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HomeMy WebLinkAboutMINUTES - 02062007 - SD.5 TO: BOARD OF SUPERVISORS .... Contra .; FROM: JOHN CULLEN, COUNTY ADMINISTRATOR Costa a DATE: FEBRUARY 6, 2007 ODSrA- ICountySUBJECT: 2007 SERIES A and 2007 SERIES B LEASE OJ � REVENUE BONDS S J SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. HEARING, pursuant to Section 6586.5 of the Government Code of the State of California, in connection with plans by the County of Contra Costa Public Financing Authority to issue not to exceed $270 million of its Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A, and Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (collectively, the "Bonds"). 2. ADOPT Resolution number 2007/47, approving the issuance in an aggregate principal amount not to exceed $270 million in additional Lease Revenue Bonds by the County of Contra Costa Public Financing Authority to finance and refinance various capital projects, to prepay and defease the County's Certificates of Participation (Contra Costa County Regional Medical Center/Merrithew Memorial hospital replacement project) refunding Series of 1997 and the County's Certificates of Participation (capital projects program), Series of 1997, authorizing the forms of and directing the execution and delivery of a sixth supplemental trust agreement, a seventh supplemental trust agreement, a sixth amendment to facility lease, a sixth amendment to master site lease, the form of Official Statement and other related financing documents; and AUTHORIZING taking of necessary actions and execution of necessary documents in connection therewith; and 3. ADOPT, as the Governing Board of the County of Contra Costa Public Financing Authority, Resolution number 2007/48, approving the issuance in an aggregate principal amount not to exceed $270 million in additional lease revenue bonds by the County of Contra Costa Public Financing Authority to finance and refinance various capital projects, to prepay and defease the County's Certificates of Participation (Contra Costa County Regional Medical Center/Merrithew Memorial hospital replacement project) refunding Series of 1997 and the County's Certificates of Participation (capital projects program), Series of 1997, authorizing the forms of and directing the execution and delivery of a sixth supplemental trust agreement, a seventh supplemental trust agreement, a sixth amendment to facility lease, a sixth amendment to master site lease and other related financing documents; and AUTHORIZING taking of necessary actions and execution of necessary documents in connection therewith. CONTINUED ON ATTACHMENT: X YES ----------- - - -SIGNATURE_-- -------- - ---------- ------------------------------------------------- - -- RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BO D COMMITTEE APPROVE OTHER SIGNATURE(S): -----------------------------------------� --------------------- -------------------------------------------- rr ----- --------------------- ACTION OF BOARD ON ll,/� APPROVE AS- RECOMMENDED VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE n AND CORRECT COPY OF AN ACTION TAKEN UNANIMOUS(ABSENT AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: n ATTESTED oC SCJ 7 CONTACT: Lisa Driscoll 335-1023 JOHN CULLEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: Lisa Driscoll,County Administration Bill Pollacek,Treasurer-Tax Collector Steve Ybarra,Auditor-Controller Dennis Barry,Community Development BY UTY Board of Supervisors 2007 Series A & B LRB February 6, 2007 FISCAL IMPACT Estimated costs and sources of funding for the projects to be financed have been previously approved by the Board of Supervisors and meet,the County's newly established Debt Management Policy. Amortization term is a maximum of 20 years with level debt/level savings. The aggregate principal amount for 2007 Series A is $116,105,000 and $109,175,000 for 2007 Series B. Sources and uses of bond proceeds for new projects, included in 2007 Series A, are currently estimated at$32.35 million from Bond proceeds and $16.80 million from other sources of revenue (listed below). BACKGROUND The 2007 Series A issue will provide new money for all or a portion of the cost of the following capital improvements and refunding projects including, but not limited to, the acquisition, construction, improvement, and/or equipping of: Series A Projects Source of Debt Service Approximate Funds Financed Cost Clerk-Recorder Building Rent savings 7,800,000 555 Escobar Street, Mtz District Attorney Building Combination of rent savings, 15,250,000 950 Ward Street, Mtz Criminal Justice Construction Funds, and reduction of staff due to consolidation Public Works Addition Use fees 5,000,000 255 Glacier Drive, Mtz Pittsburg Health Center State& Federal reimbursement 2,100,000 2311 Loveridge Road Concord Health Center Rent savings 2,200,000 2948&3052 Willow Pass Road $32,350,000 And advance refund a portion of the 2001 Series A & B, 2002 Series A and 2003 Series A lease revenue bonds; and will current refund the 1997 Certificates of Participation (Capital Projects Program). The 2007 Series B issue will current refund the 1997 Certificates of Participation for Contra Costa Regional Medical Center(Merrithew Memorial Hospital Replacement project) on a forward basis. The sale date of both of these Series is February 22, 2007 with a delivery date of March 14 and August 2, 2007 respectively. r BOARD OF DIRECTORS OF THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY RESOLUTION NO. 2007/48 RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF ADDITIONAL LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES A AND 2007 SERIES B IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED .$270,000,000 TO FINANCE AND REFINANCE VARIOUS CAPITAL PROJECTS, TO PREPAY AND DEFEASE THE COUNTY OF CONTRA COSTA CERTIFICATES OF PARTICIPATION (MERRITHEW MEMORIAL HOSPITAL REPLACEMENT PROJECT) REFUNDING SERIES OF 1997 AND THE COUNTY OF CONTRA COSTA CERTIFICATES OF PARTICIPATION (CAPITAL PROJECTS PROGRAM), SERIES OF 1997, AUTHORIZING THE FORMS OF AND DIRECTING THE EXECUTION AND DELIVERY OF A SIXTH SUPPLEMENTAL TRUST AGREEMENT, A SEVENTH SUPPLEMENTAL TRUST AGREEMENT, A SIXTH AMENDMENT TO FACILITY LEASE, A SIXTH AMENDMENT TO MASTER SITE LEASE AND RELATED FINANCING DOCUMENTS; AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OF NECESSARY DOCUMENTS IN CONNECTION THEREWITH WHEREAS, the County of Contra Costa (the "County") and the Contra Costa County Redevelopment Agency (the "Agency") have heretofore entered into a Joint Exercise of Powers Agreement, dated as of April 7, 1992 (the "Joint Powers Agreement"), which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority (the "Authority"); WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act") and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; WHEREAS, the Authority and U.S. Bank Trust National Association (predecessor to The Bank of New York Trust Company, N.A.) previously entered into a Trust Agreement, dated as of February 1, 1999 (as previously amended and supplemented, the "Trust Agreement"), in order to finance and refinance capital projects for the County, which Trust Agreement calls for the issuance of the Bonds (defined below) in one.or more series pursuant to supplemental trust agreements; WHEREAS, pursuant to the Trust Agreement, the Authority has heretofore issued $74,685,000 of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999 Series, A Bonds"), $18,030,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds"), $23,775,000 of OHS WEST:260146116.4 1 the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"), $12,650,000 of the Authority's Lease Revenue Bonds (Various Capital Projects); 2002 Series A (the "2002 Series A Bonds"), $25,400,000 of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B (the "2002 Series B Bonds") and $18,500,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2003 Series A (the "2003 Series A Bonds" and, collectively with the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds, the 2002 Series A Bonds and the 2002 Series B Bonds,the"Prior Bonds"); WHEREAS, following a public hearing the Board of Supervisors has determined that it is in the best interest of the County for the Authority to assist the County in financing all or a portion of the cost of various additional capital projects, including, but not limited to, the acquisition, construction, improvement, and/or equipping of: , Approximate Project Financed Cost Clerk-Recorder Building, 555 Escobar Street $ 7,800,000 District Attorney Building, 950 Ward Street 15,250,000 Public Works Building, 255 Glacier Drive 5,000,000 Pittsburg Health Center, Pittsburg 2,100,000 Concord Health Center, 2948 and 3052 Willow Pass Road, Concord 2,200,000 $32,350,000 (collectively, the"2007 Series A Project"); WHEREAS, First Trust of California, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "1997 Trustee") executed and delivered $34,910,000 aggregate principal amount of Certificates of Participation (Capital Projects Program), Series of 1997 (the "1997 Certificates")pursuant to a Trust Agreement, dated as of August 1, 1997, by and among the County, the. Authority and the 1997 Trustee for the purpose of financing the acquisition of certain additional capital improvements and refunding the Certificates of Participation (1991 County Buildings Acquisition Project), which financed the costs of the acquisition and improvement of certain county administration facilities; WHEREAS, the County has requested and approved the Authority's issuance of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "Series A Bonds") in an amount sufficient to finance the 2007 Series A Project, refund and defease a portion of the Prior Bonds, prepay all of the outstanding 1997 Certificates, fund bond reserves and pay related costs; WHEREAS, $125,584,011.80 aggregate principal amount of Certificates of Participation (Merrithew Memorial Hospital Replacement Project), Series of 1992 (the "1992 Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of May 1, OHS WEST:260146116.4 2 1992, by and among the County, the Contra Costa County Public Facilities Corporation (the "Corporation") and U.S. Trust Company of California, N.A. (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "Merrithew Trustee"), for the purpose of financing the construction, acquisition and equipping of the Merrithew Memorial Hospital, now known as the Contra Costa Regional Medical Center(the "Medical Center"); WHEREAS, $145,340,000 aggregate principal amount of County of Contra Costa Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates") were executed and delivered pursuant to a First Supplemental Trust Agreement, dated as of February 1, 1997, by and among the County, the Corporation and the Merrithew Trustee, for the purpose of refunding and defeasing the outstanding 1992 Certificates; WHEREAS, the County has requested and approved the Authority's issuance of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding' and Various Capital Projects), 2007 Series B (the "Series B Bonds") in an amount sufficient, on a forward delivery basis, to prepay and defease the outstanding Merrithew Certificates, fund bond reserves and pay related costs, including the expenditure of incrementally generated proceeds on additional capital projects; WHEREAS, in accordance with the requirements of Section 6586.5 of the Act, a public hearing regarding the financing proposed herein was conducted by the County on February 6, 2007; WHEREAS, notice of such hearing was published at least five days prior to such hearing in a newspaper of general circulation in the County; WHEREAS, it is further proposed that the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the "Trustee"), enter into a sixth supplemental trust agreement (the "Sixth Supplemental Trust Agreement") and a seventh supplemental trust agreement (the "Seventh Supplemental Trust Agreement"), each acknowledged by the County, which will supplement and amend the Trust Agreement and authorize the Authority to issue not to exceed $145,000,000 aggregate principal amount of the Series A Bonds and not to exceed $125,000,000 aggregate principal amount of the Series B Bonds (collectively, the "Bonds"), on a parity with the Prior Bonds; WHEREAS, it is proposed that the Authority enter into a Sixth Amendment to Master Site Lease (the ."Sixth Amendment to Site Lease") pursuant to which the County will lease the Martinez Health Center and the Juvenile Detention Facility (collectively the "2007 Series A Facilities") and the Medical Center (the "2007 Series B Facilities") to the Authority, such leased facilities to be in addition to the facilities, including any additions and improvements thereto, currently leased under the Master Site Lease, dated as of February 1, 1999, as amended, between the County and the Authority; WHEREAS, it is proposed that the Authority enter into a Sixth Amendment to Facility Lease (the "Sixth Amendment to Facility Lease") pursuant to which it will lease back the 2007 Series A Facilities and the 2007 Series B Facilities to the County in addition to the OHS WEST:260W116.4 3 facilities, including any additions and improvements thereto, currently leased pursuant to the Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, between the Authority and the County; WHEREAS, under the Sixth Amendment to Facility Lease, the County would be obligated to make additional base rental payments to the Authority which the-Authority will use to pay debt service on the Bonds; WHEREAS, it is proposed that the Authority and the County enter into a Bond Purchase Contract for the Series A Bonds (the "Bond Purchase Contract") with Citigroup Global Markets Inc., as representative of the underwriters (the"Underwriters"); WHEREAS, it is proposed that the Authority and the County enter into a Forward Delivery Bond Purchase Contract for the Series B Bonds (the "Forward Delivery Bond Purchase Contract") with the Underwriters; WHEREAS, it is proposed that the Authority enter into an Escrow Agreement (the "Escrow Agreement") with respect to the refunding of a portion of the Prior Bonds with The Bank of New York Trust Company,N.A.;as escrow agent(the"Escrow Agent"); WHEREAS, Tamalpais Advisors, Inc., is serving as financial advisor (the "Financial Advisor") to the County and the Authority and Orrick, Herrington & Sutcliffe LLP is serving as bond counsel ("Bond Counsel") to the Authority and Lofton & Jennings is serving as disclosure counsel ("Disclosure Counsel") to the County and the Authority in connection with the financing; WHEREAS, the Underwriters, the Financial Advisor, Bond Counsel and Disclosure Counsel have assisted the Authority and the County in the preparation of an Official Statement describing the Bonds (the "Official Statement") which will be distributed by the Underwriters in preliminary form (the "Preliminary Official Statement') to potential purchasers of the Bonds and in final form to actual purchasers of the Bonds; WHEREAS, this Board has been presented with the form of each document referred to herein relating to the Bonds, and the Board has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; WHEREAS, the Authority has full legal right, power and authority under the laws of the State of California to enter into the transactions hereinafter authorized; and WHEREAS, the Authority expects to finance the 2007 Series A Project and to refund a portion of the Prior Bonds, the outstanding 1997 Certificates and the outstanding Merrithew Certificates on a tax-exempt basis; OHS WEST:260146116.4 4 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the County of Contra Costa Public Financing Authority, as follows: Section 1. The foregoing recitals are true and correct and this Board so finds and determines: Section 2. The issuance and sale of the Bonds by the Authority, in an aggregate principal amount of not to exceed $270,000,000 for, the refunding of a portion of the Prior Bonds, the outstanding 1997 Certificates and the outstanding Merrithew Certificates, the financing of the 2007 Series A Project, the funding of bond reserves and.the payment of related costs is hereby authorized and approved. Section 3. The form of Sixth Amendment to Site Lease, on file with the Secretary of the Board of Directors, is hereby approved, and the Chair of the Board of Directors or the Vice Chair of the Board of Directors or the Executive Director of the Authority or the Assistant Executive Director of the Authority and the Secretary of the Board of Directors (the "Secretary") or any Assistant Secretary of the Board of Directors or any designee of such officials (the "Authorized Signatories") are hereby authorized and directed to execute and deliver the Amendment to Site Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof, provided, however, that the term thereof shall not exceed June 15, 2028. Section 4. The form of Sixth Amendment to Facility Lease, on file with the Secretary, is hereby approved, and any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Amendment to Facility Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made to such Amendment to Facility Lease are such changes as are necessary in the event the Executive Director or the Assistant Executive Director, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy and/or a reserve facility for the Bonds. Section 5. The form of Sixth Supplemental Trust Agreement on file with the Secretary, is hereby approved. Any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Sixth Supplemental Trust Agreement in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made to such Sixth Supplemental Trust Agreement are such changes as are necessary in the event the Executive Director or the Assistant Executive Director, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy and/or a reserve facility for the Bonds. Section 6. The form of Seventh Supplemental Trust Agreement on file with the Secretary, is hereby approved. Any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Seventh Supplemental Trust Agreement in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to OHS WEST:260146116,4 5 be made to such Seventh Supplemental Trust Agreement are such changes as are necessary in the event the Executive. Director or the Assistant Executive Director, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy and/or a reserve facility for the Bonds. Section 7.