth in 1997 at$106.3 million. A-7 ...................................................... ....................................... The following table provides a summary of building permit valuations and number of new dwelling units authorized in the County since 1987. COUNTY OF CONTRA COSTA BUILDING PERMIT VALUATIONS 1988-1997 Valuation($millions) -Number ofNew Dweftng Units Residential v See MU192le Year (New) Nonresidential Total Family Family Total 1988 $785,925 $214,201 $1,000,126 5,853 2,171 8,024 1989 863,313 264,020 1,127,333 5,504 2,219 7,723 1990 560,193 252,443 812,636 3,132 1,149 4,281 1991 488,939 196,165 685,104 2,705 1,275 3,980 1992 638,714 207,099 845,812 3,279 614 3,893 1993 590,135 183,156 773,291 3,026 451 3,477 1994 699,395 166,160 865,555 3,682 230 3,912 1995 619,685 190,443 810,128 2,137 618 3,755 1996 584,108 NIA NIA 3,094 450 3,580 1997 582,793 NIA NIA 3,105 381 3,486 Note: Totals may not be precise due to independent rounding Sources: Data Resources Inc. 1988; Economic Sciences Corporation: 1989 1997. In terms of major construction projects in the County,approximately$2.5 billion was recently spent by several major oil refiners to comply with federal clean fuels guidelines(see"Major Fruployers-Petroleum and Petroleum Products'). In addition,$506 million was spent by Bay Area Rapid Transit District("BART") on its extension to the West Pittsburgh/Baypoint region of the County,and$450 million of new construction was completed by the Contra Costa Water District on the Los Vaqueros Reservoir in the eastern portion of the County. Approximately$3.8 billion of construction projects are currently underway in the County,including a$2.2 billion development known as"Dougherty Valley„that will add 11,004 homes to the County's housing stock and$800 million of new home construction associated with other major subdivision developments. In addition, approximately $3.6 billion of projects are pending approval, including two projects known as "Tassajam Valley" and "Cowell Ranch" that involve $2.0 billion of construction spending on 10,000 residential units and$900 trillion to retrofit and repair two major bridges in the County,the Carquinez Bridge and the Benicia Bridge. Transportation Availability of s broad transportation network has been one of the major factors in the County's economic and population growth. Interstate 80 connects the western County to San Francisco, Sacramento and points north to Interstate 5, the major north-south highway from Mexico to Canada. Interstate 680 connects the central County communities to the rest of the Bay Area via State Routes 4 and 24,the County's major east-west arteries. On April 23, 1992,Caltrans began Northern California's largest freeway interchange reconstruction project at the intersection of Interstate 680 and Highway 24 in Walnut Creek. The$315 million project will acid traffic lanes, an elevated bypass,and redesigned access patterns. With the majority of the work being conducted at night,the project is scheduled to finish in 1998. Caltrans is also widening Interstate 80 in the western portion of the County at a project cost of$200 million. In addition to private automobiles, ground transportation is available to County residents from the following service providers. A-8 • Central Contra Costa Transit Authority("CCCTA")provides local bus service to the central area of the County including Walnut Creek,Pleasant Hill and Concord. • Bay Area Rapid Transit("BART")connects the County to Alameda County,San Francisco and Daly City in San Mateo with two main lines, one from the San Francisco area to Richmond and the other to the ConcordlWalnut Creek/Pittsburg area. In December, 1996, BART extended service to Pittsburg and is planning to extend service to Antioch in the eastern portion of the County. Construction of above-ground access down the middle of Highway 4 and the widening of Highway 4 in the affected region has been completed at a cost of approximately $500million. BART has recently received an additional eighty transit cars,fifty of which are expected to be used in both the Pittsburg extension and the Dublin extension in a nearby county. An order for an additional twenty cars is out to bid at the present time. BART is also constructing an extension to the City of Pleasanton in nearby Alameda County at a cost of$517 million which is expected to open in the summer of 1997. [needs review and update by County] • AC Transit, a daily commuter bus service based in Oakland, provides local service and connects Contra Costa communities to San Francisco and Oakland. • Other bus and rail passenger service is provided by Greyhound, Trailways Bus, and Amtrak. Amtrak operates a special commuter line between Oakland and:Sacramento that makes several daily stops at the Martinez station. +° The Santa Fe and Southern Pacific Railroads'main lines service the County, both in the industrial coastal areas and the inland farm section. Commercial water transportation and docking facilities are available through a number of port and marina locations in the County. The Port of Richmond on San Pablo Bay and several privately owned industrial docks on both San Pablo and Suisun Bays serve the heavy industry located in the area. The Port of Richmond, owned and operated by the City of Richmond, covers 202 acres and handles nearly 20 million metric tons annually. The majority of the shipments are bulk liquids with the remainder consisting of scrap metal,autos,and gypsum rack. Major scheduled airline passenger and freight transportation for County residents is available at either Oakland or San Francisco International Airports, located about 20 and 30 miles,respectively, from the County. In addition there are two general aviation fields,one at Byron and the other at Concord. Agriculture The County is comprised of 470,400 acres, with over half(254,445) of these acres allocated to farmlands and harvested cropland. In 1997, the total gross value of agricultural products and crops reached $95.8 million. The value of agricultural production since 1993 is illustrated in the table below. A-9 .......''I............................................................................................................................................................................................ ........................................................................................ COUNTY OF CONTRA COSTA AGRICULTURAL PRODUCTION,1993-1997 1993 1994 1995 1996 1997 Nursery products $24,940,000 $25,409,000 $21,782,000 $26,219,000 $31,298,000 Livestock&poultry 7,045,100 3,656,000 3,444,000 4,668,400< 5,708,000 Field crops 10,115,600 11,122,000 10,616,900 12,281,800 12,695,700 Vegetable&seed crops 16,067,500 20,242,500 19,037,000 19,899,000 20,033,000 Fruit and nut crops 13,131,700 13,156,900 14,967,500 15,294,000 18,520,000 Livestock,apiary& poultry products 5,760,950 6171,.690 5,970.430 7.2,60A90 7.591420 Total $77,060,850 $80,118,090 $75,817,830 $85,622,690: $95,842,120 Source: Contra Costa County Department of Agriculture. Environmental Control Services Water. The East Bay Municipal Utilities District("EBMUD")and the Contra Costa County Water District("CCCWD")supply water to the County. EBMUI),the second largest retail water distributor west of the Mississippi, supplies water to the western part of the County. Ninety-five percent of its supply is the Mokelumne River stored at the 68 billion gallon capacity Pardee Dam. EBMUD is entitled to 325 million gallons per day under a contract with the State Water Resources Control Board,plus an additional 325 million gallons per day under a contract with the U.S.Water and Power Resources Service(formerly the U.S.Bureau of Reclamation). EBMUD does not plan to draw on its federal entitlement for the foreseeable future. CCCWD obtains its water from the Sacramento-San Joaquin Delta and serves 400,000 customers in Concord,Pleasant ffill,Martinez,Clayton,Pittsburg and Antioch. It is entitled under a contract with the U.S. Water and Power Resources Service to 195,000 acre-feet per year. Water sold has ranged between 80,000 and 110,000 acre-feet annually. In addition, a number of industrial users and several municipalities draw water directly from the San Joaquin River under their own riparian rights,so that actual water usage in the service area averages about 125,000 acre-feet annually. To provide expanded water storage capacity, CCCWD is currently constructing the Los Vaqueros Reservoir south of the City of Antioch at an estimated project cost of $450 million. Sewer. Sewer services for the County are provided by approximately 20 sanitation districts and municipalities. Federal and State environmental requirements, plus grant money available.from these two sources,have resulted in about 14 agencies upgrading,expanding and/or building new facilities. Flood Control. The Contra Costa County Flood Control District has been in operation since 1951 to plan,build,and operate flood control projects in unincorporated areas of the County except for the Delta area on its eastern border. The Delta is interspersed with inland waterways which fa under the jurisdiction of the U.S. Corps of Engineers and the State Department of Water Resources. The District has recently completed construction of the West Antioch Capacity Improvement Project. Education and Community Services Graded public school education in the County is available through nine elementary school districts, two high school districts,and seven unified school districts. These districts provide 125 elementary schools, 29 middle,junior high,and intermediate schools,24 high schools,and a number of preschool,adult school, and special education facilities. In addition, there are 101 private schools with six or more students in the County. School enrollment in January of 1996 numbered approximately 138,838 students in public schools and 15,465 students in regular graded private schools. A-10 ................................................................................... Higher education is available in the County through a combination of two-year community colleges and four-yea colleges. The Contra Costa County Community College District has campuses in Richmond, Pleasant Hill and Pittsburg. California State University at Hayward opened a branch campus, called Contra Costa Center,in the City of Pleasant Hilt where late afternoon and evening classes in business,education and liberal arts are offered. In addition,the California State University currently has a campus in Concord St. Mary's College of California,a four-year private institution,is located on a 100-acre campus in Moraga. Also located within the County is John F. Kennedy University. In addition, County residents are within easy commuting distance of University of California at Berkeley. There are nine privately operated hospitals and one public hospital in Contra Cosh County, with a combined total of 1,900 beds. Three of the private hospitals are run by Kaiser Permanente,the largest health maintenance organization in the United States. The public hospital is Merrithew Memorial Hospital,a facility that the County renovated and opened to the public in January 1948 on the existing campus in Martinez. A-11 ''I'll'',..........................................................................................................................................................................................................