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MINUTES - 03252003 - C68
A RESOLUTION OF THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA, AUTHORIZING THE ISSUANCE OF ACALANES UNION HIGH SCHOOL DISTRICT, CONTRA COSTA COUNTY, CALIFORNIA ELECTION OF 2002 GENERAL OBLIGATION BONDS, SERIES A IN THE AGGREGATE PRINCIPAL, AMOUNT NOT TO EXCEED$44,000,000 RESOLUTION NO.2003/183 WHEREAS, a duly called election (the "Election") was held in the Acalanes Union high School District (the "District"), Contra Costa County (the "County"), California, on November 5, 2002 and thereafter canvassed pursuant to law, WHEREAS, at the Election there was submitted to and approved by the requisite fifty-five percent vote of the qualified electors of the District a question as to the issuance and sale of general obligation bonds of the District for various purposes set forth in the ballot submitted to the voters, in the maximum principal amount of Forty-Four Million Dollars ($44,000,000) payable from the levy of an ad valorem talc against the taxable property in the District; WHEREAS, at this time this Board has received the resolution of the Board of Trustees of the District (the "District Resolution") requesting the issuance of a series of such Bonds in an aggregate principal amount not to exceed Forty-Four Million Dollars ($44,000,000) (the "Series A Bonds"); WHEREAS, all acts, conditions and things required by law to be done or performed have been done and performed in strict conformity with the laws authorizing the issuance of general obligation bands of the District, and the indebtedness of the District, including this proposed issue of Series A Bonds,is within all limits prescribed by law; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY,CALIFORNIA, AS FOLLOWS: SECTION 1. RUMS of,SSelig>A Sands That for the purposes set forth in the Election and to pay all necessary legal, financial, engineering and contingent costs in connection therewith,the County authorizes the issuance of the Series A Bonds in the name of the District under and subject to the terms of the California Education Code and this resolution. SECTION 2. Termsad Co"*tions.of Sale. The Series A Bonds shall be sold at a negotiated sale upon the direction of the District's Superintendent, Assistant Superintendent of Business Services,or such other person designated by the Superintendent. The Series A Bonds shall be sold pursuant to the terms and conditions set forth in the Purchase Contract,as described below. SECTION 3. AonmiW cif Pari hW QUtracr. The form of Contract of Purchase(the "Purchase Contract")by and among the County,the District and U.S. Bancorp Piper Jaffray Inc. (the "Underwriter"), for the purchase and sale of the Series A Bonds,substantially in the form on file with the Clerk of the Board, is hereby approved and the Treasurer-Tax Collector of the County (the "rreasurer-Tax Collector"), or a designated deputy thereof, or the County Chairperson or such Chairperson's designee is hereby authorized to execute and deliver the Purchase Contract, and the Superintendent of the District (the "Superintendent"), the Assistant Superintendent, Business DOCSS \M 1400\24341.0M Services (the "Assistant Superintendent"), or such other person designated by the Superintendent, each alone, is hereby authorized and requested to acknowledge the execution of such Purchase Contract,if necessary,but with such changes therein, deletions therefrom and modifications thereto as the Treasurer-Tax Collector, or designated deputy thereof or the County Chairperson or such Chairperson's designee may approve, such approval to be conclusively evidenced by his or her execution and delivery thereof; provided, however, that the maximum true interest cost on the Series A Bonds shall not exceed the maximum rate permitted by law and the underwriter's discount, excluding original issue discount and expenses and costs of issuance paid by the Underwriter, shall be equal to 1.000/a of the aggregate principal amount of Series A Bonds issued. The Treasurer-Tax Collector, any designated deputy thereof, or the County Chairperson is finrther authorized to determine the principalamount of the Series A Bonds to be specified in the Purchase Contract for sale by the County Beard up to Forty-Four Million Dollars ($44,000,000) and to enter into and execute the purchase Contract with the Underwriter, if the conditions set forth in this Resolution are satisfied. SECTION 4. Certain RftWons. As used in this Resolution, the terms set forth below shall have the meanings ascribed to them(unless otherwise set forth in the Purchase Contract): (a) "Accreted Interest" means, with respect to the Capital Appreciation Bonds, the Accreted Value thereof as of the date of calculation minus the Denominational Amount thereof. (b) "Accreted Value"means with respect to the Capital Appreciation Bonds, as of the date of calculation,the Denominational Amount thereof,plus Accreted Interest thereon to such date of calculation, compounded semiannually on each February 1 and August 1, commencing on February 1, 2004 (unless otherwise provided in the Purchase Contract)with respect to the Capital Appreciation Bonds which mature on August 1 of a given year, at the stated Accretion Rate to maturity thereof, assuming in any such semiannual period that such Accreted Value increases in equal daily amounts on the basis of a 360-day year of twelve 30- day months. (c) "Accretion Rate" means, unless otherwise provided by the Contract of Purchase, that rate which, when applied to the Denominational Amount of any Capital Appreciation Bond and compounded semiannually on each February l and August 1 (commencing February 1,2004),produces the Accreted Value on the maturity date. (d) "Bond Insurer" means any insurance company which issues a municipal bond insurance policy insuring the payment of Denominational Amount and Accreted Interest of and interest on the Series A Bonds. (e) "Bond Payment Date" means (unless otherwise provided by the Purchase Contract)February 1 and August 1 of each year,commencing August 1,2004,with respect to the interest on the Current Interest Bonds; August 1 of each year, commencing August 1, 2004, with respect to the principal payments on the Current Interest Bond; and, with respect to the Capital Appreciation Bonds,the stated maturity dates thereof,as applicable. (f) "Band Registrar"means or any successor thereto. 2 DOCS Ff36140OVa341.0002 (g) "Capital Appreciation Bonds" paeans the Series A Bonds the interest component of which is compounded semiannually on each Bond Payment Date to maturity as shown in the table of Accreted Value for such Series A Bonds in the Purchase Contract. (h) "Current Interest Bonds"means the Series A Bonds the interest on which is payable semiannually on each Bond Payment Date specified for each such Series A Bond as designated and maturing in the years and in the amounts set forth in the Purchase Contract. (i) "Denominational Amount"means, with respect to the Capital Appreciation Bonds,the initial purchase price thereof; which represents the principal amount thereof, and, with respect to the Current Interest Bonds,the principal amount thereof. 0) "Depository" means the securities depository acting as Depository pursuant to Section 5(c)hereof. (k) "DTC" means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, in its capacity as securities depositary for the Series A Bonds. (1) "Information Services"means Financial Information, Inc.'s Financial Daily Called Bond Service, Moody's Municipal and Government; or Standard & Poor's J. J. Kenny Information Services Called Bond Service. (m) "Maturity Value" means the Accreted Value of any Capital Appreciation Bond on its maturity date. (n) '"Principal" or "Principal Amount" means, with respect to any Current Interest Bond, the principal or principal amount thereof and, with respect to any Capital Appreciation Bond,the Denominational Amount. (o) "Record Date" means the 15th day of the month preceding each Bond Payment Date. (p) "Securities Depositories" means The Depository Trust Company, 55 Water Street,New York,New York 10041,Tel: (212)855-1000 or Fax: (212)855-7320. (q) "Term Bonds" means those Series A Bonds for which mandatory redemption dates have been established in the Purchase Contract. (r) "Transfer Amount"means, with respect to any Outstanding Current Interest Bond,the Principal Amount and,with respect to any Capital Appreciation Bond,the Maturity Value. SECTION 5. 'Perms of the Series A Bonds. (a) Denomination, Ixnterest. Date of Delivery. The Series A Bonds shall be issued as Bonds registered as to both principal and interest, in the denominations of, with respect to the Current Interest Bonds, $5,000 Denominational Amount or any integral multiple thereof(except for 3 nocssr\3614oV3�24341.0002 one odd denomination, if necessary), and with respect to the Capital Appreciation Bonds, $5,000 Maturity Value, or any integral multiple thereof(except for one odd denomination, if necessary). The Series A Bonds will be initially registered to"Cede&Co.,"the nominee of the Depository Trust Company,New York,New York. Each Capital Appreciation Band shall be dated, and shall accrete interest from, its date of initial issuance. Capital Appreciation Bonds will not bear interest on a current basis. Each Current Interest Bond shall be dated the date of delivery or such date as shall appear in the Purchase Contract or the Official Statement(the"Date of Delivery"), and shall bear interest from the Bond Payment Date next precedingthe date of authentication thereof unless it is authenticated as of a day ding the period from the 16th day of the month next preceding any Bond Payment Date to that Bond Payment Date, inclusive, in which event it shall bear interest from such Bond Payment Date, or unless it is authenticated on or before July 15, 2004, in which event it shall bear interest from the Date of Delivery. The Series A Bonds shall bear or accrete interest at a rate or rates such that the interest rates or true interest cost shall not exceed the maximum limit permitted by law. Interest shall be payable on the respective Band Payment Dates. The Capital Appreciation Bonds shall mature in the years and shall be issued in the aggregate Denominational Amount set forth in the Purchase Contract and shall have an interest rate and shall have Denominational Amounts per each five thousand dollars ($5,009) in Maturity Value as shown in the Accreted Value Table attached to the Purchase Contract, pry that in the event that the amount shown in such Accreted Value Table and the Accreted Value calculated by the District and approved by the Bond Insurer by application of the definition of Accreted Value set forth in Section 4 differ,the latter amount shall be the Accreted Value of such Capital Appreciation Bond. (b) (i) Optional Rdernption Unless otherwise provided in the Purchase Contract or the Official Statement, the Current Interest Bonds maturing on or before August 1, 20_, are not subject to redemption prior to their fixed maturity dates. Unless otherwise provided in the Purchase Contract, the Current Interest Bonds maturing on or after August 1, 20_, may be redeemed before maturity at the option of the District, from any source of funds of the District, on August 1, 20__, or on any date thereafter as a whole,or in part. Unless otherwise provided in the Purchase Contract,the Current Interest Bonds called prior to maturity will be redeemed at the following redemption prices, expressed as a percentage of par value,together with accrued interest to the date of redemption: Redern tion Pgriods &&Iemption Prices August 1,20—through July 31,20s 102% August 1,20_through July 31,20_ 101 August 1,20 and thereafter 100 The Capital Appreciation Bonds are not subject to optional redemption. 4 DHSS 6140v312434L0W2 ......... ......... ......... ......... ......... ...............111.1._ ............._ ......... .......... .........111 .1 ... ......... ....... ......... ......... ......... ...... _.. ......... ......... ........... ....... ......... _. 1111.. (ii) Mandatory ReJdeDtii?n. Unless otherwise provided in the Purchase Contract or the Official Statement, the Tenn Bonds are subject to mandatory redemption from moneys in the Debt Service Fund established in Section l l hereof prior to their stated maturity date, at the Principal Amount or Accreted Value thereofwithout premium on each August 1, in Principal Amounts as set forth in the Purchase Contract and in the Official Statement described below. (iii) Section of Bunds fir Redemption. Whenever provision is made in this Resolution for the redemption of Series A Bonds and less than all Outstanding Series A Bonds are to be redeemed, the Bond Registrar identified below, upon written instruction from the District, shall select Series A Bonds for redemption as so directed and if not directed, in inverse order of maturity. Within a maturity, the Bund Registrar, shall select Series A Bonds for redemption by lot. Redemption by lot shall be in such manner as the Bond Registrar shall determine;proXdgt hgwgver, that the portion of any Current Merest Bond to be redeemed in part shall be in the Principal Amount of$5,000 or any integral multiple thereof and the portion of any Capital Appreciation Bond to be redeemed in part shall be in integral multiples of the Accreted Value per $5,000 Maturity Value thereof (iv) Nofige ofRedemption. When redemption is authorized or required pursuant to Section 5(b)(i) herreot the Bond Registrar, upon written instruction from the District, shall give notice (a"Redemption Notice")of the redemption of the Series A Bonds. Such Redemption Notice shall specify. (a)the Series A Bonds or designated portions thereof(in the case of redemption of the Series A Bonds in part but not in whole) which are to be redeemed, (b) the date of redemption, (c)the glace or places where the redemption will be made, including the name and address of the Bond Registrar, (d) the redemption price, (e) the CUSIP numbers (if any) assigned to the Series A Bonds to be redeemed, (f) the Bond numbers of the Series A Bonds to be redeemed in whole or in part and,in the case of any Series A Bond to be redeemed in part only,the Principal Amount of such Series A Bond to be redeemed, and (g) the original issue date, interest rate or Accretion Rate and stated maturity date of each Series A Bond to be redeemed in whole or in part. Such Redemption Notice'shall further state that on the specified date there shall become due and payable upon each Series A Bond or portion thereof being redeemed at the redemption price thereof, together with the interest accrued or accreted to the redemption date, and that from and after such date, interest with respect thereto shall cease to accrue or accrete. The Bond Registrar shall take the following actions with respect to such Redemption Notice: (a) At least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given to the respective Owners of Bonds designated for redemption by registered or certified mail, postage prepaid, at their addresses appearing on the Bond Register. (b) At least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given by (i) registered or certified mail, postage prepaid, (ii) telephonically confirmed facsimile transmission, or(iii)overnight delivery service, to each of the Securities Depositories. 5 n0CssF\36i40 3\243di.0M2 ................................................................................................................................................................................................ . ..... ....................................................................... At least 30 but not more than 45 days prior to the redemption date, such Redemption Notice shall be given by (i) registered or certified mail, postage prepaid, or(ii) overnight delivery service,to one of the Information Services. Neither failure to receive or failure to publish any Redemption Notice nor any defect in any such Redemption Notice so given shall affect the sufficiency of the proceedings for the redemption of the affected Series A Bonds. Each check issued or other transfer of funds made by the Bond Registrar for the purpose of redeeming Series A Bonds shall bear or include the CUSIP number identifying, by issue and maturity, the Series A Bonds being redeemed with the proceeds of such check or other transfer. (v) Partial gqd=fiQn of Series A'Bunds. Upon the surrender of any Series A Bond redeemed in part only,the Bond Registrar shall execute and deliver to the Owner thereof a new Series A Bond or bonds of like tenor and maturity and of authorized denominations equal in Transfer Amounts to the unredeemed portion of the Series A Bond surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner, and the County and the District shall be released and discharged thereupon from all liability to the extent of such payment. (vi) Effect of IN—ofice of-Ree ption. Notice having been given as aforesaid, and the moneys for the redemption (including the interest to the applicable date of redemption) having been set aside in the District's Debt Service Fund, the Series A Bonds to be redeemed shall become due and payable on such date of redemption. If on such redemption date, money for the redemption of all the Series A Bonds to be redeemed as provided in Section 5(b)(i) hereof, together with interest accrued to such redemption date, shall be held by the Bond Registrar so as to be available therefor on such redemption date, and if notice of redemption thereof shall have been given as aforesaid, then from and after such redemption date, interest with respect to the Series A Bonds to be redeemed shall cease to accrue or accrete and become payable. All money held by or on behalf of the Bond Registrar for the redemption of Series A Bonds shall be held in trust for the account of the Owners of the Series A Bonds so to be redeemed. All Series A Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of this Section 5 shall be cancelled upon surrender thereof and be delivered to or upon the order of the District and the County. All or any portion of a Series A Bond purchased by the District or the County shall be cancelled by the Bond Registrar. (vii) Swka A Bonds No LQUM Outstanding. When any Series A Bonds (or portions thereof), which have been duly called for redemption prior to maturity under the provisions of this Resolution, or with respect to which irrevocable instructions to call for redemption prior to maturity at the earliest redemption date have been given to the Bond Registrar,in form satisfactory to it, and sufficient moneys shall be held by the Bond Registrar irrevocably in trust for the payment of the redemption price of such Series A Bonds or portions thereof, and, in the case of Current interest Bonds, accrued interest with respect thereto to the date fixed for redemption, all as provided in this Resolution, then such Series A Bonds shall no longer be deemed Outstanding and shall be surrendered to the Bond Registrar for cancellation. 6 DOCSSF36140v3124341.0002 ........ ......... ......... ......... ......... ......... ......... ......... ......... ......._...._.. .... ....._....... ......... ......... ........ ......... ......... ........ ......... ......... .......... ........ ......... ......... (c} Book.-EirtrY Sy Bern. (i) Definitions. As used in this Section,the terms set forth below shall have the meanings ascribed to them: "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to this Section. "Participants"means those broker-dealers,banks and other financial institutions from time to time for which the Depository holds book-entry certificates as securities depository. (ii) flection of Book-Entry System. The Series A Bonds shall initially be delivered in the form of a separate single fully-registered bond (which may be typewritten) for each maturity date of such Series A Bonds in an authorized de wmination (except for any odd denomination Bond). The ownership of each such Series A Bond shall be registered in the Bond Register (as defined below) in the naive of the Nominee, as nominee of the Depository and ownership of the Series A Bonds, or any portion thereof may not thereafter be transferred except as provided in Section 5(c)(ii)(4). With respect to book-entry Series A Bonds,the District and the Bond Registrar shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such book-entry Series A Bonds. Without limiting the immediately preceding sentence,the District and the Bored Registrar shall have no responsibility or obligation with respect to (i)the accuracy of the records of the Depository,the Nominee, or any Participant with respect to any ownership interest in book-entry Series A Bonds, (ii)the delivery to any Participant or any other person,other than an owner as shown in the Bond Register, of any notice with respect to book-entry Series A Bonds, including any notice of redemption, (iii)the selection by the Depository and its Participants of the beneficial interests in book-entry Series A Bonds to be prepaid in the event the District redeems the Series A Bonds in part,or(iv)the payment by the Depository or any Participant or any other person, of any amount with respect to Accreted Value, Principal, premium, if any, or interest on the book-entry Series A Bonds. The District and the Bond Registrar may treat and consider the person in whose name each book-entry Series A Bond is registered in the Bond Register as the absolute owner of such book-entry Series A Bond for the pwgose of payment of Accrued Value or Principal of and premium and interest on and to such Series A Bond, for the purpose of giving notices of redemption and other matters with respect to such Series A Bond,for the purpose of registering transfers with respect to such Series A Bond, and for all other purposes whatsoever. The Bond Registrar shall pay all Accreted Value or Principal of and premium, if any, and interest on the Series A:Bonds only to or upon the order of the respective owner, as shown in the Bond Register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the District's obligations with respect to payment of Accreted Value or Principal of,and premium,if any,and interest on the Series A Bonds to the extent of the sum or sums so paid. No person other than an owner, as shown in the Bond Register, shall receive a certificate evidencing the obligation to make payments of Accreted Value or Principal of, and premium, if any, and interest on the Series A Bonds. Upon delivery by the Depository to the owner and the Bond Registrar, of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to the Record Date,the word Nominee in this Resolution shall refer to such nominee of the Depository. 7 ooessP361400\2434 OW2 ......... ......... ......... ......... ......... ......... ......... ......... ......... .......... . ......... ......... ......... ......... ........ .......... ........ ......... ......... ......... ......... ......... ......... ......... ........................ 1. PdjyM ,of Leper of ltenresentations. In order to qualify the book-entry Series A Bondsfor the Depository's book-entry system, the District and the Bond Registrar shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the District or the Blond Registrar any obligation whatsoever with respect to persons having interests in such book-entry Series A Bonds other than the owners, as shown on the Bond Register. By executing a Letter of Representations, the Bond Registrar shall agree to take all action necessary at all tunes so that the District will be in compliance with all representations of the District in such Letter of Representations. In; addition to the execution and delivery of a Letter of Representations, the District and the Bond Registrar shall take such other actions, not inconsistent with this Resolution, as are reasonably necessary to qualify book-entry Series A Bonds for the Depository's book-entry program. 2. Selection of D.apo xs�torv. In the event (i)the Depository determines not to continue to act as securities depository for book-entry Series A Bonds, or (ii)the District determines that continuation of the book-entry system is not in the best interest of the beneficial owners of the Series A Bonds or the District,then the District will discontinue the book-entry system with the Depository. if the District determines to replace the Depository with another qualified securities depository, the District shall prepare or direct the preparation of a new single, separate, fully registered bond for each maturity date of such book-entry Series A Bond, registered in the name of such successor or substitute qualified securities depository or its Nominee as provided in subsection(4)hereof. If the District fails to identify another qualified securities depository to replace the Depository,then the Series A Bonds shall no longer be restricted to being registered in such Bond Register in the name of the Nominee, but shell be registered in whatever name or names the owners transferring or exchanging such Series A Bonds shall designate, in accordance with the previsions of this Section 5(c). 3. Pym= ! Depository. Notwithstanding any other provision of this Resolution to the contrary, so long as all outstanding Series A Bonds are held in book-entry and registered in the name of the Nominee,all payments by the District or the Bond Register with respect to Accreted Value or Principal of and premium, if any, or interest on the Series A Bands and all notices with respect to such Series A Bonds shall be made and given, respectively to the Nominees, as provided in the Letter of Representations or as otherwise instructed by the Depository and agreed to by the Bond Registrar notwithstanding any inconsistent provisions herein. 4. Transfer of Series A Bonds to Substitute Depository. (A) The Series A Bonds shall be initially issued as described in the Official Statement described.herein. Registered ownership of such Series A Bonds, or any portions thereof,may not thereafter be transferred except: (1) to any successor of DTC or its nominee, or of any substitute depository designated pursuant to Section 5(c)(ii)(4)(A)(2){"Substitute Depository'); provided that any successor of DTC or Substitute Depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; 8 nc3css 14OV3\zasa1.onaz _. ........ ......... ......... ......... ......... ......_.. .......... ._......... ........ ............. ........... ....... ........ ......... ......... ......._._....... . . ............................................................................................................................................... _ _................................... (2) to any Substitute Depository, upon (1) the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the District that DTC (or its successor) is no longer able to carry out its functions as depository; provided that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it;or (3) to any person as provided below, upon (1)the resignation of DTC or its successor (or any Substitute Depository or its successor) from its functions as depositary, or (2)a determination by the District that DTC or its successor (or Substitute Depository or its successor) is no longer able to catty out its fumetions as depository. (B) In the case of any transfer pursuant to Section 5(c)(ii)(4)(A)(1) or (2), upon receipt of all outstanding Series A Bonds by the Bond Registrar, together with a written request of the District to the Bund.Registrar designating the Substitute Depository, a single new Series A Bond, which the District shall prepare or cause to be prepared, shall be executed and delivered for each maturity of Series A Bonds then outstanding, registered in the name of such successor or such Substitute Depository or their Nominees, as the case may be,all as specified in such written request of the District. In the case of any transfer pursuant m Section 5(c)(ii)(4)(A)(3), upon receipt of all outstanding Series A Bonds by the Bond Registrar,together with a written request of the District to the Bond Registrar, new Series A Bonds, which the District shall prepare or cause to be prepared, shall be executed and delivered in such denominations and registered in the names of such persons as are requested in such written request of the District,provided that the Bond Registrar shall not be required to deliver such new Series A Bonds within a period of less than sixty(60)days from the date of receipt of such written request from the District. (C) In the case of a partial redemption or an advance refunding of any Series A Bonds evidencing a portion of the Maturity Value or Principal maturing in a particular year, DTC or its successor (or any Substitute Depository or its successor) shall make an appropriate notation on such Series A Bonds indicating the date and amounts of such reduction in Maturity Value or Principal, in form acceptable to the Bond Registrar, all in accordance with the Letter of Representations. The Bond Registrar shell not be liable for such Depository's failure to make such notations or errors in making such notations. (D) The District and the Bond Registrar shall be entitled to treat the person in whose name any Series A Bond is registered as the owner thereof for all purposes of this Resolution and any applicable laws, notwithstanding any notice to the contrary received by the Bond Registrar or the District; and the District and the Bond Registrar shall not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the Series A Bonds. Neither the District not the Bond Registrar shall have any responsibility or obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or Substitute Depository or its successor), except to the Owner of any Series A Bonds, and the Bond Registrar may rely conclusively on its records as to the identity of the owners of the Series A Bonds. 9 DOCSs"6140vI24341.(N)tYI SECTION 6. Eaten ofd ftds. The Series A Bonds shell be signed by the Chairperson of the Board of Supervisors and the Treasurer-Tax Collector by their manual or facsimile signatures andcountersignedby the manual or facsimile signature of and the seal of the County affixed thereto by the Clerk of the Board of Supervisors, all in their official capacities. No Series A Bond shall be valid or obligatory for any purpose or shall be entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series A Bond is signed by the Bond Registrar as authenticating agent Authentication by the Bond Registrar shall be conclusive evidence that the Series A Bond so authenticated has been duly issued, signed and delivered under this Resolution and is entitled to the security and benefit of this Resolution. SECTION 7. Bond Ile tear; TMglftr and &AM. This Board does hereby appoint to act as the authenticating agent, bond registrar, transfer agent and paying agent(collWt vely,the"Bond Registrar)for the Series A Bonds. So long as any of the Series A Bonds remains outstanding, the District will cause the Bond Registrar to maintain and keep at its principal office all books and records necessary for the registration, exchange and transfer of the Series A Bonds as provided in this Section. Subject to the provisions of Section 8 below, the person in whose name a Series A Bond is registered on the Bond Register shall be regarded as the absolute owner of that Series A Bond for all purposes of this Resolution. Payment of or on account of the Principal or Accreted Value of and premium, if any, and interest on any Series A Bond shall be made only to or upon the order of that person, neither the District, the County nor the Bond Registrar shall be affected by any notice to the contrary, but the registration may be changed as provided in this Section. All such payments shall be valid and effectual to satisfy and discharge the District's liability upon the Series A Bonds, including interest, to the extent of the amount or amounts so paid. Any Series A Bond may be exchanged for Series A Bonds of like tenor, maturity and Transfer Amount upon presentation and surrender at the principal office of the Bond Registrar, together with a request for exchange signed by the Owner or by a person legally empowered to do so in a form satisfactory to the Band Registrar. A Series A Bond may be transferred on the Bond Register only upon presentation and surrender of the Series A Bond at the principal office of the Band Registrar together with an assignment executed by the Owner or by a person legally empowered to do so in a farm satisfarctory to the Bond Registrar. Upon exchange or transfer, the Bond Registrar shall complete, authenticate and deliver a neve Series A Bond or Series A Bands of like tenor and of any authorised denomination or denominations requested by the Owner equal to the Transfer Amount of the Series A Bond surrendered and bearing or accruing interest at the same rate and maturing on the same date. Capital Appreciation Bonds and Current Interest Bands may not be exchanged for one another. If any Series'A Bond shall become mutilated,the County, at the expense of the Owner of said Series A Bond, shall execute, and the Bond Registrar shall thereupon authenticate and deliver, a new Series A Bond of like series, tenor and Transfer Amount in exchange and substitution for the Series A Bond so mutilated, but only upon surrender to the Bond Registrar of the Series A Bond so mutilated If any Series A Bond issued hereunder shall be lost, destroyed or stolen,evidence of such loss,destruction or theft may be submitted to the Bond Registrar and,if such evidence be satisfactory to the Bond Registrar and indemnity for the Bond Registrar, the County (including the Board of Supervisors, and its officials, officers, agents and employees) and the District satisfactory to the 10 DOCSSF\3614MU4341.0002 ...................................................................................................................................................................................................... ........................ ....................I..'',.......... ......... .............................................................................. Bond Registrar shall be given by the owner, the County, at the expense of the Series A Bond owner, shall execute,and the Bond Registrar shall thereupon authenticate and deliver, a new Series A Bond of like Series A Bond tenor in lieu of and in substitution for the Series A Bond so lost destroyed or stolen (or if any such Series A Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Series A Bond the Bond Registrar may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Bond Registrar and the County). The Bond Registrar may require payment of a reasonable fee for each new Series A Bond issued under this paragraph and of the expenses which may be incurred by the County and the Bond Registrar. If manual signatures on behalf of the County are required in connection with an exchange or transfer,the Bond Registrar shall undertake the exchange or transfer of Series A Bonds only after the new Series A Bonds are signed by the authorized officers of the County. In all cases of exchanged or transferred Series A Bonds, the County shall sign and the Bond Registrar shall authenticate and deliver Series A Bonds in accordance with the provisions of this Resolution. All fees and costs of transfer shall be paid by the requesting party. Those charges may be required to be paid before the procedure is begun for the exchange or transfer. All Series A Bonds issued upon any exchange or transfer shall be valid obligations of the District, evidencing the same debt, and entitled to the same security and benefit under this Resolution as the Series A Bonds surrendered upon that exchange or transfer. Any Series A Bond surrendered to the Bond Registrar for payment, retirement, exchange, replacement or transfer shall be cancelled by the Bond Registrar. The District and the County may at any time deliver to the Bond Registrar for cancellation any previously authenticated and delivered Series A Bonds that the District and the County may have acquired in any manner whatsoever, and those Series A Bonds shall be promptly cancelled by the Bond Registrar. Written reports of the surrender and cancellation of Series A Bonds shall be made to the District and the County by the Bond Registrar on or before February I and August I of each year. The cancelled Series A Bonds shall be retained for six years, then returned to the District or destroyed by the Bond Registrar as directed by the District Neither the District, the County not the Bond Registrar will be required (a) to issue or transfer any Series A Bonds during a period beginning with the opening of business on the 15th business day next preceding either any Bond Payment Date or any date of selection of Series A Bonds to be redeemed and ending with the close of business on the Bond Payment Date or any day on which the applicable notice of redemption is given or (b) to transfer any Series A Bonds which have been selected or called for redemption in whole or in part. SECTION S. ram Payment of interest on any Current Interest Bond on any Bond Payment Date shall be made to the person appearing on the registration books of the Bond Registrar as the Owner thereof as of the Record Date immediately preceding such Bond Payment Date, such interest to be paid by check mailed to such Owner on the Bond Payment Date at his address as it appears on such registration books or at such other address as he may have filed with the Bond Registrar for that purpose on or before the Record Date. The Owner in an aggregate Principal Amount or Maturity Value of$1,000,000 or more may request in writing to the Bond Registrar that such Owner be paid interest by wire transfer to the bank and account number on file with the Bond Registrar as of the Record Date. The principal, and redemption price,if any, payable on the Current Interest Bonds and the Accreted Value and redemption price, if any, on the Capital Appreciation 11 DOCSW36140v3124341.0002 ...........-...11.1...... .............................................................................I........... ...... Bonds shall be payable upon maturity or redemption upon surrender at the principal office of the Bond Registrar. The interest,Accreted Value,Principal and premiums,if any,on the Series A Bonds shall be payable in lawfW money of the United States of America, The Band Registrar is hereby authorized to pay the Series A Bonds when duly presented for payment at maturity, and to cancel all Series A Bonds upon payment thereof. The Series A Bonds are general obligations of the District and do not constitute an obligation of the County except as provided in this Bond Resolution. No part of any fund of County is pledged or obligated to the payment of the Series A Bonds. SECTION 9. EUM or&rte A The Series A Bonds shall be in substantially the following forms,allowing those officials executing the Series A Bonds to make the insertions and deletions necessary to conform the Series A Bonds to this Resolution and the Purchase Contract. 