-The form of Bond Purchase Contract on file with the Secretary of the Authority and incorporated into this Resolution by reference, is hereby approved. The Authorized Signatories of the Authority are hereby authorized and directed,jointly and severally, for and in the name and on behalf of the Authority, to accept the offer of the Underwriters to .purchase the Bonds as reflected in the Bond Purchase Contract; and to execute and deliver the Bond Purchase Contract in substantially the form on file with the Secretary of the Authority, with such additions, deletions or changes therein as such officer determines are necessary or appropriate and are approved by such officer, such approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Contract; provided, that the interest rate on the Bonds shall not exceed a true interest cost of six percent (6%) per annum and the underwriting discount (excluding any original issue discount) shall not exceed one percent (1%) of the principal amount of Series A Bonds. Section 8. The form of Forward Delivery Bond Purchase Contract, on file with the Secretary of the Authority and incorporated into this Resolution by reference, is hereby approved. The Authorized Signatories of the Authority are hereby authorized and directed, jointly and severally, for and in the name and on behalf of the Authority, to accept the offer of the Underwriters to purchase the Bonds as reflected in the Forward Delivery Bond Purchase Contract; and to execute and deliver the Bond Purchase Contract in substantially the form on file with the Secretary of the Authority, with such additions, deletions or changes therein as such officer determines are necessary or appropriate and are approved by such officer, such approval to be conclusively evidenced by the execution thereof; provided, that the interest rate on the Series B Bonds shall not exceed a true interest cost of six percent (6%) per annum, and the underwriting discount (excluding any original issue discount) shall not exceed one percent (1%) of the principal amount of Series B Bonds. Section 9. The form of Escrow Agreement, by and between the Authority and the Escrow Agent, on file with the Secretary, is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver the Escrow Agreement in substantially said form sufficient to legally defease the refunded portion of the Prior Bonds, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 10. The form of Preliminary Official Statement describing the Bonds, on file with the Secretary, is hereby approved and the Executive Director or his designee, is hereby authorized and directed to execute and deliver a final Official Statement in substantially said form with such additions, corrections and revisions as may be determined to be necessary or desirable by the Financial Advisor, Bond Counsel, Disclosure Counsel or the County Counsel's Office. The Underwriters are hereby directed to distribute copies of the Official Statement to all actual purchasers of the Bonds. Distribution by the Underwriters of a Preliminary Official Statement relating to the Bonds is hereby approved and the Executive Director or his designee, is hereby authorized and directed to execute a certificate confirming that the Preliminary Official OHS WEST:260146116.4 6 Statement has been "deemed final by the Authority for purposes of Securities and Exchange Commission Rule 15c2-12. Section 11. The Authority acknowledges and relies upon the fact that the County has represented that it shall execute a Continuing Disclosure Agreement containing .such covenants of the County as shall be necessary to allow the underwriters of the Bonds to comply with the requirements of Securities and Exchange Commission Rule 15c2-12. The Authority acknowledges and relies upon the fact that the County has covenanted that it will comply with and carry out all of the provisions of such Continuing Disclosure Agreement. Section 12. The Board hereby authorizes the Executive Director or the Deputy Executive Director to enter into one or more investment agreements (each an "Investment Agreement") providing for the investment of moneys in the funds and accounts created under the Trust Agreement or the Escrow Agreement, or the amendment or modification of existing investment agreements relating to the Prior Bonds or the 1997 Certificates, as the Executive Director or the Deputy Executive Director deems appropriate (collectively, the "Investment Agreements"). The Board hereby finds and determines pursuant to Government Code section 5922, that the Investment Agreements will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to the Investment Agreements. The Executive Director or the Deputy Executive Director is hereby authorized and directed to execute and deliver the Investment Agreements and any other related agreement or agreements on behalf of the Authority as may be approved by the Executive Director or the Deputy Executive Director such approval to be conclusively evidence by the execution and delivery of such agreement or agreements. Any termination amounts required to be paid by the Authority with respect to the Investment Agreement shall be paid from amounts invested pursuant thereto or otherwise made available therefor. Section 13. The officers of the Authority are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in . order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including, but not limited to, executing and delivering documents related to lease terminations, title clarifications, property acceptances, signature certificates, no-litigation certificates, tax and rebate certificates and certificates concerning the contents of the Official Statement distributed in connection with the sale of the Bonds. The Authorized Signatories and the Senior Deputy County Administrator/Debt Manager of the County on behalf of the Authority are hereby authorized and directed to execute and deliver any and all certificates, instructions as to investments, written requests and other certificates necessary and desirable to administer the Bonds and the Trust Agreement or other documents authorized hereunder including executing Written Requests of the Authority authorizing disbursements from the Costs of Issuance Fund for payment of cost of issuance such as legal and financial advisor fees, trustee's fees, title insurance and bond insurance premiums, publication and printing costs, rating agency fees and similar expenses of the bond financing. Section 14. All actions heretofore taken by the officers and agents of the Authority with respect to the issuance and sale of the Bonds are hereby approved and confirmed. OHS WEST:260146116.4 7 Section 15. This Resolution shall take effect from and after its date of adoption. PASSED AND ADOPTED this 6th da e ruary, 2007. Chair of the Board of Directors County of Contra Costa Public Financing Authority ATTEST: i Deputy Clerk OHS WEST:260146116.4 8 CLERK'S CERTIFICATE The undersigned, Deputy Clerk of the Board of Directors of the County of Contra Costa Public Financing Authority, hereby certifies as follows: The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the Board of Directors of said Authority duly and regularly held at the regular meeting place thereof on the 6th day of February, 2007, of which meeting all of the members of said Board of Directors had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following vote: Ayes: Gioia,Uilkema,Bonilla, Glover and Piepho Noes: None An agenda of said meeting was posted at least 96 hours before said meeting at the County Administration Building, 651 Pine Street, Martinez, California, a location freely accessible to members of the public, and a brief general description of said resolution appeared .on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand this 6th day of February, 2007. [Seal] Deputy Clerk OHS WEST:260146116.4 BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA RESOLUTION NO. 2007/47 RESOLUTION APPROVING THE ISSUANCE BY THE COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY OF ADDITIONAL LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES A AND (MEDICAL CENTER REFUNDING) 2007 SERIES B IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $270,000,000 TO FINANCE AND REFINANCE VARIOUS CAPITAL PROJECTS, TO PREPAY AND DEFEASE THE COUNTY'S CERTIFICATES OF PARTICIPATION (MERRITHEW MEMORIAL HOSPITAL REPLACEMENT PROJECT) REFUNDING SERIES OF 1997 AND THE COUNTY'S CERTIFICATES OF PARTICIPATION (CAPITAL PROJECTS PROGRAM), SERIES OF 1997, AUTHORIZING THE FORMS OF AND DIRECTING THE EXECUTION AND DELIVERY OF A SIXTH SUPPLEMENTAL TRUST AGREEMENT, A SEVENTH SUPPLEMENTAL TRUST AGREEMENT, A'SIXTH AMENDMENT TO FACILITY LEASE, A SIXTH AMENDMENT TO MASTER " SITE LEASE AND RELATED FINANCING DOCUMENTS; AND AUTHORIZING TAKING OF NECESSARY ACTIONS AND EXECUTION OFNECESSARY DOCUMENTS IN CONNECTION THEREWITH WHEREAS, the County of Contra Costa (the "County') and the Contra Costa County Redevelopment Agency (the "Agency") have heretofore entered into a Joint Exercise of Powers Agreement, dated as of April 7, 1992 (the "Joint Powers Agreement"), which Joint Powers Agreement creates and establishes the County of Contra Costa Public Financing Authority (the "Authority'); WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act") and the Joint Powers Agreement, the Authority is authorized to issue bonds for financing public capital improvements whenever there are significant public benefits; WHEREAS, the Authority and U.S. Bank Trust National Association (predecessor to The Bank of New York Trust Company, N.A.) previously entered into a Trust Agreement, dated as of February 1, 1999 (as previously amended and supplemented, the "Trust Agreement"), in order,to finance and refinance capital projects for the County, which Trust Agreement calls for the issuance of the bonds in one or more series pursuant to supplemental trust agreements; WHEREAS, pursuant to the Trust Agreement, the Authority has heretofore issued $74,685,000 of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999 Series A Bonds"), $18,030,000 of the Authority's Lease Revenue OHS WEST:260146111.4 1 Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds"), $23,775,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"), $12,650,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2002 Series A (the "2002 Series A Bonds"), $25,440,000 of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B (the "2002 Series B Bonds") and $18,500,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2003 Series A (the "2003 Series A Bonds" and, collectively with the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds, the 2002 Series A Bonds and the 2002 Series B Bonds, the "Prior Bonds"); WHEREAS, this Board of Supervisors hereby determines that there are significant public benefits and it furthers the public purpose of the Authority to assist the County in financing all or a portion,of the cost of various additional capital projects, including, but not limited to, the acquisition, construction, improvement, and/or equipping of: Approximate Project Financed Cost Clerk-Recorder Building, 555 Escobar Street _ $ 7,800,000 District Attorney Building, 950 Ward Street 15,250,000 Public Works Addition, 255 Glacier Drive 5,000,000 Pittsburg Health Center, Pittsburg 2,100,000 Concord Health Center, 2948 and 3052 Willow Pass Road, Concord 2,200,000 $32,350,000 (collectively, the "2007 Series A Project"); WHEREAS, First Trust of California, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "1997 Trustee") executed and delivered $34,910,000aggregate principal amount of Certificates of Participation (Capital Projects Program), Series of 1997 (the "1997 Certificates") pursuant to a Trust Agreement, dated as of August 1, 1997, by and among the County, the Authority and the 1997 Trustee for the purpose of financing the acquisition of certain additional capital improvements and refunding the Certificates of Participation (1991 County Buildings Acquisition Project), which financed the costs of the acquisition and improvement of certain county administration facilities; WHEREAS, the County desires to request and approve the Authority's issuance of County of.Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "Series A Bonds") in an amount sufficient to finance the 2007 Series A Project, refund and defease a portion of the Prior Bonds, prepay all of the outstanding 1997 Certificates, fund bond reserves and pay related costs; WHEREAS, $125,584,011.80 aggregate principal amount of Certificates of Participation (Merrithew Memorial Hospital Replacement Project), Series of 1992 (the "1992 OHS WEST:260146111.4 2 Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of May 1, 1992, by and among the County, the Contra Costa County Public Facilities Corporation (the "Corporation") and U.S. Trust Company of California, N.A. (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "Merrithew Trustee"), for the purpose of financing the construction, acquisition and equipping of the Merrithew Memorial Hospital, now known as the Contra Costa Regional Medical Center(the"Medical Center"); WHEREAS, $145,340,000 aggregate principal amount of County of Contra Costa Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates") were executed and delivered-pursuant to a First Supplemental Trust Agreement, dated as of February 1, 1997, by and among the County, the Corporation and the Merrithew Trustee, for the purpose of refunding and defeasing the outstanding 1992 Certificates; WHEREAS, the County desires to request and approve the Authority's issuance of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "Series B Bonds") in an amount sufficient, on a forward delivery basis, to prepay and defease the outstanding Merrithew Certificates and pay related costs, including the expenditure of incrementally generated proceeds on additional capital projects; WHEREAS, in accordance with the requirements of Section 6586.5 of the Act, a public hearing regarding the financing proposed herein was conducted by the County on February 6, 2007;- WHEREAS, 007;WHEREAS, notice of such hearing was published at least five days prior to such hearing in a newspaper of general circulation in the County; WHEREAS, it is further proposed that the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the "Trustee"), enter into a sixth supplemental trust agreement (the "Sixth Supplemental Trust Agreement") and a seventh supplemental trust agreement (the "Seventh Supplemental Trust Agreement"), each acknowledged by the County, which will further supplement and amend the Trust Agreement and, pursuant to the Trust Agreement as so supplemented, the Authority will issue not to exceed $145,000,000 aggregate principal amount of the Series A Bonds and not to exceed $125,000,000 aggregate principal amount of the Series B Bonds (collectively,the"Bonds") on a parity with the Prior Bonds; WHEREAS, it is proposed that the County enter into a Sixth Amendment to Master Site Lease (the "Sixth Amendment to Site Lease") pursuant to which it will lease the Martinez Health Center and the Juvenile Detention Facility (collectively "2007 Series A Facilities") and the Medical Center (the "2007 Series B Facilities"), to the Authority, such leased facilities to be in addition to the facilities, including any additions and improvements thereto, currently leased under the Master Site Lease, dated as of February 1, 1999, as amended, between the County and the Authority; WHEREAS, it is proposed that the County enter into a Sixth Amendment to Facility Lease (the "Sixth Amendment to Facility Lease") pursuant to which it will lease back the 2007 Series A Facilities and the 2007 Series B Facilities from the Authority in addition to the OHS WEST:260146111.4 3 facilities, including any additions and improvements thereto, currently leased pursuant to the Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, between the Authority and the County; WHEREAS, under the Sixth Amendment to Facility Lease, the County would be obligated to make additional base rental payments to the Authority which the Authority will use to pay debt service on the Bonds; WHEREAS, it is proposed that the County and the Authority enter into a Bond Purchase Contract for the Series A Bonds (the `Bond;Purchase Contract") with Citigroup Global Markets Inc., as representative of the underwriters (the"Underwriters"); WHEREAS, it is proposed that the Authority and the County enter into a Forward Delivery Bond Purchase Contract for the Series B Bonds (the "Forward Delivery Bond Purchase Contract") with the Underwriters; WHEREAS, it is proposed that the County enter into two separate Escrow Agreements (each an "Escrow Agreement") with respect to the refunding of the outstanding 1997 Certificates and the outstanding Merrithew Certificates with The Bank of New York Trust Company, N.A.,.as escrow agent(the "Escrow Agent"); WHEREAS, Tamalpais Advisors, Inc., is serving as financial advisor (the "Financial Advisor") to the County and the Authority and Orrick, Herrington & Sutcliffe LLP is serving as bond counsel ("Bond Counsel") to the Authority and Lofton& Jennings is serving as Disclosure Counsel ("Disclosure Counsel') to the County and the Authority in connection with the financing; WHEREAS, the Underwriters, the Financial Advisor, Bond Counsel and Disclosure Counsel have assisted the County and the Authority in the preparation of an Official Statement describing the Bonds (the "Official Statement") which will be distributed by the Underwriters in preliminary form (the "Preliminary Official Statement") to potential purchasers of the Bonds and in final form to actual purchasers of the Bonds; WHEREAS, this Board has been presented with the form of each document referred to herein relating to the, Bonds, and the Board has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; WHEREAS, the County has full legal right, power and authority under the Constitution and the laws of the State of California to enter into the transactions hereinafter authorized; and WHEREAS, the County expects to finance the 2007 Series A Project and to refund a portion of the Prior Bonds, the outstanding 1997 Certificates and the outstanding Merrithew Certificates on a tax'-exempt basis; OHS WEST:260146111.4 4 NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Contra Costa, as follows:_ Section 1. The foregoing recitals are true and correct and this Board so finds and determines. Section 2. The County hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the County and that the statements, findings and determinations of the County set forth above are true and correct and that the issuance of the Bonds by the Authority for the refunding of a portion of the Prior Bonds, the outstanding 1997 Certificates and the outstanding Merrithew Certificates and the financing of the 2007 Series A Project will result in demonstrable savings in effective interest rate, bond preparation, bond underwriting or bond issuance costs producing significant public benefits. Section 3. The Board of Supervisors hereby requests and approves the issuance of the Bonds by the Authority, in an aggregate principal amount of not to exceed$270,000,000 for the refunding of a portion of the Prior Bonds, the 1997 Certificates and the Merrithew Certificates, the financing of the 2007 Series A Project, the funding of bond reserves and the payment of related costs. Section 4. The form of Sixth Amendment to Site Lease on file with the Clerk of the Board of Supervisors is hereby approved and the Chair of the Board of Supervisors or the Vice Chair of the Board of Supervisors or the County:Administrator of the County and the Clerk of the Board of Supervisors (the "Clerk") or any Deputy Clerk of the Board of Supervisors or any designee of such officials (the "Authorized Signatories") are hereby authorized and directed to execute and deliver the Sixth Amendment to Site Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the term thereof shall not exceed June 15, 2038. Section 5. The form of Sixth Amendment to Facility Lease on file with the Clerk is hereby approved and any two of the Authorized Signatories are hereby authorized and directed to execute and deliver the Sixth Amendment to Facility.Lease in substantially said form, with such changes therein as such officers may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the maximum additional annual base rental payments payable under the Sixth Amendment to Facility Lease shall not exceed $15,000,000 and the term of the Sixth Amendment to Facility Lease (including any extensions) shall not exceed June 1, 2038. Among the changes authorized to be made to the Sixth Amendment to Facility Lease are such changes as are necessary in the event the County Administrator or his designee, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy and/or a reserve facility for the Bonds. Section 6. The form of Sixth Supplemental Trust Agreement on file with the Clerk is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver the Sixth Supplemental Trust Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to OHS WEST:260146111.4 5 be made to the Sixth Supplemental Trust Agreement are such changes as are necessary in the event the County Administrator or his designee, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy and/or a reserve facility for the Bonds. Section 7. The form of Seventh Supplemental Trust Agreement on file with the Clerk is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver the Seventh Supplemental Trust Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Among the changes authorized to be made to the Seventh Supplemental Trust Agreement are such changes as are necessary in the event the County Administrator or his designee, upon consultation with the Financial Advisor, determines it is desirable to purchase a municipal bond insurance policy-and/or a reserve facility for the Bonds. Section 8. The form of Bond Purchase Contract on file with the Clerk is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver said Purchase Contract with such additions, changes and corrections thereto as the County Administrator or his designee shall require or approve, such approval to be conclusively evidenced by the execution thereof; provided, that the interest rate on the Series A Bonds shall not exceed a true interest cost of six percent (6%) per annum and the underwriting discount (excluding any original issue discount) shall not exceed one percent (1%) of the principal amount of Series A Bonds. Section 9. The form of Forward Delivery Bond Purchase Contract on