- ..................................................................................... • APPENDIX B COUNTY FINANCIAL INFORMATION APPENDIX B COUNTY FINANCIAL INFORMATION Changes in State Funding and County's Response California counties administer numerous health and social service programs as the administrative agent of the State and pursuant to State law. Historically,many of these programs have been either wholly or partially fimded with State revenues which have been subject each year to the State' budget and appropriation process. While the composition of State revenues has shifted over recent years,the overall proportion of the County's General Fund budget financed by State revenues has remained steady at approximately 35 . During the three fiscal years from 1991-92 through 1993-94, the State of California experienced budget deficits largely attributable to the economic recession in California. In response to these budget deficits, the State in 1991-92 implemented a "realignment program" removing State funding for certain health and welfare programs from the State budget process and shifting the fiscal responsibility for these programs to the counties. Under this plan,State fiinding for these programs was replaced with the sales tax increase of 1f2-cent as well as increase in vehicle license fees. An additional sales tax increase was subsequently approved by the voters as Proposition 172, permanently extending the tax for public safety purposes. The realignment program shined approximately$2.2 billion out of the State budget process. In response to continued State budget deficits,the 1992-93 State budget reduced$1.3 billion in aid to local governments, and the 1993-34 State budget shifted about $2.1 billion in property taxes from counties to relieve the State of its obligation to fund education. The property tax revenue losses for counties were offset in part by additional sales tax revenues and the elimination of state mandates. Over the last several years,State and federally mandated expenditures in justice,health and welfare have grown at a greater rate than the County's discretionary general-purpose revenues. At the same time, decreased State revenues have resulted in fewer State funds being available to the County. The result has been that the County has increased its contribution to maintain mandated services while optional local services have been reduced. The Board has responded to this trend in part by instituting measures to improve management, thereby reducing costs and increasing productivity and maintaining services with diminished funding. 1996-97 State Budget On January 10, 1996,the Governor released his proposed budget for the 1996-97(the, "Governor's 1996-97 Budget"). The Governor requested total General Fund appropriations of about$45.2 billion,based on projected revenues and transfers of about $45.6 billion, which would leave a budget reserve in the Special Fund for Economic Uncertainties at June 30, 1997 of about$400 million. The May Revision of the Governor's 1996-97 Budget released on May 21, 1996 reflected stronger economic activity and greater revenue growth, including $47.1 billion in revenue and $46.5 billion in expenditures. The Budget Act assumed savings of approximately$660 million in health and welfare costs that required changes in federal law,including federal welfare reform. The Budget Act further assumed federal law changes in August 1996 which would allow welfare cash grant levels to be reduced by October 1, 1996. These cuts totaled approximately $163 million of the anticipated $660 million savings. See "Federal Funding and. Welfare Reform" below. The Budget Act also assumed the federal government will provide approximately $700 B-1 ............................................................................................. million in new aid for incarceration and health care costs of illegal immigrants,of which$540 million was expected to be received during the 1996-97 fiscal year. There was also a proposal (as yet unrealized)to restructure trial court funding in a way which would result in a $300 million decrease in General Fund revenues. 1997-98 State Budget On August 18, 1497, the Governor signed the 1997-98 State Budget. The $67.2 billion budget reflects $52.5 billion in General Fund revenues/transfers and projected expenditures of$52.8 billion. An additional$14.4 billion in expenditures is projected in special funds. A year-end surplus of$112 million is projected for 199798. The projected spending levels include a one-time payment of$1.2 billion to the Public Employees' Retirement System pursuant to a court ruling in May, 1997. With respect to welfare reform,the 1997-98 State Budget rejects the Governor's proposal to make the SSI/SSSP statewide grant reduction payment. The grant was restored on November 1, 1997 and extends the Aid to Families with Dependent Children (AFDC) grant through October, 1498. Appropriations for AFDC assistance payments were reduced by 18%from 1996-97 levels due to declining caseloads. Cost of living adjustments were also suspended on the AFDC and SSI/SSP programs. The 1997-98 State Budget also reflects the Governor's veto of the proposed extension of prenatal services for illegal immigrants beyond December, 1947. Food stamp and SSI/SSP benefits which are denied to legal noncitizens under federal welfare reform will be maintained by the State for children and