12 DOCSSF136140OV341.0002 (Form of Current Interest Bond) REGISTERED REGISTERED NO. $ ACALANES UNION HIGH SCHOOL DISTRICT CONTRA COSTA COUNTY,CALIFORNIA ELECTION OF 2002 GENERAL OBLIGATION BOND, SERIES A IN'T REST RATE: MAIC DATE: DATED AS OF: SIP %per annum August 1,20 Date of Delivery REGISTERED OWNER: CEDE&CO. PRINCIPAL AMOUNT: The Acalanes Union High School District(the"District")in Contra Costa County,California (the "County'), for value received, promises to pay to the Registered Owner named above, or registered assigns, the Principal Amount on the Maturity Date, each as stated above, and interest thereon until the Principal Amount is paid or provided for at the Interest Rate stated above, on February 1 and August I of each year (tyre "Bond Payment Dates"), commencing February 1, 2004. This bond will bear interest from the Bond Payment Date next preceding the date of authentication hereof unless it is authenticated as of a day during the period from the l6th day of the month next preceding any Bond Payment Date to the Bond Payment Date, inclusive, in which event it shall bear interest from such Band Payment Date, or unless it is authenticated on or before January 15, 2004, in which event it shall bear interest from the Bate of Delivery. Principal and interest are payable in lawful money of the United States of America, without deduction for the paying agent services, to the person in whose name this bond (or, if applicable, one or more predecessor bonds) is registered (the "Registered Owner'") on the Register maintained by the Bond Registrar, initially [City, State]. Principal is payable upon presentation and surrender of this bond at the principal office of the Bond Registrar. Interest is payable by check or draft mailed by the Bond Registrar on each Bond Payment Date to the Registered Owner of this bond (or one or more predecessor bonds)as shown and at the address appearing on the Register at the close of business on the 15th day of the calendar month next preceding that Bond Payment Date (the "Record Date"). The Owner of Current Interest Bonds in the aggregate principal amount of$1,000,000 or more may request in writing to the Bond Registrar that the Owner be paid interest by wire transfer to the bank and account number on file with the Bond Registrar as of the Record Date. This bond is one of an authorization of$ of bonds approved for the purpose of raising money to repair and construct classrooms and to pay all necessary legal, financial, engineering and contingent costs in connection therewith under authority of and pursuant to the laws of the State of California,and the requisite fifty-five percent vote of the electors of the District cast at 13 DOGSSF\3614OV3t24341.0002 a special election held on November 5, 2002, upon the question of issuing bonds in the amount of $44,000,000 and the resolution of the Burd of Treses of the District adopted on March 5, 2003 (the"District Resolution")and the resolution of the County Board of Supervisors adopted on April 1, 2003 (the"Bond Resolution"). This bond and the issue of which this bored is one are payable as to both principal'and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District, which taxes are unlimited as to rate or amount in accordance with California Education Code Sections 15250 and 15252. The bonds of this issue are general obligations of the District and do not constitute an obligation of the County except as provided in the Band Resolution. No part of any fund of the County is pledged or obligated to the payment of the bonds of this issue. The bonds of this issue are comprised of$ principal amount of Current Interest Bonds, of which this bond is a part (a"Current Interest Bond"), and Capital Appreciation Bonds of which $ represents the Denominational Amount and $ represents the Maturity Value. This bond is exchangeable and transferable for bonds of like tenor, maturity and Transfer Amount(as defined in the Bond'Resolution) and in authorized denominations at the principal office of the Bond Registrar in Sari Francisco, California, by the Registered Owner or by a person legally empowered to do so,in a form satisfactory to the Bond Registrar, all subject to the terms,limitations and conditions provided in the Bond Resolution. All fees and cots of transfer shall be paid by the transferor. The District, the County and the: Bond Registrar may deem and treat the Registered Owner as the absolute ower of this bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes, and neither the District, the County nor the Bond Registrar shall be affected by any notice to the contrary. Neither the District, the County .nor the Bond Registrar will be required (a) to issue or transfer any band during a period beginning with the opening of business on the 15th business day next preceding either any Bond Payment Date or any date of selection of bands to be redeemed and ending with the close of business on the Bond Payment Date or day on which the applicable notice of redemption is given or(b) to transfer any bend which has been selected or called for redemption in whole or in part. The Current Interest Bonds maturing on or before August 1, 20� are not subject to redemption prior to their fixed maturity dates. The Current Interest Bonds maturing on or after August 1,20 are subject to redepmtion on or after August 1,20�at the option of the District as a whole or in part on any date at the following Redemption Prices (expressed as percentages of the Principal Amount of the Current Interest Bonds to be redeemed)plus interest accrued thereon to the dates fixed for redemption: Redemption Perio ,s Redemption Prices August 1, Zai through July 31,20102% August 1,20 through July 31,207^ 101 August 1,20 and thereafter 100 14 DOCSSM6140hM4341.0M The Current Interest Bonds maturing on August 1, 20�are subject to mandatory redemption from moneys in the Debt Service Fund prior to their stated maturity date, at the Principal Amount thereof without premium on each August 1,on and after August 1,20__, in the Principal Amounts as set forth in the following table: ReLem Pftg Principal Amount$ TOTAL $ If less than all of the bonds of any one maturity shall be called for redemption,the particular bonds or portions of bonds of such maturity to be redeemed shall be selected by lot by the District in such manner as the District in its discretion .may determine; provided, however, that the portion of any bond to be redeemed shall be in the principal amount of$5,000 or some multiple thereof If less than all of the bonds stated to mature on different dates shall be called for redemption, the particular bonds or portions thereof to be redeemed shall be called in any order of maturity selected by the District or, if not so selected,in the inverse order of matuxity. Reference is made to the Bond Resolution for a more complete description of the provisions, among ethers, with respect to the nature and extent of the security for the bunds of this series, the rights, duties and obligations of the District, the County, the Bond Registrar and the Registered Owners,and the terms and conditions upon which the bonds are issued and secured. The Registered Owner of this bondassents,by acceptance hereof,to all of the provisions of the Bund Resolution. It is certified and recited that all acts and conditions required by the Constitution and laws of the State of California to exist, to occur and to be performed or to have been met precedent to and in the issuing of the bonds in order to make thein legal, valid and binding general obligations of the District, have been performed and have been met in regular and due form as required by law; that payment in full for the bonds has been received; that no statutory or constitutional limitation on indebtedness or t mati©n has been exceeded in issuing the bonds, and that clue provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient to pay principal and interest when due, and for levying and collecting such taxes the full faith and credit of the District are hereby pledged. This bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Bonn Resolution until the Certificate of Authentication below has been signed. 15 DOCSSF13614M14341.0002 ... ........ ......... ......... ......... ......... ......... ......... ......... ......... ...._._.. ....... _........ ......... .. ....... ................................. ... ........ ........ .. ....... ......... ......... ......... ......... _ _ _ _ _.._..... .......................... IN WITNESS WHEREOF,the Acalanes Union High School District,Contra Costa County, California, has caused this bond to be executed on behalf of the District and in their official capacities by the manual or facsimile signatures of the Chairperson of the Board of Supervisors of the County and the County Treasurer-Tax Collector, and to be countersigned by the manual or facsimile signature of the Clerk of the Board of Supervisors of the County, and has caused the seal of the County to be affixed hereto,all as of the date stated above. [SEAL] CONTRA COSTA COUNTY,CALIFORNIA By: {FagAnle Signatures Chairperson,Board of Supervisors By; ff"simile Sign&t ge) Treasurer-Tax Collector COUNTERSIGNED: (Facsimile Signe) Clerk,Board of Supervisors CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the Bond Resolution referred to herein which has been authenticated and registered on May 2003. tibrm nfbom;do not signl Bond Registrar 16 DOCSSF1.36140AN24341.0002 ..... - ........ ......... ......... ......... ......... ......... -...... . ........._...._.. .......... ..._.. .................................... ....... ......... ......... ......... ................_. _ _ ......... ......... ............ . .... . .......... .................... . ....................................................... ASSIGNMENT For value received, the undersigned sells, assigns and transfers to (print or typewrite name, address and zip code of Transferee)`. this bond and irrevocably constitutes and appoints attorney to transfer this bond on the books for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the within bond in every particular, without alteration or any change whatever,and the signature(s)must be guaranteed by an eligible guarantor institution. Social Security Number, 'Taxpayer Identification Number or other identifying number of Assignee: Unless this certificate 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 certificate 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. LEGAL OPINION The fallowing is a true copy of the opinion rendered by Stradling Yocca Carlson&Rauth, a Professional Corporation in connection with the issuance of, and dated as of the date of the original delivery of,the bonds. A signed copy is on file in my office. _(Facsimile Sigture) Clerk,Board of Supervisors 17 DOCSSP361400\24341.0002 (Form of Capital Appreciation Bond) REGISTERED REGrISTERED NO. $ ACALANES UNION HIGH SCHOOL DISTRICT CONTRA COSTA COUNTY,CALIFORNIA ELECTION OF 2002 GENERAL OBLIGATION BOND,SERIES A AC ItETION RATE: MATURM DATE: DATED AS OF: CUSIl" August 1,20_ Date of Delivery REGISTERED OWNER: CEDE&CO. DENOMINATIONAL AMOUNT: MATURITY VALUE: The Acalanes Union High School District(the"District") in Contra Costa County,California (the "County"), for value received, promises to pay to the Registered Owner named above, or registered assigns, the Maturity Value on the Maturity Date, each as stated above, such Maturity Value being comprised of the Denominational Amount and interest accreted thereon. This bond will not bear current interest but will accrete interest, compounded on each February i and August 1, commencing August 1, 2003, and, at the Accretion Rate specified above to the Maturity Date, assuming that in any such semiannual period the sum of such compounded accreted interest and the Denominational Amount (such sun being herein called the "Accreted Value") increases in equal daily amounts on the basis of a 360-day year consisting of twelve 30-day months. Accreted Value and redemption premium, if any, are payable in lawful money of the United States of America, without <deduction for the paying agent services, to the person in whose name this bond (or, if applicable, one or more predecessor bonds) is registered (the "Registered Owner') on the Register maintained by the Band Registrar, initially [City, State]. Accreted Value and redemption premium, if any, are payable upon presentation and surrender of this bond at the principal office of the Bond Registrar. This bond is one of an authorization of S of bonds approved for the purpose of raising money to repair and acquire District facilities and to pay all necessary legal, financial, engineering and contingent costs in connection therewith under authority of and pursuant to the lanes of the State of California,and the requisite fifty-five percent vote of the electors of the District cast at an election held on November 5, 2002, upon the question of issuing bonds in the amount of $44,000,000 and the resolution of the Board of Trustees of the District adopted on March 5, 2003 (the"District Resolution )and the resolution of the County Board of Supervisors adopted on April 1, 2003 (the"Bond Resolution"). This bond and the issue of which this bored is one are payable as to 18 DOCSSF13614OV124341.0002 both principal and interest from the proceeds of the levy of ad valorem takes on all property subject to such taxes in the District, which taxes are unlimited €s to rate or amount in accordance with California Education Code Sections 15250 and 15252. The bonds of this issue are general obligations of the District and do not constitute an obligation of the County except as provided in the Bond Resolution. No part of any fund of the County is pledged or obligated to the payment of the bonds of this issue. The bands of this issue are comprised of S principal amount of Current Interest Bonds (each a "Current Interest Bond"), and Capital Appreciation Bonds, of which this bond is a part,in the Denominational Amount of$ and the Maturity Value of$ This bond is not subject to optional redemption prior to maturity. This bond is exchangeable and transferable for bonds of like tenor, maturity and Transfer Amount,(as defined in the Bond Resolution) and in authorized denominations at the principal office of the Bond Registrar,by the Registered Owner or by a person legally empowered to do so, in a form satisfactory to the Band.Registrar, all subject to the terms, limitations and conditions provided in the Bond Resolution All fees and costs of transfer shall be paid by the transferor. The District, the County and the Bond Registrar may deem and treat the Registered Owner as the absolute owner of this bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes, and neither the District, the County not the Bond Registrar shall be affected by any notice to the contrary. Neither the District, the County nor the Bond Registrar will be required (a) to issue or transfer any bond during a period beginning with the opening of business on the 15th business day next preceding either any Bond Payment Date or any date of selection of bonds to be redeemed and ending with the close of business on the Bund Payment Date or day on which the applicable notice of redemption is given or(b)to transfer any bond which has been selected or called for redemption in whole or in part. The bonds maturing on August 1,20 are subject to mandatory redemption from moneys in the Debt Service Fund prior to their stated maturity date, at the Accreted Value thereof without premium on the dates and in the Accreted Value as set forth in the following table: 19 DOCSW36 400\24341.4402 Rede,�tption Dates Accrete Values Reference is made to the Bond Resolution for a more complete description of the provisions, among others,with respect to the nature and extent of the security for the Capital Appreciation Bonds of this series,the rights, duties and obligations of the District,the County,the Bond Registrar and the Registered Owners, and the terms and conditions upon which the bonds are issued and secured. The Registered Owner of this bond assents, by acceptance hereof to all of the provisions of the Bond .Resolution. It is certified and recited that all acts and conditions required by the Constitution and laws of the State of California to exist,to occur and to be performed or to have been met precedent to and in the issuing of the bonds in order to make there legal, valid and binding general obligations of the District, have been performed and have been met in regular and due form as required by law; that payment in full for the bonds has been received; that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the bonds; and that due provision has been made for levying and collecting ad'valorem property taxes on all of the taxable property within the District in an amount sufficient to pay principal and interest when due, and for levying and collecting such taxes the full faith and credit of the District are hereby pledged. This bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Bond Resolution until the Certificate of Authentication below has been signed. 20 nc3essF\361 aovM4341.0002 IN WITNESS WHEREOF,the Acalanes Union High School District,Contra Costa County, California, has caused this bond to be executed on behalf of the District and in their official capacities by the manual or facsimile signatures of the Chairperson of the Board of Supervisors of the County and the County Treasurer-Tax Collector, and to be countersigned>by the manual or facsimile signature of the Clerk of the Board of Supervisors of the County, and has caused the seal of the County to be affixed hereto,all as of the date stated above. [SEAL] CONTRA COSTA COUNTY,CALIFORNIA By: ftp lime) Chairperson,Board of Supervisors By: fFacsz nide S%gpatupre) Treasurer-Talc Collector COUNTERSIGNEM (Facsimile Sjgnre) Clerk,Board of Supervisors CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the Bond Resolution referred to herein Mich has been authenticated and registered on May�, 2003. j orm �orrd ort&dry not siol Bond.Registrar 21 DOcssF\361400\24347.O«2 ASSIGNMENT For value received, the undersigned sells, assigns and transfers to (print or typewrite name, address and ZIP code of Transferee): this bond and MVDc rly constitutes and appoints attorney to transfer this band on the books for registration thereof,with full power of substitution in the premises. Dated: Signature Guaranteed; Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or by any change whatever, and the signature(s) must be guaranteed by an eligible guarantor institution.. Social Security Number,Taxpayer Identification Number or other identifying number of Assignee; Unless this certificate 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 certificate 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.OTKER USE BEREOF FOR VALUE OR O'TI ER ISE BY OR TO .ANY PERSON IS "WRONGFUL since the registered owner hereon Cede & Co., has an interest herein. LEGAL OPINION The following is a true copy of the opinion rendered by Stradling Yucca Carlson& Rauth, a Professional Corporation in connection with the issuance of, and dated as of the date of the original delivery of,the bonds. A signed copy is on file in my office. (FacsjrW a Sigpaure) Clerk,Board of Supervisors 22 DOCSSFL3614(NrM4341.0002 SECTIO3N 10. 0ehyer-Y,of� Bands. The proper officials of the County shall cause the Series A Bonds to be prepared and, following their sale, shall have the Series A Bonds signed and delivered,together with a true transcript of proceedings with reference to the issuance of the Series A Bonds,to the Underwriter upon payment of the purchase price therefor. SECTION 11. Mggdr„f Pro ds>.of Series A Bands. Theproceedsfrom the sale of the Series A Bonds, to the extent of the Denominational Amount and the Principal Amount thereof, shall be paid to the County to the credit of the fund hereby created and established and to be known as the "Acalanes Union High School District Election of 2002 General Obligation Bonds, Series A Building Fund" (the "Building Fund ) of the District, shall be Dept separate and distinct from all other District and County funds, and those proceeds shall be used solely for the purpose for which the Series A Bands are being issued and providedfurther that such proceeds shall be applied solely to authorized purposes. The accrued interest and any premium received by the County from the sale of the Series A Bands shall be kept separate and apart in the fund hereby created and established'and to be designated as the "Acalanes Union High School District Election of 2002 General Obligation Bonds, Series A'Debt Service Fund"(the"Debt Service Fund")for the Series A Bonds and used only for payment of Accreted Value or Principal of and interest on the Series A Bonds. Interest earnings on moneys held in the Building.Fund shall be retained in the Building Fund. Interest earnings on moneys held in the Debt Service Fund shall be retained in the Debt Service Fund Any excess proceeds'of the Series A Bonds not needed for the authorized'purposes set firth herein for which the Series A Bonds are being issued shall be transferred to the Debt Service Fund and applied to the payment'of Accreted Value or Principal of and interest on the Series A Bonds. If, after payment in full of the Series A Bonds, there remain excess proceeds, any such excess amounts shall be transferred to the General Fund of the District. Subject to federal tax restrictions, moneys in the funds created hereunder shall be invested in any lawful investment permitted by Sections 16429.1 and 53601 of the Government Code of the Stats of California (the "Government Code") or in shares in a California. common lave trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code which invests exclusively in investments permitted by Section 53635 of the Government Code, in LAW, or in a guaranteed investment contract with a financial institution or insurance company which has at the date of execution thereof one or more outstanding issues of unsecured, uninsured and unguaranteed debt obligations or a claims paying ability rated' not lower than the second highest rating category (without regard to subcategories) by Standard & Poor's Ratings Services and Moody's Investors Service. Except as required below to satisfy the requirements of Section 148(f) of the Internal Revenue Code of 1985, as amended(the"Code'), interest earned on the investment of moneys held in the Debt Service Fund shall be retained in the Debt Service Fund and used by the County to pay the Accreted Value or Principal of and interest on the Series A Bonds when due. SECTION 12. Rebate End, (a) The District shall create and establish a special fund designated the"Acalanes Union High School District Election of '2002 General Obligation Bonds, Series A Rebate Fund" (the "Rebate Fund"). All amounts at any time on deposit in the Rebate Fund shall be held in trust, to the extent required to satisfy the requirement to make rebate payments to the United States(the"Rebate 23 O S3S 140v3124341.0002 Requirement") pursuant to Section 148of the Code' and the Treasury Regulations promulgated thereunder(the"Treasury Regulations"). Such amounts shall be free and clear of any lien hereunder and shall be governed by this Section and by the Tax Certificate to be executed by the District. (b) Within 45 days of the end of each fifth Bond Year(as such term is defined in the Tax Certificate), (1) the District shall calculate or cause to be calculated with respect to the Series A Bonds the amount that would be considered the "rebate atno unt" within the meaning of Section 1.148-3 of the Treasury Regulations,using as the"computation date"for this purpose the end of such Bond Year, and(2)the District shall deposit to the Rebate Fund from amounts on deposit in the other funds established hereunder or from other District funds, if and to the extent required, amounts sufficient to cause the balance in the Rebate Fund to be equal to the"rebate amount" so calculated. The District shall not be required to deposit any amount to the Rebate Fund in accordance with the preceding sentence, if the amount on deposit in the Rebate Fund prior to the deposit required to be made under this subsection(b)equals or exceeds the"rebate amount"calculated in accordance with the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted under subsection (g) of this Section. The District shall not be required to calculate the "rebate amount"and shall not be required to deposit any amount to the Rebate Fund in accordance with this subsection (b), with respect to all or a portion of the proceeds of the Series A Bonds (including amounts treated as proceeds of the Series A Bonds) (1)to the extent such proceeds satisfy the expenditure requirements of Section 148(f)(4)(B) or Section 148(f)(4)(C) of the Code or Section 1.148-7(d) of the Treasury Regulations, whichever is applicable, and otherwise qualify for the exception to the Rebate Requirement pursuant to whichever of said sections is applicable, (2) to the extent such proceeds are subject to an election by the District under Section 148(f)(4)(C)(vii)of the Code to pay a one and one-half percent(11/2%)penalty in lieu of arbitrage rebate in the event any of the percentage expenditure requirements of Section 148(f)(4)(C)are not satisfied, or(3)to the extent such proceeds qualify for the exception to arbitrage rebate under Section 148(f)(4)(A)(ii)of the Cade for amounts in a"bona fide debt service fund." In such event, and with respect to such amounts, the District shall not be required to deposit any amount to the Rebate Fund in accordance with this subsection(b). (c) Any funds remaining in the Rebate Fund after redemption of all the Series A Bonds and any amounts described in path (2) of subsection (d) of this Section, or provision made therefor satisfactory to the District, including accrued interest,shall be remitted to the.District. (d) Subject to the exceptions contained in subsection (b) of this Section to the requirement to calculate the"rebate amount°'and make deposits to the Rebate Fund,the District shall pay to the United States,from amounts on deposit in the Rebate Fund, (1) not later than 60 days after the end of(i) the fifth Bond Year, and (ii) each fifth Band Year thereafter, an amount that, together with all previous rebate payments, is equal to at least 90%of the"rebate amount" calculated as of the end of such Bond Year in accordance with Section 1.148-3 of the Treasury Regulations;and (2) not later than 60 days after the payment of all Series A Bonds, an amount equal to 10€%of the"rebate amount" calculated as of the date of such payment(and any income attributable to the "rebate amount" determined to be due and payable) in accordance with Section 1.148-3 of'the Treasury Regulations. In the event that, prior to 24 DOcssF\361400\24341.©ooz the time any payment is required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the District shall calculate (or have calculated)the amount of such deficiency and deposit an amount equal to such deficiency into the Rebate Fund prior to the time such payment is due. (e) Each payment required to be made pursuant to subsection(d)of this Section shall be made to the Internal Revenue Service Center, Ogden, Utah, on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 9038-T, such form to be prepared or caused to be prepared by the District. (f) In the event that immediately following the calculation required by subsection(b) of this Section,but prior to any deposit made under said subsection,the mount on deposit in the Rebate Fund exceeds the "rebate amount"' calculated in accordance with said subsection, the District shall withdraw the excess from the Rebate Fund and credit such excess to the Debt Service Fund. (g) The District shall retain records of all determinations made hereunder until six years after the complete retirement of the Series A Bonds. (h) Notwithstanding anything in this Resolution to the contrary, the rebate Requirement shall survive the payment in full or defeasance of the Series A Bands. SECTION 13. See dit for,the Serres A Bonds. There shall be levied on all the taxable property in the District, in addition to all other taxes, a continuing direct ad valorem tsar annually during the period the Series A Bands.are outstanding in an amount sufficient to pay the principal and Accreted Value of and interest on the Series A Bonds when due, which moneys when collected will be placed in the Debt Service Fund of the District,which fund is irrevocably pledged for the payment of the principal and Accreted Value of and interest on the Series A Bonds when and as the same fall due. The moneys in the Debt Service Fund, to the extent necessary to pay the principal and Accreted''Value of and interest on the Series A Bonds as the same become due and payable, shall be transferred by;the Treasurer-Tax Collector to the Bond Registrar which, in turn, shall pay such moneys to DTCto pay the principal and Accreted Value of and interest on the Series A Bonds. DTC will thereupon make payments of principal'and accreted value and interest on the Series A Bonds to the DTC' Participants who will thereupon make payments of principal and Accreted Value and interest to the beneficial owners of the Series A bonds. Any moneys remaining in the Debt Service Fund after the Series A Boards and the interest thereon have been paid,or provision for such payment has been made, shall be transferred to the General Fund of the District, pursuant to the Education Clyde Section 15234. SECTION 14. Ad I tone The County acknowledges that the District has covenanted that it will restrict the use of the proceeds of the Series A Bonds in such manner and to such extent, if any, as may be necessary, so that the Series A Bonds will not constitute arbitrage bonds under Section 148 of the Code and the applicable regulations prescribed under that Section or any predecessor section. Calculations for determining arbitrage requirements are the sole responsibility of the District. 25 DOCS3F\36140024341.0002 SECTION 15. C2UdW= Precedent. Based in part on representations of the District, this Board determines that all acts and conditions necessary to be performed by the Board or to have been met precedent to and in the issuing of the Series A Bonds in order to make them legal,valid and binding general obligations of the District have been performed and have been met, or will at the time of delivery of the Series A Bonds have been performed and have been met, in regular and due form as required by law~, that the full faith, credit and revenues of the District are pledged for the timely payment of the principal of and interest on the Series A Bands; and that no statutory or constitutional limitation of indebtedness or taxation well have been exceeded in the issuance of the Series A Bands. SECTION 16. OMEW The Underwriter is hereby authorized to prepare a Preliminary Official Statement and an Official Statement relating to the Series A Bonds to be used in connection with the offering and sale of the Series A Bonds. The District and the Underwriter are hereby authorized to distribute copies of the Preliminary Official Statement and: the Official Statement to persons who may be interested in the purchase of the Series A Bonds and is directed to deliver copies of any final Official Statement to the purchaser of the Series A Bonds, in such time and manner as to conform with the requirements of Rule 15c2-12 of the Securities and Exchange Commission. SECTION 17. hi un x In the event the District purchases bond insurance for the Series A Bonds, and to the extent that the Bond Insurer makes payment of the principal, interest or AccretedInterest on the Series A Bonds,it shall become the owner of such Series A Bands with the right to payment of principal, interest or Accreted Interest on the Series A Bonds, and shall be fully subrogated to all of the Owners' rights, including the Owners' rights to payment thereof. To evidence such subrogation (i`) in the case of subrogation as to claims that were past clue interest components, the Bond Registrar shall note the Bond Insurer's rights as subrogee on the registration books for the Series A Bands maintained by the Boni Registrar upon receipt of a copy of the cancelled check issued by the Bond Insurer for the payment of such interest to the Owners of the Series A Bonds, and (ii) in the case of subrogation as to claims for past due Principal or Accreted Value, the Bond Registrar shall note the Bond Insurer as subrogee on the registration bolos for the Series A Bonds maintained' by the Bond Registrar upon surrender of the Series A Bonds by the Owners thereof to the Bond Insurer or the insurance trustee for the Bond Insurer. SECTION 18 Dern All or any portion of the outstanding maturities of the Series A Bonds may be defeased prior to maturity in the following ways: (a) Q& by irrevocably depositing with an independent escrow agent selected by the District an amount of cash which together with amounts then on deposit in the Debt Service Fund(as hereinafter defined) is sufficient to pay all Series A Bonds outstanding and designated for defeasance,including all principal and interest and premium, if any;or (b) Uni Staten OWigat ons: by irrevocably depositing with an independent escrow agent selected by the District noncallable United States Obligations together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and moneys then on deposit in the Debt Service Fund' together with the interest to accrue thereon, be fully sufficient to pay and discharge all 'Series A Bonds outstanding area designated for defeasance (including all 26 IOCSSM6140vM4341.0002 principal and interest represented thereby and prepayment premiums,if any)at or before their maturity date; then, notwithstanding that any of such Series A Bonds shall not have been surrendered for payment, all obligations of the District with respect to all such designated outstanding Series A Bonds shall ease and terminate,except only the obligation of the Bond Registrar or an independent escrow agent selected by the District to pay or cause to be paid from funds deposited pursuant to paragraphs(a)or (b)of this Section, to the owners of such designated Series A Bonds not so surrendered and paid all stuns due with respect thereto. For purposes of this Section,United States Obligations shall mean: Direct and general obligations of the United States of America, or obligations that are unconditionally guaranteed as to principal and interest by the UnitedStates of America, including(in the case of direct and general obligations of the United States of America) evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations. Investments in such proportionate interests must be limited to circumstances where(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; and (c) 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;provided that such obligations are rated or assessed "AAA" by Standard & Poor's, a Division of the McGraw-Hill Companies, or "Aaa" by Moody's Investors Service. SECTION 19. kdMogifiglogn 9f County. The County acknowledges and relies upon the fact that the District has represented that it shall indemnify and hold harmless, to the event permitted by laver, the County and its officers and employees{"Indemnified Parties"),against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Parties may become subject because of action or inaction related to the adoption of this Resolution, or related to the proceedings for sales award, issuance and delivery of the Series A Bonds in accordance herewith and with the District Resolution, and that the District shall also reimburse any such Indemnified Parties for any legal or other expenses incurred in connection with investigating or defending any such claims or actions. SECTION 20. Q lei ,AM. Officers of the Board and County officials and staff are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to proceed with the issuance of the Series A Bonds and otherwise carry out,give effect to and comply with the terms and intent of this Resolution. Such actions heretofore taken by such officers, officials and staff are hereby ratified,confirmed and approved. SECTION 21. R..LULIl to, Tfg € -Tmc Collector. The Clerk of this Board is hereby directed to provide a certified copy of this Resolution to the Treasurer Tax Collector of the County immediately fallowing its adoption. 27 DOCSSF\361440124341.0002 SECTION 22. Eftft as e. This Resolution shall take effect imrneiiately upon its pie. PASSED AND ADOPTED this 25th clay of March,2003,by the following vote: AYES: Supervisors Gioia, Uilkema, Glover and DeSaulnier NOES: None ABSENT: None ABSTENTIONS: None DISTRICT III SEAT VACANT CONTRA COSTA COUNTY,CALIFORNIA Chairperson,Board of Supervisors Attest: By: Clerk,Boardof Supervisors 28 DOCSSM62400\24341.0002 CLERK'S CERTIFICATE L Gina MarLin ri Clerk of the Board of Supervisors of Contra Costa County,California,hereby certify as follows: 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 and'legally held at the regular meeting place thereof on March 25 2003 of which meeting all of the members of the Berard of said County had due notice and at which a quorum was present. Ihave carefully compared the same with the original minutes of said meeting on file and of record in my office and the foregoing is a full, true and correct copy'of the original resolution adopted'at said meeting and entered in said minutes. Said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full farce and effect. Dated:March: 25 ,2003 Clerk of the Board of Supervisors 29 DOCSSP3614003 24341.0002 .1.1............................................................................................ ....... ............................___............ ACALANES UNION HIGH SCHOOL DISTRICT RESOLUTION NO.02-03-29 A RESOLUTION OF THE BOARD OF TRUSTEES OF ACALANES UNION HIGH SCHOOL DISTRICT AUTHORIZING THE ISSUANCE OF THE ACALANES UNION HIGH SCHOOL DISTRICT (CONTRA COSTA COUNTY, CALIFORNIA) ELECTION OF 2002 GENERAL OBLIGATION BONDS, SERIES A WHEREAS, a duly called election (the "Election") was held in the Acalanes Union High School District (the "District"), Contra Costa County (the "County"), California, on November 5, 2002 and thereafter canvassed pursuant to law; WHEREAS, at such election there was submitted to and approved by the requisite fifty-five percent vote of the qualified electors of the District a question as to the issuance and sale of general obligation bonds of the District for various purposes set forth in the ballot submitted to the voters, in the maximum amount of Forty-Four Million Dollars ($44,000,000), payable from the levy of an ad valorem tax against the taxable property in the District; WHEREAS, at this time this Board has determined that it is necessary and desirable to request the issuance of a series of such bonds in an aggregate principal amount not to exceed Forty- Four Million Dollars ($44,000,000) to be styled as "Acalanes Union High School District, Contra Costa County, California Election of 2002 General Obligation Bonds, Series A" (the "Series A Bonds"); and WHEREAS, all acts, conditions and things required by law to be done or performed have been done and performed in strict conformity with the laws authorizing the issuance of general obligation bonds of the District,and the indebtedness of the District, including this proposed issue of Series A Bonds, is within all limits prescribed by law; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE ACALANES UNION HIGH SCHOOL DISTRICT, CONTRA COSTA COUNTY, CALIFORNIA,AS FOLLOWS: SECTION 1. Purpose. To raise money for the purposes authorized by voters of the District at the Election and to pay all necessary legal, financial and contingent costs in connection with the issuance of the Series A Bonds, this Board hereby petitions the Board of Supervisors of Contra Costa County to authorize the issuance of the Series A Bonds and to order such Series A Bonds sold at a negotiated sale such that the Series A Bonds shall be dated as of a date to be determined by said Board of Supervisors, shall bear interest at a rate not to exceed that authorized at the Election, shall be payable upon such terms and provisions as shall be set forth in the Series A Bonds, and shall be in an aggregate principal amount not to exceed Forty-Four Million Dollars ($44,000,000). SECTION 2. Paving Akent. This Board does hereby authorize the appointment of U. S. Bank, N.A. as the authenticating agent, bond registrar, transfer agent and paying agent (collectively, the "Bond Registrar")for the Series A Bonds on behalf of the District. DOCSSF\36117v2\24341.0002 SECTION 3. Tax Covenants. The District will, notwithstanding any other provisions of this Resolution, (1)comply with all of the provisions of the resolution of the Board of Supervisors of the County authorizing the issuance of the Series A Bonds relating to the Rebate Fund (as defined therein) and perform all acts necessary to be performed by the District in connection therewith, and (2) make no use of the proceeds of the Series A Bonds or of any other amounts, regardless of the source, or of any property or take any action, or refrain from taking any action, that would cause the Series A Bonds to be"arbitrage bonds"within the meaning of Section 148 of the Code. The District will not make any use of the proceeds of the Series A Bonds or any other funds of the District, or take or omit to take any other action, that would cause the Series A Bonds to be "private activity bonds" within the meaning of Section 141 of the Code or "federally guaranteed" within the meaning of Section 149(b)of the Code. To that end, so long as any Bonds are unpaid,the District, with respect to such proceeds and such other funds, will comply with all requirements of such Sections and all regulations of the United States Department of the Treasury issued thereunder and under Section 103 of the Internal Revenue Code of 1954, as amended, to the extent such requirements are, at the time, applicable and in effect. The District will not use or permit the use of its facilities or any portion thereof by any person other than a governmental unit as such term is used in Section 141 of the Code, in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of the interest paid on the Series A Bonds. In furtherance of the foregoing tax covenants of this Section 3, the District covenants that it will comply with the instructions and requirements of the Tax Certificate to be executed and delivered by the District on the date of issuance of the Series A Bonds,which is incorporated herein as if fully set forth herein. The District will covenant with the holder of the Series A Bonds that the foregoing tax- related restrictions shall survive the payment in full or defeasance of the Series A Bonds. SECTION 4. Leeislative Determinations. This Board determines that all acts and conditions necessary to be performed by the Board or to have been met precedent to and in the issuing of the Series A Bonds in order to make them legal, valid and binding general obligations of the District have been performed and have been met, or will at the time of delivery of the Series A Bonds have been performed and have been met, in regular and due form as required by law; that the full faith, credit and revenues of the District are hereby pledged for the timely payment of the principal of and interest on the Series A Bonds; and that no statutory or constitutional limitation of indebtedness or taxation will have been exceeded in the issuance of the Series A Bonds, SECTION S. Official Statement. Stradling Yocca Carlson & Rauth (the "Bond Counsel") is hereby authorized to prepare or cause to be prepared an Official Statement relating to the Series A Bonds. The Superintendent is hereby authorized and directed, for and in the name and on behalf of the District, to execute and deliver to U.S. Bancorp Piper Jaffray Inc. (the "Underwriter") said Official Statement. The Underwriter of the District is hereby authorized to distribute copies of the Official Statement to persons who may be interested in the purchase of the Series A Bonds and is directed to deliver copies of any final Official Statement to each purchaser of the Series A Bonds. Execution of the Official Statement shall conclusively evidence the District's approval of the Official Statement. The Superintendent is also authorized to deem "final" pursuant to Rule 15c2-12 of the Securities Exchange Act of 1934 the Official Statement prior to its distribution. 2 HAMy Documents\Exhibits\Resolutions\02-03-29 Issue Measure B Bonds.doc SECTION 6. Contract of Purchase. In connection with the sale of the Series A Bonds, the Board authorizes the Superintendent of the District, on behalf of the District, to execute and deliver to the Underwriter, a Contract of Purchase for the Series A Bonds (the form of which is on file with the Clerk), with such terms and conditions as may be acceptable to the Superintendent or the Assistant Superintendent, Business Services of the District; provided, however, that the interest rate on the Series A Bonds shall not exceed that authorized at the Election, the Underwriter's discount (excluding original issue discount and expenses and costs of issuance paid by the Underwriter) shall not exceed 1.00% of the aggregate of the principal amount of Bonds so issued, and the aggregate principal amount of the Series A Bonds shall not exceed Forty-Four Million Dollars ($44,000,000). SECTION 7. Continuing Disclosure. The District hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate executed by the District and dated the date of issuance and delivery of the Series A Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. Any Series A Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Section. Noncompliance with this Section shall not result in acceleration of the Series A Bonds. SECTION 8. Authorized Actions. Officers of the Board and District officials and staff are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to proceed with the issuance of the Series A Bonds and otherwise carry out, give effect to and comply with the terms and intent of this Resolution. Such actions heretofore taken by such officers, officials and staff are hereby ratified, confirmed and approved. SECTION 9. Recitals. All the recitals in this Resolution above are true and correct and this Board so finds, determines and represents. SECTION 10. Effective Date. This Resolution shall take effect immediately upon its passage. 3 H:\My Documents\Exhibits\Resolutions\02-03-29 Issue Measure B Bonds.doc .....................................................I........ ......................... PASSED AND ADOPTED this 5th day of March, 2003,by the following vote: AYES: Carney, Coppersmith, Crews, Tobias, Whitmore NOES: None ABSENT: None ABSTENTIONS: None &I A I Judy Carney President, Board of Trustees Acalanes Union High School District Attest: Kathleen R. (:!bjpersmith Clerk, Board of Trustees Acalanes Union High School District 4 H:\My Documents\Exhibits\Resolutions\02-03-29 Issue Measure B Bonds.doc .................................. CLERK'S CERTIFICATE 1, Kathleen R. Coppersmith, Clerk of the Board of Trustees of the Acalanes Union High School District, hereby certify as follows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Trustees of said District duly and regularly and legally held at the regular meeting place thereof on March 5, 2003, of which meeting all of the members of the Board of said District had due notice and at which a quorum was present. I have carefully compared the same with the original minutes of said meeting on file and of record in my office and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes. 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. Dated: March 5, 2003 Kathleen R. Coppersmith Clerk, Board of Trustees Acalanes Union High School District 5 H:\My Doccuments\Exhibits\Resolutions102-03-29 Issue Measure B Bonds.doc ..................I.....- ................................................................................ ...........................................-............................ ACALANES UNION HIGH SCHOOL DISTRICT CONTRA COSTA COUNTY,CALIFORNIA ELECTION OF 2002 GENERAL OBLIGATION BONDS,SERIES A PURCHASE CONTRACT May_, 2003 Contra Costa County Treasurer and Tax Collector 625 Court Street,Room 102 Martinez, California 94553 Acalanes Union High School District 1212 Pleasant Hill Road Lafayette,California 94549 Ladies and Gentlemen: The undersigned (the "Underwriter") offers to enter into this Purchase Contract (the "Purchase Contract") with Contra Costa County, California (the "County"), and the Acalanes Union High School District (the "District"), which, upon your acceptance hereof, will be binding upon the County, the District and the Underwriter. This offer is made subject to the written acceptance of this Purchase Contract by the County and the District and delivery of such acceptance to us at or prior to 11:59 P.M.,California Time, on the date hereof. 1. Purchase and Sale of the Bonds. Upon the terms and conditions and in reliance upon the representations, warranties and agreements herein set forth, the Underwriter hereby agrees to purchase from the County for reoffering to the public, and the County hereby agrees to sell in the name and on behalf of the District to the Underwriter for such purpose, all (but not less than all) of $ in aggregate initial principal amount of the District's Election of 2002 General Obligation Bonds, Series A (the "Bonds"). The Bonds shall bear or accrete interest at the rates and shall mature on the dates shown on Appendix A hereto, which is incorporated herein by this reference. The Current Interest Bonds (as defined in the County Resolution described below) shall be dated the date of delivery and shall bear interest from such date payable on each February I and August 1, commencing February 1, 2004. The Capital Appreciation Bonds shall be dated their date of delivery and shall accrete interest from such date, compounded semiannually on February I and August 1,commencing August 1, 2003, and shall be paid at maturity as shown in Appendix A hereto. The Underwriter shall purchase the Bonds at a price of $_ (consisting of the principal amount of the Bonds of$ , less underwriter's discount of$ plus premium of $ , less a bond insurance premium of$ and less $ to be used by the Underwriter to pay costs of issuance,as provided below. 2. The Bonds. The Current Interest Bonds shall be dated their date of delivery. The Capital Appreciation Bonds shall be dated their date of delivery. The Bonds shall mature on the DOC SS F\36301 v2124341.0002 ................................................................................................. ..........................................................................................- dates shown on Appendix A hereto, and shall otherwise be as described in, and shall be issued and secured pursuant to the provisions of the Resolution of the District adopted on March 5, 2003 (the "District Resolution")and the Resolution of the Board of Supervisors of the County adopted April 1, 2003 (the "County Resolution" and, collectively with the District Resolution,the "Resolutions") and Section 15 100 et seg. of the California Education Code (the"Act"). The Bonds shall be executed and delivered under and in accordance with the provisions of this Purchase Contract and the Resolutions. The Bonds shall be in book-entry form, shall bear CUSIP numbers, shall be in fully registered form, registered in the name of Cede & Co., as nominee of The Depository Trust Company,New York,New York; the Bonds shall initially be in authorized denominations of$5,000 principal or maturity value each or any integral multiple thereof. 3. Use of Documents. The District and the County hereby authorize the Underwriter to use, in connection with the offer and sale of the Bonds, this Purchase Contract and an Official Statement(defined below), the Resolutions and all information contained herein and therein and all of the documents, certificates or statements furnished by the District or the County to the Underwriter in connection with the transactions contemplated by this Purchase Contract. 4. Public Offering of the Bonds. The Underwriter agrees to make a bona fide public offering of all the Bonds at the initial public offering prices or yields to be set forth on the cover page of the Official Statement. Subsequent to such initial public offering, the Underwriter reserves the right to change such initial public offering prices or yields as it deems necessary in connection with the marketing of the Bonds. 5. Review of Official Statement. The Underwriter hereby represents that it has received and reviewed the Preliminary Official Statement with respect to the Bonds, dated_, 2003 (the "Preliminary Official Statement"). The District represents that it deems the Preliminary Official Statement to be final, except for either revision or addition of the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended(the"Rule"). The Underwriter agrees that prior to the time the final Official Statement relating to the Bonds is available, the Underwriter will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the first business day following the date upon which each such request is received. 6. Closing. At 8:00 A.M., California Time, on May 2003, or at such other time or on such other date as shall have been mutually agreed upon by you and us (the "Closing"), you will deliver to us, at the offices of The Depository Trust Company ("DTC") in New York,New York, or at such other place as we may mutually agree upon, the Bonds in fully registered book-entry form, duly executed and registered in the name of Cede & Co., as nominee of DTC, and at the offices of Stradling Yocca Carlson & Rauth, a Professional Corporation ("Bond Counsel"), in San Francisco, California, the other documents hereinafter mentioned; and we will accept such delivery and pay the purchase price thereof in immediately available funds by check, draft or wire transfer to or upon the order of the District. 2 DOCSSF136301 v2124341.0002 7. Representations,Warranties and Agreements of the District. The District hereby represents,warrants and agrees with the Underwriter that: (a) Due Organization. The District is a unified school district duly organized and validly existing under the laws of the State of California, with the power to issue the Bonds pursuant to the Act. (b) Due Authorization. (i) At or prior to the Closing, the District will have taken all action required to be taken by it to authorize the issuance and delivery of the Bonds; (ii)the District has full legal right, power and authority to enter into this Purchase Contract and the Continuing Disclosure Certificate, to adopt the District Resolution, to perform its obligations under each such document or instrument, and to carry out and effectuate the transactions contemplated by this Purchase Contract and the District Resolution; (iii)the execution and delivery or adoption of, and the performance by the District of the obligations contained in the Bonds, the District Resolution, the Continuing Disclosure Certificate, the County Resolution and this Purchase Contract have been duly authorized and such authorization shall be in full force and effect at the time of the Closing; (iv)this Purchase Contract and the Continuing Disclosure Certificate constitute valid and legally binding obligations of the District; and(v)the District has duly authorized the consummation by it of all transactions contemplated by this Purchase Contract. (c) Consents. No consent, approval, authorization, order, filing, registration, qualification, election or referendum, of or by any court or governmental agency or public body whatsoever is required in connection with the issuance, delivery or sale of the Bonds, the execution and delivery of this Purchase Contract and the Continuing Disclosure Certificate, the adoption of the District Resolution, or the consummation of the other transactions effected or contemplated herein or hereby, except for such actions as may be necessary to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions of the United States as the Underwriter may reasonably request, or which have not been taken or obtained; provided, however, that the District shall not be required to subject itself to service of process in any jurisdiction in which it is not so subject as of the date hereof. (d) Internal Revenue Code. The District has complied with the Internal Revenue Code of 1986,as amended,with respect to the Bonds. (e) No Conflicts. To the best knowledge of the District, the issuance of the Bonds, and the execution, delivery and performance of this Purchase Contract, the Continuing Disclosure Certificate, the District Resolution and the Bonds, and the compliance with the provisions hereof do not conflict with or constitute on the part of the District a violation of or default under, the Constitution of the State of California or any existing law, charter, ordinance, regulation, decree, order or resolution and do not conflict with or result in a violation or breach of, or constitute a default under, any agreement, indenture, mortgage, lease or other instrument to which the District is a party or by which it is bound or to which it is subject. (f) Litigation. As of the time of acceptance hereof, no action, suit, proceeding, hearing or investigation is pending or, to the best knowledge of the District, threatened 3 DOCSSF\30301 v2\24341.0002 against the District: (i)in any way affecting the existence of the District or in any way challenging the respective powers of the several offices or of the titles of the officials of the District to such offices; or (ii)seeking to restrain or enjoin the sale, issuance or delivery of any of the Bonds, the application of the proceeds of the sale of the Bonds, or the collection of revenues or assets of the District pledged or to be pledged or available to pay the principal or accreted value of and interest on the Bonds, or the pledge thereof, or, the levy of any taxes contemplated by the Resolutions or in any way contesting or affecting the validity or enforceability of the Bonds, this Purchase Contract or the Resolutions or contesting the powers of the District or its authority with respect to the Bonds, the Resolutions or this Purchase Contract; or (iii) in which a final adverse decision could (a)materially adversely affect the operations of the District or the consummation of the transactions contemplated by this Purchase Contract or the Resolutions, (b)declare this Purchase Contract to be invalid or unenforceable in whole or in material part,or(c) adversely affect the exclusion of the interest paid on the Bonds from gross income for federal income tax purposes and the exemption of such interest from California personal income taxation. (g) No Other Debt. Between the date hereof and the Closing, without the prior written consent of the Underwriter, neither the District, nor the County,nor any other person on behalf of the District, will have issued in the name and on behalf of the District any bonds, notes or other obligations for borrowed money except for such borrowings as may be described in or contemplated by the Official Statement. (h) Arbitrage Certificate. The District has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the District is a bond issuer whose arbitrage certificates may not be relied upon. (i) Certificates. Any certificates signed by any officer of the District and delivered to the Underwriter shall be deemed a representation and warranty by the District to the Underwriter,but not by the person signing the same,as to the statements made therein. 6) Continuing Disclosure. At or prior to the Closing, the District shall have duly authorized, executed and delivered a continuing disclosure certificate (the "Continuing Disclosure Certificate") on behalf of each obligated person for which financial and/or operating data is presented in the Official Statement. The Continuing Disclosure Certificate shall comply with the provisions of Rule 15c 2-12(b)(5) and be substantially in the form attached to the Official Statement in Appendix C. (k) Official Statement Accurate and CoMlete. The Preliminary Official Statement, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing Date, the Final Official Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The District makes no representation or warranty as to the information contained in or omitted from the Preliminary Official Statement or the Final Official Statement in reliance upon an in conformity with information furnished in writing to the District by or on behalf of the Underwriter through a representative of the Underwriter specifically for inclusion therein. 4 DOCSSF\36301v 24341.0002 .......................................................................................................................................................................................................... (1) Levy of Tax. The District hereby agrees to take any and all actions as may be required by the County or otherwise necessary in order to arrange for the levy and collection of taxes, payment of the Bonds, and the deposit and investment of Bond proceeds. In particular, the District hereby agrees to provide to the County Auditor and the County Treasurer-Tax Collector a copy of the District Resolution, a copy of Appendix A hereto, and the full debt service schedule for the Bonds, in accordance with Education Code Section 15140(c)and policies and procedures of the County. 8. Representations, Warranties and Agreements of the County. The County hereby represents,warrants and agrees with the Underwriter that: (a) Due Organization. The County is a political subdivision duly organized and validly existing under the laws of the State of California, with the power to issue the Bonds pursuant to the Act. (b) Due Authorization. (i) At or prior to the Closing, the County will have taken all action required to be taken by it to authorize the issuance and delivery of the Bonds; (ii)the County has full legal right, power and authority to enter into this Purchase Contract, to adopt the County Resolution, to issue and deliver the Bonds to the Underwriter on behalf of the District and to perform its obligations under each such document or instrument, and to carry out and effectuate the transactions contemplated by this Purchase Contract and the Resolutions; (iii)the execution and delivery or adoption of, and the performance by the County of its obligations contained in the Bonds, the District Resolution, the County Resolution and this Purchase Contract have been duly authorized and such authorization shall be in full force and effect at the time of the Closing; (iv)this Purchase Contract constitutes a valid and legally binding obligation of the County; and (v)the County has duly authorized the consummation by it of all of its transactions contemplated by this Purchase Contract. (c) Consents. No consent, approval, authorization, order, filing, registration, qualification, election or referendum, of or by any court or governmental agency or public body whatsoever is required in connection with the issuance, delivery or sale of the Bonds or the consummation of the other transactions effected or contemplated herein or hereby, except for such actions as may be necessary to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions of the United States as the Underwriter may reasonably request, or which have not been taken or obtained; provided, however, that the County shall not be required to subject itself to service of process in any jurisdiction in which it is not so subject as of the date hereof. (d) No Conflicts. To the best knowledge of the County, the issuance of the Bonds, the execution, delivery and performance of this Purchase Contract, the County Resolution and the Bonds, and the compliance with the provisions hereof do not conflict with or constitute on the part of the County a violation of or default under, the Constitution of the State of California or any existing law, charter, ordinance, regulation, decree, order or resolution and do not conflict with or result in a violation or breach of, or constitute a default under, any agreement, indenture, mortgage, lease or other instrument to which the County is a party or by which it is bound or to which it is subject. 5 DOCSSF\36301 v2\24341.0002 .............................................................. (e) Litigation. As of the time of acceptance hereof, based on the advice of County Counsel, no action, suit, proceeding, hearing or investigation is pending or, to the best knowledge of the County, threatened against the County: (i)in any way affecting the existence of the County or in any way challenging the respective powers of the several offices or of the titles of the officials of the County to such offices; or(ii)seeking to restrain or enjoin the sale, issuance or delivery of any of the Bonds, or the levy on any taxes contemplated by the Resolutions, or in any way contesting or affecting the validity or enforceability of the Bonds, this Purchase Contract or the Resolutions or contesting the powers of the County or its authority with respect to the Bonds, the Resolutions or this Purchase Contract; or (iii) in which a final adverse decision could (a)materially adversely affect the operations of the County or the consummation of the transactions contemplated by this Purchase Contract or the Resolutions, (b)declare this Purchase Contract to be invalid or unenforceable in whole or in material part,or(c)adversely affect the exclusion of the interest paid on the Bonds from gross income for federal income tax purposes and the exemption of such interest from California personal income taxation. (f) No Other Debt. Between the date hereof and the Closing, without the prior written consent of the Underwriter, the County will not have issued in the name and on behalf of the District any bonds, notes or other obligations for borrowed money except for such borrowings as may be described in or contemplated by the Official Statement. (g) Arbitrage Certificate. The County has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the County is a bond issuer whose arbitrage certificates may not be relied upon. (h) Certificates. Any certificates signed by any officer of the County and delivered to the Underwriter shall be deemed a representation and warranty by the County to the Underwriter,but not by the person signing the same,as to the statements made therein. (i) Official Statement Accurate and Complete. The section of the Preliminary Official Statement entitled "Contra Costa County Investment Pool," at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein,in the light of the circumstances under which they were made, not misleading. At the date hereof and on the Closing Date, the section of the Final Official Statement entitled "Contra Costa County Investment Pool" did not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 9. Covenants of the County and the District. The County and the District respectively covenant and agree with the Underwriter that: (a) Securities Laws. The County and the District will furnish such information, execute such instruments, and tape such other action in cooperation with the Underwriter if and as the Underwriter may reasonably request in order to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations or such states and jurisdictions, provided, however, that the County and the District shall not be required to 6 DOCSSF136301 v?124341.0002 _. . ..._.............._.................. ........................ ...._........ _ ....._.._.... I'll,...-..........................................................................................................................................................................................-........................ .................................................-................ consent to service of process in any jurisdiction in which they are not so subject as of the date hereof; (b) Application of Proceeds. The District will apply the proceeds from the sale of the Bonds for the purposes specified in the District Resolution; (c) Official Statement. The District hereby agrees to deliver or cause to be delivered (and the County agrees to cooperate with the District in connection with such delivery)to the Underwriter, not later than the seventh (7th) business day following the date this Purchase Contract is signed, copies of a final Official Statement substantially in the form of the Preliminary Official Statement, with only such changes therein as shall have been accepted by the Underwriter, the County and the District (such Official Statement with such changes, if any, and including the cover page and all appendices, exhibits, maps, reports and statements included therein or attached thereto being herein called the "Official Statement") in such quantities as may be requested by the Underwriter not later than five (5) business days following the date this Purchase Contract is signed, in order to permit the Underwriter to comply with paragraph (b)(4) of the Rule and with the rules of the Municipal Securities Rulemaking Board. The District hereby authorizes the Underwriter to use and distribute the Official Statement in connection with the offering and sale of the Bonds; (d) Subsequent Events. The District hereby agree to notify the Underwriter of any event or occurrence that may affect the accuracy or completeness of any information set forth in the Official Statement relating to the County or the District, respectively, until the date which is ninety(90)days following the Closing; (e) References. References herein to the Preliminary Official Statement and the final Official Statement include the cover page and all appendices, exhibits, maps, reports and statements included therein or attached thereto; and (f) Amendments to Official Statement. For a period of ninety(90)days after the Closing or until such time (if earlier) as the Underwriter shall no longer hold any of the Bonds for sale, the District will adopt any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, the Underwriter shall object in writing or which shall be disapproved by the Underwriter; and if any event relating to or affecting the District shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in light of the circumstances existing at the time it is delivered to a purchaser, forthwith prepare and furnish(at the expense of the District)a reasonable number of copies of an amendment of or supplement to the Official Statement(in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser,not misleading. 10. Conditions to Closing. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the County and the District contained herein and the performance by the District of its obligations hereunder, both as of the date hereof and as of the date of Closing. The Underwriter's obligations under this Purchase Contract are and shall be subject 7 DOCSSF1363,01 v2124341.0002 ..................... ........................... at the option of the Underwriter,to the following further conditions at the Closing: (a) Representations True. The representations and warranties of the County and the District contained herein shall be true, complete and correct in all material respects at the date hereof and at and as of the Closing, as if made at and as of the Closing, and the statements made in all certificates and other documents delivered to the Underwriter at the Closing pursuant hereto shall be true,complete and correct in all material respects on the date of the Closing; and the County and the District shall be in compliance with each of the agreements made by it in this Purchase Contract; (b) Obligations Performed. At the time of the Closing, (i)the Official Statement, this Purchase Contract, the District Resolution and the County Resolution shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by us; (ii)all actions under the Act which, in the opinion of Band Counsel, shall be necessary in connection with the transactions contemplated hereby, shall have been duly taken and shall be in full force and effect; and (iii)the County and the District shall perform or have performed all of their obligations required under or specified in the District Resolution, the County Resolution, this Purchase Contract or the Official Statement to be performed at or prior to the Closing; (c) Adverse Rulings. No decision, ruling or finding shall have been entered by any court or governmental authority since the date of this Purchase Contract (and not reversed on appeal or otherwise set aside), or to the best knowledge of the County or the District, pending or threatened which has any of the effects describe in Section ?(f) or 8(e) hereof or contesting in any way the completeness or accuracy of the Official Statement; (d) Marketability. Between the date hereof and the Closing, the market price or marketability or the ability of the Underwriter to enforce contracts for the sale of the Bonds, at the initial offering prices set forth in the Official Statement, of the Bonds shall not have been materially adversely affected in the judgment of the Underwriter (evidenced by a written notice to the County and the District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds)by reason of any of the following: (1) legislation enacted or introduced in the Congress or recommended for passage by the President of the United States, or a decision rendered by a court established under Article III of the Constitution of the United States or by the United States Tax Court, or an order, ruling, regulation (final, temporary or proposed) or official statement issued or made: (i) by or on behalf of the United States Treasury Department, or by or on behalf of the Internal Revenue Service, with the purpose or effect, directly or indirectly, of causing inclusion in gross income for purposes of federal income taxation of the interest received by the owners of the Bonds; or (ii) by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, to the effect that the Bonds, or obligations of the general character of 8 DOCSSF136301 v2124341.0002 11.1.1............................................................................................................................................................................................................ ....................................................... 11111...I'll, the Bonds, including any and all underlying arrangements, are not exempt from registration under the Securities Act of 1933,as amended; (2) any outbreak or escalation or hostilities affecting the United States, the declaration by the United States of a national emergency or war,or engagement in major military hostilities by the United States or the occurrence of any other national emergency or calamity relating to the effective operation of the government or the financial community in the United States; (3) the declaration of a general banking moratorium by federal, New York or California authorities, or the general suspension of trading by the New York Stock Exchange, any national securities exchange, or any governmental authority securities exchange; (4) the imposition by the New York Stock Exchange, other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds, or obligations of the general character of the Bonds, or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of,the Underwriter; (5) an order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws,as amended and then in effect; (6) the withdrawal or downgrading of any rating of the District's outstanding indebtedness by a national rating agency; (7) any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material adverse respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; or (8) the suspension by the SEC of trading in the outstanding securities of the District or the County. (e) Delivery of Documents. At or prior to the date of the Closing, the Underwriter shall receive three copies of the following documents in each case dated as of the Closing Date and satisfactory in form and substance to the Underwriter: 9 DOCSS"6301 v2124341.0002 . . ............................................................... .................................... (1) Bond Opinion. An approving opinion of Bond Counsel, as to the validity and tax-exempt status of the Bonds, dated the date of the Closing, in substantially the form set forth in the Preliminary Official Statement and the Official Statement as Appendix A; (2) Reliance Letter. A reliance letter from Bond Counsel to the effect that the Underwriter can rely upon the approving opinion described in(e)(1)above; (3) Certificates. A certificate signed by appropriate officials of the County and the District to the effect that (i) such officials are authorized to execute this Purchase Contract, (ii) the representations, agreements and warranties of the County and the District herein are true and correct in all material respects as of the date of Closing, (iii) the County and the District have complied with all the terms of the District Resolution, the County Resolution and this Purchase Contract to be complied with by the County and the District prior to or concurrently with the Closing and, as to the District, such documents are in full force and effect, (iv) such District officials have reviewed the Official Statement and on such basis certify that the Official Statement does not contain any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, (v) the Bonds being delivered on the date of the Closing to the Underwriter under this Purchase Contract substantially conform to the descriptions thereof contained in the County Resolution, and (vi)no event concerning the County or the District has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement thereto, but should be disclosed in order to make the statements in the Official Statement in light of the circumstances in which they were made not misleading; provided that the certificate provided by the County may exclude statements to the effect of(iii),(iv)and(v)above; (4) Arbitrage. A nonarbitrage certificate of the District in form satisfactory to Bond Counsel; (5) Rating. Evidence satisfactory to the Underwriter that the Bonds shall have been rated "Aaa" by Moody's Investors Service and "AAA" by Standard& Poor's, a Division of the McGraw-Hill Companies (or such other equivalent ratings as such rating agencies may give)and that any such ratings have not been revoked or downgraded; (6) District Resolution. A certificate, together with fully executed copies of the District Resolution, of the Clerk of the District Board of Trustees to the effect that: (i) such copies are true and correct copies of the District Resolution;and (ii) that the District Resolution was duly adopted and has not been modified,amended, rescinded or revoked and is in full force and effect on the date of the Closing. 10 DOCSSF136301 vM4341.0002 _..... ......... .......... ... ....... ......... ......