file with the Clerk of the Board of Supervisors is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver said Purchase Contract with such additions, changes and corrections thereto as the County Administrator or his designee shall require or approve, such approval to be conclusively evidenced by the execution thereof, provided, that the interest rate.on the Series B Bonds shall not exceed a true interest cost of six percent (6%) per annum, and the underwriting discount (excluding any original issue discount) shall not exceed one percent (1%) of the principal amount of Series B Bonds. Section 10. The form of Escrow Agreement on file with the Clerk, is hereby approved. Any one of the Authorized Signatories is hereby authorized and directed to execute and deliver the Escrow Agreements in substantially"said form sufficient to legally defease the outstanding 1997 Certificates and the outstanding Merrithew Certificates, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof Section 11. The form of Preliminary Official Statement describing the Bonds, on file with the Clerk, is hereby approved and the County Administrator or his designee, is hereby authorized and directed to execute and deliver a final Official Statement in substantially said form with such additions, corrections and revisions as may be determined to be necessary or desirable by the Underwriters, Financial Advisor, Bond Counsel, Disclosure Counsel or the County Counsel's Office. The Underwriters are hereby directed to distribute copies of the Official Statement to all actual purchasers of the Bonds. Distribution by the Underwriters of a OHS WEST:260146111.4 6 Preliminary Official Statement relating to the Bonds to potential purchasers is hereby approved and the County Administrator, or his designee, is hereby authorized and directed to execute a certificate confirming that the Preliminary Official Statement has been "deemed final" by the County for purposes of Securities and Exchange Commission Rule 15c2-12. Section 12. The proposed form of Continuing Disclosure Agreement, to be dated the date of issuance of the Bonds, by and among the County and the Trustee, on file with the Clerk, is hereby approved. Any of the Authorized Signatories are hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement in substantially said form,with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 13. The Board hereby authorizes the County Administrator or the Senior Deputy County Administrator/Debt Manager on behalf of the County to enter into or approve the Authority's execution and delivery of one or more investment agreements (each an "Investment Agreement")providing for the investment of moneys in the funds and accounts created under the Trust Agreement or the Escrow Agreements, or the amendment or modification of existing investment agreements relating to the Prior Bonds, the 1997 Certificates or the Merrithew Certificates, as the County Administrator or the Senior Deputy County Administrator/Debt. Manager deems appropriate (collectively, the "Investment Agreements"). The Board hereby finds and determines pursuant to Government Code section 5922, that each Investment Agreement will reduce the amount and duration of interest rate risk with respect to amounts invested pursuant to such agreement. The County Administrator or his designee is hereby authorized and directed to execute and deliver or approve the execution and delivery of the Investment Agreements and any other related agreement or agreements on behalf of the County as may be approved by the County Administrator or his designee, such approval to be conclusively evidence by the execution and delivery of such agreement or agreements. Any termination amounts required to be paid by the County with respect to the Investment Agreements shall be paid from amounts invested pursuant thereto or otherwise made available therefor. Section 14. The officers of the County are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution, including,but not limited to,preparation of title reports and/or a title insurance policy, signature certificates, no-litigation certificates, tax and rebate certificates and certificates concerning the contents of the Official Statement distributed in connection with the sale of the Bonds. The Authorized Signatories, the Senior Deputy County Administrator/Debt Manager and other appropriate officers of the County before and after the issuance of the Bonds are hereby authorized and directed to execute and deliver any and all lease termination agreements, property acceptances, title clarification documents, certificates, instructions as to investments, written requests and other certificates necessary or desirable to administer the Bonds or leases, pay costs of issuance or to accomplish the transactions contemplated herein. Section 15. All actions heretofore taken by the officers and agents of the County with respect to the issuance and sale of the Bonds are hereby approved and confirmed. OHS WEST:260146111.4 7 Section 16. This Resolution shall take effect from and after its date of adoption. PASSED AND ADOPTED this 6th day of F ary, 2007. a1r o oard of Supervisors County of Contra Costa, California [Seal] ATTEST: John B. Cullen, Clerk of the Board of Supervisors and County Administrator By Deputy rk of the Board of Sup - 'sors of the County of Contra Costa, State of California OHS WEST:260146111.4 8 CLERK'S CERTIFICATE The undersigned, Deputy Clerk of the Board of Supervisors of the County of Contra Costa, hereby certifies 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 held at the regular meeting place thereof on the 6th day of February, 2007, of which meeting all of the members of said Board of Supervisors had due notice and at which a majority thereof were present; and at said meeting said resolution was adopted by the following vote: Ayes: Gioia,Uilkema,Bonilla, Glover and Piepho Noes: None An agenda of said meeting was.posted at least 96 hours before said meeting at the County Administration Building, 651 Pine Street, Martinez, California, a location freely accessible.to members of the public, and a brief general description of said resolution appeared on said agenda. I have carefully compared the same with the original minutes of said meeting on file and of record in my office; the foregoing resolution is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and said resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand and the seal of the County of Contra Costa this 6`o' day of ) 2007. [Seal] Deputy Clerk of the Board of Supervisors of the County of Contra Costa, State of California OHS WEST260146111.4 OHS DRAFT January 23, 2007 Recording requested by and return to: COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY c/o Orrick; Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105-2669 Attn: Mary A. Collins Exempt from Recording Fee Pursuant to Government Code Section 6103 SIXTH AMENDMENT TO MASTER SITE LEASE between the COUNTY OF CONTRA COSTA and the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY Dated as of March 1, 2007 (Amending the Master Site Lease dated as of February 1, 1999, as amended by the First Amendment to Master Site Lease dated as of January 1, 2001, the Second Amendment to Master Site Lease dated as of May 1, 2001, the Third Amendment to Master Site Lease dated as of June 1, 2002, the Fourth Amendment to Master Site Lease dated as of July 1, 2002 and the Fifth Amendment to Master Site Lease dated as of July 1, 2003) OHS WEST:260146110.3 SIXTH AMENDMENT TO MASTER SITE LEASE This Sixth Amendment to Master Site Lease, dated as of March 1, 2007 between the COUNTY OF CONTRA COSTA, a political subdivision organized and existing under and by virtue of the laws of the State of California (the "County"), as lessor,and the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY- (the "Authority"), as lessee, a joint exercise of power authority, duly organized and existing pursuant to an Agreement, dated April 7, 1992, entitled "County of Contra Costa Public Financing Authority Joint Exercise of Powers Agreement," by and between the County of Contra Costa and the Contra Costa County Redevelopment Agency; WITNESSETH WHEREAS, this Sixth Amendment to Master Site Lease is entered into in order to amend in certain respects a lease between the County and the Authority entitled "Master Site Lease ," dated as of February 1, 1999 and recorded on March 4, 1999, in the office of the County Recorderof the County, under Recorder's Instrument No. 99-0059811, as amended by the First Amendment to Master Site Lease, dated as of January 1, 2001 and recorded on January 25, 2001, in the office of the County Recorder of the County, under Recorder's Instrument No. 2001- 0017620'the Second Amendment to Master Site Lease, dated as of May 1, 2001 and recorded on May 10, 2601, in the office of the County Recorder of the County, under Recorder's Instrument No. 2001-01-123402, the Third Amendment to Master Site Lease, dated as of June 1, 2002 and recorded on June 26, 2002 in the office of the County Recorder of the County under Recorder's Instrument No. 2002-22-4906, the Fourth Amendment to Master Site Lease, dated as of July 1, 2002 and recorded on September 5, 2002 in the office of the County Recorder of the County under Recorder's Instrument No. 2002-02-311941 and the Fifth Amendment to Master Site Lease, dated as of July 1, 2003 .and recorded on August 14, 2003 in the office of the County Recorder of the County under Recorder's Instrument No. [2003-0402053] (together, the "Master Site Lease"), and to add to the property leased pursuant to the Master Site Lease certain additional real property consisting of the following building and facilities located in the County, the real property descriptions of which are contained in Exhibit A (capitalized terms used herein and not otherwise defined herein have the meanings assigned thereto by the Master Site Lease): The Martinez Health Center,2500 Alhambra Avenue, Martinez, CA 94553 The Juvenile Detention Facility, 202 Glacier Drive,Martinez, CA 14553 (collectively,the "2007 Series A Leased Facilities") and The Medical Center, 2500 Alhambra Avenue,Martinez, CA 94553 (the "2007 Series B Leased Facilities" and, together with the Series 2007 Series A Leased Facilities, the"2007 Leased Facilities"); WHEREAS, $125,584,011.80 aggregate principal amount of Certificates of Participation (Merrithew Memorial Hospital Replacement Project), .Series of 1992 (the "1992 OHS WEST:260146110.3 Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of May 1, 1992, by and among the County, the Contra Costa County Public Facilities Corporation (the "Corporation") and U.S. Trust Company of California, N.A. (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "Merrithew Trustee"), for the purpose of financing the construction, acquisition and equipping of the Merrithew Memorial Hospital, now known as the Contra Costa Regional Medical Center(the"Medical Center"); WHEREAS, $145,340,000 aggregate principal amount of County of Contra Costa Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates") were executed and delivered pursuant to a,First Supplemental Trust Agreement, dated as of February 1, 1997, by and among the;,County, the Corporation and the Merrithew Trustee, for the purpose of prepaying and defeasing the outstanding 1992 Certificates and refinancing the construction, acquisition and equipping of the Medical Center; WHEREAS, the County has determined that it is in its best interests to prepay and defease the outstanding Merrithew Certificates; WHEREAS, the County desires the Authority to sell "forward delivery" refunding bonds to currently refund the Merrithew Certificates which bonds will be'delivered in August, 2007; WHEREAS, the Authority has agreed to issue $ aggregate principal amount of its Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "2007 Series B Bonds") on August _, 2007, pursuant to a Seventh Supplemental Trust Agreement, dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement") by and between the Authority and the Trustee, for the purpose of prepaying and defeasing the outstanding Merrithew Certificates; WHEREAS, the County will use the proceeds of the 2007 Series B Bonds 'to defease the Merrithew Certificates and, prior to such defeasance, this Master Site Lease shall be a sublease to the leases per to the Merrithew Certificates with respect to the 2007 Series B Facilities; NOW, THEREFORE, the parties hereto agree as follows: Section 1. This Sixth Amendment to Master Site Lease shall become effective on the date of recordation of this instrument in the office of the County Recorder of the County; State of California, or on-April 1, 2007, whichever is earlier, and such date of commencement shall be hereinafter referred to as the"effective date." Section 2. From and after the effective date of this instrument, the County, for good and valuable consideration (consisting of receipt of a portion of the proceeds of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A and the expected receipt, following the issuance of the Lease Revenue Bonds (Medical Center Refunding), 2007 Series B), of a portion of the proceeds thereof, the sufficiency.of which is hereby acknowledged, hereby leases to the Authority and the Authority hereby leases from the OHS WEST:260146110.3 2 County, the real property described in Exhibit A hereto, which real property is hereby added to the Facilities leased pursuant to the Master Site Lease and all references to the Facilities in the Master Site Lease shall include said real property. The Authority agrees to lease :said real property back to the County pursuant to the Facility Lease. Section 3. The term of the Master Site Lease shall end on June 15, 2028 for the real property identified in Exhibit A as the Martinez Health Center, June 15, 2028 for the real property identified in Exhibit A as the Juvenile Detention Facility and June 15, 2023, for the real property identified in Exhibit A as the Merrithew Memorial Hospital, unless such. term is extended or sooner terminated as provided in the Master Site Lease. Section 4. The County covenants that it is owner in fee of the 2007 Series A Leased Facilities and the Merrithew Demised Premises and that it has a valid leasehold interest in the 2007 Series B Leased Facilities. Section 5. Except as in this Sixth Amendment to Master Site Lease expressly provided, the Master Site Lease shall continue in full force and effect in accordance with the terms and provisions thereof, as amended hereby. Section 6. If one or more of the terms, provisions, covenants or conditions of this Sixth Amendment to Master Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions,covenants and conditions of this Sixth Amendment to Master Site Lease shall be affected thereby, and each provision of this Sixth Amendment to Master Site Lease shall be valid and enforceable to the fullest extent permitted by law. Section 7. This Sixth Amendment to Master Site Lease may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHS WEsT:260146110.3 3 IN WITNESS WHEREOF, the County and the Authority have caused this Sixth Amendment to Master Site Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. COUNTY OF CONTRA COSTA, as Lessor [SEAL] By Mary N. Piepho Chair of the Board of Supervisors Attest: John B. Cullen Clerk of the Board of Supervisors and County Administrator By Chief Clerk COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, as Lessee By Mary N. Piepho Chair Attest: John B. Cullen, Executive Director and Secretary By Assistant Executive Director OHS WEST:260146110.3 EXHIBIT A Additions to Facilities All that certain real property situated in the County of Contra Costa, State of California, described as follows: OHS WEST:260146110.3 CONSENT OF TRUSTEE The undersigned, as successor trustee under the Trust Agreement dated as of February 1, 1999, as amended, between the County of Contra Costa Public Financing Authority (the "Authority") and the trustee, -hereby acknowledges and consents to`the execution and delivery of the Sixth Amendment to Master Site Lease dated as of March 1, 2007, between the County of Contra Costa (the "County") and the Authority, relating to the Master Site Lease, dated as of February 1, 1999, as amended by the First Amendment to Master Site Lease, dated as of January 1, 2001, the Second Amendment to Master Site Lease,dated as of May 1, 2001, the Third Amendment to Master Site Lease, dated as of June 1, 2002, the Fourth Amendment to Master Site Lease, dated as of July 1, 2002, and the Fifth Amendment to Master Site Lease, dated as of July 1, 2003,between the County and the Authority. THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By: Authorized Officer OHS WEST:260146110.3 CONSENT OF BOND INSURER The undersigned, as Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A, issued pursuant to the Trust Agreement dated as of February 1, 1999, between the County of Contra Costa Public Financing Authority (the "Authority") and the trustee and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series A issued pursuant to the First Supplemental Trust Agreement dated as of January 1, 2001, and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series B issued pursuant to the Second Supplemental Trust Agreement dated as of May 1, 2001, and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2002 Series A issued pursuant to the Third Supplemental Trust Agreement dated as of June 1, 2002, and as Insurer of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B issued pursuant to the Fourth Supplemental Trust Agreement dated as of July 1, 2002, and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2003 Series A issued pursuant to the Fifth Supplemental Trust Agreement dated as of July 1, 2003,.hereby consents to the execution and delivery of the Sixth Amendment to Master Site Lease dated as of March 1, 2007, between the County of Contra Costa (the "County") and the Authority, relating to the Master Site Lease, dated as of February 1, 1999, between the County and the Authority, as amended by the First Amendment to Master Site Lease, dated as of January 1, 2001, the Second Amendment to Master Site Lease, dated as of May 1, 2001, the Third Amendment to Master Site Lease, dated as of June 1., 2002, the Fourth Amendment to Master Site Lease, dated as of July 1, 2002 and the Fifth Amendment to Master Site Lease, dated as of July 1, 2003. MBIA INSURANCE CORPORATION By Authorized Officer OHS WEST:260146110.3 OHS DRAFT January 23, 2007 Recording requested by and return to: COUNTY OF CONTRA COSTA c/o Orrick, Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105-2669 Attn: Mary A. Collins Exempt from Recording Fee Pursuant to Government Code Section 6103 SIXTH AMENDMENT TO FACILITY LEASE by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and the COUNTY OF CONTRA COSTA Dated as of March 1, 2007 (Amending the Facility Lease(Various Capital Projects) dated as.of February 1, 1999 as amended by the First Amendment to Facility Lease dated as of January 1, 2001, the . Second Amendment to Facility Lease dated as of May 1, 2001, the Third Amendment to Facility Lease dated as of June 1, 2002, the Fourth Amendment to Facility Lease dated as of July 1, 2002 and the Fifth Amendment to Facility Lease dated as of July 1, 2003) OHS WEST:260146113.3 TABLE OF CONTENTS Page ARTICLE XVI ADDITIONS RELATING TO LEASE REVENUE BONDS (VARIOUS CAPITAL PROJECTS), 2007 SERIES A......:............................2 SECTION 16.01. Effective Date. ...............................................................................2 SECTION 16.02. Additional Definitions. ..................................................................2 SECTION 16.03. Term of Additional Facilities.........................................................3 SECTION 16.04. Use of Proceeds of 2007 Series A Bonds. ......................................3 SECTION 16.05. Increase to Base Rental Payments. .................................................3 SECTION 16.06. Possession of Additional Facilities................................................3 SECTION 16.07. Evidence of Title............................................................................4 SECTION 16.08. Continuing Disclosure. ...........................................................::.....4 SECTION.16.09. Trust Agreement. ...........................................................................4 SECTION 16.10. Facility Lease in Full Force and