elderly noncitizens. The 1947-98 State Budget funds a major Welfare to Work program in the California Work Opportunity and responsibility to Kids program (CalWORKs). The program establishes aid limits and participation requirements on adults,and expands childcare and job training services. Of special interest to counties, the 1997-98 State Budget does incorporate$32.7 million in TANF funding for probation camps and$100 million in funding for the Citizen's Option for Public Safety Program (COPs). Approximately $ million of the TANF funding and $� million in COPS funding will be allocated to Contra Costa County. Due to the payment to the Public Employees' Retirement System, the return of$ million in property tax revenues to the County from the Educational Relief Augmentation Fund was deleted from the 1997-98 State Budget. The County received a $ million reduction in the State's Disproportionate Share Hospital administrative fee. Federal Funding and Welfare Reform The federal government provided approximately 16% of the County's 1997-98 General Fund Budgets. The human services departments receive substantial funds for assistance payments and social service programs. On August 22, 1996, President Clinton signed the Welfare Reform Act that makes substantial modifications to the welfare system. Among ether changes,the Welfare Reform Act will allow the State to deny access to some federally funded welfare assistance programs to legal immigrants(but not to refugees), which could result in a significant impact on the County's budget. In the aggregate, the bill`s restrictions B-2 would reduce federal expenditures in low-income programs by more than $55 billion over the next six years. Nearly all of the $55 billion in savings come from reductions in the federal food stamp program, Supplemental Security Income (SSI) program, and assistance to legal immigrants. California would potentially lose over $10.0 billion in federal funds during the same period of time. Absent revisions to current state lave,the California State Association of Counties has estimated that counties in the State could see annual costs increase by $1.7 billion, while the State may realize savings of roughly $1.4 billion annually. This analysis results from the expectation that expenditures required to be made by counties for General Assistance could increase significantly. For example,the annual increase in cost for county-fimded General Assistance due to the reduction of federal assistance to legal immigrants in the County receiving SSI (one of the assistance programs impacted by amending California Welfare and Institutions Code Section 17000, which mandates that counties provide support and relief to those residents who are not supported by other means) could be between $54 million and $118 million under current state law and General Assistance program parameters. This range of potential additional annual cost represents a worst case scenario. A more precise estimate of the impacts of the Federal Welfare Reform to the County will not be possible until the State of California adopts implementing legislation. It is currently unknown what aspects of welfare reform the State will choose to implement and whether or not the State will mitigate impacts to the County. If there are additional costs to the County during the 1997-98 fiscal year due to the Welfare Reform Act or other related legislation, the County anticipates that it may be necessary to reduce general government service levels by deleting positions and/or reducing overhead costs. In any event, the County's budget for 1997-98 will be balanced, as required by law, within the available financial resources. The County Board of Supervisors has repeatedly demonstrated its resolve to balance the County's budget despite difficult program reductions, impacting constituents and employees,that have often been necessary to achieve a balanced budget: County Budget Process The County is required by State law to adopt a balanced budget by August 30 of each year, although the Board may, by resolution, extend on a permanent basis or for a limited period, the date to October 2. The County's budget process involves a number of steps. First, upon release of the Governor's Proposed Budget in January, the County Administrator prepares a preliminary forecast of the County's budget based on current year expenditures,the assumptions and projections contained in the Governor's Proposed Budget,and other projected revenue trends. Second, the County Administrator presents the County's Proposed Budget to the Board of Supervisors. Absent the adoption of a final County budget by June 30, the current existing budget is continued into the new fiscal year until a final budget is adopted. Third, between January and the tune the State adopts its own budget, legally due no later than June 15, representatives of the County Administrator monitor, review and analyze the State budget and all adjustments made by the State legislature. Upon adoption of the final State budget, the County Administrator recommends revisions to the Proposed Budget to align County expenditures with approved State revenue. After conducting public hearings and deliberating the details of the budget,the Board adopts the County's Final Budget by August 30,or by October 2 if the Board has adopted a resolution to extend the deadline. The County adopted its Final Budget for 1997-98 on , ahead of the legally extended deadline of October_, 1997. In order to ensure that the budget remains in balance throughout the fiscal; year, the County B-3 ...................................................................................... Administrator monitors actual expenditures and revenue receipts each month. In the event of a projected year-end deficit, immediate steps are taken, in accordance with the State Constitution, to reduce expenditures. On a quarterly basis, the County Administrator's staff prepares a report that details the activity within each budget category and provides summary information on the status of the budget. Actions which are necessary to ensure a healthy budget status at the end of the fiscal year are recommended in the quarterly budget status reports. Other items which have major fiscal impacts are also reviewed quarterly. The County's ability to increase its revenues is limited by State laws which prohibit the imposition of fees to raise general revenue,except to recover the cost of regulation or provisions of services. See"CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" in the forepart of this OfficialStatement. 1995-96,1996-97,and 1997-98 County General Fund Budgets Set forth below is a description of the County's comparative budgetary and expenditure experience for fiscal years 1995-96 through 1997-98. For a summary of the actual audited financial results of the County for fiscal year 1996-97, see"FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 1997" in Appendix C to this Official Statement. Fiscal Year 1995-96. In January 1995 a preliminary budget gap of$25.4 million was identified for the 1995-96 fiscal year. To address the potential deficit,the Board adopted an accelerated budget schedule so that budget reductions would occur in early June 1995 rather than in August 1995,thereby lessening the number of employee layoff's by taking advantage of twelve months of cost savings. Additionally, three budget workshops were held during April and May 1995 so that Board members could, review the intricacies of the County budget and further evaluate the options available to balance the budget. A second round of budget hearings was held in the Summer of 1995 to adjust the budgets of some departments to the impact of the State budget. Financing for Social Services and Health Services programs and for the trial courts was affected. The continuation of property tax revenue shifts from the County was not included in State budget legislation for fiscal year 1995-96 as it had been in the prior two fiscal years. The County's 1995-96 Budget reflected the above adjustments as well as a final $22.8 million of budget cuts. General'Assistance provides cash assistance to indigent persons not eligible for State or federally funded assistance programs. Expenditures in Fiscal Year 1994-95 were $13,797,835. For Fiscal Year 1995-96,the Board of Supervisors reduced the budget to$9,932,300,a reduction of$3,865,535 (28%). At the same time, the Board of Supervisors enacted program modifications including vendor payments for housing, mandatory shelter referrals for self declared homeless recipients, redesigned the substance abuse referral and treatment program and increased sanctions for program noncompliance. As of the third quarter budget report,the cash aid program was projected at$9,301,435 or$630,865 under budget. In addition, the County entered into SB 1255 Round #9 negotiations with California Medical Assistance Commission and realized a$5.0 million net benefit from the 1995-96 program. Fiscal Year 1996-97 The County's fiscal year 1996-97 Adopted Budget reflected a 3.9%decline from fiscal year 1995-96. However, the County experienced a decline in general assistance and welfare caseloads compared to the prior fiscal year, thereby resulting in greater discretionary County revenuethan in the recent past. The County's 1996-97 Adjusted Budget did not contain any significant budget cuts as a result of improvement in both the State and local economies. B-4 ............................................................................................................................ .......................................................................................... .................... ...... Fiscal Year 1997-95. The County's Fiscal Year 1997-98 budget is similar to the 1996-97 Final Budget [To be updated by County] A comparison of the General Fund Budget portion of the County's 1996-97 Final Budget and the 1997-98 Adjusted Budget is shown below. COUNTY OF CONTRA COSTA GENERAL FUND BUDGETSO) FOR FISCAL YEARS 1996-97 AND 1997-98 (IN THOUSANDS OF DOLLARS) Final Adjusted Budget Budget 1996-97t') 1997-98 REQUIREMENTS General Government S 92,938 $ 94,328 Public Protection 194,258 199,084 Health and Sanitation 141,778 145,072 Public Assistance 256,137 244,197 Education 11,355 12,582 Public Ways and Facilities 13,862 13,473 Recreation and Culture I I Reserves and Debt Service 16,328 16.334 Total Requirements $726,657 $725,071 AVAILABLE FUNDS Property Taxes $ 93,975 S %,761 Fund Balance Available 38,014 43,382 Other Taxes 7,319 9,265 Licenses,Permits and Franchises 10,850 11,838 Fines,Forfeitures and Penalties 13,712 10,934 Use of Money and Property 12,871 12,196 Intergovernmental 393,680 392,565 Charges for Current Services 111,110 109,078 Other Revenue 45,124 38&32 Total Availatile Funds $726,65 $725,071 (1) Includes General Fund,Library Fund,Land Development Fund,and Child Development Fund. (2) Final Budget,as adjusted through March 11, 1998. Source: County Auditor-Controller The Contra Costa County Investment Pool All 1998 Series A Bond proceeds will be held in certain funds by the Trustee pursuant to the Trust Agreement. Although none of the 1998 Series A Bond proceeds will be deposited in the County of Contra