_... (7) County Resolution.. A certificate, together with fully executed copies of the County Resolution, of the Clerk of the County Board of Supervisors to the effect that: (i) such copies are true and correct copies of the County Resolution; and (ii) that the County Resolution was duly adopted; (8) County Counsel Opinion. An opinion of Counsel to the County in the form attached hereto as Appendix B; (9) Official Statement. A certificate of the appropriate official of the District evidencing his or her determinations respecting the Preliminary Official Statement in accordance with the Rule; (10) Policy of Insurance. A policy of insurance from an insurance provider satisfactory to the Underwriter, insuring the payment of principal of and interest on the Bonds; (11) Continuing Disclosure Certificate. An executed copy of the Continuing Disclosure Certificate, substantially in the form presented in the Official Statement as Appendix C thereto; (12) Certificate of the Insurer. A certificate of the appropriate agent of the Insurer evidencing the Insurer's determination that the information contained in the Official Statement regarding the Insurer and its policy with respect to the Bonds is accurate;and (13) Other Documents. Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter may reasonably request to evidence compliance (i) by the County and the District with legal requirements, (ii) the truth and accuracy, as of the time of Closing, of the representations of the County and the District herein contained and of the Official Statement,and(iii)the due performance or satisfaction by the County and the District at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the District. (f) Termination. Notwithstanding anything to the contrary herein contained, if for any reason whatsoever the Bonds shall not have been delivered by the District to the Underwriter prior to the close of business, California Time, on , 2003, then the obligation to purchase Bonds hereunder shall terminate and be of no further force or effect except with respect to the obligations of the District and the Underwriter under Section 11 hereof. If the County and/or the District is unable to satisfy the conditions to the Underwriter's obligations contained in this Purchase Contract or if the Underwriter's obligations shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract may be cancelled by the 11 DOC SSR36301 v2t24341.0002 ... ................... ........... ..._..... ..............._... ... ......... ......... ......... ......... ......... .......... ...................................................................................................................................................................... ....................................................................................................... Underwriter at, or at any time prior to, the time of Closing. Notice of such cancellation shall be given to the County and the District in writing, or by telephone or telegraph, confirmed in writing. Notwithstanding any provision herein to the contrary, the performance of any and all obligations of the County and the District hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriter may be waived by the Underwriter in writing at its sole discretion. 11. Conditions to Obligations of the County and the District. The performance by the County and the District of their obligations is conditioned upon (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the District and the Underwriter of opinions and certificates being delivered at the Closing by persons and entities other than the County and the District. 12. Expenses. To the extent that the transactions contemplated by this Purchase Contract are consummated, the District shall pay costs of issuance of the Bonds, including but not limited to the following: (i) the cost of the preparation and reproduction of the Resolutions-, (ii) the fees and disbursements of Bond Counsel; (iii) the cost of the preparation, printing and delivery of the Bonds; (iv) the fees, if any, for bond ratings, including all necessary travel expenses; (v) the cost of the printing and distribution of the Preliminary Official Statement and the Official Statement; (vi) the bond insurance premium; and(vii)all other fees and expenses incident to the issuance and sale of the Bonds. In the event that following payment of the expenses set forth above, there is any portion of such amount remaining with the Underwriter, the Underwriter shall remit such remaining amount to the District and the District shall deposit such amount into the Debt Service Fund. At the time that all costs of issuance are paid, the Underwriter shall provide the District with a complete accounting of such payments and any amounts remaining after all payments have been made. (b) In addition to the above expenses, the Underwriter shall pay all out-of-pocket expenses of the Underwriter, including the California Debt and Investment Advisory Commission fee,travel and other expenses(except those expressly provided above)without limitation. 13. Notices. Any notice or other communication to be given under this Purchase Contract(other than the acceptance hereof as specified in the first paragraph hereof)may be given by delivering the same in writing if to the County, to the Treasurer and Tax Collector, Contra Costa County, 625 Court Street, Room 102, Martinez, California 94553, if to the District, to the Superintendent,Acalanes Union High School District, 1212 Pleasant Hill Road, Lafayette,California 94549, or if to the Underwriter, to U.S. Bancorp Piper Jaffray Inc., 1235 Hermosa Avenue, Suite 300, Hermosa Beach,California 90254. 14, Parties in Interest; Survival of Representations and Warranties. This Purchase Contract when accepted by the District in writing as heretofore specified shall constitute the entire agreement among the County, the District and the Underwriter. This Purchase Contract is made solely for the benefit of the County, the District and the Underwriter (including the successors or assigns of the Underwriter). No person shall acquire or have any rights hereunder or by virtue hereof. All your representations, warranties and agreements of the County and the District in this Purchase Contract shall survive regardless of(a)any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b)delivery of and payment by the Underwriter for the Bonds hereunder,and(c)any termination of this Purchase Contract. 12 DOCSSF136301v2\24341.0002 ....................I......... ...... ................................................................................................... 15. Execution in Counterparts. This Purchase Contract may be executed in several counterparts each of which shall be regarded as an original and all of which shall constitute but one and the same document. 13 DOCSSP13630l v2\24341.4002 .......................................................................................................................................................................................................................... . . . . .. ........................... 16. Applicable Law. This Purchase Contract shall be interpreted,governed and enforced in accordance with the laws of the State of California applicable to contracts made and performed in such State. Very truly yours, U.S.BANCORP PIPER JAFFRAY INC. By: Eugene M. Yee Managing Director The foregoing is hereby agreed to and accepted as of the date first above written: CONTRA COSTA COUNTY Accepted: Treasurer and Tax Collector Approved as to Form: Contra Costa County Counsel By: Mary Ann Mason Deputy County Counsel ACALANES UNION HIGH SCHOOL DISTRICT By: Superintendent 14 DOCSSF\36301v2\24341.0002 ............................. ................................................................................................................................. I'll,....11.11,111.11...I........................ APPENDIX A ACALANES UNION HIGH SCHOOL DISTRICT Contra Costa County,California Election of 2002 General Obligation Bonds,Series A $ *Current Interest Serial Bonds Maturity Principal Interest Maturity Principal Interest (August 1 Amount Rate Yield (August i Amount Rate Yield $ _°!°Term Bonds due August 1,20 -Yield $ *Capital Appreciation Serial Bonds Due original Accretion Reoffering Reoffering Yield Final Au'ust 1 Principal Amount Rate Principal Amount to Maturity Accreted Value $ °!°Capital Appreciation Bonds due May 1,2028 A-1 DOCSSF136301 v2124341.0002 _ _ _ _.._._... .............. .._....... ..._..... ..............._.. ___ ....... _... ........__... ......... ......... ......... ......... ......... ......... .......... .. ........ __ _ I.-....... _ _._._._...... __._....._ ''I'll''................................................................................ ...................................... Redemption Provisions Optional Redemption. The Current Interest Bonds maturing on or before August 1, 20 are not subject to redemption prior to their fixed maturity dates. The Current Interest Bonds maturing on or after August 1, 20—* may be redeemed prior to their respective stated maturity dates at the option of the District, from any source of funds, on August 1, 20_* or on any date thereafter as a whole, or in part, at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption), together with interest accrued thereon to the date fixed for redemption: Redemption Periods* Redemption Price* August 1, 20_through July 31, 20 102% August 1,20—through July 31, 20� 101 August 1,20 and thereafter 100 Mandatory Sinking Fund Redemption. The Current Interest Bonds maturing on August 1, 20_*, are subject to redemption prior to maturity from mandatory sinking fund payments on August I of each year, on and after August 1, 20_*, at a redemption price equal to the principal amount thereof, together with accrued interest thereon to the date fixed for redemption, without premium. The principal amount represented by such Current Interest Bonds to be so redeemed and the dates therefor and the final principal payment date are as indicated in the following table: Redemption Date Au u—St-1) Principal Amount The Capital Appreciation Bonds are not subject to redemption. Preliminary,subject to change. A-2 DOCSSF136301 v2124341.0002 ..................................................................................................................... ............ . . . ..... ........................ ................................................................ APPENDIX B OPINION OF COUNTY COUNSEL ACALANES UNION HIGH SCHOOL DISTRICT CONTRA COSTA COUNTY,CALIFORNIA ELECTION OF 2002 GENERAL OBLIGATION BONDS, SERIES A Ladies and Gentlemen: This opinion is rendered as counsel to the County of Contra Costa (the "County") in connection with the issuance by the Acalanes Union High School District (the "District") of its Election of 2002 General Obligation Bonds, Series A in the aggregate principal amount of $ ("Bonds"). The Bonds are being issued pursuant to a resolution of the Board of Supervisors of the County adopted on April 1, 2003 (the "County Resolution7% at the request of the District made pursuant to a resolution adopted by the Board of Trustees of the District on March 5, 2003 (the"District Resolution"). In rendering this opinion, we have examined the County Resolution and such other documents,records and instruments and made such investigations of law and fact as we have deemed necessary to render the opinions expressed herein. Based upon the foregoing, and solely with respect to the laws of the State of California (the "State'),we are of the opinion,as of the date hereof,that: 1. The County is a political subdivision duly organized and existing pursuant to the Constitution and the laws of the State of California. 2. The County Resolution approving and authorizing the execution and delivery of the Purchase Contract and the issuance of the Bonds was duly adopted at a meeting of the governing body of the County which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption, has not been modified, amended,rescinded or revoked and is in full force and effect on the date hereof. 3. To the best of my knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened against the County (a) affecting the existence of the County or the titles of its officers who have acted with respect to the proceedings for issuance and sale of the Bonds to their respective officers; (b) seeking to prohibit, restrain or enjoin the execution of the Purchase Contract or the issuance of the Bonds or in anyway contesting or affecting the validity or enforceability of the Bonds, the Purchase Contract, or the County Resolution; (c)contesting the powers of the County or its authority to enter into, adopt or perform its obligations under the County Resolution or the Purchase Contract;or(d)seeking to restrain or enjoin the levy or collection of tax revenues pledged for payment of the Bonds. B-1 DOCS5F\36301 v2124341.0002 ...............................I........ .................................................................................................................... ...................................... .. ..................................I..'',................ 4. The Purchase Contract has been duly authorized, executed and delivered by the County and the Bonds have been duly authorized by the County,executed by the County on behalf of the District and delivered by the County and, assuming due authorization, execution and delivery by the other parties thereto, the Purchase Contract will constitute the legal, valid and binding agreement of the County enforceable against the County in accordance with its terms. With respect to the opinions we have expressed, enforcement of the rights and obligations under the County Resolution, the Purchase Contract and the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally, by the application of equitable principles if equitable remedies are sought, and by limitations on legal remedies imposed in actions against public entities in the State. We express no opinion as to the availability of equitable remedies in connection with enforcement of the County Resolution,the Purchase Contract or the Bonds. Very truly yours, Contra Costa County Counsel By: Mary Ann Mason Deputy County Counsel B-2 DOCSSFi36301 v2124341.0002 ..... . ... ....................................... -,....................................................................................................................................................................................................................... . ....................................................................................................................................................................................................................... PRELIMINARY OFFICIAL STATEMENT DATED MAY_,2003 SYCR Draft 3/10/03 NEW ISSUE FULL BOOK{ENTRY RATINGS: Insured Ratings:Moodyls: S&P: Underlying RatingMAody's: S&P: _ ( ee"M1SCELLNEOVS_ Rating_s_.'� In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ("Bond Counsel' und6r existing statutes, regulations, rulin s, and judicial decisions, and assuming the accuracy, of certain g represen?61tions and compliance with certain covenaN and requirements described herein, interest (and original issue discount)on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tagriferencefor purposes of calculatin h E W f the alternative minimum tax imposed on individuals and corporations. In thefyr her opinion of �: Bond Counsel interes (an original issue discount)on the Bonds is exempt from Stateo ,California personal income tax. See "T4XMAffffiS"herein with respect to other tax consequences with respect to the Bods. $44,000,000* 51 ACALANES UNION HIGH SCHOOL DISTRICT CJ Contra Costa County,California Election of 2002 General Obligation Bonds, Series A E o Dated: Date of Delivery Due:August I and May 1,as shown on inside cover The Acalanes Union High School District, Contra Costa County, California, Election of 2002 General Obligation Bonds, Series A (the "Bonds"), were authorized at an election of the registered voters of the Acalanes Union High School e .2 District (the "District") held on November 5, 2002, at which more than fifty-five percent of the persons voting on the proposition voted to authorize the issuance and sale of $44,000,000 principal amount of general obligation bonds of the E u District.The Bonds are being issued to rehabilitate,expand and improve District schools,grounds and facilities. Bonds are general obligations of the District. The Board of Supervisors of Contra Costa County is empowered o and obligated to levy ad valorem taxes, without limitation of rate or amount, upon all property within the District subject to taxation by the District (except certain personal property which is taxable at limited rates), for the payment of interest on and principal of the Bonds when due. E Zo The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede& Co. as nominee for The Depository Trust Company, New York, New York (collectively referred to herein as "DTC'). Purchasers will not receive certificates representing their interest in the Bonds. See "APPENDIX F - Book-Entry Only E = System." E >, Interest with respect to the Current Interest Bonds accrues from the date of delivery and is payable semiannually on IV 'q February I and August I of each year, commencing February 1, 2004. The Current Interest Bonds are issuable in denominations of$5,000 or any integral multiple thereof. 05 The Capital Appreciation Bonds maturing August 1,20 to August 1,20 are dated the date of delivery and accrete interest from such date,compounded semiannually on February T—and August I of each year,commencing August 1,2003, and o are payable at maturity. The Capital Appreciation Bonds maturing May 1, 2028, are dated the date of delivery of the Bonds and accrete interest from such date, compounded semiannually on February I and August 1 of each year and May 1, 2028, commencing August 1, 2003, and are payable at maturity. The Capital Appreciation Bonds are issuable in denominations of 5,000 Accreted Value or any integral multiple thereof. Payments of principal and Accreted Value of and interest on the Bonds will be paid by as :9 Bond Registrar and Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to 0 the beneficial owners of the Bonds. See"APPENDIX F-Book-Entry Only System." The Current Interest Bonds are subject to optional redemption as described herein. The Capital Appreciation Bonds are not subject to optional redemption.The Current Interest Term Bonds are subject to mandatory redemption, as described herein. a The scheduled payment of principal of(or,in the case of Capital Appreciation Bonds,the Accreted Value)and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by (the"Insurer"). (See"THE BONDS—Bond Insurance"and Appendix E-Form of Municipal Bond E Insurance Policy.) [Bond Insurer LOGO] MATURITY SCHEDULE (See inside cover) E This cover page contains certain information for reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. E The Bonds will be offered when, as and if issued and received by he Underwriter, subject to the approval of legality <u t rw I ali Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel. The Bonds, in book-entry form, will be available for delivery through The Depository Trust Company in New York, New York on or about May_, 2003. C) [Underwriter LOGO] Dated: May 2003 Preliminary,subject to change. $44,000,000* ACALANES UNION HIGH SCHOOL DISTRICT Contra Costa County, California Election of 2002 General Obligation Bonds, Series A MATURITY SCHEDULE $ *Current Interest Serial Bonds Maturity Principal Interest Maturity Principal Interest (August i Amount Rate Yield (August 1 Amount Rate Yield Term Bonds due August 1,20_-Yield_% $ *Capital Appreciation Serial Bonds Due Original Accretion Reoffering Reoffering Yield Final (August 1} Principal Amount Rate Principal Amount to Maturity Accreted Value Capital Appreciation Bonds due May 1,2028 DOCSSR36160v4\24341.0002 This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the District. No dealer,broker,salesperson or other person has been authorized by the District to give any information or to make any representations other than as contained in this Official Statement,and if given or made,such other information or representation not so authorized should not be relied upon as having been given or authorized by the District. The issuance and sale of the Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Certain of the information set forth herein has been obtained from sources outside the District which are believed to be reliable,but is not guaranteed as to accuracy or completeness,and is not to be construed as a representation by the District. The information and expressions of opinions herein are subject to change without notice and neither 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 District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used,in whole or in part,for any other purpose. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE:MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. The Underwriter has provided the following sentence for inclusion in this Official Statement: "The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information." Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements." Such statements are generally identifiable by the terminology used, such as "plan," "expect," "estimate," "budget" or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.The District does not plan to issue any updates or revisions to those forward-looking statements if or when their expectations,or events,conditions or circumstances on which such statements are based,occur. DOC:SSR36160v4\24341.0002 .. ......... ......... ......... ......... ......... ......... ......... ......... ......... ..............._.. .... . ............ .......... ......... ......... . ........................... . ...... .. ...... . ... ..... . ........ ............. ........ .. ...... ......... ACALANES UNION HIGH SCHOOL DISTRICT Board of Trustees Judy Carney,President Kathy Coppersmith, Clerk Vanessa Crews,Member Margot Tobias, Member Richard Whitmore,Member Administration Dr.Randall Olson,Superintendent Mr.Christopher Learned,Assistant Superintendent, Business Services Dr. Beverly Sadler,Associate Superintendent,Curriculum and Assessment PROFESSIONAL SERVICES Bond Counsel Stradling Yocca Carlson&Rauth, a Professional Corporation San Francisco, California Underwriter U.S.Bancorp Piper Jaffray Inc. Hermosa Beach, California Paying Agent,Registrar and Transfer Agent [City, State] DOCSSR36160v4\24341.0402 .............. ......................................................................................................................................................................................................................................... ....._. ......... ......... ........ . .............................. ......... ... .... ................ ... ............................ .. ......... 'TABLE OF CONTENTS Page INTRODUCTION............................................................................................................... THE DISTRICT [TO BE UPDATED BY DISTRICT].............................................................................................I.......-.—I PURPOSEOF THE BONDS.............................................................................................................................................i AUTHORITY FOR ISSUANCE OF THE BONDS................................................................................................................I SOURCES OF PAYMENT FOR THE BONDS...........—............................................................. ........................... .........2 DESCRIPTION OF THE BONDS......................................................................................................................................2 TAXMATTERS...................................................._......................................................................................................3 OFFERING AND DELIVERY OF THE BONDS..................................................................................................................3 BONDOWNER's RISKS................................................................................................................................................3 CONTINUINGDISCLOSURE.........................................................................................................................................3 PROFESSIONALS INVOLVED IN THE OFFERING............................................................................................................4 OTHERINFORMATION................................................................................................................................................4 THEBONDS................................................................................................................................................................4 AUTHORITYFOR ISSUANCE.......................................................................................................................................A SECURITY AND SOURCES OF PAYMENT......................................................................................................................5 BONDINSURANCE......................................................................................................................................................5 GENERALPROVISIONS ...............................................................................................................................................5 ANNUALDEBT SERVICE.............................................................................................................................................7 APPLICATION AND INVESTMENT OF BOND PROCEEDS................................................................................................7 REDEMPTION..............................................................................................................................................................8 DEFEASANCE............................................................................................................................................................10 ESTIMATED SOURCES AND USES OF FUNDS................................................................................................11 CONTRA COSTA COUNTY INVESTMENT POOL...........................................................................................11 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS.................................................................................................................................................12 ARTICLE XIIIA OF THE CALIFORNIA CONSTITUTION...............................................................................................12 LEGISLATION IMPLEMENTING ARTICLE XIIIA.........................................................................................................13 UNITARYPROPERTY................................................................................................................................................14 PROPOSITION39.......................................................................................................................................................15 PROPOSITION62.......................................................................................................................................................16 ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION...............................................................................................16 ARTICLE XIIIC AND ARTICLE XIIID OF THE CALIFORNIA CONSTITUTION..............................................................17 PROPOSITIONS98 AND 111.......................................................................................................................................18 THE CLASS SIZE REDUCTION KINDERGARTEN-UNIVERSITY PUBLIC EDUCATION FACILITIES BOND ACT OF 2002 19 FUTUREINITIATIVES................................................................................................................................................21 GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION.....................................................................21 STATE FUNDING OF EDUCATION AND REVENUE LIMITATIONS.................................................................................21 REVENUESOURCES..................................................................................................................................................22 BUDGETPROCESS....................................................................................................................................................23 ACCOUNTINGPRACTICES.........................................................................................................................................25 ECONOMIC CONDITIONS IN CALIFORNIA..................................................................................................................26 STATEBUDGET..............._........................................................................................................................................26 ACALANES UNION HIGH SCHOOL DISTRICT.............................................................................................»32 GENERALINFORMATION..........................................................................................................................................32 ADMINISTRATION.....................................................................................................................................................33 AVERAGEDAILY ATTENDANCE...............................................................................................................................33 LABORRELATIONS,............ ...................... ........................................ ................. ................ ............................34 i DOC:SSF136160v412434I.0002 ......... ......... ......... ......... ......... ......... ......... ......... ......... ...._......_....1.11.1_ .. ......._.... ......_...... .......... ...... .. ............................1..11..1.............. . ........ . ........ ............. ....... ......... ......... .1111............................ TABLE OF CONTENTS(cont'd) Page DISTRicT RETIREMENT SYSTEMS.............................................................................................................................34 JOINTPOWERS AGREEMENTS...................................................................................................................................34 AD VALOREM PROPERTY TAXATION.........................................................................................................................35 TAX LEVIES,COLLECTIONS AND DELINQUENCIES...................................................................................................36 ALTERNATIVE METHOD OF TAX APPORTIONMENT-"TEETER PLAN"......................................................................37 TAXRATES..............................................................................................................................................................38 PRINCIPALTAXPAYERS............................................................................................................................................39 COMPARATIVE FINANCIAL STATEMENTS.................................................................................................................39 DISTRICTDEBT STRUCTURE....................................................................................................................................41 TAXMATTERS........................................................................................................................................................44 LEGALMATTERS...................................................................................................................................................46 LEGALITY FOR INVESTMENT IN CALIFORNIA............................................................................................................46 CONTINUINGDISCLOSURE.......................................................................................................................................46 NOLITIGATION........................................................................................................................................................46 LEGALOPINION........................................................................................................................................................46 MISCELLANEOUS..................................................................................................................................................46 RATINGS...................................................................................................................................................................46 UNDERWRITING........................................................................................................................................................47 ADDITIONALINFORMATION.....................................................................................................................................48 APPENDIX A: FORM OF OPINION OF BOND COUNSEL.......................................................................A-1 APPENDIX B: EXCERPTS FROM THE DISTRICT'S 2001-02 AUDITED FINANCIAL STATEMENTS................................................................................................................B-I APPENDIX C: CONTINUING DISCLOSURE CERTIFICATE ....................................................................0-1 APPENDIX D: ECONOMY OF CONTRA COSTA COUNTY.....................................................................D-I APPENDIX E: FORM OF MUNICIPAL BOND INSURANCE POLICY .......................................................E-1 APPENDIX F: BOOK-ENTRY ONLY SYSTEM..................................................................1111.................F-I APPENDIX G: TABLE OF ACCRETED VALUES.................................................................................... G-1 ii DOCSSF136160v4\2434I.0002 ......... ......... ......... ......... ......... ......... ......... ......... .._...... ..... .. .......... . .......... ......... . ......... ............................... .. ... . ....... ...... ..... ..... ............. . .... ......... ......... .. ._...... ......... ......... $44,000,000* ACALANES UNION HIGH SCHOOL DISTRICT Contra Costa County,California Election of 2002 General Obligation Bonds,Series A INTRODUCTION This Preliminary Official Statement, which includes the cover page and appendices hereto, provides information in connection with the sale of Acalanes Union High School District, Contra Costa County,California,Election of 2002 General Obligation Bonds, Series A(the "Bonds"). This Introduction is not a summary of this Preliminary Official Statement, It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Preliminary Uff cial Statement, including the cover page and appendices hereto, and the documents summarized or described herein. 4 full review should be made of the entire Preliminary Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Preliminary Oficial Statement. The District [to he updated by District] The Acalanes Union High School District (the "District") is located in the western portion of Contra Costa County (the "County") approximately 20 miles east of San Francisco. The District encompasses an area of approximately 80 square miles and has an estimated population of 85,000. The District was established in 1940 and provides secondary educational services to the residents of the Cities of Lafayette and Orinda, the Town of Moraga, a portion of the City of Walnut Creek, and of certain surrounding unincorporated areas in Contra Costa County. The 2002-03 assessed valuation of the area served by the District is $15,825,192,971. The District's estimated average daily attendance for fiscal year 2002-03 is 5,355,and the District's 2002-03 budget is approximately$39.6 million. The District is governed by a five-member Board of Trustees,each member of which is elected to a four-year term. Elections for positions to the Board are held every two years, alternating between two and three available positions. The management and policies of the District are administered by a Superintendent,appointed by the Board of Trustees, who is responsible for day-to-day District operations as well as the supervision of the District's other personnel. Dr. Randall Olson is the District Superintendent. See"ACALANES UNION HIGH SCHOOL DISTRICT." Purpose of the Bonds The net proceeds of the Bonds will be used to finance the rehabilitation, expansion and improvement of District schools, grounds and facilities, as specified in a list submitted to and approved by the voters of the District. Authority for Issuance of the Bonds The Bonds are issued pursuant to certain provisions of the State of California Education Code and pursuant to resolutions adopted by the Board of Trustees of the District and Board of Supervisors of the County. See "THE BONDS-Authority for Issuance." 1 DOCSS F\36160v4\24341.0602 Sources of Payment for the Bonds The Bonds are general obligations of the District. The Board of Supervisors of Contra Costa County has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District, without limitation as to rate or amount(except certain personal property which is taxable at limited rates) for the payment of principal, and in the case of Capital Appreciation Bonds, the Accreted Value of and interest on the Bonds. See "THE BONDS - Security and Sources of Payment" and "ACALANES UNION HIGH SCHOOL DISTRICT.,, Description of the Bunds Form and Registration. The Bonds will be issued in fully registered form only, without coupons. The Bonds will be initially 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 Bonds. See "THE BONDS-General Provisions"and APPENDIX F—BOOK-ENTRY ONLY SYSTEM." In the event that the book-entry only system described below is no longer used with respect to the Bonds, the Bonds will be registered in accordance with the Resolution described herein. Current Interest and Capital Appreciation Bonds. The Bonds will be issued as current interest bonds (the "Current Interest Bands") and capital appreciation bonds (the "Capital Appreciation Bonds"). The Current Interest Bonds mature on August 1 in the years indicated on the inside cover page hereof. The Capital Appreciation Bonds mature serially on each August I from August 1, 20_ to August 1, 20 , and on May 1, 2028. The Capital Appreciation Bonds are payable only at maturity or redemption and will not bear interest on a current basis. The Accreted Value ("Accreted Value") of each Bond is equal to its initial purchase price (the "Denominational Amount") and the accreted interest between the delivery date and its respective maturity date. Denominations. Individual purchases of interest in the Bonds will be available to purchasers of the Bonds in the denominations of $5,000 principal amount or Accreted Value, as applicable, or any integral part thereof. One Capital Appreciation Bond may have an odd Accreted Value. Redemption. The Current Interest Bonds maturing on or after August 1, 20_+ may be redeemed before maturity at the option of the District from any source of funds, on August 1,20_*, or on any date thereafter. The Current Interest Bonds maturing on August 1, 20 * are also subject to mandatory sinking fund redemption prior to maturity, as stated herein. The Current Interest Bonds maturing on or before August 1, 20_* and all of the Capital Appreciation Bonds are not subject to redemption prior to their fixed maturity dates. See "THE BONDS -Redemption." Payments. Interest on the Current Interest Bonds accrues from the date of delivery of the Bonds, and is payable semiannually on each February 1 and August 1, commencing February 1, 2004. Principal on the Current Interest Bonds is payable on August 1, commencing August 1, 2004, in the amounts and years as set forth on the inside cover page hereof. Interest on the Capital Appreciation Bonds accretes from the date of their delivery at the approximate yields per annum set forth on the inside cover page, compoundable semiannually on February 1 and August I of each year, commencing August 1, 2003, payable only at maturity, according to the amounts set forth in the accreted value tables as shown in Appendix G. The Accreted Value of the Capital Appreciation Bonds is payable on August 1, in the amounts and years as set forth in Appendix G and on the inside cover page. Each Capital Appreciation Bond maturing August 1, 20— to August 1, 20 , accretes in value fromits initial principal amount on the date of delivery to its Maturity Value on the maturity thereof at the approximate yields per annum set {Preliminary,subject to change. 