Effect..........................................4 SECTION 16.11. Execution in Counterparts..............................................................4 EXHIBIT A—Additions to Demised Premises....................................................................::...A-1 EXHIBIT B—Base Rental Payment..........................................................................................B-1 OHS WEST:260146113.3 _i_ SIXTH AMENDMENT TO FACILITY LEASE This Sixth Amendment to Facility Lease, dated as of March 1, 2007, between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and existing under and by virtue of the laws of the State of California (the "Authority"), as lessor, and the COUNTY OF CONTRA COSTA, a political subdivision organized and validly existing under the Constitution and laws of the State of California(the "County"), as lessee; WITNESSETH: WHEREAS, the County has leased certain real property and the improvements thereon to the Authority pursuant to a lease, entitled "Master Site Lease" and dated as of February 1, 1999 and recorded on March 4, 1999 in the office of the County Recorder of the County, under Recorder's Instrument No. 99-0059811; as amended by the First Amendment to Master Site Lease dated as of January 1, 2001 and recorded on January 25, 2001 in the office of . the County Recorder of the County, under Recorder's Instrument No. 01-17620, and the Second Amendment to Master Site Lease dated as of May 1, 2001 and recorded on May 10, 2001 in the office of the County Recorder of the County, under Recorder's Instrument No. 01-123402 and the Third Amendment to Master Site Lease dated as of June 1, 2002 and recorded on June 26, 2002 in the office of the County Recorder of the County, under Recorder's Instrument No. 2002-22-4906 and the Fourth Amendment to Master. Site Lease dated as of July 1, 2002 and recorded on September 5, 2002 in the office of the County Recorder of the County, under Recorder's Instrument No. 2002-02-311941 and the Fifth Amendment to Master Site Lease dated as of July 1, 2003 and recorded on August 14, 2003 in the office of the County Recorder of the County, under Recorder's Instrument No. 2003-0402053; WHEREAS, the County has further amended said Master Site Lease pursuant to the Sixth Amendment to Master Site Lease dated as of March 1, 2007, to lease certain additional real property to the Authority consisting of the following buildings and facilities (the "2007 Leased Facilities"): The Martinez Health Center,2500 Alhambra Avenue,Martinez,'CA 94553. The Juvenile Detention Facility, 202 Glacier Drive,Martinez, CA 94553 The Contra Costa Regional Medical Center, 2500 Alhambra Avenue, Martinez, CA 94553 WHEREAS, the County further agrees, in connection with the leaseback of the 2007 Leased Facilities, to pay increased rental for the 2007 Leased Facilities and in recognition of the increased value of the West County Detention Facility and in consideration for the refunding,to increase the Base Rental payable pursuant hereto; WHEREAS, this Sixth Amendment to Facility Lease is entered into to amend and supplement in certain respects a lease between the Authority and the County entitled "Facility Lease (Various Capital Projects)," dated as of February 1, 1999 and recorded on March 4, 1999 OHS WEST:260146113.3 in the office of the County Recorder of the County, State of California, under Recorder's Instrument No. 99-0059812, as amended by the First Amendment to Facility Lease, dated as of January 1, 2001 and recorded on January 25, 2001 in the office of the County Recorder of the County, State of California, under Recorder's Instrument No. 01-17621, the Second Amendment to Facility Lease, dated.as of May 1, 2001 and recorded on May 10, 2001 in the office of the County Recorder of the County, State of California, under Recorder's Instrument No. 01- 123403, the Third Amendment to Facility Lease, dated as of June 1, 2002 and recorded on June 26, 2002 in the office of the County Recorder of the County, State of California under Recorder's Instrument No. 2002-22-4907, the Fourth Amendment to Facility Lease, dated as of July 1, 2002 and recorded on September 5, 2002 in the office of the County Recorder of the County, State of California under Recorder's Instrument No. 2002-02-311942 and the Fifth Amendment to Facility Lease, dated as of July 1, 2,003 and recorded on August 14, 2003 in the office of the County Recorder of the County, State of California under Recorder's Instrument No. 2003-0402051 (together and as amended from time to time, the "Facility Lease") and to add to the property leased pursuant to the Facility Lease certain additional real property consisting of the real property and facilities leased by the County pursuant to the Sixth Amendment to Master Site Lease (the "2007 Leased Facilities"), the real property descriptions of which are contained in Exhibit A to this Sixth Amendment to Facility Lease; NOW, THEREFORE,the parties hereto agree as follows: ARTICLE XVI ADDITIONS RELATING TO LEASE REVENUE BONDS (VARIOUS CAPITAL PROJECTS),2007 SERIES A SECTION 16.01. Effective Date. This Sixth Amendment to Facility Lease shall become effective on the date of recordation of this instrument in the office of the County Recorder of the County, State of California, or on April 1, 2007, whichever is earlier, and such date of commencement shall be hereinafter referred to as the"effective date"and on the effective date the additional real property consisting of the 2007 Facilities is hereby added to the Facility Lease as set forth in Exhibit A hereto and shall be encumbered by the Facility Lease and references to Facilities in the Facility Lease shall hereafter include such real property and equipment and reference to Demised Premises in the Facility Lease shall hereafter include the real property described in Exhibit A to this Sixth Amendment to Facility Lease. SECTION 16.02. Additional Definitions. From and after the effective date of this instrument, the following new definitions shall be added to Section 1.01 of the Facility Lease, in alphabetical order,to read as follows: OHS WEST:260146113.3 2 "Juvenile Detention Facility The term"Juvenile Detention Facility"means the County's juvenile detention facility located at 202 Glacier Drive,Martinez, CA 94553 "Martinez Health Center The term "Martinez Health Center"means the County ambulatory care facility containing approximately 60,700 square feet located at 2500 Alhambra Avenue in the City of Martinez. "Medical Center The term"Medical Center"means the Contra Costa Regional Medical Center containing approximately square feet located at 2500 Alhambra Avenue in the City of Martinez. "Medical Center Demised Premises The term"Medical Center Demised Premises"means the site of the Medical Center. "Merrithew Certificates The term"Merrithew Certificates"means the $145,340,000 County of Contra Costa Certificates of Participation(Merrithew Memorial Hospital Replacement Project)Refunding Series of 1997, executed and delivered pursuant to a Trust Agreement, dated as of May 1, 1992,by and among the County,the Contra Costa County Public Facilities Corporation and U.S. Trust Company of California,N.A. (predecessor to The.Bank of New York Trust Company,N.A.), as trustee, as amended and supplemented by a First Supplemental Trust Agreement, dated as of February 1, 1997, for the purpose of refinancing the construction, acquisition and equipping of the Medical Center. "Seventh Supplemental Trust Agreement The term `Seventh Supplemental Trust Agreement' means that Seventh Supplemental Trust Agreement between the Authority and the-Trustee, dated as of March 1, 2007, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions of the.Trust Agreement." OHS WEST:260146113.3 3 "Sixth Amendment to Facility Lease The term `Sixth Amendment to Facility Lease' means that Sixth Amendment to Facility Lease between the Authority and the County, dated as of March 1, 2007, as originally executed and recorded oras it may from time to time be supplemented, modified or amended pursuant to the provisions hereof." "Sixth Supplemental Trust Agreement The term `Sixth Supplemental Trust Agreement' means that Sixth Supplemental Trust Agreement between the Authority and the Trustee, dated as of March 1, 2007, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions of the Trust Agreement." 1997 Certificates The term "1997 Certificates"means the Authority's $34,910,000 Certificates of Participation(Capital Projects Program), Series of 1997, evidencing proportionate ownership interests of the owner thereof in payments to be made by the County as rental for certain land and facilities pursuant to a lease agreement, dated as of August 1, 1997,by and between the County and the Authority. "2007 Series A Bond Insurer The term `2007 Series A Bond Insurer' means MBIA Insurance Corporation, or any successor thereto or assignee thereof." "2007 Series A Bonds The term `2007 Series A Bonds' means the bonds issued by the Authority under and pursuant to the Trust Agreement and the Sixth Supplemental Trust Agreement, the proceeds of which will be applied to the acquisition, construction and equipping of the 2007 Series A Project, the refunding of a portion of the Outstanding Bonds,the prepayment of the 1997 Certificates,the funding of a portion of the Reserve Fund Requirement and to the payment of costs related thereto." OHS WEST:260146113.3 4 "2007 Series B Bonds The term `2007 Series B Bonds' means the bonds issued by the Authority under and pursuant to the Trust Agreement and the Seventh Supplemental Trust Agreement,the proceeds of which will be applied to the prepayment of the Merrithew Certificates and to the payment of costs related thereto." "2007 Facilities The term `2007 Facilities' means the Martinez Health Center, the Juvenile Detention Facility and the Medical Center." "2007 Series A Project The term `2007 Series A Project' means the Subsequent Phase of the Project financed with the proceeds of the 2007 Series A Bonds being the facilities and improvements described in Exhibit B to the Sixth Supplement Trust Agreement, as the same may be changed by notice to the Trustee." SECTION 16.03. Term of Additional Facilities. The term of this Lease for the 2007 Series A Facilities shall end on June 15, 2028 for the real property identified in Exhibit A as the Martinez Health Center, June 15, 2028 for the real property identified in Exhibit A as the Juvenile Detention Facility and June 15, 2023, for the real property identified in Exhibit A as the Merrithew Memorial Hospital, unless such term is extended (for up to ten years) or sooner terminated as provided in the Facility Lease. SECTION 16.04. Use of Proceeds of 2007 Series A Bonds and 2007 Series B Bonds . The parties hereto agree that the proceeds of the 2007 Series A Bonds will be used by the Authority to refund and defease a portion of the Outstanding Bonds and the outstanding 1997 Certificates and to finance the acquisition and construction of the 2007 Series A Project, to fund the portion of the Reserve Fund Requirement necessary for the issuance of the 2007 Series A Bonds and to pay costs related thereto and that the proceeds of the 2007 Series B Bonds will be used by the Authority to prepay and defease the outstanding 1997 Certificates and to pay costs related thereto as specified in the Sixth Supplemental Trust Agreement and the Seventh Supplemental Trust Agreement. SECTION 16.05. Restatement of Base Rental Pa, nenents. From and after the effective date of this instrument, the Base Rental Payments shall be in the amounts set forth in Exhibit B attached hereto. SECTION 16.06. Possession of Additional Facilities. The County hereby represents and warrants that the County has taken possession of and will occupy the 2007 Series A Facilities throughout the term of this Lease for such facilities under the. terms and provisions of this Lease; the 2007 Series A Facilities and the 2007 Series B Facilities are of OHS WEST:260146113.3 5 comparable worth and economic life to the 2007 Series A Project and the Medical Center, respectively, and are ready for immediate use and occupancy by the County. SECTION 16.07. Evidence of Title. The County shall have obtained or shall obtain upon the execution and delivery of this Sixth Amendment to Facility Lease policies of title insurance or supplements to existing policies on the Martinez Health Center and the Juvenile Detention Facility, in form and substance satisfactory to the Bond Insurer, in an amount equal to the estimated value of the Martinez Health Center and the Juvenile Detention Facility, issued by a company or companies of recognized standing duly authorized to issue the same, subject only to Permitted Encumbrances and a certificate of the County or such other evidence of the County's leasehold or fee interest in the Medical Center as shall be acceptable to the Authority. Any proceeds of such insurance shall be delivered to the Trustee as a prepayment of rent pursuant to Section 7.02 and shall be applied by the Trustee to the redemption of Bonds pursuant to Section 4.01, Section 16.01, Section 22.01, Section 28.01, Section 34.01, Section 40.01, Section 46.01 and Section 52.01 of the Trust Agreement. (g) A title insurance policy insuring the Authority's leasehold or fee title in the real property on which the Facilities are located, and, if the proceeds of such Additional Bonds are to be used to finance construction on real property not then described in the Facility Lease, a title insurance policy insuring the Authority's leasehold or fee title in such real property, or, at the option of the Authority, an opinion of counsel or Certificate of the County or such other evidence of the Authority's or County's leasehold or fee interest in such real property as shall be acceptable to the Authority SECTION 16.08. Continuing Disclosure. The County hereby covenants and agrees that it will comply with and carry out all of the provisions of the 2007 Series A Continuing Disclosure Agreement and the 2007 Series B Continuing Disclosure Agreement. Notwithstanding any other provision of this Lease, failure of the County to comply with the 2007 Series A Continuing Disclosure Agreement and the 2007 Series B Continuing Disclosure Agreement shall not be considered an event of default hereunder; however, the Trustee may (and, at the request of any Participating Underwriter(as defined in the 2007 Series A Continuing Disclosure Agreement and the 2007 Series B Continuing Disclosure Agreement) or the Owners of at least 25% aggregate principal amount of Bonds Outstanding. and provided satisfactory indemnification is provided to the Trustee, shall) or any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to compel the County to comply with its obligations under this Section 16.08. SECTION 16.09. Trust Agreement. The parties hereto acknowledge that the County is a third-party beneficiary to the Trust Agreement, and the Authority hereby agrees that during the term of the Facility Lease and provided the County is not in default hereunder, it will not, without the prior written consent of the County, amend the Trust Agreement in any manner materially adverse to the interests of the County. The County hereby consents to the execution and delivery of the Sixth Supplemental Trust Agreement and the Seventh Supplemental Trust Agreement. SECTION 16.10. Facility Lease in Full Force and Effect. Except as in this Sixth Amendment to Facility Lease expressly provided, the Facility Lease shall continue in full force OHS WEST:260146113.3 6 and effect in accordance with the terms and provisions thereof, as amended and supplemented hereby. SECTION 16.11. Execution in Countep2arts. This Sixth Amendment to Facility Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same.Sixth Amendment to Facility Lease. It is also agreed that separate counterparts of this Sixth Amendment to Facility Lease may separately be executed by the Authority and the County, all with the same force and effect as though the same counterpart had been executed by both the'Authority and the County. OHS WEST:260146113.3 7 IN WITNESS WHEREOF, the Authority and the County have caused this Sixth Amendment to Facility Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written. COUNTY OF CONTRA COSTA, as Lessee [SEAL] By Mary N.Piepho Chair,Board of Supervisors County of Contra Costa,State of California Attest: John B. Cullen Clerk of the Board of Supervisors L and County Administrator By Chief Clerk COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, Lessor By Mary N. Piepho Chair Attest: John B. Cullen, Executive Director and Secretary By Assistant Executive Director OHS WEST:260146113.3 8 EXHIBIT A Addition to Demised Premises All that certain real property situated in the County,of Contra Costa, State of California, described.as follows: s OHS WEST:260146113.3 A-1 EXHIBIT B Base Rental Payment Schedule Date Principal Interest Total Fiscal Year Total Totals OHS WEST:260146113.3 B-1 CONSENT OF TRUSTEE The undersigned, as successor trustee under the Trust Agreement dated as of February 1, A999, as amended, between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority") and the trustee, hereby acknowledges and consents to the execution and delivery of the SIXTH AMENDMENT TO FACILITY LEASE dated as of March 1, 2007,between the Authority and the COUNTY OF CONTRA COSTA(the "County") relating to the Facility Lease (Various Capital Projects) dated as of February 1, 199% as amended by the First Amendment to Facility Lease dated as of January 1, 2001, the Second .Amendment to Facility Lease dated as of May 1, 2001, the Third Amendment to Facility Lease dated as of June 1, 2002, the Fourth Amendment to Facility Lease dated as of July 1, 2002..and the Fifth Amendment to Facility Lease dated as of July 1, 2003, between the Authority and'.the County. THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By Authorized Officer OHS WEST260146113.3 CONSENT OF INSURER The undersigned, as Insurer of a portion of the County of Contra Costa Public Financingi Authority. Lease Revenue Bonds (Refunding and Various Capital Projects), .1999 Series A,.issued pursuant to the Trust Agreement dated as of February 1, 1999, between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority") and the trustee, and as Insurer of the Authority's Lease Revenue Bonds (Various Capital Projects), 2001 Series A, issued pursuant to the First Supplemental Trust Agreement, the Authority's Lease Revenue,Bonds (Various Capital Projects), 2001 Series B, issued pursuant to the Second Supplemental Trust Agreement,the Authority's Lease Revenue Bonds (Various Capital Projects) 2002 Series A, issued pursuant to the Third Supplemental Trust Agreement, the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects) 2002.Series B, issued pursuant to the Fourth Supplemental Trust Agreement and of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2003 Series A, issued pursuant to the. Fifth Supplemental Trust Agreement, hereby consents to the execution and delivery of the Sixth Amendment to Facility Lease dated as of March 1, 2007, between the Authority and the COUNTY OF CONTRA COSTA (the "County") relating to the Facility Lease (Various Capital Projects) dated as of February 1, 1999, as amended by the First Amendment to Facility Lease, dated as of January 1, 20,01, the Second Amendment to Facility Lease, dated as of May 1, 2001, the Third Amendment to Facility Lease dated as of June 1, 2002, the Fourth Amendment to Facility Lease dated as of July 1, 2002 and the Fifth Amendment to Facility Lease dated as of July 1, 2003 between the Authority and the County. MBIA INSURANCE CORPORATION By . Authorized Officer OHS WEST:260146113.3 OHS DRAFT January 23, 2007 SIXTH SUPPLEMENTAL TRUST AGREEMENT by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and THE BANK OF NEW YORK TRUST COMPANY,N.A. Dated as of March 1, 2007 RELATING TO THE $ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES A (Supplementing the Trust Agreement dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001, the Second Supplemental Trust Agreement dated as of May 1, 2001, the Third Supplemental Trust Agreement dated as of June 1, 2002, the Fourth Supplemental Trust Agreement dated as of July 1, 2002) and the Fifth Supplemental Trust Agreement dated as of July 1, 2.003) OHS WEST:260146115.3 TABLE OF CONTENTS Page ARTICLE XLIII DEFINITIONS; EQUAL SECURITY ................................................3 SECTION 43.01. Additional Definitions ...................................................................3 ARTICLE XLIV THE BONDS ...........