Costa Investment Pool (the "Poor"), the following disclosure about the Pool and the County Investment Polity is provided for general informational purposes. State law requires that all moneys of the County, school districts, and certain special districts be held in the County Treasury by the Treasurer. The Treasurer has authority to implement and oversee the investment of such funds in the Pool in accordance with California Government Code Section 53600 et seq. (the "California Government Code"). The Treasurer accepts funds only from agencies located within the County. The moneys on deposit are predominantly derived from local government revenues consisting of property taxes, State and federal funding and other fees and charges. As of February 28, 1998, there were 37 participants in the Pool, the largest being the County. The County, County B-5 .................................................... .................................................................. ---l-,............................................................................................... ............................................... Agencies, and School and Community College Districts (who are involuntary members of the Pool) represented an aggregate 88.7%of the Pool's membership. As of February 28, 1998, investments in the Pool were held for the following local agencies in the indicated amounts: Investment Funds Local Agogy finSmillions) County and Agencies $487.75 School Districts 290.90 Community College Districts 36.37 Other Public Agencies* 338.83 Total $1,153.85 *Represents sanitation,fire,and transportation authorities that we voluntary parkipants in the Pool. The Treasurer has historically maintained a more restrictive investment policy for the Pool than that mandated under the California Government Code. For instance, the use of reverse repurchase agreements and purchase of mutual fund shares are prohibited. The County has an investment oversight committee that meets quarterly to monitor and report on all investment activities of the Treasurer's Office. As of February 28, 1998, the Pool had approximately 51.2% of its assets invested in U.S. Treasury and federal agency securities, and repurchase agreements. Approximately 28.2% of the Pool's assets were invested in highly liquid short-term money market instruments (certificates of deposit, bankers acceptances, and commercial paper). As of February 28, 1998, the detailed,composition, cost, and market value of the Pool was as follows: jjgg of Investment Cost Market Value %of Total Cash $69,865,122 $69,865,122 6.1% U.S.Treasuries 81,205,871 81,933,700 7.1% U. S.Agencies 490,161,510 491,008,369 42.6% Money Market Instruments 323,833,297 323,852,164 28.2% Other 184,375,400 184,192,331 16.0% Total $1,149,441,200 $1,150,851,685 100.0% B-6 ............................................................................................... -...............I................................................................................................. ............................. The Pool is highly liquid,with over 91%of the portfolio having a maturity of less than one year and an average weighted days to maturity of 132 days. The maturity distribution of the Pool's portfolio as of February 28, 1998 is presented in the following table. Amount Tenn to Maturity (Cost Basis) %of Total Less than I year $1,051,417,296 91.5% 1 to 2 years 44,874,717 3.9 2+years to 3 years 36,709,164 3.2 3+years to 4 years 37,284,861 0.6 4+years to 5 years 7,286,023 0.6 Greater than 5 years* 1,869,139 0.2 Total $1,149,441,200 100.00/0 Represents bond proceeds of Martinez Unified School District The mix of investments is designed to ensure that sufficient liquid funds are available to meet disbursement requirements. Funds on hand at the end of each of the past five fiscal years in excess of disbursement requirements were as follows: Fiscal Year Available Funds Ending JMne 30_ min millions) 1993 $801 1994 864 1995 969 1996 998 1997 1,135 Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property that is situated in the County as of the preceding January 1. For assessment and collection purposes,property is classified either as"secured"or"unsecured,"and is listed accordingly on separate parts of the assessment roll. The"secured roll" is that part of the assessment roll containing State assessed property and property secured by a lien on real property which is sufficient, in the opinion of the Assessor, to seem payment of the taxes. Other property is assessed on the"unsecured roll." B-7 ...............I....................................... ....................................................................... Property takes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid,such taxes become delinquent on,December 10 and April 10,respectively,and a 10%penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared to be in default on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of one and rine half percent per month to the time of redemption. If truces are unpaid for a period of five years or more,the tax-defaulted property is declared to be subject to the Treasurer`s power of sale and may be subsequently sold by the Treasurer. Legislation established the "supplemental roll" in 1984 which directs the Assessor to re-assess real property, at market value,on the date the property changes ownership or upon completion of construction. Property on the supplemental roll is eligible for billing 30 days after the reassessment and notification to the new assessee. The resultant charge(or refund) is a one-time levy on the increase(or