2 DOC SS F\36164v4\24341.0002 forth on the inside cover page hereof, compounded semiannually on February 1 and August I of each year, commencing August 1, 2003,and is payable only at maturity according to the amounts set forth in the accreted value tables as shown in APPENDIX G. Each Capital Appreciation Bond maturing May 1, 2028, accretes in value from its initial principal amount on the date of delivery to its Maturity Value on the maturity thereof at the approximate yields per annum set forth on the inside cover page hereof, compounded semiannually on February I and August I and on May 1, 2028, commencing August 1, 2003. Payments of the Bonds will be made by check of [City, State],the District's paying agent, registrar and transfer agent (the "Paying Agent") mailed to the registered owner thereof (provided that registered owners of at least $1,000,000 in aggregate principal amount of Bonds may receive interest by wire transfer as described herein). Bond Insurance. The scheduled payment of principal of(or, in the case of Capital Appreciation Bonds, the Accreted Value) and interest on the Bonds when due will be insured by a municipal bond insurances policy to be issued simultaneously with the delivery of the Bonds by - (the "Insurer"). See"THE BONDS-Bond Insurance"and"MISCELLANEOUS—Ratings." Tax Matters In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ("Bond Counsel"), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See "TAX MATTERS" herein with respect to other tax consequences with respect to the Bonds. Offering and Delivery of the Bonds The Bonds are offered when, as and if issued, subject to approval as to their legality by Bond Counsel. It is anticipated that the Bonds in book-entry form will be available for delivery through DTC in New York,New York on or about May_,2003. Bondowner's Risks The Bonds are general obligations of the District payable from ad valorem taxes which may be levied without limitation as to rate or amount (except with respect to certain personal property which is taxable at limited rates)on all taxable property in the District. For more complete information regarding the District's financial condition and taxation of property within the District, see "ACALANES UNION HIGH SCHOOL DISTRICT." Continuing Disclosure The District has covenanted that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. "Continuing Disclosure Certificate" shall mean that certain Continuing Disclosure Certificate relating to disclosure of annual financial information and notices of certain events executed by the District as of the date of issuance and delivery of the Bonds, as it may be amended from time to time in accordance with the terms thereof. See "LEGAL MATTERS - Continuing Disclosure"and"APPENDIX C -CONTINUING DISCLOSURE CERTIFICATE." 3 DOC'SSR36160v4124341.0002 .. ......... ......... ......... ......... ......... ......... ......... ......... _....... . _ _ ............ ......... ............. . ... ............................ ...... .... ...... ...... ......... ......... ......... ......... ......... _ . ._._.... ......... .......... . ......... ........ ......... Professionals Involved in the Offering Stradling Yocca Carlson&Rauth,a Professional Corporation, San Francisco,California,is acting as Bond Counsel to the District with respect to the Bonds. , [City, State], is acting as Paying Agent for the Bonds. The Paying Agent and Stradling Yocca Carlson & Rauth will receive compensation from the District contingent upon the sale and delivery of the Bonds. Other Information This Preliminary Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of documents referred to herein and information concerning the Bonds are available from the Superintendent,Acalanes Union High School District, 1212 Pleasant Hill Road, Lafayette, California 94549,telephone; (925)935-2800. The District may impose a charge for copying,mailing and handling. No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make any representations other than as contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the District. This Preliminary Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Preliminary Official Statement is not to be construed as a contract with the purchasers of the Bands. Statements contained in this Preliminary 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 fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each such documents, statutes and constitutional provisions. The information set forth herein has been obtained from official sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Preliminary 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 District since the date hereof. This Preliminary Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. THE BONDS Authority for issuance The Bonds are issued pursuant to the provisions of Chapter 1.5 of Part 10 of Division 1 of Title 1 of the Education Code of the State of California (the "Act"), commencing with Section 15100, as amended, Article XIIIA of the California Constitution and pursuant to resolutions adopted by the Board of Trustees of the District on March 5, 2003, and by the Board of Supervisors of Contra Costa County on April 1, 2003 (collectively, the "Resolution"). The District received authorization at an election held on November 5, 2002, by a fifty-five percent majority of the votes cast by eligible voters within the District to issue not to exceed $44,000,000 of general obligation bonds (the "Authorization"). The Bonds represent the first series of bonds sold under the Authorization. 4 DOCSS R36 160v4124341.0002 ____... ......... ......... ......... ......... ......... ......... ......... ..........._.__.. .............._...__.. ......... ........ .. ........................................................ ... .. ......... ......... ......... ......... ................... .. .__.. _._.... _....... .......... ........ . . ........ .... .... ......... Security and Sources of Payment The Bonds are general obligations of the District. The Bonds are payable from ad valorem taxes. The Board of Supervisors of the County is empowered and is obligated to levy ad valorem taxes, without limitation as to rate or amount, for the payment of the interest on and principal of the Bonds upon all property subject to taxation by the District (except certain personal property which is taxable at limited rates). Such taxes, when collected, will be placed by the County in the District's Debt Service Fund, as defined hereafter,which is segregated and maintained by the County and which is irrevocably pledged for the payment of the Bonds and interest thereon when due. Although the County is obligated to levy an ad valorem tax for the payment of the Bands, and will maintain the Debt Service Fund pledged to the repayment of the Bonds, the Bonds are not a debt of the County. See "ACALANES UNION HIGH SCHOOL DISTRICT—Ad Valorem Property Taxation"for information on the District's tax base. The amount of the annual ad valorem tax levied by the County to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the District and the amount of debt service due on the Bonds. A reduction in the assessed valuation of taxable property in the District due to economic factors and other factors outside the District's control, such as economic recession, deflation of land values, a relocation out of the District by one or more major property owners, or the complete or partial destruction of such property caused by, among other eventualities, an earthquake, flood or other natural disaster, could cause a reduction in the assessed value of the District and necessitate an unanticipated increase in annual tax levy. Bond insurance [to came] General Provisions The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede& Co. as nominee for DTC. Purchasers will not receive certificates representing their interest in the Bonds. Interest with respect to the Current Interest Bands accrues from the date of delivery of the Bonds, and is payable semiannually on February 1 and August 1 of each year commencing February 1, 2004. Each Current Interest Bond shall bear interest from the Band Payment Date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the month next preceding any Band Payment Date to that Bond Payment Date, inclusive, in which event it shall bear interest from such Bond Payment Date, or unless it is authenticated on or before January 15, 2004, in which event it shall bear interest from the date of delivery. The Current Interest Bonds are issuable in denominations of $5,000 principal amount or any integral multiple thereof. The Current Interest Bonds mature on August 1,in the years and amounts set forth on the inside cover page hereof. The Capital Appreciation Bonds are dated the date of delivery of the Bonds and accrete interest from such date, compounded semiannually on February 1 and August 1 of each year commencing August 1,2003, The Capital Appreciation Bonds are issuable in denominations of$5,000 maturity value or any integral multiple thereof. The Capital Appreciation Bonds are payable only at maturity, according to the amounts set forth in the table of accreted values (see "APPENDIX G — TABLE OF ACCRETED VALUES."). Interest on the Capital Appreciation Bands maturing May 1, 2028, shall be compounded semiannually on February 1 and August 1 in each year and May 1, 2028, commencing August 1, 2003, and shall be payable upon the maturity thereof. The Capital Appreciation Bonds shall mature on the dates 5 DOCSSF`361 G0v4124341.0002 _ _.. ......... ......... ......... ......... ......... ......... .._...._. .._........ _........ ......... ............. ... . ....................................... .. . .. ...... ......... ......... ......... ............._.. ............. ..... .._._.............................................................................................. . . . ....................................................... and in the principal amounts and shall accrete in value at the rates per annum set forth on the inside cover page hereof. Payment of interest on any Current Interest Bond on any Bond Payment Date shall be made to the person appearing on the registration books of the Paying Agent as the Owner thereof as of the Record Date immediately preceding such Bond Payment Date, such interest to be paid by check mailed to such Owner on the Bond Payment Date at his address as it appears on such registration books or at such other address as he may have filed with the Paying Agent for that purpose on or before the Record Date. The Owner in an aggregate Principal Amount or Maturity Value of$1,000,000 or more may request in writing to the Paying Agent that Such Owner be paid interest by wire transfer to the bank and account number on file with the Paying Agent as of the Record Date. The principal, and prepayment premiums, if any, payable on the Current Interest Bonds and the Accreted Value and redemption premiums, if any, on the Capital Appreciation Bonds shall be payable upon maturity upon surrender at the principal office of the Paying Agent. The interest, Accreted Value, principal and premiums, if any, on the Bonds shall be payable in lawful money of the United States of America. The Paying Agent is authorized to pay the Bonds when duly presented for payment at maturity,and to cancel all Bonds upon payment thereof. 6 DOCSSF\36160v4\24341.0002 . ................................................ Annual Debt Service Annual debt service obligations for the Bonds, assuming no redemptions are made, are as follows: Series A Bonds Current Interest Bonds Capital Appreciation Bonds Bond Annual Total Year Annual Principal Annual Interest Annual Principal Accreted Interest Annual Ending Payment Paymentll Payment"" Payment Debt Service 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2422 2023 2024 2025 2026 2027 20281'1 Total Interest payments on the Current Interest Bonds will be made semiannually on February 1 and August 1 of each year, commencing February 1,2004. The Capital Appreciation Bonds maturing August 1, 20_to August 1, 20 are payable only at maturity on August 1 of each year, and interest on such Capital Appreciation Bonds is compounded semiannually on February 1 and August 1, commencing August 1, 2043. The Capital Appreciation Bonds maturing May 1, 2028 are payable only at maturity on May 1, 2028, and interest on such Capital Appreciation Bonds is also compounded semiannually on February 1 and August 1,commencing August 1,2003. Application and Investment of Bond Proceeds The proceeds from the sale of the Bonds will be used by the District to: (i)pay the costs of rehabilitating, expanding and improving schools, grounds and facilities, and (ii) pay certain costs of issuance of the Bonds. The proceeds from the sale of the Bonds shall be paid to the County to the credit of the Acalanes Union High School District Election of 20012 General Obligation Bonds, Series A Building Fund (the "Building Fund"). Any premium received by the County from the sale of the Bonds shall be Dept 7 DOCSSR36160v4124341.0002 separate and apart in the fund hereby created and established and to be designated as the "Acalanes Union High School District Election of 2002 General Obligation Bonds,Series A Debt Service Fund"(the "Debt Service Fund") for the Bonds and used only for payment of Accreted Value or principal and interest, as appropriate,on the Bonds.. Any excess proceeds of the Bonds not needed for the authorized purposes for which the Bonds are being issued shall be transferred to the Debt Service Fund and applied to the payment of Accreted Value or principal and interest, as appropriate, on the Bonds. If, after payment in full of the Bonds, there remain excess proceeds, any such excess amounts shall be transferred to the General Fund of the District. Moneys in the Building Fund and the Debt Service Fund are expected to be invested through the Contra Costa County Treasury Pool. See"CONTRA COSTA COUNTY TREASURY POOL." Redemption Optional Redemption. The Current Interest Bonds maturing on or before August 1, 20—* are not subject to redemption prior to their fixed maturity dates. The Current Interest Bonds maturing on or after August 1, 20_* may be redeemed prior to their respective stated maturity dates at the option of the District, from any source offunds, on August 1, 20—* or on any date thereafter as a whole, or in part, at the following redemption prices (expressed as a percentage of the principal amount of the Bonds called for redemption),together with interest accrued thereon to the date fixed for redemption: Redemption Periods* Redemption Price* August 1,20T through July 31, 20_ 102% August 1,20 through July 31, 20_ 101 August 1,20�and thereafter 100 Mandatory Sinking Fund Redemption. The Current Interest Bonds maturing on August 1, 20_*, are subject to redemption prior to maturity from mandatory sinking fund payments on August 1 of each year, on and after August 1, 20_*, at a redemption price equal to the principal amount thereof, together with accrued interest thereon to the date fixed for redemption, without premium. The principal amount represented by such Current Interest Bonds to be so redeemed and the dates therefor and the final principal payment date are as indicated in the following table: Redemption Date (August 1 Principal Amount The Capital Appreciation Bends are not subject to redemption. Selection of Bonds for Redemption. Whenever provision is made for the redemption of Bonds and less than all Bonds are to be redeemed, the Paying Agent, upon written instruction from the District, shall select Bonds for redemption as so directed and if not directed, in inverse order of maturity. Within a maturity, the Paying Agent, in a manner determined by the District, shall select Bonds for redemption by lot. Redemption by lot shall be in such manner as the Paying Agent shall determine, provided, however, "Preliminary,subject to change. 8 DOC SS R36160v4124341.0002 .......................................................................................................................................................................................................... ....................................... that the portion of any Bond to be redeemed in part shall be in the principal amount of$5,000 or any integral multiple thereof. Notice of Redemption. Notice of any redemption of Bonds will be mailed, postage-prepaid, not less than thirty nor more than forty-five days prior to the redemption date (i)to the respective registered owners thereof at the addresses appearing on the bond registration books, (ii)to the Securities Depositories described below, and (iii) to one or more of the Information Services described below. Notice of redemption to the Securities Depositories and the Information Services will be given by registered mail, facsimile transmission or overnight delivery service. Each notice of redemption will specify (a)the Bonds or designated portions thereof(in the case of redemption of the Bonds in part but not in whole) which are to be redeemed, (b)the date of redemption, (c)the place or places where the redemption will be made, including the name and address of the Paying Agent, (d)the redemption price, (e)the CUSIP numbers(if any)assigned to the Bonds to be redeemed, (f) the Bond numbers of the Bonds to be redeemed in whole or in part and, in the case of any Bond to be redeemed in part only, the principal amount of such Bond to be redeemed,and(g)the original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or in part. Such redemption notice will further state that on the specified date there shall become due and payable upon each Bond or portion thereof being redeemed at the redemption price thereof, together with the interest accrued to the redemption date, and that from and after such date,interest with respect thereto shall cease to accrue. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Moody's Investors Service, 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; and Standard and Poor's J.J. Kenny Information Services' "Called Bond Record," 55 Water Street,45th Floor,New York,New York 10041. "Securities Depositories" shall mean The Depository Trust Company, 55 Water Street, New York,New York 10041,Tel:(212) 855-1000 or Fax: (212)855-7320. The actual receipt by the Owner (hereinafter referred to as "Bondowner") or by any Information Service or Securities Depository of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the date fixed for redemption. The notice or notices required for redemption will be given by the Paying Agent or its designee. A certificate by the Paying Agent that notice of call and redemption has been given to owners of Bonds and to the appropriate Securities Depositories and Information Services shall be conclusive as against all parties, and no Bondowner whose Bond is called for redemption may object thereto or object to the cessation of interest on the fixed redemption date by any claim or showing that said Bondowner failed to actually receive such notice of call and redemption. When notice of redemption has been given, substantially as described above, and when the amount necessary for the payment of principal of and premium, if any, is set aside for the purpose in the Debt Service Fund,the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, such Bonds shall be redeemed and paid at said redemption price out of the Debt Service Fund, and no interest will accrue on such Bonds called for redemption after the redemption date specified in such notice, and the owners of said Bonds so called for redemption after such redemption date shall look for the payment of such Bonds and the premium thereon only to said Debt Service Fund. 9 DOCSSF06160v4124341.0002 ................ ...... ............................................... ...................... ................... ............... Defeasance All or any portion of the outstanding maturities of the Bonds may be defeased at any time prior to maturity in the following ways: (a) Cash. By irrevocably depositing with an independent escrow agent selected by the District an amount of cash which together with amounts then on deposit in the Debt Service Fund, is sufficient to pay all Bonds outstanding and designated for defeasance, including all principal,Maturity Value, interest and premium,if any; or (b) United States Obligations. By irrevocably depositing with an independent escrow agent selected by the District noncallable United States Obligations(as defined below)together with cash, if required, in such amount as will, in the opinion of an independent certified public account,together with interest to accrue thereon and moneys then on deposit in the Debt Service Fund together with the interest to accrue thereon, be fully sufficient to pay and, discharge all Bonds outstanding and designated for defeasance (including all principal and interest represented thereby and redemption premiums, if any), at or before their maturity date; then, notwithstanding that any such maturities of Bonds shall not have been surrendered for payment, all obligations of the District with respect to all such designated outstanding Bonds shall cease and terminate, except only the obligation of the Paying Agent or an independent escrow agent selected by the District to pay or cause to be paid from funds deposited pursuant to paragraphs (a) or (b) above, to the owners of such designated Bonds not so surrendered and paid all sums due with respect thereto. United States Obligations mean 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, including (in the case of direct and general obligations of the United States of America) evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations. Investments in such proportionate interests must be limited to circumstances wherein (a) a bank or trust company acts as custodian and hold 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; and (c) 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; provided that such obligations are rated or assessed "AAA" by Standard & Door's, a Division of the McGraw-Hill Companies,or"Aaa"by Moody's Investors Service. 10 D0,CSSF136160v4124341.0002 ................................................................................................ . ........................................................................................................................................................................................ ... ... ......... ...... ................................................................................................................................................................................... ................................. ESTIMATED SOURCES AND USES OF FUNDS The proceeds of the Bonds are expected to be applied as follows: Sources of Funds Principal Amount of Bonds Plus Net Original Issue Premium/Discount Total Sources Uses of Funds Building Fund Debt Service Fund Less Costs of Issuance(l) Total Uses All costs of issuance including insurance premium for the Bonds and underwriter's discount. CONTRA COSTA COUNTY INVESTMENT POOL The following information has been provided by the Treasurer of the County for inclusion in the Preliminary Official Statement. The District takes no responsibility for the accuracy or completeness thereof. Further information may be obtained by contacting the County Treasurer. Substantially all operating funds of the District are invested in the Contra Costa County Investment Pool. Upon closing of the Bonds, proceeds of the Bonds will be deposited with the Contra Costa County Treasurer. The Treasurer accepts funds only from agencies located with the County for investment in the Contra Costa County Investment Pool. As of December 31, 2002,the cost value of the Contra Costa County Investment Pool was $1,563,766,381 and the fair value was $1,571,431,867 which was 100.5%of cost. The following table summarizes the composition of the Pool as of December 31,2002. ll DOC SSR36160v4124341.0002 ............. .................................................... .................................. ............................................................................ —11.1111— .................I CONTRA COSTA COUNTY INVESTMENT POOL PORTFOLIO COMPOSITION (as of December 31,2442) Percent of Total Type of Investment Cost Value Market Value (Cost Value) U.S.Treasuries(STRIPS,Bills,Notes) $16,912,241.00 $18,391,027.22 1.08% U.S.Agencies(Federal,State,Local) 729,719,962.29 734,013,467.58 46.66% Money Market Instruments 624,561,138.70 625,403,229.47 39.94% Other 125,874,006.30 126,925,109.53 8.05% Cash 66,699,033.05 _ 66.699,033,05 4.27% TOTAL J1,563,766,38134 $1,571,431,866.85 100.00% As of December 31, 2442 the weighted average maturity of the Contra Costa County Investment Pool was 76.47 days. The following table summarizes the maturity structure of the Contra Costa County Investment Pool. CONTRA COSTA COUNTY INVESTMENT POOL PORTFOLIO MATURITY STRUCTURE (as of December 31,2442) Percent of Total Term of Maturity Cost Value (Cost Value Maturities Less than I year $1,454,171,614 92.99% Maturities 1 to 2 years 66,670,223 4.26% Maturities 2 to 3 years 36,665,065 2.34% Maturities 3 to 4 years 3,235,464 0.21% Maturities 4 to 5 years 2,297,888 0.15% Maturities Greater than 5 years()) 726,128 0.05% TOTAL $1,563.766,381 100.000/0 rep esents band proceeds of school districts The Treasurer's investment Portfolio is in compliance with Government Code 53600 et. sect. and is in compliance with the Treasurer's current investment policy. The Treasurer's investment portfolio has no securities lending, reverse repurchase agreements or derivatives. The County reports that it is current practice for the Treasurer to mark the portfolio to market on a monthly basis, Such evaluations are performed by the County. Over 92% of the portfolio or over 1,454 million will mature in less than a year. The County is able to meet its cash flow needs for the next six months. CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Article XIIIA of the California Constitution Article XIIIA. of the State Constitution limits the amount of ad valorem taxes on real property to 1%of"full cash value" as determined by the county assessor, Article XIIIA dunes "full cash value"to mean "the county assessor's valuation of real property as shown on the 1975-76 bill under `full cash value,' or thereafter,the appraised value of real property when purchased,newly constructed or a change in ownership has occurred after the 1975 assessment," subject to exemptions in certain circumstances of property transfer or reconstruction. The "full cash value" is subject to annual adjustment to reflect 12 DOc'ss1 3616ov4\24341.0002 ............................................................................................................................................1111.11.... ....................................................................................................................................................................... ........................................................................................... ............... increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data,or to reflect reductions in property value caused by damage,destruction or other factors. Article XIIIA requires a vote of two-thirds of the qualified electorate of a city, county, special district or other public agency to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. Article XIIIA exempts from the I% tax limitation any taxes above that level required to pay debt service (i)on any indebtedness approved by the voters prior to July 1, 1978, or (ii) as the result of an amendment approved by State voters on July 3, 1986, on any bonded indebtedness approved by two-thirds of the votes cast by the voters for the acquisition or improvement of real property on or after July 1, 1978,or(iii)bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% or more of the votes cast of the proposition, but only if certain accountability measurers are included in the proposition. In addition, Article XIIIA requires the approval of two-thirds of all members of the state legislature to change any state taxes for the purpose of increasing tax revenues. Legislation Implementing Article XIIIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1%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. That portion of annual property tax revenues generated by increases in assessed valuations within each tax rate area within a county, subject to redevelopment agency, if any, claims on tax increment and subject to changes in organizations,if any,of affected jurisdictions, is allocated to each jurisdiction within the tax rate area in the same proportion that the total property tax revenue from the tax rate area for the prior year was allocated to such jurisdictions. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the annual adjustment not to exceed 2% 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. Beginning in fiscal year 1981-82, assessors in California no longer record property values on tax rolls at the assessed value of 25%of market value which was expressed as $4 per$100 of assessed value. All taxable property is now shown at 100%© of assessed value on the tax rolls. Consequently,the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100% of taxable value (unless noted differently)and all tax rates reflect the $1 per $100 of taxable value. Both the United States Supreme Court and the California State Supreme Court have upheld the general validity of Article XIIIA. County of Orange v. Orange County Assessment Appeals Board No. 3. In a ruling issued on December 27, 2001, in County of Orange v. Orange County Assessment Appeals Board No. 3, Case No. 00CC03385, the Orange County Superior Court held that the Orange County assessor violated the 2% annual inflation adjustment provision of Article XIIIA when the assessor tried to "recapture" the taxable value of a single family residential property by increasing its assessed value by approximately 4% in a single year. This ruling currently applies only to the particular taxpayer who filed the case; however, if 13 D0CSSF\36160v4\24341,13002 ................. ......................................................I......... . ................ ................................................... .............................................................................. ........... .............................................................................................................................................—... ... ...............................................................................................................I.I.I...I.I...,.,...,...................................................................................................................................o..................... .............. the Court's reasoning is applied generally, it could have the effect of reducing the amount of property tax revenues currently allocated to public agencies in the State, including the District. The assessor had not increased the assessed value of the property during a year when the market value of the property was determined by the assessor to have declined below its taxable value pursuant to Article XIIIA. In the following year, the assessor established the taxable value of the property by determining that its then current market value was greater than if the 2% annual inflation adjustment had been applied in the previous year. The assessor enrolled the property at a taxable value that recaptured the foregone 2% inflation adjustment from the previous year, resulting in a one-year increase of approximately 4%. The State Board of Equalization has approved this methodology from increasing assessed values in similar circumstances. In a ruling issued on December 12, 2002, the Orange County Superior Court held that any Orange County taxpayer whose property assessment rose more than 2% due to"recapturing"since 1979 is part of the certified class action lawsuit filed against the County of Orange in 2000. If upheld on appeal, the class action suit may result in $1 billion in illegally collected taxes being returned to Orange County taxpayers. On January 30, 2003, the Orange County Superior Court held a hearing and ruled on the motion to determine if the Orange County Tax Collector must notify such "recapture" taxpayers of their right to file tax refund claims. The Court granted the motion, but immediately put a hold on its implementation pending further review by the appellate courts on this entire case. Therefore, no notices will be issued by the Orange County Tax Collector at this time. With this action, the local court is expected to issue a final judgment for the entire case in the month of February. At that time, the case will be ready for review in the appellate courts. The County uses the same methodology as Orange County, and as a result, the District is unable to predict the outcome of this litigation and what effect, if any, a similar action in the County might have on assessed values in the District. However, the obligation of the County to levy ad valorem taxes upon all taxable property within the District in an amount sufficient for the payment of principal of and interest on any general obligation bonds to be issued by the District would not be impaired in any event, and any loss of ad valorem taxes to be distributed to the District from its share of the countywide 1% tax (at least in future years) would be made up by a corresponding increase in the State aid portion of the District's revenue limit income(so long as the District is not a Basic Aid school district that relies almost solely on local property taxes in lieu of revenue limit funding). Unitary Property Some amount of property tax revenue of the District is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions ("unitary property"). Under the State Constitution, such property is assessed by the State Board of Equalization ("SBE")as part of a "going concern"rather than as individual pieces of real or personal property. State- assessed unitary and certain other property is allocated to the counties by SBE, taxed at special county- wide rates, and the tax revenues distributed to taxing jurisdictions (including the District) according to statutory formulae generally based on the distribution of taxes in the prior year. The California electric utility industry has been undergoing significant changes in its structure and in the way in which components of the industry are regulated and owned. Sale of electric generation assets to largely unregulated, nonutility companies may affect how those assets are assessed, and which local agencies are to receive the property taxes. The District is unable to predict the impact of these changes on its utility property tax revenues, or whether legislation may be proposed or adopted in response to industry restructuring, or whether any future litigation may affect ownership of utility assets or the State's methods of assessing utility property and the allocation of assessed value to local taxing agencies, including the District. Because the District is not a basic aid district, taxes lost through any 14 DOCSSF\36160v4\24341.0002 ....................1.11............................................... ........................................... ...............................-....... ................................. reduction in assessed valuation will be compensated by the State as equalization aid under the State's school financing formula. See"GENERAL SamL DISTRICT FINANCIAL INFORMATION." Proposition 39 On November 7, 2000, California voters approved an amendment (commonly known as Proposition 39)to the California Constitution. This amendment(1)allows school facilities bond measures to be approved by 55 percent(rather than two-thirds)of the voters in local elections and permits property taxes to exceed the current 1 percent limit in order to repay the bonds and (2) changes existing statutory law regarding charter school facilities. As adopted, the constitutional amendments may be changed only with another Statewide vote of the people. The statutory provisions could be changed by a majority vote of both houses of the Legislature and approval by the Governor, but only to further the purposes of the proposition.The local school jurisdictions affected by this proposition are K-12 school districts, including the District,community college districts, and county offices of education. As noted above, the California Constitution previously limited property taxes to I percent of the value of property. Property taxes may only exceed this limit to pay for (1) any local government debts approved by the voters prior to July 1, 1978 or (2) bonds to buy or improve real property that receive two-thirds voter approval after July 1, 1978. The 55 percent vote requirement would apply only if the local bond measure presented to the voters includes: (1) a requirement that the bond funds can be used only for construction, rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities; (2) a specific list of school projects to be funded and certification that the school board has evaluated safety, class size reduction, and information technology needs in developing the list; and (3) a requirement that the school board conduct annual, independent financial and performance audits until all bond funds have been spent to ensure that the bond funds have been used only for the projects listed in the measure. Legislation approved in June 2000 places certain limitations on local school bonds to be approved by 55 percent of the voters. These provisions require that the tax rate levied as the result of any single election be no more than $60(for a unified school district), $30(for a high school and elementary school district), or$25 (for a community college district),per$100,000 of taxable property value. These requirements are not part of this proposition and can be changed with a majority vote of both houses of the Legislature and approval by the Governor. Alternatively, charter schools are independent public schools formed by teachers, parents, and other individuals and/or groups. The schools function under contracts or "charters" with local school districts, county boards of education, or the State Board of Education. They are exempt from most State laws and regulations affecting public schools. As of June 2000, there were 309 charter schools in California, serving about 105,000 students (less than 2 percent of all K-12 students). The law permits an additional 100 charter schools each year until 2003, at which time the charter school program will be reviewed by the Legislature. Under current law, school districts must allow charter schools to use, at no charge, facilities not currently used by the district for instructional or administrative purposes. Proposition 39 requires that each local K-12 school district provide charter school facilities sufficient to accommodate the charter school's students. A K-12 school district, however, would not be required to spend its general discretionary revenues to provide these facilities for charter schools. Instead, the district could choose to use these or other revenues including State and local bonds. Such facilities must be reasonably equivalent to the district schools that such charter students would otherwise attend. The respective K-12 school district is permitted charge the charter school for its facilities if district discretionary revenues are used to fund the facilities and a district may decline to provide facilities for a charter school with a current or projected enrollment of fewer than 80 students. There are presently no charter schools within the District. 