__..........................................................................6 SECTION 44.01. Authorization of 2007 Series A Bonds 6 . .......................................... SECTION 44.02. Terms of the 2007 Series A Bonds................................................7 SECTION 44.03. Form of 2007 Series A Bonds........................................................9 SECTION 44.04. Execution of 2007 Series A Bonds................................................9 SECTION 44.05. Transfer, Exchange and Payment of 2007 Series A Bonds...........9 SECTION 44.06. Special Covenants as to Book-Entry Only System for 2007 SeriesA Bonds...............................................................................9 SECTION 44.07. Compliance with 2007 Series.A Continuing Disclosure Agreement.................................................................................... 11 ARTICLE XLV ISSUANCE OF BONDS ................................................................... 12 SECTION 45.01. Procedure for the Issuance of 2007 Series A Bonds.................... 12 SECTION 45.02. 2007 Series A Project Fund......................................................... SECTION 45.03. Reserve Fund Requirement Calculation...................................... 13 SECTION 45.04. Tax Covenants ............................................................................. 13 ARTICLE XLVI REDEMPTION OF BONDS............................................................. 13 SECTION 46.01. Extraordinary Redemption........................................................... 13 SECTION 46.02. Optional Redemption................................................................... 14 SECTION 46.03. Effect of Redemption................................................................... 14 ARTICLE XLVII MUNICIPAL BOND INSURANCE; 2007 SERIES A RESERVE FACILITY....................................................................... 14 ARTICLE XLVIII MISCELLANEOUS PROVISIONS.................................................. 14 SECTION 48.01. 2007 Series A Bond Insurer......................................................... 14 SECTION 48.02. Validity of Supplement................................................................ 14 SECTION 48.03. Terms of 2007 Series A Bonds Subject to the Trust Agreement.................................................................................... 15 SECTION 48.04. Assignment Acknowledged......................................................... 15 SECTION 48.05. Effective Date of Sixth Supplemental Trust Agreement............. 15 SECTION 48.06. Execution in Counterparts.........:.................................................. 15 OHS WEST:260146115.3 _i_ TABLE OF CONTENTS (continued) Page EXHIBIT A FORM OF 2007 SERIES A BOND ...................................................................A-1 EXHIBIT B DESCRIPTION OF 2007 SERIES A_PROJECT...............................................B-1 EXHIBIT C FORM OF REQUISITION—COSTS OF ISSUANCE.....................................C-1 EXHIBIT D FORM-OF REQUISITION—PROJECT FUND...............................................D-1 EXHIBIT E SCHEDULE OF REFUNDED BONDS............................................................ E-1 OHS WEST:260146115.3 -Il- THIS SIXTH SUPPLEMENTAL TRUST AGREEMENT dated as of March 1, 2007, by and between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority"), a joint exercise of powers authority, duly organized and validly existing pursuant to an Agreement entitled "County of Contra Costa Public Financing Authority Joint Exercise of Powers Agreement'by and between the County of Contra Costa and the Contra Costa County Redevelopment_Agency, and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association qualified to accept and administer the trusts hereby created, as successor trustee (together with any successor thereto, the "Trustee"), being supplemental to the trust agreement dated as of February 1, 1999, by and between U.S. Bank Trust National Association, as original trustee and the Authority; WITNESSETH: WHEREAS, the County of Contra Costa (the "County") has leased certain real property (as further defined herein, the "Facilities") to the Authority pursuant to a Master Site Lease, dated as of February 1, 1999 (together with amendments from time to time thereto, called the"Site Lease"); WHEREAS, the County and the Authority have entered into a Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (herein called the "Sixth Amendment to Master Site Lease"), to amend the. Site Lease in certain respects and to lease to the Authority certain additional real property; WHEREAS, the Authority is leasing certain Facilities to the County pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, including as amended by the Sixth Amendment to Facility Lease,.dated as of March 1, 2007 (herein, together with other amendments thereto, collectively called the"Facility Lease"); WHEREAS,the U.S. Bank Trust National Association, as original trustee, and the Authority have heretofore executed the Trust Agreement, dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001, between the Authority and State Street Bank and Trust Company of California, N.A., as successor trustee and predecessor to the Trustee,. the Second Supplemental Trust Agreement dated as of May 1, 2001, the Third Supplemental Trust Agreement dated as of June 1, 2002, the Fourth Supplemental Trust Agreement dated as of July 1, 2002, the Fifth Supplemental Trust Agreement dated as of July 1, 2003 and as supplemented by this Sixth Supplemental Trust Agreement dated as of March 1, 2007 (herein, together with other supplements thereto, collectively called the "Trust Agreement'); WHEREAS., the Authority has heretofore issued pursuant to the Trust Agreement $74,685,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999 Series A Bonds"), $18,030,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds"), $23,775,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"), $12,650,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A (the "2002 Series A OHS WEST:260146115.3 Bonds"), $25,440,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B (the "2002 Series B Bonds") and $18,500,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2003 Series A (the "2003 Series A Bonds"), to acquire the leasehold in the Facilities and to assist the County in financing and refinancing various capital projects (as further defined herein, the"Project"); WHEREAS, the County has determined that it is in the best interest of the County and has requested the Authority to refund and defease a portion of the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001-Series B Bonds, the 2002 Series A Bonds and the 2002 Series B Bonds(as further defined herein, the"2007 Refunded Bonds"); WHEREAS, First Trust of California, National Association (now succeeded by The Bank of New York Trust Company, N.A.), as trustee.(the "1997 Trustee") executed and delivered $34,910,000 aggregate principal amount of Certificates of Participation (Capital Projects Program), Series of 1917 (the "1997 Certificates")pursuant to a Trust Agreement, dated as of August 1, 1997, by and among the County, the Authority and the 1997 Trustee for the purpose of refunding the Certificates of Participation (1991 County Buildings Acquisition Project), which financed the costs of the acquisition and improvement of certain county administration facilities, and financing the acquisition of certain additional capital improvements; WHEREAS, the County has determined that it is in the best interest of the County to prepay and defease the outstanding 1997 Certificates; WHEREAS, in order to provide funds for the financing of the 2007 Series A Project (hereinafter defined) and the refunding of the 2007 Refunded Bonds and all of the outstanding 1997 Certificates the County has requested that the Authority issue the 2007 Series A Bonds (hereinafter defined) and acquire a leasehold interest in the 2007 Series A Facilities (hereinafter defined) and lease the same back to the County; WHEREAS, the Authority may at any time, with the consent of the Bond Insurer, issue Additional Bonds payable from, and secured by a pledge of and lien upon,the Revenues, as provided in Section 3.03 of the Trust Agreement, provided that the proceeds of such Additional Bonds be applied to, among other things, the acquisition (by purchase or lease) of facilities to be added to the Facilities or the refunding of any Bonds then Outstanding; WHEREAS, the County will lease to the Authority certain capital assets of the County (as further defined herein, the "2007 Series A Facilities") pursuant to the Sixth Amendment to Master Site Lease; WHEREAS, the County will lease the 2007 Series A Facilities from the Authority pursuant to the terms of the Facility Lease; WHEREAS, under the Sixth Amendment to Facility Lease, the County is obligated to pay increased base rental payments to the Authority; WHEREAS, all rights to receive such base rental payments have been pledged without recourse by the Authority to the Trustee pursuant to the Trust Agreement; OHS WEST:260146115.3 2 WHEREAS, in.consideration of such increased base rental payments and other adequate consideration,the Authority has agreed to issue bonds entitled"County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A" (the "2007 Series A Bonds"), in the aggregate principal amount of . $ , and in connection therewith the Authority and the County have provided for the amendment of the Site Lease_and the_Facility Lease; WHEREAS, the 2007 Series A Bonds are payable from Revenues on, a parity basis with the Outstanding Bonds and any Additional Bonds hereafter issued by the Authority under the Trust Agreement; and WHEREAS, the Authority has determined that all acts and proceedings required by law necessary to make the 2007 Series A Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Authority payable in accordance with their terms, and to constitute the Trust Agreement a valid and binding agreement of the parties hereto for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Sixth Supplemental Trust Agreement have been in all respects duly authorized; NOW, THEREFORE, THIS SIXTH SUPPLEMENTAL TRUST AGREEMENT WITNESSETH, that in order to secure the full and timely payment of the principal,of, premium, if any, and the interest on all Bonds at any time issued and outstanding under the Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE XLIII DEFINITIONS;.EQUAL SECURITY SECTION 43.01. Additional Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of the Trust Agreement and of any amendment hereof or supplement.hereto and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein and to the extent the definitions in this Section differ from the definitions of such terms contained in Section 1.01 of the Trust Agreement, the definitions in this Section shall control and the definitions in Section 1.01 shall be amended accordingly. Capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Facility Lease. OHS WEST:260146115.3 3 Facility Lease The term "Facility Lease" means that certain lease, entitled "Facility Lease (Various Capital Projects)," by and between the Authority and the County, dated as of February 1, 1999, which. lease or.a memorandum thereof was recorded in the office of the County Recorder of.the County on March.4, 1999 under Recorder's Serial No..99:-0059812,.as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof, including the Sixth Amendment to Facility Lease. Site Lease The term "Site Lease" means that certain lease, entitled "Master Site Lease," by and between the County and the Authority, dated as of February 1, 1999, which lease or a memorandum thereof was recorded in the office. of the County Recorder of the County on March 4, 1999 under Recorder's Serial Number 99-0059811, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof including the Sixth Amendment to Master Site Lease. Sixth Amendment to Facility Lease The term "Sixth Amendment to Facility Lease" means that certain lease and instrument, entitled"Sixth Amendment to Facility Lease,"by and between the Authority and the County, dated as of March 1, 2007, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County on , 2007 under Recorder's Serial No. , as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof. Sixth Amendment to Master Site Lease The term "Sixth Amendment to Master Site Lease" means that certain lease and instrument, entitled "Sixth Amendment to Master Site Lease," by and between the County and the Authority, dated as of March 1, 2007, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County on , 2007 under Recorder's Serial Number , as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof. Sixth Supplemental Trust Agreement The term "Sixth Supplemental Trust Agreement" means this Sixth Supplemental Trust Agreement, dated as of March 1, 2007, by and between the Trustee and the Authority, executed and delivered in accordance with the Trust Agreement and which is supplemental to the Trust Agreement. OHS WESr:260146115.3 4 1997 Certificates The term "1997 Certificates:" means the $34,910,000 Certificates of Participation (Capital Projects Program), Series of 1997, evidencing proportionate ownership interests of the owner thereof in payments to be made by the County as rental for certain land and facilities pursuant to a lease agreement, dated as of August 1, 1997, by and between the County.and the Authority. 1997 Escrow Agent The term "1997 Escrow Agent" means The Bank of New York Trust Company, N.A., as successor to U.S. Trust Company of California, N.A., as the 1997 Trustee, or its successor thereto. 1997 Escrow Agreement The term "1997 Escrow Agreement" means that certain Escrow Agreement, by and between the 1997 Escrow Agent and the County, dated as of March 1, 2007, providing for the defeasance and prepayment of the 1997 Certificates. 1997 Escrow Fund The term "1997 Escrow Fund" means the fund of the same name defined in the 1997 Escrow Agreement. 1997 Trust Agreement The term "1997 Trust Agreement' means that certain trust agreement dated as of August 1, 1997, among the Authority,the County and the 1997 Trustee authorizing the execution and delivery of the 1997 Certificates. 1997 Trustee The term "1997 Trustee"means The Bank of New York Trust Company, N.A., as successor to U.S. Trust Company of California,N.A., as trustee for the 1997 Certificates. 2007 Escrow Agent The term "2007 Escrow Agent' means The Bank of New York Trust Company, N.A., as escrow agent. 2007 Escrow Agreement The term "2007 Escrow Agreement' means that certain Escrow Agreement, by and between the 2007 Escrow Agent and the County, dated as of March 1, 2007, providing for the defeasance and prepayment of the 2007 Certificates. OHS WEST:260146115.3 5 2007 Escrow Fund The term "2007 Escrow Fund" means the fund of the same name defined in the 2007 Escrow Agreement. 2007 Refunded Bonds The term "2007 Refunded Bonds"means that portion of the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds, the. 2002 Series A Bonds, the 2002 Series B and the 2003 Series A Bonds refunded by the 2007 Series A Bonds and identified in Exhibit E hereto.. 2007 Series A Bond Insurance Policy The term "2007 Series A Bond Insurance Policy" means the insurance policy issued by the 2007 Series A Bond Insurer guaranteeing the scheduled payment of principal of and interest on all or a portion of the 2007 Series A Bonds when due. 2007 Series A Bond Insurer The term "2007 Series A Bond Insurer" means MBIA Insurance Corporation, or any successor thereto or assignee thereof. 2007 Series A Bonds The term "2007 Series A Bonds" means the bonds issued by the Authority under and pursuant to the Trust Agreement and this Sixth Supplemental Trust Agreement, the proceeds. of which will be applied to the financing of the 2007 Series A Project, the refunding of the 2007 Refunded Bonds, the prepayment of the 1997 Certificates, the funding of a portion of the. Reserve Fund Requirement and the payment of costs related thereto. 2007 Series A Continuing Disclosure Agreement The term "2007 Series A Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement between the County and the Trustee dated the date of issuance of the 2007 Series A Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. 2007 Series A Costs of Issuance Fund The term "2007 Series A Costs of Issuance Fund"means the fund by that name established pursuant to Section 45.01 of this Sixth Supplemental Trust Agreement. 2007 Series A Facilities The term "2007 Series A Facilities" means additional Facilities consisting of the following: OHSWEST:260146115.3 6 The Martinez Health Clinic, 2500 Alhambra Avenue,Martinez, CA 94553 The Juvenile Detention Facility, 202 Glacier Drive, Martinez, CA 94553 j2007 Series A Financial Guaranty Agreement The term "2007 Series A Financial Guaranty Agreement" means the Financial. Guaranty Agreement, dated the date of issuance of the 2007 Series A Bonds, between the Authority and the 2007 Series.A Reserve Facility Provider.] 2007 Series A Project The term "2007 Series A Project' means the Subsequent Phase of the Project financed with the proceeds of the 2007 Series A Bonds being the facilities and improvements described in Exhibit B to this Sixth Supplemental.Trust Agreement, as the same may be changed by notice to the Trustee from the County. 