decrease)in value for the period between the date of the change in ownership or completion of construction and the date of the next regular tax roll upon which the assessment is entered. Billings are made on a monthly basis and due on the date mailed. If mailed between the months of July through October,the first installment becomes delinquent on December 10th and the second on April 10th. If mailed within the months of November through June,the first installment becomes delinquent on the last day of the month fallowing the month of billing. The second installment becomes delinquent on the last day of the fourth month following the date the first installment is delinquent. Property taxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if unpaid,on August 31. A 10%penalty attaches to delinquent taxes on property on the unsecured roll,and an additional penalty of one and one-half percent per month begins to accrue beginning November 1. The taxing authority has four ways of collecting unsecured personal property taxes. (1) by filing a civil action against the taxpayer; (2)by filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer;(3)by filing a certificate of delinquency for recordation in the County Recorder`s office,in order to obtain a lien on certain property of the taxpayer; and(4)by the seizure and sale of personal property, improvements or possessory interest,belonging to the taxpayer. The County and its political subdivisions operate under the Teeter Plan pursuant to provisions of Sections 4701-4717 of the California Revenue and Taxation Code. Pursuant to those sections,the accounts of all political subdivisions that levy taxes on the County tax rolls are credited with 10010 of their respective tax levies regardless of actual payments and delinquencies. The County Treasury's cash position (from taxes)is protected by a special fund(the "Talc Losses Reserve Fund")into which all countywide delinquent penalties are deposited. The County has used this method since fiscal year 1950-51. Historically, the County has borne the full cost of property assessment and revenue collection and distribution. Senate Bill 2557, passed in 1990, allowed counties to charge cities, schools, special districts and redevelopment agencies for their share of property tax administrative costs. This legislation was subsequently repealed as to charges against school districts. In addition, the legality of the,property tax administrative charge has been challenged by the other affected taxing entities. While the County is unable to predict the ultimate outcome of such litigation,the County has prevailed at the Court of Appeals level on the issue of the viability of tax administrative charges to redevelopment agencies and at the Superior Court level as to all other challenged fees. The amount in question, approximately$4 million per year, does not represent a large proportion of the County's annual General Fund Budget,which exceeds$725 million. B-8 _._. ........................... ................................... _.. ''I'll-,................................................................................................................................. ....................................................... A recent history of Contra Costa County tax levies,delinquencies and the Tax Losses Reserve Fund cash balances as of June 30 is shown below. COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION FOR FISCAL YEARS 19W89 THROUGH 1997-" Percentage Secured Cur-rent Levy Current Levy Tax Losses Fiscal Assessed Property Delinquent Delinquent Reserve Fund Year Valuation Tax Levies &4ie 30 June 30 Wance June 30 1988-89 44,101,311,276 535,212,918 13,387,564 2.50 20,125,551 1989-90 48,641,369,485 593,937,412 14,746,710 2.48 21,797,766 1990-91 54,114,860,918 669,071,124 19,762,687 2.95 24,093,615 1991-92 58,422,186,087 714,963,082 24,787,991 3.47 26,558,333 1992-93 61,393,320,088 760,559,294 24,239,204 3.19 29,042,152 1993-94 63,427,696,578 794,435,830 20,652,106 2.60 31,225,565 1994-95 65,294,364,749 823,495,651 20,640,379 2.51 24,709a 11 1995-96 67,146,461,590 854,519,586 19,296,237 2.14 18,670,811 1996-97 69,242,099,630 869,580,974 18,057,023 2.08 17,154,539 1997-98 70,314,800,8923 894,661,0000) 19,235,0000) 2.1503 17,265,5390) 1998-99 71,721,000,0001') (1)Estimated Source: County Auditor-Controller During each fiscal year,the Tax Losses Reserve Fund is reviewed and when the amount of the fund exceeds certain levels, the excess is credited to the County General Fund as provided by Section 4703 and 4703.2 of the California Revenue and Taxation Code. Sections 4703 and 4703.2 allow any county to draw down the Tax Losses Reserve Fund to a balance equal to (i)one percent of the total of all taxes and assessments levied on the secured roll for that year, or(ii)25% of the current year delinquent secured tax levy. The reductions in the Tax Losses Reserve Fund balances during the last three years reflect multiple reductions in minimum reserve requirements legislated over that period. The impact of these reductions was to allow increased credits to the County General Fund. No other material drawdowns have occurred. B-9 111.1.11...................................................................................................................................................... ......................................................................... Largest Taxpayers The ten largest taxpayers in the County, as shown on the fiscal year 1997-98 secured tax roll, and the approximate amounts of their property tax payments are shown below. These ten taxpayers paid a total of$ million in taxes,or about %of the County's 1997-98 secured tax collection. COUNTY OF CONTRA COSTA TEN LARGEST PROPERTY TAxPAYERs [TO BE UPDATED BY COUNTY] Total Taxes Paid Commy 1997-98 Chevron USA Pacific Gas&Electric Company Shell Oil Company Pacific Bell Tosco Corporation Unocal USS Posco Seeno/Sierra Pacific Bank of America Kaiser Permanente TOTAL Source: County Treasurer-Tax Collector B-10 ................................................................................ ............................................................. Redevelopment Agencies The California Community Redevelopment Law authorizes city or county redevelopment agencies to issue bonds payable from the allocation of tax revenues resulting from increases in full cash values of properties within designated project areas. In effect, local taxing authorities other than the redevelopment agency realize tax revenues only on the "frozen" tax base. The following table shows redevelopment agency full cash value increments and tax allocations for agencies within the County. COMMUNITY REDEVELOPMENT AGENCY PROJECTS FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONStr) FISCAL YEARS 1996-87 THROUGH 1"6-97 Fiscal Full Cash Value Total Tax Year Base Year Value Increment Allocations(2) 1987-88 969,566,378 2,618,912,341 28,863,403 1988-89 1,342,442,031 2,845,683,596(3) 33,282,273 1989-90 1,591,934,101 3,275,371,212(3) 35,326,113 1990-91 1,696,768,706 3,966,154,674(3) 42,171,285 1991-92 1,806,223,553 4,573,718,772(3) 48,590,841 1992-93 1,864,029,147 5,009,792,773(3) 53,485,897 1993-94 1,864,029,147 5,236,543,696(3) 55,748,579 199495 2,715,784,139 5,320,724,209(3) 56,677,717 1995-96 3,051,303,629 5,337,629,341(3) 57,204,637 1996-97 3,195,085,095 5,433,724,548(3) 58,807,082 (t) Full cash values for all 'redevelopment projects above the "frozen" base year valuations. These data represent growth in full cash values generating tax revenues for use by the community redevelopment agencies. (2) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies. (3) Does not include unitary and operating non-unitary utility roll values which, starting with Fiscal Year 1988-89, are determined by the State Board of Equalization on a countywide basis as provided by Assembly Bill 454,Chapter 921,Statutes of 1987. Source: County Auditor-Controller Accounting Policies,Reports and Audits The County's accounting policies used in preparation of its audited financial statements conform to generally accepted accounting principles applicable to counties. The County's governmentalfunds and fiduciary funds use the modified accrual basis of accounting. This system recognizes revenues when they become available and measurable. Expenditures,with the exception of unmatbred interest on general long- term debt, are recognized when the fund liability is incurred. Proprietary funds use the accrual basis of accounting, whereby revenues are recognized when they are earned and become'measurable, while expenses are recognized when they are incurred. The Treasurer also holds certain trust and agency fiords not under the control of the Board,such as those of school districts,which are accounted for on a cash basis. B-11 ............................ ........ ......... ......._... ........ ........ ........ ........ ......... The California Government Code requires every county to prepare an annual financialreport. The Auditor-Controller prepares the Comprehensive Annual Financial Report for the County. This annual report covers financial operations of the County, County districts and service areas, local autonomous districts and various trust transactions of the County Treasury. Under California law,independent audits are required of all operating funds under the control of the Board. The County has had independent'audits for more than 40 years. Additionally,the County Grand Jury may also conduct management audits of certain offices of the County. Funds accounted for by the County are categorized as follows: General County Funds. The general County funds consist of the General Fund and other operating funds. The General Fund is used to account for the revenues and expenditures'of the County that are not accounted for by other funds. The other operating funds are used to account for the proceeds from specific revenue sources (other than special assessments) or to account for the financing of specific activities as required by law or administrative regulations. Special District Funds Under Control of Board of Supervisors. These funds are used to account for the transactions of fire protection districts,flood control and storm drainage districts,sanitation districts and county service areas under the control of the Board. Special District Funds Under Control of Local Boards and School District Funds. These funds are used to account for cash received and disbursed and cash and investments held by the, County for districts controlled by local boards. These districts maintain their own accounting records supporting their separate financial statements which are subject to separate audit under California law. Trust and Agency Funds. Trust and Agency funds are used to account for money and other assets received and held as trustee,custodian or agent for individuals and governmental agencies. Presented on the following page is the County's Schedule of Revenues,Expenditures and Changes in Fund Balances as of June 30' for the five most recent fiscal years. More detailed information from the County's audited financial report for the fiscal year ending June 30, 1997 appears in Appendix C to this Official Statement. B-12