15 DOCSSR36160v4124341.0002 Proposition 62 A statutory initiative ("Proposition 62") was adopted by the voters at the November 4, 1986, general election which (a)requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the District be approved by a two-thirds vote of the governmental entity's legislative body and 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 cid valorem taxes on real property by local governmental entities except as permitted by Article XIIIA,(e)prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and(f)requires 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 the adoption of the initiative or be terminated by November 15, 1988. California appellate court cases have overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes. However, the California Supreme Court upheld Proposition 62 in its decision on August 28, 1915, in Santa Barbara County Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme Court's decision, such as what remedies exist for taxpayers subject to a tax not in compliance with Proposition 62, and whether the decision applies to charter cities. The District has not experienced any substantive adverse financial impact as a result of the passage of this initiative. Article XIIIB of the California Constitution. Article XIIIB of the State Constitution, as subsequently amended by Propositions 98 and 111, respectively,limits the annual appropriations of the State and of any city,county, school district, authority or ether political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and in population and for transfers in the financial responsibility for providing services and for certain declared emergencies. As amended,Article XIIIB defines (a) "change in the cost of living" with respect to school districts to mean the percentage change in California per capita income from the preceding year,and (b) "change in population"with respect to a school district to mean the percentage change in the average daily attendance of the school district from the preceding fiscal year. For fiscal years beginning on or after July 1, 1910, the appropriations limit of each entity of government shall be the appropriations limit for the 1986-81 fiscal year adjusted for the changes trade from that fiscal year pursuant to the provisions of Article XIIIB,as amended. The appropriations of an entity of local government subject to Article XIIIB limitations include the proceeds of taxes levied by or for that entity and the proceeds of certain state subventions to that entity. "Proceeds of taxes"include, but are not limited to, all tax revenues and the proceeds to the entity from(a)regulatory licenses, user charges and user fees(but only to the extent that these proceeds exceed the reasonable costs in providing the regulation, product or service), and (b)the investment of tax revenues. 16 DOCSSF1363 60v4t2434t.0002 Appropriations subject to limitation do not include (a)refunds of taxes, (b)appropriations for debt service such as the Bonds,(c)appropriations required to comply with certain mandates of the courts or the federal government, (d)appropriations of certain special districts, (e)appropriations for all qualified capital outlay projects as defined by the legislature, (f)appropriations derived from certain fuel and vehicle taxes and(g)appropriations derived from certain taxes on tobacco products. Article XIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years. Article XIIIB also includes a requirement that fifty percent of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be transferred and allocated to the State School Fund pursuant to Section 8.5 of Article XVI of the State Constitution. See "Propositions 98 and I I I"below. Article XIIIC and Article XIIID of the California Constitution On November 5, 1996,the voters of the State of California approved Proposition 218, popularly known as the "Right to Vote on Taxes Act." Proposition 218 added to the California Constitution Articles XIIIC and XIIID, which contain a number of provisions affecting the ability of local agencies, including school districts, to levy and collect both existing and future taxes, assessments, fees and charges. According to the "Title and Summary„ of Proposition 218 prepared by the California Attorney General,Proposition 218 limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." Among other things, Article XIIIC establishes that every tax is either a "general tax" (imposed for general governmental purposes) or a "special tax" (imposed for specific purposes), prohibits special purpose government agencies such as school districts from levying general taxes, and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote; and also provides that the initiative power will not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. Article XIIIC further provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4. Article XIIID deals with assessments and property- related fees and charges, and explicitly provides that nothing in Article XIIIC or XIIID will be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development. The District does not impose any taxes, assessments, or property-related fees or charges which are subject to the provisions of Proposition 218. It does, however, receive a portion of the basic one percent ad valorem property tax levied and collected by the County pursuant to Article XIIIA of the California Constitution. The provisions of Proposition 218 may have an indirect effect on the District, such as by limiting or reducing the revenues otherwise available to other local governments whose boundaries encompass property located within the District thereby causing such local governments to reduce service levels and possibly adversely affecting the value of property within the District. 17 DOCSSF'3 G1 b0v4124341.0002 Propositions 98 and III On November 8, 1988, voters approved Proposition 98, a combined initiative constitutional amendment and statute called the "Classroom Instructional Improvement and Accountability Act" (the "Accountability Act"). Certain provisions of the Accountability Act have, however, been modified by Proposition I1I, discussed below, the provisions of which became effective on July 1, 1990. The Accountability Act changes State fundingof public education below the university level and the operation of the State's appropriations limit. The Accountability Act guarantees State funding for K-12 school districts and community college districts(hereinafter referred to collectively as "K-14 school districts")at a level equal to the greater of (a)the same percentage of General Fund revenues as the percentage appropriated to such districts in 1986-87, and (b)the amount actually appropriated to such districts from the General Fund in the previous fiscal year, adjusted for increases in enrollment and changes in the cost of living. The Accountability Act permits the Legislature to suspend this formula for a one-year period. Since the Accountability Act is unclear in some details, there can be no assurances that the Legislature or a court might not interpret the Accountability Act to require a different percentage of General Fund revenues to be allocated to K-14 school districts, or to apply the relevant percentage to the State's budgets in a different way than is proposed in the Governor's Budget. In any event,the Governor and other fiscal observers expect the Accountability Act to place increasing pressure on the State's budget over future years, potentially reducing resources available for other State programs, especially to the extent the Article XIIIB spending limit would restrain the State's ability to fund such other programs by raising taxes. The Accountability Act also changes how tax revenues in excess of the State appropriations limit are distributed. Any excess State tax revenues up to a specified amount would, instead of being returned to taxpayers,be transferred to K-14 school districts. Any such transfer to K-14 school districts would be excluded from the appropriations limit for K-14 school districts and the K-14 school district appropriations limit for the next year would automatically be increased by the amount of such transfer. These additional moneys would enter the base funding calculation for K-14 school districts for subsequent years, creating further pressure on other portions of the State budget,particularly if revenues decline in a year following an Article XIIIB surplus. The maximum amount of excess tax revenues which could be transferred to K-14 school districts is 411/a of the minimum State spending for education mandated by the Accountability Act. On June 5, 1990, the voters approved Proposition I I I (Senate Constitutional Amendment No. 1) called the"Traffic Congestion Relief and Spending Limit Act of 1990"("Proposition I I I")which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of the State Constitution with respect to appropriations limitations and school funding priority and allocation. The most significant provisions of Proposition 111 are summarized as follows: a. Annual Ad'us� tments to Spending Limit. The annual adjustments to the Article XIIIB spending limit were liberalized to be more closely linked to the rate of economic growth. Instead of being tied to the Consumer Price Index, the `.`change in the cost of living" is now measured by the change in California per capita personal income. The definition of "change in population" specifies that a portion of the State's spending limit is to be adjusted to reflect changes in school attendance. b. Treatment of Excess Tax Revenues. "Excess"tax revenues with respect to Article XIIIB are now determined based on a two-year cycle, so that the State can avoid having to return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal 18 DO SSP13b1 f 00\24341,0002 year are under its limit. In addition, the Proposition 98 provision regarding excess tax revenues was modified. After any two-year period, if there are excess State tax revenues, 50%of the excess are to be transferred to K-14 school districts with the balance returned to taxpayers; finder prior law, 100% of excess State tax revenues went to K-14 school districts,but only up to a maximum of 4%of the schools' minimum funding level. Also, reversing prior law,any excess State tax revenues transferred to K-14 school districts are not built into the school districts'base expenditures for calculating their entitlement for State aid in the next year, and the State's appropriations limit is not to be increased by this amount. C. Exclusions from Spending Limit. Two exceptions were added to the calculation of appropriations which are subject to the Article XIIIB spending limit. First, there are excluded all appropriations for "qualified capital outlay projects" as defined by the Legislature. Second, there are excluded any increases in gasoline taxes above the 1990 level(then nine cents per gallon), sales and use taxes on such increment in gasoline taxes, and increases in receipts from vehicle weight fees above the levels in effect on January 1, 1990. These latter provisions were necessary to make effective the transportation funding package approved by the Legislature and the Governor, which expected to raise over $15 billion in additional taxes from 1990 through 2000 to fund transportation programs. d. Recalculation of Arsuroxrriations Limit. The Article XIIIB appropriations limit for each unit of government, including the State, is to be recalculated beginning in fiscal year 1990-91. It is based on the actual limit for fiscal year 1986-87,adjusted forward to 1990- 91 as if Proposition 111 had,been in effect. e. School Funding Guarantee. 'There is a complex adjustment in the formula enacted in Proposition 98 which guarantees K-14 school districts a certain amount of State general fund revenues. Under prior law, K-14 school districts were guaranteed the greater of (1)40.9%of State general fund revenues(the "first test") or(2)the amount appropriated in the prior year adjusted for changes in the cost of living (measured as in Article XIIIB by reference to per capita personal income) and enrollment (the "second test"). Under Proposition 111,schools will receive the greater of(1)the first test,(2) the second test,or (3)a third test, which will replace the second test in any year when growth in per capita State general fund revenues from the prior year is less than the annual growth in California per capital personal income. Under the third test, schools will receive the amount appropriated in the prior year adjusted for change in enrollment and per capita State general fund revenues,plus an additional small adjustment factor. If the third test is used in any year, the difference between the third test and the second test will become a "credit" to schools which will be paid in future years when State general fund revenue growth exceeds personal income growth. The Class Size Reduction Kindergarten-University Public Education Facilities Bernd Act of 2002 The Class Size Reduction Kindergarten - University Public Education Facilities Bond Act of 2002("Proposition 4T)appeared on the November 5, 2002 ballot as Proposition 47 and was approved by the California voters. This measure authorizes the sale and issuance of $13.05 billion in general obligation bonds for construction and renovation of K-12 school facilities ($11.4 billion) and higher education.facilities($1.65 billion). 19 COC SS F\3b 16Qv 4\2#341.4002 K-12 School Facilities. Proposition 47 includes $6.35 billion for acquisition of land and new construction of K-12 school facilities. Of this amount, $2.9 billion will be set aside to fund backlog projects that school districts submitted applications to the State on or prior to February 1, 2002 and the balance of$3.45 billion would be use to fund projects that school districts submitted applications to the State after February 1, 2002. K-12 school districts will be required to pay for 50 percent of the costs with local revenues. In addition, $104 million of the $3.45 billion would be available for charter school facilities. Proposition 47 makes available $3.3 billion for reconstruction or modernization of existing K- 12 school facilities. Of this amount, $1.9 billion will be set aside to fund backlog projects that school districts submitted applications to the State on or prior to February 1, 2002 and the balance of $1.40 billion would be use to fund projects that school districts submitted applications to the State after February 1, 2002. K-12 school districts will be required to pay for 40 percent of the costs with local revenues. Proposition 47 directs a total of$1.7 billion to K-12 school districts which are considered critically overcrowded, specifically to schools that have large number of pupils relative to the size of the school site. $50 million will be available to fund joint-use projects. Higher Education Facilities. Proposition 47 includes $1.65 billion to construct new buildings and related infrastructure, alter existing buildings and purchase equipment for use in the State's public higher education systems. The Governor and the Legislature will select the specific projects for funding by the funds available under the$13.05 billion band issuance. 20 DOCSSFt36160v4\24341.0042 -11-111-.....-.................... ..... ...... ....... ........... The table below shows the planned use of bond funds for the$13.05 billion bond issuance: PROPOSITION 47 Use of Bond Funds (In Millions) K-12 New Construction: New pro'ects $3,450"1 � Back10 g 1) 2,900 Modernization: New projects 1,400 Backlog(2) 1,900 Critically overcrowded schools 1,700 Joint Use 50 Subtotal,K-12 $11,40031 Higher Education Community Colleges $746 California State University 496 University of California 408 Subtotal,Higher Education $1,650 Total $13,050 (1) Up to$100 million available for charter schools. (2) Projects for which school district had submitted applications on or before February 1,2002. (3) Up to$20 million available for energy conservation projects. Source: California Secretary of State. Future Initiatives Article X111A, Article X111B, Article X111C, Article X111D of the California Constitution and Propositions 39, 47, 62, 98 and 111 were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted further affecting District revenues or the District's ability to expend revenues. The nature and impact of these measures cannot be anticipated by the District. GENERAL SCHOOL DISTRICT FINANCIAL INFORMATION The information in this section concerning the State funding of public education is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Preliminary Official Statement that the principal of or interest on the Bonds is payable from State revenues. The Bonds are payable from the proceeds of an ad valorem tax which is required to be levied by the County in an amount sufficient for the payment thereof, State Funding of Education and Revenue Limitations California school districts receive a significant portion of their funding from State appropriations. As a result, changes in State revenues may affect appropriations made by the Legislature to school districts. 21 DOCSSR36160v4124341,0002 Annual State apportionments of basic and equalization ail to school districts are computed based on a revenue limit per unit of average daily attendance ("A.D.A."). Prior to fiscal year 1998-99, daily attendance numbers included students who are absent from school for an excused absence,such as illness. Effective in fiscal year 1998-99,only actual attendance will be counted in the A.D.A. This change is essentially fiscally neutral for school districts that maintain the same excused absence rate. The rate per student was recalculated to provide the same total funding to school districts in the base year as would have been received under the old system. In the future, school districts that can improve their actual attendance rate will receive additional funding. Revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among California school districts. The fallowing table shows the average daily attendance for the District for the last five years,and the District's revenue limit per A.D.A. for such period. AVERAGE DAILY ATTENDANCE AND REVENUE LIMIT Fiscal Years 1998-99 through 2002-03 Acalanes Union High School District Average Daily Revenue Limit Fiscal Year Attendance" Per A.D.A. 1998-99 4,845 $4,438.73 1999-2440 5,049 4,542.11 2000-01 5,150 5,106.00 2001-02(2) 5,320 5,096.98 2002-03czt 5,369 5,400.51 Source. Aealanes Union High School District. Note: All amounts are rounded to the nearest whale number. (1)Data.for fiscal year 1998-99 and thereafter are based on state legislation which reconfigured Average Daily Attendance to represent actual attendance without regard to excused absences. 0 2001-02 Estimated Actual;2002-03 Budgeted. Revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among California school districts. Revenue Sources The District categorizes its general fund revenues into four sources: (1) revenue limit sources (consisting of a mix of State and local revenues), (2) federal revenues, (3) other State revenues and (4) other local revenues. Each of these revenue sources is described below. Revenue Limit Sources. Since fiscal year 1973-74, California school districts have operated under general purpose revenue limits established by the State Legislature. In general, revenue limits are calculated for each school district by multiplying the A.D.A. for such district by abase revenue limit per unit of A.D.A. The revenue limit calculations are adjusted annually in accordance with a number of factors designated primarily to provide cost of living increases and to equalize revenues among all California school districts of the same type. 22 DOCSSF\3616Ov4\24341.()W2 Funding of the District's revenue limit is provided by a mix of local property taxes and State apportionments of basic and equalization aid. Generally, the State apportionments will amount to the difference between the District's revenue limit and its local property tax revenues. Beginning in 1978-79, Proposition 13 and its implementing legislation provided for each county to levy(except for levies to support prior voter-approved indebtedness) and collect all property taxes,and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county. Federal Revenues. The federal government provides funding for several District programs, including special education programs, programs under the Educational Consolidation and Improvement Act,and specialized programs such as Drug Free Schools,Education for Economic Security,and the free and reduced lunch program. The federal revenues,most of which are restricted,comprised approximately 1.6% of general fund revenues in 2€341-02 and are budgeted to equal approximately 1.9% of such revenues in 2442-03. Other State Revenues. As discussed above, the District receives State apportionment of basic and equalization aid in an amount equal to the difference between the District's revenue limit and its property tax revenues. In addition to such apportionment revenue, the District receives substantial other State revenues. These other State revenues are primarily restricted revenues funding items such as the Class Size Reduction Program, Educational Technology Assistance Grants, mandated cost reimbursements and instructional materials, among others. Other State revenues comprised approximately 15.1% of general fund revenues in 2041-02 and are budgeted to equal approximately 11.56%of such revenues in 2002-03. Other State revenues include the California State Lottery (the "Lottery"), which was established by a constitutional amendment approved in the November 1984 general election. Lottery revenues must be used for the education of students and cannot be used for non-instructional purposes such as real property acquisition,facility construction,or the financing of research. Lottery revenues are budgeted to equal approximately 1.8%of general fund revenues in 2042-03. Other Local Revenues. In addition to property taxes, the District receives additional local revenues from items such as leases and rentals, interest earnings, interagency services, and other local sources. Other local revenues comprised approximately 12.9%of general fund revenues in 2401-02 and are budgeted to equal approximately 12.45%of general fund revenues in 2002-03. Budget Process The District is required by previsions of the State Education Code to maintain a balanced budget each year, in which the sura of expenditures and the ending fund balance cannot exceed the sura of revenues and the carry-over fund balance from the previous year. The State Department of Education imposes a uniform budgeting and accounting format for school districts. The budget process for school districts was substantially amended by A.B. 1200, which became law on October 14, 1991. Portions of A.B. 1200 are summarized below. School districts must adopt a budget on or before July l of each year. The budget must be submitted to the county superintendent within five days of adoption or by July 1, whichever occurs first. A district may be on either a dual or single budget cycle. The dual budget option requires a revised and readopted budget by July 1 that is subject to State-mandated standards and criteria. The revised budget must reflect changes in projected income and expenses subsequent to July 1. The single budget is only 23 DOCssF\ss t 6gv4\2as41.0002 readapted if it is disapproved by the county office of education, or as needed. The District is on a dual budget cycle and adopts its budget on or before July I. For both dual and single budgets submitted on.July 1, the county superintendent will examine the adopted budget for compliance with the standards and criteria adopted by the State Board of Education and identify technical corrections necessary to bring the budget into compliance, will determine if the budget allows the district to meet its current obligations and will determine if the budget is consistent with a financial plan that will enable the district to meet its multi-year financial commitments. On or before August 15, the county superintendent will approve or disapprove the adopted budget for each school district. Budgets will be disapproved if they fail the above standards. The district board must be notified by August 15 of the county superintendent's recommendations for revision and reasons for the recommendations. The county superintendent may assign a fiscal advisor or appoint a committee to examine and comment on the superintendent's recommendations. The committee must report its findings no later than August 20. Any recommendations made by the county superintendent must be made available by the district for public inspection. The law does not provide for conditional approvals; budgets must be either approved or disapproved. No later than August 20, the county superintendent must notify the Superintendent of Public Instruction of all school districts whose budget has been disapproved. For all dual budget options and for single budget option districts whose budgets have been disapproved, the district must revise and readopt its budget by August 1, reflecting changes in projected income and expense since July 1, including responding to the county superintendent's recommendations. The county superintendent must determine if the budget conforms with the standards and criteria applicable to final district budgets and not later than October 8 will approve or disapprove the revised budgets. If the budget is disapproved, the county superintendent will call for the formation of a budget review committee pursuant to Education Code §42127.1. Until a district's budget is approved, the district will operate on the lesser of its proposed budget for the current fiscal year or the last budget adopted and reviewed for the prior fiscal year. The District has never had an adopted budget disapproved by the County Superintendent of Schools, and has never received a "qualified" or negative certification of an Interim Financial Report pursuant to A.B. 1200. The following table shows the District's adopted budgets for fiscal years 2000-01, 2001-02 and 2002-03 and the District's audited actuals for fiscal years 2000-01 and 2001-02. For further information, see also"Appendix B—EXCERPTS FROM THE DISTRICT'S 2001-02 AUDITED FINANCIAL,STATEMENTS." 24 D0C35F\36#64v4t2434I.0002 ........................... ........ COMPARISON OF GENERAL FUND BUDGETS FOR FISCAL YEARS 2000-01,2001-02 AND 2002-03 AND AUDITED ACTUALS FOR FISCAL YEARS 2000-01 AND 2001-02 Acalanes Union High School District Adopted Audited Adopted Audited Adopted Budget Actuals Budget Actuals Budget 2000-01 2000-01 2001-02 2001-02 2002-03 REVENUES: Revenue Limit Sources: State Apportionments $7,331,471 $5,598,979 $8,797,137 $5,514,698 $6,105,513 Local Sources 19,355,478 20,9 858 19,475,498 22,945,574 23,920,01 26,686,949 26,508,837 28,272,635 28,460,272 $29,125,532 Federal 385,408 541,509 581,353 755,863 597,585 Other State 4,898,012 6,877,329 5,285,398 6,015,012 4,809,934 Other Local 3,912,812 3,887,329 4,988,478 4,637,406 5,017,394 Other 527,257 576,695 - TOTAL REVENUES 35,883,181 38,342,818 39,127,864 40,445,248 39,550,445 EXPENDITURES: Salaries: Certificated 18,075,335 19,139,386 20,439,687 21,000,899 21,423,163 Classified 4,673,674 4,997,835 5,503,535 6)062,177 6,117,876 Employee Benefits 5,170,119 5,183,232 6,338,569 6,301,494 6,587,387 Books&Supplies 1,771,090 1,390,577 1,927,960 1,509,851 1,434,110 Contract Services&Other Operating 4,363,451 Expenses 3,720,216 3,975,845 4,437,228 5,211,218 Capital Outlay 267,706 778,135 391,026 608,469 248,884 Direct Support/indirect Costs (250,000) Other Outgo 422,502 469,046 151-150 68,936 156,894 TOTAL EXPENDITURES 34,100,642 35,934,056 39,189,155 39,783,405 40,929,532 Excess of Revenues Over/(Under) 1,782,539 2,408,762 (61,291) 661,943 (1,379,087) Expenditures OTHER FINANCING SOURCES(Uses): (12,039) (12,039) 237,563 (14,040) (12,436) Excess(Deficiency)of Revenues and Other Financing Sources Over(Under) Expenditures and Financing Sources 1,770,499 2,396,723 176,272 647,803 (1,391,523) FUND BALANCE,JULY 1 1,644,813 1644,815 2,946,011 3,614,198 4,292,084 FUND BALANCE,JUNE 30 $3,415,312 $4 _ 2283 $42620 ,041�538 $3�12 $2,900,561 Source. Acalanes Union High School District. Accounting Practices The accounting policies of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section 41010 of the California Education Code, is to be followed by all California school districts. The Governmental Accounting Standards Board ("GASB") has released Statement No. 34, which makes changes in the annual financial statements for all governmental agencies in the United States, especially in recording of fixed assets and their depreciation, and in the way the report itself is formatted. These requirements will become effective on June 15, 2003 for the District, as well as for any other governmental agency with annual revenues of between $10 million and $100 million. Revenues are 25 DOCSSR36160v4124341 M02 recognized in the period in which they became bath measurable and available to finance expenditures of the current fiscal period. Expenditures are recognized in the period in which the liability is incurred. Economic Conditions in California In the early 1990s, an economic recession and a State budget imbalance resulted in K-14 school districts receiving no increase in per-student funding from the State. Per-student spending was essentially frozen during this period, with no cost-of-living adjustments. In recent years increasing State revenues have unproved the funding for K-14 school districts. The economy in the State now has slowed and the State is experiencing severe budget shortfalls. Reduced State revenues and budget shortfalls could have an adverse financial impact on the District. See"STATE BUDGET—Future Budgets." A slowing economy, a declining stock market and the events of September 11, 2001 have negatively affected the revenue outlook for the State. In October 2001, in response to the weak revenue results, the Governor announced a hiring freeze for most State positions and directed State agencies to make cuts in operating expenses totaling at least $150 million in 2001-02 expenditures. The Governor also asked agencies to prepare for cuts of up to 15%in expenditures in the 2002-03 fiscal year budget. In further response to the revenue shortfalls, on November 14, 2001, the Governor issued a letter to all State departments and agencies instituting immediate action to further reduce expenditures in the 2001-02 fiscal year. The Governor called:a special session of the Legislature in January 2002 to consider almost$2.25 billion in spending costs for the current fiscal year. fending action by the Legislature to cut expenditures, the Governor directed agencies to immediately freeze spending on a specified list of programs and projects totaling almost$2.25 billion (including the actions he directed in October). These program cuts and reversions cover almost all areas of State spending, including State operations, aid to local government and capital outlay. The Governor stated that he had excluded from spending cuts expenditures which could provide short-term stimulus to the State's economy. On February 4, 2002, legislation was enacted which approved$2.2 billion of current year expenditure reductions. On September 5, 2002, the Governor signed the State Budget for fiscal year 2002-03. In announcing the Budget, the Governor stated that the sharpness of the decline in State revenues was beyond previous projections and would result in a depletion of the State's Reserve for Economic Uncertainties and a $3 billion shortfall for fiscal year 2001-02. The shortfall, combined with a reduced revenue estimate for fiscal year 2002-03 and the need for a reserve, required the State to close a funding gap exceeding$12 billion for fiscal year 2002-03. The 2002-03 Budget was based on an assumption of a mid-year recovery for the California economy. The Budget states that, if the economic recovery was delayed, thereby protracting the projected rebound in State revenues, additional measures would be needed to ensure that the State budget for fiscal year 2002-03 remained balanced. The 2002-03 Budget includes spending reductions and other strategies to provide relief to the State's general fund of $12.5 billion. These strategies include borrowing against the State's tobacco settlement money, delaying contributions to the State retirement funds and borrowing from various special funds. The State Legislative .Analyst has advised the Legislature that the 2002-03 Budget is overly optimistic and defers expenses to future fiscal years. State Budget The .following information concerning the State's budgets has been obtained from publicly available information which the District believes to be reliable; however, the District takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information. Furthermore, it should not be inferred from the inclusion of this information in this Official 26 o0cssr\361 60v 4\2434 L0W2 Statement that the principal of or interest on the.Fonds is payable form the General Fund of the District. Tlie Bands are payable solely from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment thereof 2002-03 State Budget. In mid-2002, the Governor estimated that the dramatic drop in state tax revenues resulted in a$23.6 billion shortfall between State revenues and anticipated expenditures for the 2001-02 and 2002-03 fiscal years. Can September 5,2002, the Governor signed into law the 2002 Budget Act, which attempted to close the revenue/expenditure gap resulting in the aforementioned severe budget shortfall with a combination of expenditure reductions, revenue enhancements and extensive use of one- time budgetary actions, such as fund transfers and loans, expenditure deferrals, fund shifts and other actions,as summarized below: 2002-03 BUDGET ADDRESSING A$23.6 BILLION GAP (Dollars in Millions) Percent of Amount Solution Program Reductions $7,458 31.5% Tobacco Settlement Securitization 4,500 19.0% Loans 2,028 8.6% Deferral of Education Disbursements(1 1,728 7.3% month) Funds Shifts 1,328 5.6% Net Operating Loss(NUL)Deferral(2 1,200 5.1% years) Debt Restructuring 1,083 4.6% Federal Tax Conformity/Tax Compliance 1,651 7.0% Federal Funding Increases t,081 4.6% Other Accelerations&Transfers 1.585 6.7% Total $23,642 100.0%u Proposed 2002-03 Mid-Year Reductions. On December 6, 2002, the Governor released his mid- year spending reduction proposals, which proposed reductions and adjustments totaling $10.2 billion for fiscal years 20€12-03 and 2003-04. The Governor's proposal includes a 3.66% across-the-board reduction in K-14 local assistance. More specifically, the Governor proposed that Proposition 98 appropriations be reduced to the current estimate of the required minimum Proposition 98 spending level. The. Governor has proposed separate legislation to assist districts in managing these reductions by easing the 3%reserve requirement of budgeted expenditures through .Tune, 2004 and expanding the number of categorical programs among which funds can be shifted. The State Legislature is now meeting in special session to consider the Governor's proposed raid-year spending reduction proposals. According to the Governor's Office, the spending required. by Proposition 98 has been reduced due to a decline in 2002-03 estimated State General Fund revenues and revised population and average daily attendance data,each indicating a downward trend in enrollment and average daily attendance. The total 2002-03 Proposition 98 funding requirement, as of the Governor's December 2002 projections, was estimated to be $44.645 billion. Proposition 98 appropriations are proposed to be reduced by a total of $1.734 billion, which is 3.7% of total Proposition 98 revenues (including property taxes). K-12 appropriations are proposed to be reduced by$1.51 billion(a 3.61/o reduction of total K-12 revenues) and California Community College programs are proposed to be reduced by $135 million (a 2.8%b reduction of total revenues). Additionally, the $143 million set-aside for Proposition 98 cost increases, originally contained in the 2002 Budget Act,is no longer appropriated in the Governor's proposals. 