2007 Series A Project Fund The term "2007 Series A Project Fund" means the fund of that name created pursuant to Section 45.02. (2007 Series A Reserve Facility The term"2007 Series A Reserve Facility" means the surety bond, effective as of the date of issuance of the 2007 Series A Bonds, issued by the 2007 Series A Reserve Facility Provider.] [2007 Series A Reserve Facility Provider The term "2007 Series A Reserve Facility Provider" means [Insurer], as issuer of the 2007 Series A Reserve Facility.] ARTICLE XLIV THE BONDS SECTION 44.01. Authorization of 2007 Series A Bonds. (a) A seventh Series of Bonds is hereby created and designated "County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A." The aggregate principal amount of 2007 Series A Bonds which may be issued and Outstanding under this Sixth Supplemental Trust Agreement shall not exceed $ . The 2007 Series A Bonds shall be payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues equal to the pledge, charge and lien securing the Outstanding Bonds. The 2007 Series A Bonds are issued in accordance with Article III. OHS WEST:260146115.3 7 (b) The Authority has reviewed all proceedings heretofore taken relative to the authorization of the 2007 Series A Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to.have happened and to have been performed precedent to and in the issuance of the 2007 Series A Bonds do exist, have happened and have been performed in 'due time, form and manner as required by law, and that the Authority is. now duly authorized, pursuant to each and every requirement of the Act, to issue the 2007 Series A Bonds in the form and manner provided herein for the purpose of providing funds to finance the Project, including the 2007 Series A Project, to refund the 2007 Refunded Bonds and to prepay the 1997 Certificates and that the 2007 Series A Bonds shall be entitled to the benefit,protection and security of the provisions hereof. (c) The validity of the issuance of the 2007_.Series A Bonds shall not be dependent on or affected in any way by the proceedings taken by the Authority for the finance and refinancing of the Project or by any contracts made by. the Authority or its agents in connection therewith, and shall not be dependent upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The 2007 Series A Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive 2007 Series A Bonds (or any temporary 2007 Series A Bonds exchangeable therefor) shall have been delivered to the. purchaser thereof and the proceeds of sale thereof received. SECTION 44.02. Terms of the 2007 Series A Bonds. (a) The 2007 Series A Bonds shall be issued in the aggregate principal amount of $ The 2007 Series A Bonds shall be dated the date of issuance thereof, shall be issued only in fully registered form in Authorized Denominations (not exceeding the principal amount of 2007 Series A Bonds maturing at any one time), and shall mature in the years and in -the principal amounts and bear interest at the rates as set forth in the following schedule, subject to prior redemption as described in Article XLVI hereof. OHS WESr:260146115.3 8 County of Contra Costa Public Financing Authority Lease Revenue Bonds(Refunding and Various Capital Projects), 2007 Series A Maturity Date June 1 Principal Amount Interest Rate 5 The 2007 Series A Bonds shall bear interest at the rates set forth above, payable commencing [June 1, 2007], and semiannually thereafter on June 1 and December 1 in each year. The 2007 Series A Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication.thereof, unless such date of authentication is an Interest Payment Date, in which event they shall bear interest from such date,or unless such date of authentication is prior to the Record Date for the first Interest Payment Date, in which event they shall bear interest from their dated date. The amount of interest so payable on any Interest Payment Date shall be computed on-the basis of a 360-day year consisting of twelve 30-day months. (b) Payment of interest.on the 2007 Series A Bonds due on or before the maturity or prior redempti©n thereof shall be paid by check mailed by first class mail on each Interest Payment Date to the person in whose name the Bond is registered as of the applicable Record Date for such Interest Payment Date at the address shown on the registration books maintained by the Trustee pursuant to Section 2.07; provided, however, that interest on the 2007 Series A ��WEST:260146115.3 9 Bonds shall be paid by wire transfer or other means to provide immediately available funds to any Owner of at least $1,000,000 in aggregate principal amount of such Series of Bonds, at its option, to an account within the United States of America according to wire instructions given to the Trustee in writing for such purpose and on file as of the applicable Record Date preceding the Interest Payment Date in accordance with Section 2.02 of the Trust Agreement. SECTION 44.03. Form of 2007 Series A Bonds. The 2007 Series A Bonds and the authentication and registration endorsement and assignment to appear thereon shall be substantially in the form set forth in Exhibit A hereto attached and by this reference herein incorporated. SECTION 44.04. Execution of 2007 Series A Bonds. The Chair or the Executive Director of the Authority is hereby authorized and directed to execute each of the 2007 Series A Bonds on behalf of the Authority and the Secretary or Assistant Secretary of the Authority is hereby authorized and directed to countersign each of the 2007 Series A Bonds on behalf of the Authority. The signatures of such officers may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the 2007 Series A Bonds shall cease to be such officer before the delivery of the 2007 Series A Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the 2007 Series A Bonds. Only those 2007 Series A Bonds bearing thereon a certificate of authentication in the form set forth in Exhibit A hereto, executed manually and dated by the Trustee, shall be entitled to any benefit,protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the 2007 Series A Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof. SECTION 44.05. Transfer, Exchange and Payment of 2007 Series A Bonds. Any 2007 Series A Bond may, in accordance with its terms, be transferred, paid or exchanged as provided in Section 2.05 through Section 2.08,inclusive. SECTION 44.06. Special Covenants as to Book-Entry Only System for 2007 Series A Bonds. (a) Except as otherwise provided in subsections (b) and (c) of this Section 44.06, all of the 2007 Series A Bonds initially issued shall be registered'in the name of Cede & Co., as nominee for DTC, or such other nominee as DTC shall request pursuant to the Representation. Letter. Payment of the interest on any 2007 Series A Bond registered in the name of Cede &Co. shall be made on each Interest Payment Date for such 2007 Series A Bonds to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. (b) The 2007 Series A Bonds initially shall be issued in the form of a single authenticated fully registered bond for each stated maturity of such 2007 Series A Bonds, representing the aggregate principal amount of the 2007 Series A Bonds of such maturity. Upon initial issuance, the ownership of all such. 2007 Series A Bonds shall be registered in the registration records maintained by the Trustee pursuant to Section 2.07 in the name of Cede& OHS WEST:260146115.3 10 Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the 2007 Series A Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such 2007 Series A Bonds, selecting the 2007 Series A Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Bondholders hereunder, registering the transfer of 2007 Series A Bonds, obtaining any consent or other action to be taken by Bondholders of the 2007 Series A Bonds and for all other purposes whatsoever; and neither the Trustee nor the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility or obligation to any "Participant" (which shall mean, for purposes of this Section 44.06, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the 2007 Series A Bonds under or through DTC or any Participant, or any, other person which is not shown on the registration records as being a Bondholder, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii)the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the 2007 Series A Bonds, (iii) any notice which is permitted or required to be given to Bondholders of 2007 Series A Bonds hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the 2007 Series A Bonds, or(v) any consent given or other action taken by DTC as Bondholder of 2007 Series A Bonds. Notwithstanding anything to the contrary contained in this Trust Agreement, the Trustee shall pay all principal of and premium, if any, and interest on the 2007 Series A Bonds only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the Authority's obligations with respect to the - payment of the principal of and premium, if any, and interest on the 2007 Series A Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the 2007 Series A Bonds will be transferable to such new nominee in accordance with subsection(e) of this Section 44.06. (c) In the event that the Authority determines that the 2007 Series A Bonds should not be maintained in book-entry form, the Trustee shall, upon the written instruction of the Authority, so notify DTC,.whereupon DTC shall notify the Participants of the availability through DTC of bond certificates. In such event, the 2007 Series A Bonds will be transferable in accordance with subsection (e) of this Section 44.06. DTC may determine to discontinue providing its services with respect to the 2007 Series A Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the Authority or the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the 2007 Series A Bonds will be transferable in accordance with subsection(e) of this Section 44.06. If at any time DTC shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then this Section 44.06 shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the 2007 Series A Bonds as provided below. Whenever DTC requests the Authority and the Trustee to do so, the Trustee and the Authority will cooperate with DTC in taking appropriate action after reasonable OHS WEST:260146115.3 11 notice to arrange for another securities depository to maintain custody of all certificates evidencing the 2007 Series A Bonds then Outstanding. In such event, the 2007 Series A Bonds will be transferable to such securities depository in accordance with subsection (e) of this Section 44.06, and thereafter, all references in this Sixth Supplemental Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as-appropriate. (d) Notwithstanding any other provision of this Sixth Supplemental Trust Agreement to the contrary, so long as all 2007 Series A Bonds Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal of and premium, if any, and interest on each such 2007 Series A Bond and all notices with respect to each such 2007 Series A Bond shall be made and given, respectively, to DTC as provided in or pursuant to the Representation Letter. (e) In the event that any transfer or exchange of 2007 Series A Bonds is authorized under subsection (b) or (c) of this Section 44.06, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered owner thereof of the 2007 Series A Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.05 and 2.06. In the event 2007 Series A Bond certificates are issued to Bondholders other than Cede & Co., its successor as nominee for DTC as holder of all the 2007 Series A Bonds, _another securities depository as holder of all the 2007 Series A Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.05 and 2.06 shall also apply to, among other things, the registration, exchange and transfer of the 2007 Series A Bonds and the method of payment of principal of,premium, if any, and interest on the 2007 Series A Bonds. SECTION 44.07. Compliance with 2007 Series A Continuing Disclosure Agreement. Pursuant to Section 15.08 of the Facility Lease, the County has undertaken all responsibility for compliance with continuing disclosure requirements, and the Authority shall have no liability to the Owners of the 2007 Series A Bonds or any other person with respect to Securities and Exchange Commission Rule 15c2-12. The County has agreed, under the 2007 Series A Continuing Disclosure Agreement, to perform or cause to be performed all of the provisions thereof to be performed by the Dissemination Agent. Notwithstanding any other provision of this Trust Agreement, failure of the ,County to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations under Section 15.08 of the Facility Lease or under.this Section 44.07. For purposes of this Section, `Beneficial Owner" means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). OHS WEST:260146115.3 12 ARTICLE XLV ISSUANCE OF BONDS SECTION 45.01. Procedure for the Issuance of 2007 Series A Bonds. At any time after the sale of the 2007.Series A Bonds in accordance with the Act, the Authority shall execute the 2007 Series A Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the 2007 Series A Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon the Written Request of the Authority and upon receipt of payment therefor from the purchaser thereof. Upon receipt of payment for the 2007 Series A Bonds from the purchaser thereof, the Trustee shall, unless otherwise instructed by the Authority, transfer or deposit the proceeds received from such sale (including the good faith deposit received.from the purchaser) to the following respective parties or to the following respective accounts or funds, in the following order of priority: (i) deposit the amount of$ in the 2007 Series A Costs of Issuance Fund,which fund is hereby created and which fund the Trustee hereby covenants and agrees to maintain. All money in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the 2007 Series A Bonds upon receipt of a Written Request of the Authority in the form attached hereto as Exhibit C, filed with the Trustee; each of which shall be sequentially numbered and shall state the person(s)to whom payment is to be made, the amount(s)to be paid,the purpose(s) for which the obligation(s) was incurred and that such payment is a proper charge against said fund. On December 1, 2007, or upon the earlier Written Request of the Authority, any remaining balance in the 2007 Series A Costs of.Issuance Fund shall be transferred to the 2007 Series A Project Fund and the 2007 Series A Costs of Issuance Fund shall be closed; (ii) transfer the amount of$ to the 1997 Escrow Agent for deposit in the 1997 Escrow Fund; (iii) transfer the amount of$ to the 2007 Escrow Agent for deposit in the 2007 Escrow Fund; The Trustee shall also receive the amount of$ from the 1997 Trustee from the reserve fund for the 1997 Certificates together with $ from the proceeds of the 2007 Series A Bonds which amount the Trustee shall deposit in the Reserve Fund in order to cause the Reserve Fund to contain the Reserve Fund Requirement. (iv) deposit the amount of$ ,being the balance of the proceeds, in the 2007 Series A Project Fund. SECTION 45.02.. 2007 Series A Project Fund. The Trustee herehy agrees to establish and maintain so long as any 2007 Series A Bonds are Outstanding the 2007 Series A Project Fund (the "2007 Series A Project Fund"). The initial payment into the 2007 Series A Project Fund is provided by Section 45.01. The moneys in the 2007 Series A Project Fund shall be disbursed by the Trustee upon the Written Request of the County in the form attached hereto OHS WEST:260146115.3 13 as Exhibit D, for the payment of costs relating to the financing of the 2007 Series A Project: All interest earnings or profits received from investments of amounts in the 2007 Series A Project Fund shall be deposited in the 2007 Series A Project Fund until completion of the 2007 Series Project and thereafter any remaining amounts in the 2007 Series A Project Fund will be deposited first in the Reserve Fund, to the extent necessary to make amounts on deposit in:the Reserve--Fund equal to_ the Reserve Fund Requirement, and then in the Revenue_ Fund and;the 2007 SeriesA Project Fund shall be closed. SECTION 45.03. Reserve Fund Requirement Calculation. Following issuance of the 2007 Series A Bonds, the Reserve Fund Requirement for the Outstanding Bonds will equal $ an amount equal to [125% of average]/[maximum] annual debt service on the Outstanding Bonds. Such amount will be satisfied by the current deposit in the Reserve Fund of $ and the existing Reserve Facilities issued in the aggregate amount of $ , plus.the deposit with the Trustee of [the 2007 Series A Reserve Facility in the amount of$ I[cash in the amount of$ ]. The Trustee is hereby directed to accept and acknowledge receipt of the [2007 Series A Reserve Facility][cash deposit] prior to the delivery of the 2007 Series A Bonds to the purchaser thereof. The Reserve Fund Requirement shall only be calculated upon the issuance of a Series of Bonds and upon the retirement or defeasance of a Series of Bonds. The Authority shall provide to the Trustee.the amount so-calculated. SECTION 45.04. Tax Covenants The provisions of Section 6.03 are applicable to the 2007 Series A Bonds, the interest on which is intended by the Authority to be excluded from gross income of the Owner thereof for federal income tax purposes. ARTICLE XLVI REDEMPTION OF BONDS SECTION 46.01. Extraordinary Redemption. The 2007 Series A Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities,. upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations, from prepayments made by the County pursuant to Section 7.02 of the Facility Lease, at a redemption price equal to the sum of.the principal amount thereof, without premium, plus accrued interest thereon to the Redemption Date. Whenever less than all of the Outstanding Bonds are to be redeemed on any one date,the Trustee shall select, in accordance with written directions from the Authority, the Bonds to be redeemed in part from the Outstanding Bonds so that the aggregate annual principal amount of and interest on Bonds which shall be payable after such Redemption Date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on Bonds Outstanding prior to such Redemption Date. SECTION 46.02: Optional Redemption. The 2007 Series A Bonds maturing on or prior to June 1, 20_, are not subject to optional redemption. The 2007 Series A Bonds maturing on or after June 1, 20_, are subject to redemption prior to their respective stated maturities at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing OHS WEST:260146115.3 14 by the Authority to the Trustee) on or after June 1, 20_, at the following prices (expressed as a percentage of the principal amount of 2007 Series A Bonds called for redemption), plus accrued interest to the date fixed for redemption: Redemption Period (dates inclusive) Redemption Price June 1, 20_through May 31, 20_ % June 1, 20 through May 31, 20_ June 1, 20 -and thereafter SECTION 46.03. Effect of Redemption. All 2007 Series A Bonds redeemed pursuant to.the provisions of this Article and Article IV shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued. ARTICLE XLVII MUNICIPAL BOND INSURANCE; 2007 SERIES A RESERVE FACILITY [TO COME] ARTICLE XLVIII MISCELLANEOUS PROVISIONS SECTION 48.01. 2007 Series A Bond Insurer. The 2007 Series A Bond Insurer shall have the benefit of all provisions relating to the 1999 Series B Bond Insurer included in the Facility Lease, the Site Lease and the Trust Agreement and any references to the "Bond Insurer" shall include the 2007 Series A Bond Insurer, and the 2007 Series A Bond Insurer is hereby included as a third party beneficiary to the Trust Agreement. SECTION 48.02. Validity of Sup lep meat. The County, the Authority and the Trustee hereby determine that the amendments set forth herein do not adversely affect the interest of the Owners, shall become binding without the written consents of any Owners, and are in compliance with the provisions of Section 9.01(b) of the Trust Agreement. The Trustee is making such.determination based solely in reliance upon an Opinion of Counsel and the determination of the County and the Authority and the consent of the Bond Insurer. SECTION 48.03. Terms of 2007 Series A Bonds Subject to the Trust Agreement. Except as in this Sixth Supplemental Trust Agreement expressly provided, every term and condition contained in the Trust Agreement shall apply to this Sixth Supplemental Trust Agreement and to the 2007 Series A Bonds with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Sixth Supplemental Trust Agreement. This Sixth Supplemental Trust Agreement and all the terms and provisions herein contained shall form part of the Trust Agreement as fully and with the same effect as if all such OHS WEST:260146115.3 15 terms and provisions had been set forth in the Trust Agreement. The Trust Agreement is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as supplemented and amended hereby. SECTION 48.04. Assignment Acknowledged. Pursuant to the Trust Agreement, the Base.Rental Payments-have been assigned to. the Trustee and such assignment _ - extends to and includes the Base Rental Payments increased pursuant to the Sixth Amendment to Facility Lease. The assignment of the Base Rental Payments increased pursuant to the Sixth Amendment to Facility Lease to the Trustee is hereby approved, consented to, acknowledged and confirmed. SECTION 48.05. Effective Date of Sixth Supplemental Trust Agreement. This Sixth Supplemental Trust Agreement shall take effect upon its execution and delivery. SECTION 48.06. Execution in Counterparts. This Sixth Supplemental Trust Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHS WEST:260146115.3 16 IN WITNESS WHEREOF, the parties hereto have executed this Sixth Supplemental Trust Agreement by their officers thereunto duly authorized as of the day and year first written above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Chair Attest: John B. Cullen Executive Director and Secretary By: Assistant Executive Director THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By: Authorized Officer Acknowledged and Approved: COUNTY OF CONTRA COSTA By: Title: Senior Deputy County Administrator /Debt Manager, County of Contra Costa OHS WEST:260146115.3 17 CONSENT OF BOND INSURER The undersigned, as Bond Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series B, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B and the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2003 Series A hereby consents to the execution and delivery of the Sixth Supplemental Trust Agreement dated as of March 1, 2007 between the County of Contra Costa Public Financing Authority and The Bank of New York Trust Company, N.A., as trustee, and to the issuance of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A for the purposes set forth therein. MBIA INSURANCE CORPORATION By: Authorized Officer OHS WEST:260146115.3 EXHIBIT A FORM OF 2007 SERIES A BOND No. $ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES A NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY NOR THE COUNTY OF CONTRA COSTA IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE BONDS AND NO TAX OR OTHER SOURCE OF FUNDS OTHER THAN THE REVENUES HEREINAFTER REFERRED TO IS PLEDGED TO PAY THE INTEREST ON OR PRINCIPAL OF THE BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY OF CONTRA COSTA OR THE CONTRA COSTA COUNTY REDEVELOPMENT AGENCY, THE PARTIES TO THE AGREEMENT CREATING