27 DOCssr\36160V4\24341 M02 As originally adopted, the provisions of the 2402 Budget Act for K-12 school districts included $817 million for a 2.0% cost of living adjustment (COLA) for both apportionments and categorical programs (the 2402-03 statutory COLA rate is 1.66%) and $727 million for increases in student population in both apportionments and categorical programs, assuming statewide average daily attendance increases from 5,801,000 to 5,881,000,an increase of 1.37%. Other significant features of the 2002 Budget Act for K-12 school districts included: • Proposition 98: Total Proposition.98 spending of $41.6 billion, an increase of $3.3 billion (8.6"%) over the prior fiscal year. Total K-12 spending per pupil increased by $457 from $6,610 in 2001-02 to $7,067 in 2402-03, a 6.9%increase. The 2002 Budget Act also reflected a total of$143.3 million in Proposition 98 appropriations vetoed and set aside to be appropriated later in the fiscal year for any increased costs in existing programs such as enrollment or other necessary funding adjustments. • Instructional Materials Block Grant: $400 million ($150 million one-time) to provide standards- aligned instructional materials for K-12 students. • Mathematics and Reading Professional Development: $63.5 trillion to continue implementation of the Mathematics and Reading Professional Development Program. Schools receive $2,500 for each teacher trained and$1,000 for each instructional aide trained. • Assistance to Low performing Schools: $441.3 million for assistance to low-performing schools through a variety of programs. • Governor's Performance Awards: $77 million to pay the remaining balance of the $144.3 million Governor's Performance Awards earned by schools in 2001-02. • School Assistance and Intervention: $6.0 million Proposition 98 General :Fund and up to $29.1 million in federal Title I funds to support schools working with School Assistance and Intervention Teams or subject to other sanctions pursuant to the Immediate Intervention/Underperforming Schools Program. In addition, a portion of these fiords will support a statewide system of school support to provide intensive support and technical assistance to school districts,county offices of education and schools in need of improvement. • Special Education: $72.4 million to provide a cost-of-living adjustment and $49.9 million to provide funding for program growth. The 2002 Budget Act also contained an additional $8.2 million General Fund augmentation for special education, to be used to provide a permanent increase to the base funding level for this program. • "No Child Left Behind": The No Child Left Behind Act converts a formerly federal-administered after school program to a state-administered program. Commencing in 2002-03, California is to receive $42.5 million for State operations costs and grants to local partnerships between schools and communities to provide academic support and a safe, constructive alternative for school students in the hours after the regular school day. The 2042 Budget Act reflected a total increase in federal funding of$738 million,including the following significant increases: (i) $132 million for the new Reading First Program, which will provide additional teacher training, instructional materials,and other assistance to K-3 classrooms; (ii) $312 million, a 27%increase,for basic Title I grants to schools in lower- income areas of the State, including up to$29 million for sanctions programs; 28 DOC'SSR36160v4\24341.0002 (iii) $109 million, a 50% increase; in Title Il funding for teacher recruitment and development; (iv) $74 million, a 47% increase, for English language learners from the Title I Migrant and Title III Immigrant Programs; (v) $29 million in funding for enhanced student assessments and data collection;and (vi) $83 million for the federal Enhancing Education through Technology program,which focuses on using technology as a tool to improve student achievement. Governor's Proposed 2003-04 Budget. On January 10,2003, the Governor released his proposed budget for fiscal year 2003-04 (the "Governor's Proposed 2003-04 Budget") in which he addressed deficits under the 2002 Budget Act and 2403-04 fiscal year budget shortfalls---a combined $34.6 billion gap between projected revenues and expenditures over the 2002-03 and 2003-04 fiscal years. To close the balance of the$34.6 billion budget gap, the Governor proposed additional measures that are expected to address the estimated $524.4 billion budget shortfall not addressed in the Governor's December 2002 mid-year spending reductions proposals. The following table shows the additional measures by the Governer; Proposed 2003-04 Budget and the mid-year spending reduction proposals announced in December 2002 which together comprise the Governor's overall solution to closing the entire predicted $34.6 billion budget shortfall: ADDRESSING THE OVERALL$34.6 BILLION GAP (Dollars in Millions) December Additional Revision Measures Total Percentage Cuts/Savings $ 8,966.41" $ 11,761.9 $ 20,728.3 59.9% State-Local Realignment 191.6(" 7,962.4 8,154.0 23.6% Fund Shifts 815.6 1,087.1 1,942.7 5.5% Transfers/Other Revenue 199.711) 1914.6 2,114.3 6.1% Loans/Borrowing 25.4 1,657.9 1,683.3 4.9% Total $ 14.198.7 $ 24,383.9 $ 34,582.6 1€14.4%0 01 $544 million property tax from Redevelopment Agencies was classified as "Other Revenue" in the Mid-Year S nding Reduction Proposals plan. It is now used to offset Proposition Expenditures(as cuts/savings). E2 $191.6 million of Proposition 98 CalWorks Stage 3 elimination was classified as "Cuts/Savings" in Mid-Year Spending Reduction Proposals plan. This amount is currently part of the State-local alignment package. Source: Governor's Budget summary 2443-04. The Governor's Proposed 2003-04 Budget includes: (i) increasing personal income tax margins up to 10%and 11% for high-income taxpayers (which according to the Governor is expected to generate approximately $2,6 billion in additional revenues fiscal year during 2003-04), (ii) raising sales and use taxes by one cent(which according to the Governor is expected to generate approximately $4.6 billion in additional revenues during fiscal year 2003-04) and increasing the cigarette tax $1.10 per pack (which according to the Governor is expected to generate approximately $1.2 billion in additional revenues during fiscal year 2003-04). The Governor's Proposed 2003-04 Budget shifts to counties roughly $8 billion of health, child care and social service programs for which the State is currently responsible and reduces State General Fund support to the trial courts by$300 million. To offset the financial impact of the proposed state-local realignment measurers, $8.2 billion in revenue increases assumed by the 29 D0CSSFt36i 6ov4i24341.tW2 .......................... Governor as a result of the tax generating measures described above will be utilized to provide funding to counties and courts for the aforementioned programs and services. The Governor's Proposed 2003-04 Budget proposes restoration of Executive Branch authority to make mid-year adjustments to the budget when revenues fall significantly below budgeted forecasts. The Governor's Proposed 2003-04 Budget contemplates the creation of a special budget reserve for proceeds from extraordinary revenue growth to be used for one-time expenditures. According to the Governor, the Governor's Proposed 2003-04 Budget fully funds statutory revenue limit growth for school districts, county offices of education and special education. The funding formula for the Proposition 98 guarantee reflects changes in the State's General Fund revenue growth. $980.8 million or 3.66% of across-the-board reductions are to continue in 2003-04 for all programs including apportionments proposed in the December 2002 mid-year spending reduction proposals. Other significant features of the Governor's Proposed 2003-04 Budget for K-12 school districts include: • Proposition 98: Approximately$53.0 billion will be devoted to California's 983 school districts and 58 county offices of education resulting in estimated total per-pupil expenditures from all sources of $9,072 in fiscal year 2002-03 and $8,899 in fiscal year 2003-04. Proposition 98 support for K-12 education will increase 1.6% over the 2002 Budget Act level as revised by the December 2002 mid- year spending reduction proposals. This level of funding supports K-12 Proposition 98 per-pupil expenditures of$6,704 in 2003-04—up from$6,536 in 2002-03. • Categorical Reductions: A consolidation of 64 categories into a$5.1 billion Block Grant with repeal of virtually all control statues in all 64 categorical programs. • COLA: A suspension of all statutory cost-of-living increases in 2003-04 using "in lieu" language found in Proposition 111 School Funding Guarantee that would not require recognition of the COLA deficit. The suspension of the COLA is projected to be 1.55% and will save the State approximately $663 million. • Enrollment Growth: Attendance growth has remained relatively low primarily due to steady declines in birth rates. Statutory enrollment growth funding of$358.7 million for school district and county offices of education apportionments ($321.5 million) and special education ($37.2 million) is fully funded. The Governor's Proposed 2003-04 Budget proposes to fund regular ADA growth, but does not provide for enrollment growth in categorical programs. • Equalization: The Governor's Proposed 2003-04 Budget proposes to retain $203 million of current law equalization aid that is to be implemented and to increase the appropriation by an additional $47 million. • Defer Mandaf es: New mandate cost programs with be deferred in future years saving the State $870 million by not funding new project mandates or prior deficiencies. • Basic Aid• Eliminate both the$120-per-ADA funding and most of the local property tax income that exceeds the total revenue limit for a basic aid district that is received by basic aid school districts under current law. The Governor's Proposed 2003-04 Budget allocates the estimated$126 million of local property tax income collected by basic aid school districts in excess of their total revenue limit to other school districts in the same county. 30 DOCSSF\36160v4124341.OW2 .... ..... ...... • Bailout Funding: $102 million is to be set aside in special fund of non-Proposition 98 funds in order to provide bailout assistance for fiscally troubled districts that may need a State loan pursuant to future legislation. • PERS: The Governor's Proposed 2003-04 Budget fully funds the estimated $381.7 million increase in the PERS school employer contribution rate. • Unemployment Insurance: The Governor's Proposed 2003-04 Budget provides full funding for the estimated$35.2 million increase in local education agency unemployment insurance reimbursements. • K-3 Class Size Reduction: $1.480 billion for this program in 2002-03 and 2003-04. Despite reductions by 10.82%0, the Governor's Proposed 2003-04 Budget allows amendment language to the budget act to allow this program to receive transfers of funding from other categorical programs. • Pupil Testing: The Governor's Proposed 2003-04 Budget provides $120.2 million, including federal funds, for various statewide exams such as $66.1 million to the Standardized Testing and Reporting Exam, $21.2 million to the High School Exit Exam. and $18.5 million to the California English Language Development Exam. • Accountability: The Governor's Proposed 2003-04 Budget provides $127.6 million,including federal funds, to the Immediate Intervention/Underperforming Schools Program and $193.8 million, including federal funds,to the High Priority Schools Grant Program. • Standards-Based Training Programs: $26.2 million for the Principal Training Program and $27.9 million for the Mathematics and Reading Profession Development Program. It is anticipated that the Principal Training Program will be completed in 2004-05 and the completion slate for the Mathematics and Reading Profe=ssion Development Program is dependent on the funding levels of future budgets. The State Legislative Analyst Office (the "LAO"), in a report issued on January 15, 2003, contends that the Governor's Proposed 2003-04 Budget overstates both baseline costs and budget program savings in numerous areas of the budget and understates tax revenues. The LAO notes that approximately $8 billion dollars in the difference between the LAO November, 2002 projection of at $21.1 billion deficit and the Governor's $34.6 billion deficit prediction is attributable to forecasting differences of revenues and program caseloads that drive expenditures. The balance of the discrepancy between the two agencies projections, according to the LAO, is attributable to definitional differences relating to the baseline used for analyzing expenditure reductions, according.to the LAO, the Governor's baseline in some cases reflects additional spending that would be required to achieve the administration's policy goals as well as proposals that have not yet been adopted. The LACI doses predict that based on more up-to-date information about revenues and caseload trends and other factors affecting spending, it will update its estimate of the budget shortfall to the$26-plus billion range. Impact on District Budgets. The District cannot predict what actions will be taken by the State Legislature in addressing the State budget deficit and the Governor's proposed reductions. The State budget will be affected by national and state economic conditions and other factors over which the District will have no control. The State's financial condition is likely to have an adverse financial impact on the District in the current and subsequent fiscal years. The Governor's proposal, if implemented,will result in a reduction in District revenues in the current and subsequent fiscal years. Until the nature and magnitude of reductions is finalized, the District remains uncertain as to how it will adjust its budget to respond to the changes. The District believes it will attempt to absorb such a reduction: by eliminating certain planned expenditures and. if necessary, expending a portion of its undesignated reserves. 31 DOCSSF,35160v4t24341.{)402 ................ ................................. ...... ........ Continued State budget shortfalls in future fiscal years could have an adverse financial impact on the District, Class Size Reduction Kindergarten-University Public Education Facilities bund Act of'2004. In April 2002,the Governor signed legislation authorizing a $12.3 billion bond measure on the March 2004 ballot for improvement, modernization and construction of facilities for grades K-12 and higher education. At such time, the Governor also signed legislation authorizing a $13 billion bond measure on the November 2002 ballot, which has since passed by a significant majority. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS — The Class Size Reduction Kindergarten-University Public Education Facilities Bond Act of 2002"herein for a discussion of Proposition 47. California Teachers'Association v. Gould. During several years in the early 1990s, the State realized less tax receipts than it had previously budgeted, so that in each of those years public education received more in funding than its minimum entitlement under Proposition 98. (See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS- Propositions 98 and 111.) The State legislature characterized the overfunded amounts as "loans" to be repaid from the Proposition 98 entitlement in future years. The aggregate amount of these loans is approximately $1.76 billion, The validity of the loan characterization and repayment mechanism were challenged by the California Teachers' Association("CTA"),which sought to void the obligation to repay the loan amounts. On April 26, 1994, a Sacramento County superior court entered a judgment that K-14 districts are not obligated to repay the inter-year loans. The decision was appealed by the State, and pending such appeal the CTA and the State reached a settlement which became final on April 12, 1996. Pursuant to the settlement agreement..no new inter-year loans will be created; the existing loans are required to be repaid over an eight-year period,with K-14 schools contributing$825 million from funds allocated to education under Proposition 98, and the State contributing the balance of$938 million. The schools' contribution of$925 million will be counted toward the Proposition 98 guarantee in future years. The District can-not predict the effect that the general economic conditions within the State and the State's continuing budgetary problems may have in the future on the District's budgets or operations. For more information on State Funding of public education, see "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS - Propositions 98 and 11LI, ACALANES UNION HIGH SCHOOL DISTRICT The information in this section concerning the operations of the District and the District's operating budget are provided as supplementary information only, and it should not be inferred froth the inclusion of this information in this Preliminary Official Statement that the principal of or interest on the Bonds ispayable front the General Fund of the District. The Bonds are payable from the proceeds of an ad valorem tax required to be levied by the County in an amount sufficient for the payment there of, See "THE BONDS Security and Sources of Payment. General Information The Acalanes Union High School District (the "District") is located in the western portion of Contra Costa County (the "County") approximately 20 miles east of San Francisco. The District encompasses an area of approximately 80 square miles and has an estimated population of 85,000. 32 D0C.SSF3616Gv412434HW2 The District was established in 1940 and provides secondary educational services to the resident of the Cities of Lafayette and Orinda, the town of Moraga, a portion of the City of'Walnut Creek,and of certain surrounding unincorporated areas in Contra Costa County. The 2002-03 assessed valuation of the area served by the District is $15,825,192,971. The District's estimated average daily attendance for fiscal year 2002.03 is 5,355,and the District's 2402-03 budget is approximately$39.6 million. Administration The District is governed by a five-member Board of Trustees (the "Board`), each of which is elected to a four-year term. Elections for positions to the Board are held every two years, alternating between two and three available positions. The members of the Board, together with their office and the date their term expires,are listed below: Board Member Office Term Expires Judy Carney President December 2004 Kathy Coppersmith Clerk December 2004 Vanessa Crews Member December 2006 Margot Tobias Member December 2006 Richard Whitmore Member December 2006 The Superintendent of the District is responsible for administering the affairs of the District in accordance with the policies of the Board. Dr. Randall Olson is the District's Superintendent and Mr. Christopher Learned is the Assistant Superintendent,Business Services. Average Daily Attendance The following table shows the District's average daily attendance ("A.D.A.") over the last eight years. AVERAGE DAILY ATTENDANCE FISCAL YEARS 1995-%THROUGH 2002-03 Acalanes Union High School District Year Average Daily Attendance 1995-96 4,399 1996-97 4,659 1997-98 4,829 1998-99 4,845 1999-00 5,049 2004-01 5,150 2001-02 5,369 2002-03* 5,324 *2002-03 Budgeted A.D.A. Source; Acalanes Union High School District. 33 DOC'SSF\36160v4\24341.0W2 ....................... Labor Relations As of June 30, 2002, the District employed 343 full-time certificated employees and 195 classified employees. These employees, except management and some part-time employees, are represented by the two bargaining units as noted below: BARGAINING UNITS Acalanes Union High School District Number of Employees In Contract Labor Organization Bargaining Unit Expiration Date Acalaries,Education Association 324 June 30,2003 United Public Employees,Local 790 188 June 30,2003 Source: Acalanes Union High School District. District Retirement Systems Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers' Retirement System("STRS") and classified employees are members of the Public Employees' Retirement System("PERS"). All full-time certificated employees participate in STRS, a cost-sharing, multiple-employer contributory public employee retirement system. STRS provides retirement and disability benefits and survivor benefits to beneficiaries. Benefit provisions are established by State statutes, as legislatively amended,within the State Teachers' Retirement Law, All full-time and some part time classified employees -participate in PERS, a cost-sharing multiple-employer contributory public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provision are established by the State statutes, as legislatively amended, with the Public Employees' Retirement Laws. The District is part of a "cost-sharing"pool within PERS. One actuarial valuation is performed for those employers participating in the pool, and the same contributions rated applies to each. The District's contributions to STRS for the fiscal year ending June 30, 2002, 2001 and 2000 were $1,665,861, $1,535,367 and $1,390,186, respectively, The District has budgeted $1,898,176 as its STRS contribution for fiscal year 2002-03. The District's contributions to PERS for fiscal year ending June 30, 2002, 2001 and 2000 were $0, $291,656 and $250,154, respectively. The District has budgeted $546,141 as its PERS contribution for fiscal year 2002-03. Joint Powers Agreements The District participates in various public entity risk pools and joint powers authorities (JPAs). The District is a member of the Schools Excess Liability Fund, Schools Self-Insurance of Contra Costa County Schools Insurance Group and the East Bay Schools Insurance Group. The District pays an annual 34 DOC.SSF\36)6Gv4%2434T,0002 .............. .. ...... premium to each entity for its health., wormers' compensation and property liability coverage. The relationship between the District and the JPAs is such that the JPA is not a component unit of the District for financial reporting purposes. The JPA arranges for and/or provides coverage for its:members. The JPA is governed by a board consisting of a representative from each member district. The board controls the operations of the JPA, including selection of management and approval of operating budgets independent of any influence by the member districts beyond their representation on the board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and deficits proportionately to their participation in the JPA. Ad Valorem Property Taxation District property taxes are assessed and collected by the County at the same time and on the same rolls as the special district property taxes. Assessed valuations are the same for both District and County taxing purposes. The valuation of secured property is established as of January 1. Property taxes are payable in two installments due November 1 and February 1, respectively,and become delinquent on December 10 and April 10 for each respective installment. Taxes on unsecured property (personal property and leasehold) are due on August 31 of each year based on the preceding fiscal year's secured tax rate and become delinquent on October 31. State law exempts from taxation$7,000 of the full cash value of an owner-occupied dwelling,but this exemption does not result in any loss of revenue to local agencies, since the State reimburses local agencies for the value of the exemptions. All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. Mate law provides exemptions from ad valorem property taxation for certain classes of property such as churches,colleges,non-profit hospitals,and charitable institutions. Future assessed valuation growth allowed under Article XIIIA (new construction,certain changes of ownership, 2%inflation)will be allocated on the basis of"situs"among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of"base" revenues from the tax rate area. Each year's growth allocation becomes part of each agency's allocation in the following year. The availability of revenue from growth in tax bases to such entities may be affected by the establishment of redevelopment agencies which, under certain circumstances, may be entitled to revenues resulting from the increase in certain property values. For assessment and collection purposes, property is classified as either"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 real property having a tax lien which is sufficient, in the opinion of the assessor,to secure payment of the taxes. Unsecured property comprises all property not attached to land such as personal property or business property. Beats and airplanes are examples of unsecured property. Unsecured property is assessed on the"unsecured roll." 35 DOC:SSR36164v4124341.0002 The following represents the eight-year history of assessed valuations in the District: ASSESSED VALUATION Fiscal Years 1995-96 to 2002-03 Acalanes Union High School District Tax Year Local Secured Utility Unsecured Total 1995-96 $10,241,984,540 $1,134,950 $371,275,485 $10,614,394,975 1996-97 10,534,049,507 1,135,011 348,094,180 10,883,272,698 1997-98 10,895,312,064 1,132,510 345,223,602 11,241,668,476 1998-99 11,500;152,044 1,777,618 352,203,959 11,854,133,621 1999-2000 12,303,016,649 1,159,510 375,119,836 12,679,295,995 2000-01 13,273,261,445 1,224,434 399,914,241 13,674,400,120 2001-02 14,441,066,828 1,759,048 420,134,340 14,862,960,216 2002-03 15,416,818,565 2,629,075 405,745,331 15,825,192,971 Source: California Municipal Statistics,Inc. Tax Levies,Collections and Delinquencies Taxes are levied for each fiscal year on taxable real and personal property which is situated in the District as of the preceding January 1. A supplemental tax is levied when property changes hands or new construction is completed which produces additional revenue. A ten percent penalty attaches to any delinquent payment for secured roll taxes. In addition, property on the secured roll with respect to which taxes are delinquent becomes tax-defaulted. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty(i.e., interest)to the time of redemption. If taxes are unpaid for a period of five years or more,the property is subject to auction sale by the County Tax Collector. In the case of unsecured property taxes,a 10%penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue beginning November 1 of the fiscal year, and a lien is recorded against the assessee. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer;(2)filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on specific property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder's office in order to obtain a lien on specified property of the taxpayer; and (4)seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Each county levies (except for levies to support prior voter-approved indebtedness) and collects all property taxes for property falling within that county's taxing boundaries. 36 DOCSSF136160v4N24341.0002 The following table shows the secured tax charges and delinquencies for taxes collected by the County from property in the District between 1994-95 and 2001-02. SECURED TAX CHARGES AND DELINQUENCY RATES Fiscal"Years 1994-95 through 2001-42 Acalanes Union High School District Tax Year Secured Tax Charge') Amount Delinquent June 30 Percent Delinquent June 30 1994-95 $121,698,252.15 $2,118,896.69 1.74% 1995-96 128,202,578.72 2,237,732.71 1.75 1996-97 131,749,521.99 2,381,629.42 1.81 1997-98 136,224,595.00 1,963,303.00 1.44 1998-99 145,442,127.34 1,687,276.56 1.16 1999-2000 150,909,617.47 1,834,352.39 1.22 2000-41 163,585,578.19 1,539,624.61 0.94 2001-02 178,156,008.96 2,004,191.65 1.12 " All taxes collected by the County within the District. Source: California Municipal Statistics, Inc. Alternative Method of Tax Apportionment-"Teeter Plan" The Board of Supervisors of the County has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in Section 4701 et seq, of the California Revenue and Taxation Code. The Teeter Plan guarantees distribution of 100% of the general taxes levied to the taxing entities within the County, with the County administering any penalties and interest ultimately collected as prescribed in the California Revenue and'Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an cash basis to local political subdivisions, including the District, for which the County acts as the tax- levying or tax-collecting agency. At the conclusion of each fiscal year, the County distributes 100% of any taxes delinquent as of June 30th to the respective taxing entities. The Teeter Plan is applicable to all secured tax levies for which the County acts as the tax-levying or tax-collecting agency, or for which the County treasury is the legal depository of the tax collections. As adopted by the County, the Teeter Plan includes Mello-Roos Community Facilities Districts and special assessment districts which provide for accelerated judicial foreclosure of property for which assessments are delinquent. The ad valorem property tax to be levied to pay the interest on and principal of the Bonds will be subject to the Teeter Plan,beginning in the first year of such levy in fiscal year 2003-04. The District will receive 1001./"of the ad valorem property tax levied to pay the Bonds irrespective of actual delinquencies in the collection of the tax by the County. The Teeter Plan is to remain in effect unless the Board of Supervisors of the County orders its discontinuance or unless, prior to the commencement of any fiscal year of the County (which commences on July 1), the Board of Supervisors receives a petition for its discontinuance joined in by resolutions adopted by at least two-thirds of the participating revenue districts in the County, in which event the Board of Supervisors is to order discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year. If the Teeter Plan is discontinued subsequent to its implementation, only those secured property taxes actually collected would be allocated to political subdivisions (including the District)for which the County acts as the tax-levying or tax-collecting agency,but penalties and interest would be credited to the political subdivisions. 37 DOCssR30160v4\24341.0002 .............................. Tax Rates The following table summarizes the historical and current property tax rates levied on behalf of the District to repay debt obligations. FIVE YEAR SUMMARY OF TAX RATES Per$100 of Assessed Valuation Acalanes Union High School District Tax Year 1997-98 1998-99 1999-2000 2000-01 2001-02 G.OBond Repayment $0.0232 $0.0371 %0278 $0.0370 $0.0340 Source: Contra Costa County Auditor-Controller's Office. For taxing purposes, the State Board of Equalization has divided the area served by the District into 120 separate tax rate areas. The largest tax rate area in the District is Tax Rate Area 09000. TRA 09000 has a total 2002-03 assessed valuation of $3,885,519,097, approximately 24.5% of the District's total assessed valuation. The components of the 2001-02 property tax rate levied in Tax Rate Area 09000 are set forth in the following table: TAX RATE COMPONENTS-TRA 09000 Acalanes Union High School District 2001-02 Tax Rates per$100 of Assessed Value County-wide Rate") $1.0000 Service Area R-8 Bond 0.0050 East Bay Regional Park District Bond 0.0072 Acalanes HSD Bonds,Election of 1988 0.0180 Acalanes HSD Bonds,Election of 1997 0.0160 Walnut Creek ESD Bonds 0:0210 TOTAL LI-0672 'OT— Maximum rate for purposes other than paying debt service in accordance with Article XIIIA of the State Constitution. Source: Contra Costa County Auditor-Controller's Qffice. 38 D0CSSF136I60v4Q4341 AM Principal Taxpayers The following table lists the major taxpayers in the District as determined by secured assessed valuation in fiscal year 2002-03. LARGEST 2002-03 LOCAL SECURED PROPERTY TAXPAYERS Acalanes Union>High School District 2002-03 %of Property Owner Primary Land Use Assessed Valuation Total I 1. First Walnut Creek Mutual Cooperatives-Rossmoor $ 187,905,967 1.22% 2. Second Walnut Creek Mutual Cooperatives-Rossmoor 144,760,085 0.94 3. Macerich Northwest Associates Shopping Center 88,980,087 0.58 4. California Plaza(7a,Walnut Creek Inc. Office Building 74,388,599 0.48 5. Property California SCJLW One Corp. Office Building 65,006,539 0.42 6. Metropolitan Life Insurance Office Building 64,024,091 0.42 7. Fidelity Non-Profit Management Fund Office Building 57,972,382 0.38 8. Northwestern Mutual Life Insurance Co. Office Building 53,318,247 0.35 9. Spieker-Treat Towers LLC Office Building 48,234,000 0.31 10. Cornerstone Suburban Office Office Building 45,909,936 0.30 11. Bayconn LLC Apartments 44,833,706 0.29 12. Growers Square Inc. Office Building 43,991,495 0.29 13. Walnut Creek Properties Inc. Office Building 43,613,303 0.28 14. Security Capital Pacific Trust Apartments 43,592,676 0.28 15. 1500 Botelho LLC Shopping Center 38,849,400 0.25 16. MIP Walnut Creek LLC Hotel 37,791,120 0.25 17. Broadway Pointe Investors Shopping Center 30,959,747 0.20 18. Sierra Pacific Properties Office Building 30,948,094 0.20 19. Civic Executive Center Office Building 28,989,237 0.19 20. Manor Healthcare Corporation Convalescent Hospital 26.276,152 0.17 $1,200,344,863 7.79% 2002-03-Local Secured Assessed Valuation: $15,416,818,565 Source: California Municipal Statistics, Inc. Comparative Financial Statements The District's general fund finances the legally authorized activities of the District for which restricted funds are not provided. General fund revenues are derived from such sources as State school fund apportionments, taxes, use of money and property, and aid from other governmental agencies. Audited financial statements for the District for the fiscal year ended June 30,2002, and prior fiscal years are on file with the District and available for public inspection at the Office of the Superintendent of the District, 1212 Pleasant Hill Road, Lafayette, CA 94549, telephone: (925) 935-2800. The audited financial statements for the year ended June 30,2002,are included in APPENDIX B hereto. 39 DOC SS R36160v4124341.0002 The following table reflects the District's revenues, expenditures and fund balances for fiscal years 1997-98 through 2001-02: GENERAL FUND REVENUES,EXPENDITURES AND FUND BALANCES FISCAL YEARS 1997-99 THROUGH 2401-02 Acalanes Union High School District .Actual Actuals Actuals Actuals Actuals REVENUE: 1997-98 1998-99 1999-2000 2000-01 2001-02 Revenue Limit Sources: State Apportionments $3,775,680 $3,625,816 $4,007,922 $5,598,979 $5,514,698 Local Sources 16,416.577 17,983,892 19.298,793 20,909,858 22.945,574 Total Revenue Limit Sources 20,192,257 21,609,708 23,306,715 26,508,837 28,460,272 Federal 209,835 229,643 335,770 541,509 755,863 Other State 2,819,483 3,705,444 5,746,002 6,877,886 6,015,012 Other Local 31878,071 3,928,780 3,668,426 3;887,329 4,637,406 Other 343,927 368.997 388,221 527,257 576,695 TOTAL REVENUES 27,443,573 29,842,572 33,445,134 38,342;818 40,445;248 EXPENDITURES: Salaries: Certificated 14,781,049 16,162,131 17,264,693 19,139,386 21,006,899 Classifier) 4,029;045 4,115,078 4,524,405 4,997,835 6,062,177 Employee Benefits 4,217,423 4,2099,161 4,674,998 5,183,232 6,301,494 Books&Supplies 1,060,786 1,200,994 1,573,674 1,390,577 1,509,851 Contract Services&Other Operating Expenses 2,841,413 2,843,308 3,274,759 3,975,845 4,363,451 Capital Outlay 377,969 648,775 1,222,480 778,135 608,469 Other 68,378 366,277 384,819 469;046 68,936 TOTAL EXPENDITURES 27,376,063 29;545,724 32,919,828 35,934,056 39,783,405 Excess of Revenues Overl(Under) Expenditures 67,510 296,848 525,306 2,408,762 661,843 OTHER FINANCING SOURCES(Uses).- Operating Uses):Operating Transfers In 0 0 0 0 Operating Transfers Out1( 1,050) (11,354) (11,632) 1�2,0391lE 4;040# Total Other Financing Sources(Uses) (11,050) (11,354) (11,632) (12,039) (14,040) Excess of Revenues and Other Financing Sources Over(Under)Expenditures and 56,460 285,494 513,674 2,396,723 647,803 Financing Sources FUND BALANCE,JULY 1 618,186 845,647 1,131,141 1,644,815 3,614,803 ADJUSTMENT'S TO FUND BALANCE 171.001 0 0 0 0 FUND BALANCE,JUNE 30 $845,647 $1,131,141 $1,,,644.815 $4,041,538 $4,262,001 Source: Acalanes union High School District. 40 D0CSSF136160v4`,24341.0002 District Debt Structure short-Term Debt. The District issued $6,250,000 of Tax and Revenue Anticipation Notes (the "Notes")dated July 2, 2002. The Notes mature on July 3, 2003 and yield 2.3% interest. The Notes were sold by the District to supplement its cash flow. Long-Term Debt. A schedule of changes in long-term debt for the year ended June 30,2002,is shown below: Balance Beginning Additions and Balance of Year Adiustments Deductions End of Year General Obligation Bonds Current Interest Bonds $63,445,000 -r $2,110,000 $61,335,000 Capital Appreciation Bonds 15,482,173 $561,149 -- 16,043,322 Accumulated vacation net 312,785 32,023 -- 344,808 Capital leases 15,786 -- 9,474 6,312 Arbitrage liability 350.000 350.000 $79.605.744 $593,172 $2,119.474 $78 079.442 Amount currently available and reserved for retirement of general long-term debt Bond interest and redemption 4,158,984 Amount to be provided for retirement of general long-term debt $73,920,462 Source: Acalanes Union High School District 2442 Audited Financial Statements Capital Leases. The District's liability on lease agreements with options to purchase are summarized below: Colaiers Balance,Beginning of Year $16,233 Payments 7.843 Balance,End of Year J&430 The capital leases have minimum lease payments as follows: Year Ending June 30 Lease Payment 2003 $8,530 Less:Amount Representing Interest 2,118 Present Value of Minimum Lease Payments $6,312 Source: Acalanes Union High School District 2002 Audited Financial:Statements Statement of:Direct and Overlapping Debt. Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics, Inc. and dated March 1, 2003. The Debt Report is included for general information purposes only. The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith. 41 D0CSSFl36160v4134341.0002 The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long- term obligations generally are not payable from revenues of the District(except as indicated)nor are they necessarily obligations secured by land within the District. In many cases long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. The first column in the table names each public agency which has outstanding debt as of the date of the report and whose territory overlaps the District in whole or in part. Column 2 shows the percentage of each, overlapping agency's assessed value located within the boundaries of the District. This percentage, multiplied by the total outstanding debt of each overlapping agency (which is not shown in the table) produces the amount shown in column 3, which is the apportionment of each overlapping agency's outstanding debt to taxable property in the District. 42 DOCSSR363 60v412434 t.0002 STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT Acalanes Union High School District 2002-03 Assessed Valuation: $15,825,192,971 Redevelopment Incremental Valuation: 550,820,392 Adjusted Assessed Valuation: $15,274,372,579 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicabie Debt 31/03 Contra Costa Community College District 17.257%� $ 8,628,500 Acalanes Union High School District 100. 77,574,749 (1) Lafayette School District 100. 27,700,000 Moraga School District 100. 12,815,000 Orinda Union School District I00. 16,550,000 Walnut Creek School District 100. 18,665,000 City of Lafayette 100. 9,735,000 East Bay Municipal Utility District and Special District No. 1 14.209&0.007 682,822 East Bay Regional Park District 7.715 12,381,032 Contra Costa County Service Area No.R-8 61.812 618,120 Storm Drainage District No.16 0.850 128 Contra Costa County Community Facilities District No. 1991-1 7.230 313,059 1915 Act Bonds 43.614-100. 