THE AUTHORITY. Interest Maturity Dated Rate Date Date CUSIP June 1, March , 2007 REGISTERED OWNER: CEDE &CO. PRINCIPAL SUM: DOLLARS The COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and validly existing under and pursuant to the laws of the State of California(the "Authority"), for value received, hereby promises to pay(but only out of the Revenues hereinafter referred to) to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest on such principal sum from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is registered as of an interest payment date or during the period from the OHS WEST:260146115.3 A-1 fifteenth calendar day of the month preceding an interest payment date to such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated prior to [May 15, 2007], in which event it shall bear interest from the Dated Date specified above) until the principal hereof shall have been paid at the interest rate per annum specified above, payable on [June 1, 2007], and semiannually thereafter on each June 1 and December 1. Interest due on or before the maturity or prior redemption of this Bond shall be payable only by check mailed by first-class mail to the registered owner hereof, provided that upon the written request of a Bondholder of$1,000,000 or more in aggregate principal amount of Bonds of the Series of which this Bond is a part received by the Trustee (defined hereinafter) prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds to an account within the United States of America. The principal hereof is payable in lawful money of the United States of America upon presentation of this Bond at the principal office of the Trustee. This Bond is one of a duly authorized issue of bonds of the Authority designated as its "County of Contra Costa Public Financing Authority Lease Revenue Bonds" (the `Bonds") unlimited as to principal amount and is one of a duly authorized series of such Bonds known as "(Refunding and Various Capital Projects), 2007 Series A" (the "2007 Series A Bonds") issued in an aggregate principal amount of$ , all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions of a Trust Agreement, dated as of February 1, 1999, a First Supplemental Trust Agreement, dated as of January 1, 2001 a Second Supplemental Trust Agreement dated as of May 1, 2001, a Third Supplemental Trust Agreement, dated as of June 1, 2002, a Fourth Supplemental Trust Agreement, dated as of July 1, 2002, a Fifth Supplemental Trust Agreement, dated as of July 1, 2003 and a Sixth Supplemental Trust Agreement dated as of March 1, 2007 (collectively, as amended from time to time, the "Trust Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (together with any successor as trustee under the Trust Agreement, the "Trustee") (copies of the Trust Agreement are on file at the principal office of the Trustee in San Francisco, California). The Bonds are issued to provide funds to finance and refinance the acquisition, construction, improvement, equipping, remodeling and refinancing of certain public buildings and related facilities, located in the County of Contra Costa (as more fully defined in the Trust Agreement, the "Project"). The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from certain proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and the revenues (as more fully defined in the Trust Agreement, the "Revenues") derived from Base Rental Payments and other payments made by the County of Contra Costa (the "County"), and all interest or other investment income thereon, pursuant to the Facility Lease (Various Capital Projects), dated as of February 1, 1999• (as amended from time to time, including the Sixth Amendment to Facility Lease, dated as of March 1, 2007, the " Facility Lease"), by and between the Authority and the County, and the Authority is not obligated to pay the interest or premium, if any, on and principal of the Bonds except from the Revenues. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Trust Agreement by a pledge and assignment of OHS WEST:260146115.3 A-2 and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest or premium, if any, on and principal of the Bonds as provided in the Trust Agreement. The full faith and credit of the Authority, the Contra Costa County Redevelopment Agency (the "Agency") and the County are not pledged for the payment of the interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Authority or any of its income or receipts except the Revenues, and neither the payment of the interest on nor principal (or premium, if any) of the Bonds is a debt, liability or general obligation of the Authority, the County or any member of the Authority for which such entity is obligated to levy or pledge any form of taxation. Additional bonds payable from the Revenues may be issued which will rank equally as to security with the Bonds, but only subject to the conditions and upon compliance with the procedures set forth in the Trust Agreement. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds); and all the terms of the Trust Agreement are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof, agrees and consents. The Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations so that the aggregate annual principal amount of and interest on the Bonds which shall be payable after such redemption date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on the Bonds Outstanding prior to such redemption date, from prepayments of Base Rental Payments made by the County from the proceeds received by the County due to a taking of the Facilities or portions thereof under the power of eminent domain and from the net proceeds of title insurance or insurance received for material damage or destruction to the Facilities or portions thereof received by the Authority from the County, all as provided in and under the circumstances.and terms prescribed in the Facility Lease and the Trust Agreement, at the principal amount thereof plus interest accrued thereon to the date fixed for redemption,without premium. The 2007 Series A Bonds maturing on or prior to June 1, 20_, are not subject to optional redemption. The 2007 Series A Bonds maturing on or after June 1, 20_, are subject to redemption prior to their respective.stated maturities at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by.the Authority to the Trustee) on or after June 1, 20_, at the following prices (expressed as a percentage of the principal amount of 2007 Series A Bonds called for redemption),plus accrued interest to the date fixed for redemption: OHS WEST:260146115.3 A-3 Redemption Period (dates inclusive) Redemption Price June 1, 20_through May 31, 20_ % June 1, 20_through May 31, 20_ June 1, 20_and thereafter Notice of redemption of this Bond shall be given by first-class mail not less than thirty(30) days nor more than sixty(60) days before the redemption date to the registered owner of any.Bond selected for redemption, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly given as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Bond shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and .from and after the date so designated, interest on this Bond shall cease to accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof. If an Event of Default (as defined in the Trust Agreement) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Trust Agreement. The Trust Agreement provides that in certain events such declaration and its consequences may be rescinded by the holders of not less than a majority in aggregate principal amount of the Bonds then outstanding or by the Trustee. This Bond is transferable only on a register to be kept for that purpose at the above-mentioned corporate trust office of the Trustee by the registered owner hereof in person or by the duly authorized attorney of such owner upon payment of the charges provided in the Trust Agreement and upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or the duly authorized attorney of such owner, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount in authorized denominations will. be issued to the transferee in exchange therefor. The Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of this Bond shall be made only to such registered owner,which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the .Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee. OHS WEST:260146115.3 A-4 It is hereby certified and recited that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Act, and by the Constitution and laws of the State of California, that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the-Constitution or laws of the State of California and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement. IN WITNESS WHEREOF, the County of Contra Costa Public Financing Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and countersigned by the manual or facsimile signature of the Secretary of said Authority, and has caused this Bond to be dated as of the Dated Date specified above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Chair Countersigned: Secretary OHS WES7:260146115.3 A-5 [FORM OF CERTIFICATE OF AUTHENTICATION TO APPEAR ON 2007 Series A BONDS] This is one of the Bonds described in the within-mentioned Trust Agreement which has been registered and authenticated on THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By Authorized Signatory OHS WEST:260146115.3 A-6 [INSERT STATEMENT OF INSURANCE] OHS WEST:2601461153 A-7 1 [FORM OF ASSIGNMENT TO APPEAR ON 2007 SERIES A BONDS] For value received the undersigned hereby sells, assigns and transfers unto (Taxpayer Identification Number: ) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within bond on the books kept for registration thereof,with full power of substitution in the premises. NOTE: The signature to this Assignment must correspond with the name as written on the face of the Bond in every particular, without alteration or enlargement or any change whatever. Dated: PLEASE INSERT SOCIAL SECURITY NUMBER,TAXPAYER IDENTIFICATION NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature Guaranteed: NOTE: Signature must be guaranteed by an eligible guarantor institution. OHS WEST:260146115.3 A-8 . EXHIBIT B DESCRIPTION OF 2007 SERIES A PROJECT Acquisition, construction, improvement and/or equipping of the following facilities: Approximate Project Financed Cost Clerk-Recorder Building, 555 Escobar Street $ 7,800,000 District Attorney Building, 950 Ward Street 15,250,000 Public Works Building, 255 Glacier Drive 5,000,000 Pittsburg Health Center, Pittsburg 2,100,000 Concord Health Clinic, 2948 and 3052 Willow Pass Road, Concord 2,200,000 $32,350,000 Acquisition, construction and improvement or other equipment and facilities for the County as set forth in requisitions to the Trustee. By refunding and defeasing the 1997 Certificates the following projects are being refinanced: Project Approximate Cost Refurbishing Public Defender's Office $ 3,500,000 Addition to County Assessor's Office 3,000,000 Remodeling of Third Floor of 50 Douglas Drive 3,000,000 Remodeling of Sheriff's Dispatch Center 1,100,000 Refinancing of 1991 Certificates of Participation 23,000,000 OHS WEST:260146115.3 B-1 EXHIBIT C FORM OF REQUISITION—COSTS OF ISSUANCE Date: No. The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, CA 94108 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (Written Request of the Authority—2007 Series A Costs of Issuance Fund) Ladies and Gentlemen: This letter is our authorization to you to disburse from the 2007 Series A Costs of Issuance Fund provided for in Section 45.02 of the Trust Agreement dated as of February 1, 1999, as amended, including as amended by the Sixth Supplemental Trust Agreement, dated as of March 1, 2007 (the"Trust Agreement")between the County of Contra Costa Public Financing Authority(the"Authority") and The Bank of New York Trust Company,N.A., as trustee, the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and corporations for expenses incident to the issuance of the above-referenced Bonds pursuant to the Trust Agreement. The obligations in the stated amounts have been incurred by the Authority and each item thereof is a proper charge against the 2007 Series A Costs of Issuance Fund. ❑ If checked here you are hereby authorized to close the 2007 Series A Costs of Issuance Fund and transfer any remaining balance (after payment of any amounts indicated in Schedule A)to the 2007 Series A Project Fund. Very truly yours, COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Assistant Executive Director and Assistant Secretary OHS WEST:260146115.3 C-1 SCHEDULE A Item No. Payee Amount Purpose OHS WEST:260146115.3 C-2 EXHIBIT D FORM OF REQUISITION—PROJECT FUND : Date: No. The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, CA 94108 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Protects), 2007 Series A (Written Request of the Authority—2007 Series A Project Fund) Ladies and Gentlemen: This letter is our authorization to you to disburse from the 2007 Series A Project Fund provided for in Section 45.02 of the Trust Agreement dated as of February 1, 1999, as amended, including as amended by the Sixth Supplemental Trust Agreement, dated as of March 1, 2007 (collectively the"Trust Agreement')between the County of Contra Costa Public Financing.Authority(the"Authority") and The Bank of New York Trust Company,N.A., as trustee, the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and corporations for costs related to completion of the Project. The obligations in the stated amounts have been incurred by the County of Contra Costa and each item thereof is a proper charge against the 2007 Series A Project Fund. Very truly yours, COUNTY OF CONTRA COSTA By Senior Deputy County Administrator/Debt Manager ❑ If checked here you are hereby authorized to close the 2007 Series A Project Fund and transfer any remaining balance (after payment of any amounts indicate in Schedule A) in accordance with Section 45.02 of the Trust Agreement. OHS WESr:260146115.3 D-1 SCHEDULE A Item No. Payee, Amount Purpose OHS WESr:260146115.3 D-2 EXHIBIT E SCHEDULE OF REFUNDED BONDS OHS WEST:2601461.15.3 E-1 OHS DRAFT January 23, 2007 I SEVENTH SUPPLEMENTAL TRUST AGREEMENT by and between COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY and THE BANK OF NEW YORK TRUST COMPANY,N.A. Dated as of March 1, 2007 RELATING TO THE$ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES B (Supplementing the Trust Agreement dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001, the Second Supplemental Trust Agreement dated as of May 1, 2001, the Third Supplemental Trust Agreement dated as of June 1, 2002, the Fourth.Supplemental Trust Agreement dated as of July 1, 2002, the Fifth Supplemental Trust Agreement dated as of July 1, 2003 and the Sixth Supplemental Trust Agreement dated as of March 1, 2007) OHS WEST:260157490.2 TABLE OF CONTENTS Page ARTICLE XLIII DEFINITIONS; EQUAL SECURITY ................................................3 SECTION 43.01. Additional Definitions ...................................................................3 ARTICLEXLIV THE BONDS..................__............._..........._........................._..............._6 SECTION 44.01. Authorization of 2007 Series B Bonds..........................................6 SECTION 44.02. Terms of the 2007 Series B Bonds .................................................7 SECTION 44.03. Form of 2007 Series B Bonds........................................................9 SECTION 44.04. Execution of 2007 Series B Bonds ................................................9 SECTION 44.05. Transfer,Exchange and Payment of 2007 Series B Bonds ...........9 SECTION 50.06. Special Covenants as to Book-Entry Only System for 2007 SeriesB Bonds...............................................................................9 SECTION 44.07. Compliance with 2007 Series B Continuing Disclosure Agreement.................................................................................... 11 ARTICLE XLV ISSUANCE OF BONDS ................................................................... 12 SECTION 45.01. Procedure for the Issuance of 2007 Series B Bonds.................... 12 SECTION 45.02. Reserve Fund Requirement Calculation...................................... 13 SECTION 45.04. Tax Covenants ............................................................................. 13 ARTICLE XLVI REDEMPTION OF BONDS............................................................. 13 SECTION 46.01. Extraordinary Redemption........................................................... 13 SECTION 46.02. Optional Redemption................................................................... 14 SECTION 46.03. Effect of Redemption................................................................... 14 ARTICLE XLVII MUNICIPAL BOND INSURANCE; 2007 SERIES B RESERVE FACILITY....................................................................... 14 ARTICLE XLVIII MISCELLANEOUS PROVISIONS.................................................. 14 SECTION 48.01. 2007 Series B Bond Insurer........................................:................ 14 SECTION 48.02. Validity of Supplement................................................................ 14 SECTION 48.03. Terms of 2007 Series B Bonds Subject to the Trust Agreement.................................................................................... 15 SECTION 48.04. Assignment Acknowledged......................................................... 15 SECTION 48.05. Effective Date of Seventh Supplemental Trust Agreement......... 15 SECTION48.06. Execution in Counterparts..................................:......................... 