4,653,504 TOTAL GROSS DIRECT AND OVERLAPPINGTAX AND ASSESSMENT DEBT $190,316,914 Less: East Bay lvlunicipal Utility District(100%self-supporting) 679,901 TOTAL NET DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $189,637,013 OVERLAPPING GENERAL FUND OBLIGATION DEBT: Contra Costa County General Fund Obligations 17.242% $ 56,676,178 Contra Costa County Pension Obligations 17.242 48,523,299 Contra Costa County Board of Education Certificates of Participation 17.242 413,808 Contra Costa County Mosquito Abatement District Certificates of Participation 17.242 140,522 Contra Costa Community College District Certificates of Participation 17.257 240,735 City of Walnut Creek General Fund Obligations 55.461 1,173,000 San Ramon Valley Fire Protection District Certificates of Participation 0.022 1,838 Pleasant Hill Recreation and Park District Certificates of Participation 7.390 216,527 TOTAL OVERLAPPING GENERAL FUND OBLIGATION DEBT $107,385,907 GROSS COMBINED TOTAL DEBT $297,702,821 (2) NET COMBINED TOTAL DEBT $297,022,920 (1) Excludes general obligation bonds to be sold. (2) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 2002-03 Assessed Valuation: Direct Debt (577,574,749) 0.49% Total Gross Direct and Overlapping Tax and Assessment Debt.....1.20% Total Net Direct and Overlapping Tax.and Assessment Debt........1.20% Ratios to Adiusted Assessed Valuation: Gross Combined Total Debt............................................ ..............1.95% Net Combined Total Debt...............................................................1.94% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/02: $0 Source: California Municipal Statistics, Inc. 43 DOC SS F\36160v4124341.0002 TAX MATTERS In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ("Bond Counsels'), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel,interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. The difference between the issue price of a Bond(the first price at which a substantial amount of the Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bored constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bernd Owner's basis in the Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of the Bond is excluded from the gross income of such owner for federal income tax purposes,is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. Bond Counsel's opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. The amount by which a Bond Owner's original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner's basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Band premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium. The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bands will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds(or by an audit of similar bonds). Bond Counsel's opinions may be affected by actions taken (or not taken)or events occurring (or not occurring) after the elate hereof. Bond Counsel has not undertaken to determine, or to inform any 44 DOOSSR36160v4\24341.0002 person,whether any such actions or events are taken or do occur. The Resolution and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income of interest (and original issue discount)on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson& Rauth. Although Bond Counsel has rendered an opinion that interest(and original issue discount)on the Bonds is excluded from gross income for federal income tax purposes provided that the District continues to comply with certain requirements of the Code,the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds,all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds. A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX A. 45 DOCSSR36160v41,24341.0402 LEGAL MATTERS Legality for Investment in California Under provisions of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and, under provisions of the Government Code of the State,are eligible for security for deposits of public moneys in the State. Continuing Disclosure The District has covenanted for the benefit of bondholders (including beneficial owners of the Bonds) to provide certain financial information and operating data relating to the District (the "Annual Report")by not later than 270 days following the end of the District's fiscal year (which currently ends June 30), commencing with the report for the 2402-03 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the District with each Nationally Recognized Municipal Securities Information Repository (and with the appropriate State information depository, if any). The notices of material events will be filed by the District with the Municipal Securities Rulemaking Board(and with the appropriate State information depository, if any). The specific nature of the information to be contained in the Annual Report or the notices of material events is included under the caption "A.PPENDIx C — CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5). The District has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. No Litigation No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Bonds. The District is not aware of any litigation pending or threatened questioning the political existence of the District or contesting the District's ability to receive ad valorem taxes or to collect other revenues or contesting the District's ability to issue and retire the Bonds. Legal Opinion The legal opinion of Bond Counsel, approving the validity of the Bonds, will be supplied to the original purchasers of the Bonds without cost. A copy of the proposed form of such legal opinion is attached to this Official Statement as Appendix A. MISCELLANEOUS Ratings The Bonds have been assigned insured ratings of " " and <` >' by Moody's Investors Service ("Moody's") and Standard & Poor's, a Division of the McGraw-Hill Companies ("S&P"), respectively, based on the issuance by the Insurer of its Municipal Bond Insurance Policy. The Bonds have been assigned underlying ratings of" " and " by Moody's and S&P, respectively. The rating reflects only the view of the respective rating agency, and any explanation of the significance of such rating should be obtained from the rating agencies at the following address: Moody's Investors 46 DOC SSF\36160v4\24341.0002 Service, 99 Church Street, New York, NY 10007-2796 and Standard & Poor's, 55 Water Street, New York.,NY 10041. There is no assurance that the ratings will be retained for any given period of time or that the same will not be revised downward or withdrawn entirely by the respective rating agency if, in the judgment of the rating agency, circumstances so warrant. The District undertakes no responsibility to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the ratings obtained may have an adverse effect on the market price of the Bonds. Underwriting U.S. Bancorp Piper Jaffray Inc. (the "Underwriter") has agreed, pursuant to a purchase contract between the District,the County and the Underwriter,to purchase all of the Bonds for a purchase price of $ (principal amount of the Bonds of $ , plus net original issue premium of $ ,Tess underwriter's discount of$ , less costs of issuance of$ , less bond insurance premium on the Bonds of$ ). The purchase contract related to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased,the obligation to make such purchase being subject to certain terms and conditions set forth in the purchase contract, the approval of certain legal matters by bond counsel and certain other conditions. The initial offering prices stated on the cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than such initial offering prices. 47 €?OCSSFi36160v4\24341.0042 Additional Information The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations from and summaries and explanations of the Bonds, the Resolution providing for issuance of the Bonds, and the constitutional provisions, statutes and other documents referenced herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for full and complete statements of their provisions. All data contained herein has been taken or constructed from District records. Appropriate District officials, acting in their official capacities, have reviewed this Official Statement and have determined that, as of the date hereof, the information contained herein is,to the best of their knowledge and belief, true and correct in all material respects and does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made,not misleading. This Official Statement has been approved by the District. ACALANES UNION HIGH SCHOOL DISTRICT By: Dr. Randall Olson Superintendent 48 DOCSSR361600\24341.©OQ2 APPENDIX A FORM OF OPINION OF BOND COUNSEL May_,2003 Board of Trustees Acalanes Union High School District Members of the Board of Trustees: We have examined a certified copy of the record of the proceedings relative to the issuance and sale of S Acalanes Union High School District Election of 2002 General Obligation Bonds, Series A(the"Bonds"). As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. Based on our examination as bond counsel of existing law, certified copies of such legal proceedings and such other proofs as we deem necessary to render this opinion, we are of the opinion, as of the date hereof and under existing law,that: 1. Such proceedings and proofs show lawfulauthority for the issuance and sale of the Bonds pursuant to Title 1,Division 1, Part 10, Chapter 1.5 of the California Education Code, a fifty-five percent vete of the qualified electors of the Acalanes Union High School District(the "District")voting at an election held on November 5, 2002; a resolution of the Board of Trustees of the District(the "District Resolution") and a resolution of the Board of Supervisors of Contra Costa County,California(together with the District Resolution,the"Resolutions"). 2. The Bonds constitute valid and binding general obligations of the District, payable as to both principal and interest from the proceeds of a levy of ad valorem taxes on all property subject to such taxes in the District,which taxes are unlimited as to rate or amount. 3. Linder existing statutes,regulations,rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, with respect to corporations, such interest may be included as an adjustment in the calculation of alternative minimum taxable income,which may affect the alternative minimum tax liability of corporations. 4. Interest on the Bonds is exempt from State of California personal income tax. 5. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated A-1 D0C'.SSF\__;6160v4\24341.0002 redemption price at maturity with respect to such Bonds constitutes original issue discount. For purposes of the previous sentence, the stated redemption price at maturity includes the aggregate sum of all debt service payments on a Capital Appreciation Bonds. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bondowner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bondowner will increase the Bondowner's basis in the applicable Bund. Original issue discount that accrues to the Bondowner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. The opinions expressed herein may be affected by actions taken(or not taken)or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Resolutions and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the exclusion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than ourselves. Other than expressly stated herein, we express no opinion regarding tax consequences with respect to the Bonds. The opinions expressed herein as to the exclusion from gross income of interest (and original issue discount)on the Bands are based upon certain representations of fact and certifications made by the District and others and are subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the issuance of the Bonds to assure that such interest(and original issue discount)will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest(and original issue discount) on the Bonds to be included in grass income for federal income tax purposes retroactive to the elate of issuance of the Bonds. The District has covenanted to comply with all such requirements. The rights of the owners of the Bands and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, Stradling Yocca Carlson&Rauth A-2 DOCSSR36160v4\24341 M02 ............I.......................................................................... .................................................................................................... ........... ..............-.................................................... APPENDIX B EXCERPTS FROM THE DISTRICT'S 2001-02 AUDITED FINANCIAL STATEMENTS B-1 DOCSSF\36160v4\24341.0002 ...........1.1.11....... . ................................................................................................................................................................ ............. ............................................................................................................................. -..................................... ........................ APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate(the"Disclosure Certificate")is executed and delivered by the Acalanes Union High School District(the"District")in connection with the issuance of$ Election of 2002 General Obligation Bonds, Series A (the "Bonds"). The Bonds are being issued pursuant to a Resolution of the District dated March 5, 2003 (the"District Resolution"), and a Resolution of Contra Costa County dated April 1, 2003 (the "County Resolution"). The District Resolution and the County Resolution are together referred to as the "Resolution." The District covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District 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 Resolution, which apply to any capitalized term used in this Disclosure Certificate 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 District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which(a)has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Dissemination Agent" shall mean initially the District, or any successor Dissemination Agent designated in writing by the District (which may be the District) and which has filed with the District a written acceptance of such designation. "Holders"shall mean registered owners of the Bonds. "Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories currently approved by the Securities and Exchange Commission is located at the web site http:/fwww.sec.gov/consumer/nrmsir.htm. "Participating Underwriter" shall mean U.S. Bancorp Piper Jaffray Inc. and any of the original underwriters of the Bands required to comply with the Rule in connection with offering of the Bonds. "Repository"shall mean each National Repository and each 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. C-1 DOCSSR36160v4\24341.0402 ............. "State Repository"shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Certificate,there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than eight months following the end of the District's fiscal year (which shall be March I of each year, so long as the District's fiscal year ends on June 30),commencing with the report for the 2002-2003 fiscal year,provide to the Participating Underwriter and each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate;provided that the audited financial statements of the District 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 District'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 thirty (30) days (nor more that sixty (60) days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repositories to the Dissemination Agent(if other than the District). If the District is unable to provide to the Repositories an Annual Report by the date required in subsection(a), the District shall send a notice to each Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repositories of Failure to File an Annual Report. (c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder,stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Roos. The District's Annual Report shall contain or include by reference the following: I. The audited financial statements of the District 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 District'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 final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Material financial information and operating data with respect to the District of the type included in the Official Statement in the following categories(to the extent not included in the District's audited financial statements): (a) State funding received by the District for the last completed fiscal year; (b) average daily attendance of the District for the last completed fiscal year; C-2 DOC SSR 36150v4124341.0002 (c) outstanding District indebtedness; (d) tax delinquencies,to the extent the County is no longer on the Teeter Plan; and (e) summary financial information on revenues, expenditures and fund balances for the District's general fund reflecting adopted budget for the current fiscal year. 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 District 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 District 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 District shall give, or cause to be given, notice of the occurrence of any of the fallowing events with respect to the Bonds, if material: I. principal and interest payment delinquencies. 2.. non-payment related defaults. 3. modifications to rights of Bondholders. 4. optional,contingent or unscheduled bond calls. 5. defeasances. 6. rating changes. 7. adverse tax opinions or events affecting the tax-exempt status of the Bonds. 8. unscheduled draws on the debt service reserves reflecting financial difficulties. 9. unscheduleddraws on the credit enhancements reflecting financial difficulties. 10. substitution of the credit or liquidity providers or their failure to perform. 11, release, substitution or sale of property securing repayment of the Bonds. (b) Whenever the:District obtains knowledge of the occurrence of a Listed Event,the District shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the District determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the District shall promptly file a notice of such occurrence with the Repositories or provide notice of such reportable event to the Dissemination Agent in format suitable for filing with the Repositories. 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 C-3 DOCSSR36160v4\24341.0002 ...................................................................................................................................................................................---- ..................................................................................................................................................................................... 11 -....................................... affected Bonds pursuant to the Resolution. The Dissemination Agent shall have no duty to independently prepare or file any report of Listed Events, The Dissemination Agent may conclusively rely on the District's determination of materiality pursuant to Section 5(b). SECTION 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Certificate 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 District shall give notice of such termination in the same manner as for a Listed Event under Section 5(a). SECTION 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent (or substitute Dissemination Agent) to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign upon fifteen (15)days written notice to the District. Upon such resignation, the District shall act as its own Dissemination Agent until it appoints a successor. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate and shall not be responsible to verify the accuracy, completeness or materiality of any continuing disclosure information provided by the District. The District shall compensate the Dissemination Agent for its fees and expenses hereunder as agreed by the parties. Any entity succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without the execution or filing of any paper or further act. SECTION 8. Amendment-, Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate 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 5(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; (c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel,materially impair the interests of the Holders or Beneficial Owners of the Bonds; and (d) No duties of the Dissemination Agent hereunder shall be amended without its written consent thereto. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the District 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 District. 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(a), 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 C-4 DOCSSM6160v4124341.0002 ..................................................................................... ........... ............................................................ 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 Certificate shall be deemed to prevent the District from disseminating any other information,using the means of dissemination set forth in this Disclosure Certificate 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 Certificate. If the District 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 Certificate, the District shall have no obligation under this Certificate 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 District to comply with any provision of this Disclosure Certificate 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 District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 11. Duties Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The Dissemination Agent acts hereunder solely for the benefit of the District; this Disclosure Certificate shall confer no duties on the Dissemination Agent to the Participating Underwriter, the Holders and the Beneficial Owners. The District agrees to indemnify and save the Dissemination Agent, its 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 gross negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall have no liability for the failure to report any event or any financial information as to which the District has not provided an information report in format suitable for filing with the Repositories. The Dissemination Agent shall not be required to monitor or enforce the District's duty to comply with its continuing disclosure requirements hereunder. SECTION 12, Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District,the Dissemination Agent,the Participating underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: 2003 ACALANES UNION HIGH SCHOOL DISTRICT By: Superintendent C-5 DOCSSR36164v4\24341.0002 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of District: ACALANES UNION HIGH SCHOOL DISTRICT Name of Bond Issue: Election of 2002 General Obligation Bonds, Series A Date of Issuance: May_,2003 NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate relating to the Bonds. The District anticipates that the Annual Report will be filed by Dated: ACALANES UNION HIGH SCHOOL DISTRICT By. (form only• no si¢nature required) DOCSS R36160v4124341.0002 APPENDIX D ECONOMY OF THE DISTRICT AND CONTRA COSTA COUNTY The following information regarding economic activity within the various cities served by the District and the County in which the District is located is provided as background information only, to describe the general economic health of the region. However, the District encompasses a relatively small area within the County and the property tax required to be levied by the County to repay the Bonds will be levied only on property located in the District. Introduction The District serves the Cities of Lafayette and Orinda, the Town of Moraga approximately one- third of the City of Walnut Creek and certain surrounding unincorporated areas in Contra Costa County. Situated northeast of San Francisco, Contra Costa County is bounded by San Francisco Bay to the west, the San Pablo Bay and the Sacramento River delta to the north and by Alameda County on the south. Ranges of hills effectively divide Contra Costa County into three distinct regions. The western portion, with its access to water, contains much of Contra Costa's heavy industry. The central section is rapidly developing from a suburban area into a major commercial and financial headquarters center. The eastern part is also undergoing substantial change, from a rural, agricultural area,to a suburban region. Contra Costa County has extensive and varied transportation facilities - ports accessible to ocean-going vessels, railroads, freeways, and rapid transit lines connecting the area with Alameda County and San Francisca. Papulation The fallowing table summarizes population figures for the Cities of Lafayette, Orinda and Walnut Creek,the Town of Moraga and the County. CITY OF LAFAYETTE,CITY OF ORINDA,THE TOWN OF MORAGA, CITY OF WALNUT CREEK AND CONTRA COSTA COUNTY Population 1970,1980, 1990, 1998-2002 Year Ending City of Town of City of City of Contra Costa (January 1 Lafayette Moraga Orinda Walnut Creek Countv 1970 20,484 N/A N/A 39,844 557,500 1980 20,837 15,014 NIA 54,062 658,500 1990 23,366 15,987 16,642 60,569 803,732 1998 24,150 16,650 17,300 63,600 906,500 1999 24,450 16,850 17,500 64,500 924,400 2000 23,908 16,290 17,599 64,296 948,816 2001 24,150 16,450 17,800 65,600 965,100 2002 24,404 16,500 17,850 65,900 981,600 Source: 1970, 1980, 1990 and 2000 population data based upon U.S. Census Bureau statistics. The figures for 1998-1999 and 2001-2002 are based upon adjusted.January estimates provided by the State Department of Finance. D-1 DOC S S R 3 6160 v 412 43 41.0002 Income Effective buying income as reported in the annual publication "Survey of Buying Power„ published by Sales and Marketing Management, is defined as personal income less personal taxes and certain nontax payments. Personal income includes wages and salaries, other labor-related income (such as employer contributions to private pension funds) and certain other income (e.g., proprietor's income, rental income, dividends,personal interest income,pensions and welfare assistance). Deductions are then made for federal, state and local taxes, certain nontax payments(such as fines and penalties)and personal contributions to a retirement program. The following table summarizes historical median household effective buying income, for the City of Walnut Creek,County, State of California and United States. CITY OF WALNUT CREEK AND CONTRA COSTA COUNTY, STATE OF CALIFORNIA AND UNITED STATES OF AMERICA Median Household Effective Buying Income 1995-20010 Year City of Contra Costa State of United States Ending Walnut Creek Coun California of America 1995 $45,535 $45,119 $34,533 $32,238 1996 46,917 46,468 35,216 33,482 1997 49,277 48,476 36,483 34,618 1998 50,672 49,645 37,091 35,377 1999 52,056 53,234 39,977 37,233 2000 58,977 60,189 44,464 39,129 Source: "Survey of Buying Power", Sales&Marketing Management Magazine. Commercial Activity The following table summarizes historical taxable transactions in the Cities of Lafayette and Walnut Creek and the County. CITY OF LAFAYETTE,WALNUT CREEK AND CONTRA COSTA COUNTY Total Taxable Transactions (Dollars in Thousands) 1996-2000 City of Lafayette City of Walnut Creek Contra Costa County Year Outlets Taxable Transactions Outlets Taxable Transactions Outlets Taxable Transactions 1996 1,157 $162,800 2,591 $1,163,835 24,326 $8,575,704 1997 1,112 176,298 2,590 1,497,769 23,643 9,277,418 1998 1,081 182,261 2,530 1,747,401 23,093 10,093,690 1999 1,044 199,705 2,593 1,485,968 22,733 11,114,476 2000 1,015 209,801 2,481 1,671,753 22,674 12,330,560 Source: State Board of Equalization. D-2 DOC SS M6166v4124341.0002 Major Employers The following table summarizes the largest employers in Contra Costa County. CONTRA COSTA COUNTY Largest Employers Employer Product/Service Number of Employees SBC Telephone Services 11,800 U.S.Postal Service Postal Services 10,600 Contra Costa County(2) County Government 8,0g0 Safeway Supermarkets 8,000 Bank of America Banking 7,081 Chevron Companies Energy,Oil&Gas 6,586 Pacific Gas&Electric Gas&Electric Service 5,200 Kaiser Permanente Medical Center(2) Health Care 4,730 Lucky Stores Supermarkets 4,631 Wells Fargo&Co. Banking 4,000 AT&T Telecommunications 3,341 Longs Drug Stores(2) Retail Drug Stores 2,900 Western Contra Costa School District(2) K-12 Education 2,844 Mt.Diablo Unified School District{2) K-12 Education 2,502 .John Muir/Mt.Diablo Health System(2) Health Care 2,170 Contra Costa Newspapersf�1 Newspaper Publishing 1,417 Round Table Franchise Corp. Pizza Restaurants 1,230 Tosco Oil Refinery 1,200 Hill Physicians Med.Group Healthcare i,050 USS Posco Industries Steel Manufacturing 1,000 Shell Martinez Refining Co.(Equilon) Oil Refinery 930 I Source: companies;East Bay Business Times, November 2000;San Francisco Business Times;November 1999. Data is ,for the reported entity's latest fiscal year. (:)Headquartered in the County. Industry and Employment The following table summarizes historical employment and unemployment for the County. CONTRA COSTA COUNTY Civilian Labor Force,Employment and Unemployment Annual Averages 1997-2001 1997 1998 1999 2000 2001 Civilian Labor Force Employed 453,200 461,600 474,500 490,400 493,100 Unemployed 19,600 17,30Q 14,80Q 13,700 16,700 Total 472,800 479,000 489,300 504,100 509,800 Unemployment Rate(l) 4.1% 3.6% 3.0% 2.7% 3.3% "The unemployment rate is calculated using unrounded data. Source: California Employment Development Department,Labor Market Information Division. D-3 DOCSSR36160v4124341.0002 The fallowing table summarizes the historical numbers of workers by industry in Contra Costa County. CONTRA COSTA COUNTY Estimated Number of Wage and Salary Workers by Industry* (Amounts in Thousands) 1997-2401 1997 1998 1999 2000 2001 Agriculture 1,100 900 1,300 2,200 2,400 Mining 1,700 1,600 2,100 1,700 1,600 Construction 20,400 21,700 24,200 26,300 28,200 Manufacturing 26,000 25,600 24,400 25,400 25,500 Transportation&Public Utilities 20,400 20,100 19,900 20,500 20,800 Wholesale Trade 11,300 11,000 12,100 12,300 12,200 Retail Trade 57,400 59,200 60,600 62,000 62,200 Finance,Insurance&Real Estate 27,900 28,100 28,500 28,400 30,100 Services 98,900 103,800 106,300 109,800 109,900 Government 45,600 45,500 47,200 48,200 49,600 Total All Industries 310,800 317,600 326,600 336,600 342,300 Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households, and persons involved in labor/management trade disputes. Employment reported by place of work. Items may not add to totals due to independent rounding. March 2001 benchmark. Source: California Employment Development Department,Labor Market Information Division. Construction Activity The following table summarizes historical building permit valuation for the County. CONTRA COSTA COUNTY Building Permit Valuation (Dollars in Thousands) 1997-2001 Year Ending Residential Non-Residential (January 1) Residential Units Valuation Valuation Total Valuation 1997 3,514 $750,109 $327,251 $1,077,361 1998 4,249 881,328 241,880 1,123,209 1999 4,589 1,063,314 332,044 1,395,358 2000 5,639 1,224,484 480,270 1,704,754 2001 5,136 1,170,610 524,975 1,695,585 Source: Construction Industry Research Board. D-4 DOC S S F\36160v4\24341.0002 _ _ __ APPENDIX E FORM OF MUNICIPAL BOND INSURANCE POLICY E-1 DOCSSR36160v4\24341.0002 APPENDIX F BOOK-ENTRY ONLY SYSTEM General The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy or completeness thereof. The District cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a)payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or(c)redemption or other notices sent to DTC or Cede& Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current"Rules"applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file 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 corporation" 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 and provides asset servicing for over 2 million issues of U.S. and non- U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants("Direct Participants")deposit with DTC.DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities,through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations,and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTC-C"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (respectively, "NSCC," "LSCC," "MBSCC," and "EMCC," also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial towner") 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. Beneficial Owners are,however, 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 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on F-1 DOCSSF06160v4l24341.0002 ...............................................................................................................................................................................................................- ............................-1-1. 1................I -....... ....................................................................... behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds,except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede& Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect 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. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices will be sent to DTC. The conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC 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. Any failure of DTC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Bonds called for redemption or of any other action premised on such notice. Redemption of portions of the Bonds by the District will reduce the outstanding principal amount of Bonds held by DTC. In such event,DTC will implement, through its book-entry system, a redemption by lot of interests in the Bonds held for the account of DTC Participants in accordance with its own rules or other agreements with DTC Participants and then DTC Participants and Indirect Participants will implement a redemption of the Bonds for the Beneficial Owners. Any such selection of Bonds to be redeemed will not be governed by the Indenture and will not be conducted by the District or the Paying Agent. Neither DTC nor Cede& Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures.Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of, premium, if any, and interest evidenced by the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the District or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. 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 (nor its nominee), the Paying Agent, the Underwriter or the District, subject to any F-2 DOCSSR36160v4\24341.0002 ...........I...... ....... .............................................................................................-..........I......... ...................... ................. statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the Bonds to Cede & Co. {or such other nominee as may be requested by an authorized representative of DTC} is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. NEITHER THE DISTRICT, THE UNDERWRITER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR PREPAYMENT. Neither the District, the Underwriter nor the Paying Agent can give any assurances that DTC, DTC Participants,Indirect Participants or others will distribute payments of principal of,premium,if any, and interest on the Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District, the Underwriter or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained,security certificates are required to be printed and delivered. SO LONG AS CEDE& CO. IS THE REGISTERED OWNER OF THE BONDS,AS NOMINEE OF DTC, REFERENCES HEREIN TO THE OWNERS OR HOLDERS OF THE BONDS (OTHER THAN UNDER THE CAPTION"TAX MATTERS"HEREIN)WILL MEAN CEDE&CO.AND WILL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS. The foregoing description concerning DTC and DTC's book entry system is based solely on information provided by DTC, which the District believes to be reliable, but the District takes no responsibility for the accuracy thereof and no representation is made herein as to the accuracy or completeness of such information. BENEFICIAL OWNERS WILL NOT RECEIVE PHYSICAL DELIVERY OF BONDS AND WILL NOT BE RECOGNIZED BY THE PAYING AGENT AS OWNERS THEREOF UNDER THE TERMS OF THE BOARD RESOLUTION, AND BENEFICIAL OWNERS WILL BE PERMITTED TO EXERCISE THE RIGHTS OF OWNERS ONLY INDIRECTLY THROUGH DTC AND THE PARTICIPANTS. THE DISTRICT WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO DTC PARTICIPANTS OR THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS. F-3 DOCSSR36164v4i24341.0002 APPENDIX G BUND YIELD ACCRETED VALUE TABLES G-1 DOCSSF\36164v4\24341 M02 VY ACALANES UNION HIGH SCHOOL DISTRICT 2003 Gyral Obligation Bond Issuance —Fkmcing Tem (as of February 18,2003) ISVER Acalanes Unite High School District FAX (925)932-2336 1212 Pleasant74549 H�ASG Ra oad Lafaye tte,CA Dr.Randall Olson (925)935-2800 Superintendent dent rolson@acalanes.kJa.ea.us Mr. Chris Learned (925)935-2800 Assistant Superintendent,Business Services cleamed a7@acalanes.V 2.ea.us Bf)lYD+COUNSEL Strafing,Yocca,Carlson,&Rauth FAX (415)283-2255 44 Montgomery Street, Suite 4200 San Francisco, CA 94104 Mr. David Casnocha,Esq. (415)283-2241 d=nocha@syer.com Mr.Ray Amanquah, Esti. (415)283.2249 ramanquah a@sycr.com UNDER MIER U.S.Bancorp Piper Jafray Inc. FAX (310)406-1955 1235 Henosa,Avenue, Suite 300 Hexinm Beach,California 40254 Mr.Gene M.Yee (800)876-1854 M,anaging Director (310)406-1950 eye'e@a pjc.cam Mr. Mark J. Farrell (310)406-1947 Associate mark farrell ,jc.com Mr.Tony R.Hsieh (310)406-1946 Awlyst ahsieh@pjc.com DMSSP36190v1124341.0002 __ ___ _ ............................................................................................................................................................................................ .................................... C9NTRA,COaA —$NEERVIDRS jCOOMRQAMO F 651 Pine Stred,Room 106 FAX (925)335-1908 Martinez,CA 94553 Laura Lockwood (925)335-1093 Director of Capital Facilities and Debt Management llock@cao co.contra-costa.ca.us Gina Martin (925)335-1908 Chief Clerk of the Board gmart@cobxo.contra-costa.ca.us ,COJ�UA CQUA MNTY TREA A M IQOLLECT 625 Court Street,Room 102 FAX (925)646-2509 Martinez,CA 94553-1282 Clarissa Javier (925)6464115 Assistant Treasurer cjaW@Vaxco.contra-cosiaca.us CO NTRA COVNTY A ONIRO LER -C Property Tax Division FAX (925)646-2649 625 Court Street,Room 103 Marfi=,CA 94553-1282 Paul Abelson (925)646-2233 Chief Accountant PAbel@ac.co.contra-costa.ca,us Leslie Williams Frankiewich (925)646-2225 Accountant LFran@ac.co.contra-costa.ca.us CONTRA CC&U CQUNTY COUNSEL 651 Pine Street�,99'Floor FAX (925)646-1078 Martinez,CA 94553 Mazy Ann Mason (925)335-1800 mmaw@ccxo.contra-costacaus PAYING AGENT U.S. Bank N.A. FAX (415)2734590 One California.Street, Suite 2550 San Francisco,California 94111 Leticia Sabiniano (415)2734512 Assistant Vice President leticia.sabinianogusbank com D=&Fa6I9GvI\24341.0002 ............ ......I........ ...........................................................................................I......... ............................................................................................................... ........................................ 4. TBA RAT—ING AGENCY Standard and Poor's FAX (212)438-2156 55 Water Suva 38d'Floor New York,NY 10041 Sussan Corson (212)438-2014 sussan—corson@,sandp.com Ed McGlade (212)438-2061 FAX (212)438-2131 edward_mcglade@,sandp.com Moody's Investor Service FAX (415)274-1717 3 Ebarcardero Center,Suite 1920 San Francisco, CA 94111 Sigrid Nubia (415)274-1741 sigrid nublagmoodys.com DOCSSR36190vV24341.0002 ...............I........... ................................................................ ............................................................... ..........................................................