15 OHS WEST:260157490.2 _i_ TABLE OF CONTENTS (continued) Page EXHIBIT A FORM OF 2007 SERIES B BOND...................................................................A-1 EXHIBIT B. FORM OF REQUISITION—COSTS-OF ISSUANCE.....................................B-1 OHS WEST:260157490.2 THIS SEVENTH SUPPLEMENTAL TRUST AGREEMENT dated as of March 1, 2007, by and between the COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority"), a joint exercise of powers authority, duly organized and validly existing pursuant to an Agreement entitled "County of Contra Costa Public Financing Authority Joint Exercise of Powers Agreement"by and between the County of Contra Costa and the Contra Costa County Redevelopment Agency, and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association qualified to accept and administer the trusts hereby created, as successor trustee (together with any successor thereto, the "Trustee"), being supplemental to the trust agreement dated as of February 1, 1999, by and between U.S. Bank Trust National Association, as original trustee and the Authority; WITNESSETH: WHEREAS, the County of Contra Costa (the "County") has leased certain real property (as further defined herein, the "Facilities") to the Authority pursuant to a Master Site Lease, dated as of February 1, 1999 (together with amendments from time to time thereto, called the"Site Lease"); WHEREAS, the County and the Authority have entered into a Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (herein called the "Sixth Amendment to Master Site Lease"), to amend the Site Lease in certain respects and to lease to the Authority certain additional real property; WHEREAS, the Authority is leasing certain Facilities to the County pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as amended, including as amended by the Sixth Amendment to Facility Lease, dated as of March 1, 2007 (herein, together with other amendments thereto, collectively called the"Facility Lease"); WHEREAS, the U.S. Bank Trust National Association, as original trustee, and the Authority have heretofore executed the Trust Agreement, dated as of February 1, 1999, as supplemented by the First Supplemental Trust Agreement dated as of January 1, 2001, between the Authority and State Street Bank and Trust Company of California, N.A., as successor trustee and predecessor to the Trustee, the Second Supplemental Trust Agreement dated as of May 1, 2001, the Third Supplemental Trust Agreement dated as of June 1, 2002, the Fourth Supplemental Trust Agreement dated as of July 1, 2002, the Fifth Supplemental Trust Agreement dated as of July 1, 2003, the Sixth Supplemental Trust Agreement dated as of March 1, 2007 and as supplemented by this Seventh Supplemental Trust Agreement dated as of March 1, 2007 (herein, together with other supplements thereto, collectively called the "Trust Agreement"); WHEREAS, the Authority has heretofore issued pursuant to the Trust Agreement $74,685,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999 Series A Bonds"), $18,030,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the "2001 Series A Bonds"), $23,775,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"), $12,650,000 County of Contra Costa Public Financing OHS WEST:260157490.2 Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A (the "2002 Series A Bonds"), $25,440,000 County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B (the "2002 Series B Bonds") and $18,500,000 of the Authority's Lease Revenue Bonds (Various Capital Projects), 2003 Series A (the "2003 Series A Bonds"),'to acquire the leasehold in the Facilities and to assist the County in financing and refinancing various capital projects (as further defined herein, the"Project"); WHEREAS, $125,584,011.80 aggregate principal amount of Certificates of Participation (Merrithew Memorial Hospital Replacement Project), Series of 1992 (the "1992 Certificates") were executed and delivered pursuant to a Trust Agreement, dated as of May 1, 1992 (the "1992 Trust Agreement"), by and among the County, the Contra Costa County Public Facilities .Corporation (the "Corporation") and U.S. Trust Company of California, N.A. (predecessor to The Bank of New York Trust Company, N.A.), as trustee_ (the "Merrithew Trustee"), for the purpose of financing the construction, acquisition and equipping of the Merrithew Memorial Hospital(the"Merrithew Project"); WHEREAS, $145,340,000 aggregate principal amount of County of Contra Costa Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates") were executed and delivered pursuant to the 1992 Trust Agreement, as amended and supplemented by a First Supplemental Trust Agreement, dated as of February 1, 1997, by and among the County, the Corporation and the Merrithew Trustee, for the purpose of prepaying and defeasing the outstanding 1992 Certificates and refinancing the construction, acquisition and equipping of the Merrithew Project; WHEREAS, pursuant to a lease agreement, dated as of May 1, 1992, between the Corporation and the County, which lease or memorandum thereof was recorded in the office of .the County Recorder of the County of Contra Costa on May 13, 1992 under Recorder's Serial Number 92-119065, as amended by a First Amendment to Facility Lease, dated as of February 1, 1997, which lease or memorandum thereof was recorded in the office of the County Recorder of the County of Contra Costa on February 20, 1997 under Recorder's Serial Number 97-027552, the Corporation leased the Merrithew Project and the site thereof to the County(the "2007 Series B Facilities"); WHEREAS, pursuant to an assignment agreement, dated as of May 1, 1992, as amended by the First Amendment to Assignment Agreement Relating to Facility Lease (Merrithew Memorial Hospital Replacement Project), dated as of February 1, 1997, between the Corporation and the Merrithew Trustee, the lease payments made by the County under the Merrithew Facility Lease ("Merrithew Base Rental")were assigned to the Merrithew Trustee and- the principal and interest components thereof are represented by the Merrithew Certificates; WHEREAS, the County has determined that it is in the best interest of the County and has requested the Authority to prepay and defease the outstanding Merrithew Certificates; WHEREAS,pursuant to Section 149(d) of the Internal Revenue Code, the County is not permitted to advance refund the Merrithew Certificates and therefore desires to issue "forward delivery" refunding bonds which bonds will be delivered in August, 2007 to currently refund the Merrithew Certificates; OHS WEST:260157490.2 2 WHEREAS, in order to provide funds for the defeasance of all of the outstanding Merrithew Certificates the County has requested that the Authority issue the 2007 Series B Bonds (hereinafter defined) and acquire a leasehold interest in the 2007 Series B Facilities and lease the same back to the County; WHEREAS, pursuant to an escrow agreement, dated as of March 1, 2007, by and . between the County and the Merrithew Trustee, certain proceeds of the 2007 Series B Bonds will be deposited into an escrow fund (the "Merrithew Escrow Fund") and irrevocably pledged to repay the Merrithew Base Rental and Merrithew Certificates, thereby defeasing the Merrithew Certificates; WHEREAS, the Authority may at any time, with the consent of the Bond Insurer, issue Additional Bonds payable from, and secured by a pledge of and lien upon, the Revenues, as provided in Section 3.03 of the Trust Agreement, provided that the proceeds of such Additional Bonds be applied to, among other things, the acquisition (by purchase or lease) of facilities to be added to the Facilities; WHEREAS, the County will lease to the Authority the 2007 Series B Facilities pursuant to the Sixth Amendment to Master Site Lease; WHEREAS, the County will lease the 2007 Series B Facilities from the Authority pursuant to the terms of the Facility Lease; WHEREAS, under the Sixth Amendment to Facility Lease, the County is .obligated to pay increased base rental payments to the Authority; WHEREAS, all rights to receive such base rental payments have been pledged without recourse by the Authority to the Trustee pursuant to the Trust Agreement; WHEREAS, in consideration of such increased base rental payments and other adequate consideration, the Authority has agreed to issue.bonds entitled"County of Contra Costa Public .Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series B" (the "2007 Series B Bonds"), in the aggregate principal amount of $ , and in connection therewith the Authority and the County have provided for the amendment of the Site Lease and the Facility Lease; WHEREAS, the 2007 Series B Bonds are payable from Revenues on a parity basis with the Outstanding Bonds and any Additional Bonds hereafter issued by the Authority under the Trust Agreement; and WHEREAS,.the Authority has determined that all acts and proceedings required by law necessary to make the 2007 Series B Bonds,. when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Authority payable in accordance with their terms, and to constitute the Trust Agreement a valid and binding agreement of the parties hereto for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Seventh Supplemental Trust Agreement have been in all respects duly authorized; OHS WEST260157490.2 3 NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL TRUST AGREEMENT WITNESSETH, that in order to secure the full and timely payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under the Trust Agreement, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject.to which.the Bonds are to be issued and received; and in . consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE XLIX DEFINITIONS; EQUAL SECURITY SECTION 49.01. Additional Definitions. Unless the context otherwise requires; the terns defined in this Section shall for all purposes of the Trust Agreement and of any amendment hereof or supplement hereto and of any certificate, opinion, request or other document mentioned herein or therein have the .meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein and to the extent the definitions in this Section differ from the definitions of such terms contained in Section 1.01 of the Trust Agreement, the definitions in this Section shall control and the definitions in Section 1.01 shall be amended accordingly. Capitalized terms not otherwise defined herein shall have the meaning assigned to such terms in the Facility Lease. Corporation The term "Corporation" means the Contra Costa County Public Facilities Corporation. Facility Lease The term "Facility Lease" means that certain lease, entitled "Facility Lease (Various Capital Projects)," by and between the Authority and the County, dated as of February 1, 1999, which lease or a memorandum thereof was recorded in the office of the County Recorder of the County on March 4, 1999 under Recorder's Serial No. 99-0059812, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof, including the Sixth Amendment to Facility Lease. Merrithew Certificates The term "Merrithew Certificates" means the $145,340,000 County of Contra Costa Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997, executed and delivered pursuant to a First Supplemental Trust Agreement, dated as of February 1, 1997, by and among the County, the Corporation and the Merrithew Trustee, for the purpose of refinancing the construction, acquisition and equipping of the Merrithew Project. OHS WEST:260157490.2. 4 Merrithew Demised Premises The term "Merrithew Demised Premises"has the meaning assigned thereto in the Sixth Amendment to Facility Lease. Merrithew Escrow Agent The term "Merrithew Escrow Agent" means The Bank of New York Trust Company, N.A., as successor to U.S. Trust Company of California, N.A., as the Merrithew Trustee, or its successor thereto. Merrithew Escrow Agreement The term "Merrithew Escrow Agreement"means that certain Escrow Agreement, by and between the Merrithew Escrow Agent and the County, dated as of March 1, 2007, providing for the defeasance and prepayment of the Merrithew Certificates. Merrithew Escrow Fund The term "Merrithew Escrow Fund means the fund of the same name defined in the Merrithew Escrow Agreement. Merrithew Project The term "Merrithew Project" means the construction, acquisition and equipping of a hospital, together with site development, landscaping, utilities, fixtures, furnishings, equipment, improvements and appurtenant and related facilities, originally financed with the proceeds of the 1992 Certificates. Merrithew Trustee The term "Merrithew Trustee" means The Bank of New York Trust Company, N.A., as successor to U.S. Trust Company of California, N.A., as trustee for the Merrithew Certificates. Site Lease The term "Site Lease" means that certain lease, entitled "Master Site Lease," by and between the County and the Authority, dated as of February 1, 1999, which lease or a memorandum thereof was recorded in the office of the County Recorder .of the County on March 4, 1999 under Recorder's Serial Number 99-0059811, as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof including the Sixth Amendment to Master Site Lease. Sixth Amendment to Facility Lease The term "Sixth Amendment to Facility Lease" means that certain lease and instrument, entitled"Sixth Amendment to Facility Lease,"by and between the Authority and the OHS WEST:260157490.2 5 County, dated as of March 1, 2007, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County on , 2007 under Recorder's Serial No. as originally executed and recorded or as it may from time to time be supplemented,modified or amended pursuant to the provisions hereof and thereof. Sixth Amendment to Master Site Lease The term "Sixth Amendment to Master Site Lease" means that certain lease and instrument, entitled "Sixth Amendment to Master Site Lease," by and between the County and the Authority, dated as of March 1, 2007, which instrument or a memorandum thereof was recorded in the office of the County Recorder of the County.on , 2007 under Recorder's Serial Number , as originally executed and recorded or as it may from time to time be supplemented, modified or amended pursuant to the provisions hereof and thereof. Seventh Supplemental Trust Agreement The term "Seventh Supplemental Trust Agreement" means this Seventh Supplemental Trust Agreement, dated as of March 1, 2007, by and between the Trustee and the Authority, executed and delivered in accordance with the Trust Agreement and which is supplemental to the Trust Agreement. 2007 Series B Bond Insurance Policy The term "2007 Series B Bond Insurance Policy" means the insurance policy issued by the 2007 Series B Bond Insurer guaranteeing the scheduled payment of principal of and interest on all or a portion of the 2007 Series B Bonds when due. 2007 Series B Bond Insurer The term "2007 Series B Bond Insurer" means MBIA Insurance Corporation, or any successor thereto or assignee thereof. 2007 Series B Bonds The term "2007 Series B Bonds" means the bonds issued by the Authority under and pursuant to the Trust Agreement and this Seventh Supplemental Trust Agreement, the proceeds of which will be applied to the refunding of the Merrithew Certificates and to the payment of costs related thereto. 2007 Series B Continuing Disclosure Agreement The term "2007 Series B Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement between the County and the Trustee dated the date of issuance of the 2007 Series B Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. OHS WEST:260157490.2 6 2007 Series B Costs of Issuance Fund The term "2007 Series B Costs of Issuance Fund" means the fund by that name established pursuant to Section 51.01 of thisl Seventh Supplemental Trust Agreement. 2007 Series B Facilities The term "2007 Series B Facilities" means the Merrithew Demised Premises and the and the Merrithew Project. 12007 Series B Financial Guaranty Agreement The term "2007 Series B Financial Guaranty Agreement" means the Financial Guaranty Agreement, dated the date of issuance of the 2007 Series B Bonds, between the Authority and the 2007 Series B Reserve Facility Provider.] [2007 Series B Reserve Facility The term "2007 Series B Reserve Facility" means the surety bond, effective as of the date of issuance of the 2007 Series B Bonds, issued by the 2007 Series B Reserve Facility Provider.] j2007 Series B Reserve Facility Provider The term "2007 Series B Reserve Facility Provider" means [Insurer], as issuer of the 2007 Series B Reserve Facility.] ARTICLE L THE BONDS SECTION 50.01. Authorization of 2007 Series B Bonds. (a) An eighth Series of Bonds is hereby created and designated"County of Contra Costa Public Financing Authority Lease Revenue Refunding Bonds, 2007 Series B." The aggregate principal amount of 2007 Series B Bonds which may be issued and Outstanding under this Seventh Supplemental Trust Agreement shall not exceed $ The 2007 Series B Bonds shall be payable from the Revenues and secured by a pledge of and charge and lien upon the Revenues equal to the pledge, charge and lien securing the Outstanding Bonds. The 2007 Series B Bonds are issued in accordance with Article III. (b) The Authority has reviewed all proceedings heretofore taken relative to the authorization of the 2007 Series B Bonds and has found, as a result.of such review, and hereby finds and determines that all acts, conditions. and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of the 2007 Series B Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every OHS WEST:260157490.2 7 requirement of the Act, to issue the 2007 Series B Bonds in the form and manner provided herein for the purpose of providing funds to prepay and defease the Merrithew Certificates and that the 2007 Series B Bonds shall be entitled to the benefit, protection and security of the provisions hereof. (c)_ The validity of the issuance of the 2007 Series B Bonds shall not be dependent on or affected in any way by the proceedings taken by the Authority for the finance and refinancing of the Project or by any contracts made by the Authority or its agents in connection therewith, and shall not be dependent upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The 2007 Series B Bonds shall be deemed to be issued, within the meaning hereof, whenever .the definitive 2007 Series B Bonds (or any temporary 2007 Series B Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. SECTION 50.02. Terms of the 2007 Series B Bonds. (a) The 2007 Series B Bonds shall be issued in the aggregate principal amount of $ . The 2007 Series B Bonds shall be dated the date of issuance thereof, shall be issued only in fully registered form in Authorized Denominations (not exceeding the principal amount of 2007 Series B Bonds maturing at any one time), and shall mature in the years and in the principal amounts and bear interest at the rates as set forth in the following schedule, subject to prior redemption as described in Article XLVI hereof: OHS WEST:260157490.2 8 County of Contra Costa Public Financing Authority Lease Revenue Bonds(Refunding and Various Capital Projects), 2007 Series B Maturity Date June 1 Principal-Amount Interest Rate The 2007 Series B Bonds shall bear interest at the rates set forth above, payable commencing [December 1, 2007], and semiannually thereafter on June 1 and December 1 in each year. The 2007 Series B Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless such date of authentication is an Interest Payment Date, in which event they shall bear interest from such date, or unless such date of authentication is prior to the Record Date for the first Interest Payment Date, in which event they shall bear interest from their dated date. The amount of interest so payable on any Interest Payment Date ,shall be computed on the basis of a 360-day year consisting of twelve 30-day months. (b) Payment of interest on the 2007 Series B Bonds due on or before the maturity or prior redemption thereof shall be paid by check mailed by first class mail on each Interest Payment Date to the person in whose name the Bond is registered as of the applicable Record Date for such Interest Payment Date at the address shown on the registration books maintained OHS WEST260157490.2 9 by the Trustee pursuant to Section 2.07; provided, however, that interest on the 2007 Series B Bonds shall be paid by wire transfer or other means to provide immediately available funds to any Owner of at least $1,000,000 in aggregate principal amount of such Series of Bonds, at its option, to an account within the United States of America according to wire instructions given to the Trustee in writing for such purpose and on file as of the applicable Record Date preceding the Interest Payment Date in accordance with.Section 2.02 of the Trust Agreement. SECTION 50.03: Form of 2007 Series B Bonds. The 2007 Series B Bonds and the authentication and registration endorsement and assignment to appear thereon shall be substantially in the form set forth in Exhibit A hereto attached and by this reference herein incorporated. SECTION 50.04. Execution....of 2007 Series B Bonds. The Chair or the Executive Director of the Authority is hereby authorized and directed to execute each of the 2007 Series B Bonds on behalf of the Authority and the Secretary or Assistant Secretary of the Authority is hereby authorized and directed to countersign each of the 2007 Series B Bonds on behalf of the Authority. The signatures of such officers may be by printed, lithographed or engraved by facsimile reproduction. In case any officer whose signature appears on the 2007 Series B Bonds shall cease to be such officer before the delivery of the 2007 Series B Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the 2007 Series B Bonds. Only those 2007 Series B Bonds bearing thereon a certificate of authentication in the form set forth in Exhibit A hereto, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the 2007 Series B Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to:the benefit, protection and security hereof. SECTION 50.05. ' Transfer, Exchange and Payment of 2007 Series B Bonds. Any 2007 Series B Bond may, in accordance with its terms, be transferred, paid or exchanged as provided in Section 2.05 through Section 2.08, inclusive. SECTION 50.06. Special.Covenants as to Book-Entry Only System for 2007 Series B Bonds. (a) Except as otherwise provided in subsections (b) and (c) of this Section 50.06, all of the 2007 Series B Bonds initially issued shall be registered in the name of Cede& Co., as nominee for DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the interest on any 2007 Series B Bond registered in the name of Cede & Co. shall be made on each Interest Payment Date for such 2007 Series B Bonds to the account, in the manner and at the address indicated in or pursuant to the Representation Letter. (b) The 2007 Series B Bonds initially shall be issued in the form of a single authenticated fully registered bond for each stated maturity of such 2007 Series B Bonds, representing the aggregate principal amount of the 2007 Series B Bonds of such maturity. Upon initial issuance, the ownership of all such 2007 Series B Bonds shall be registered in the OHS WEST:260157490.2 10 registration records maintained by the Trustee pursuant to Section 2.07 in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the 2007 Series B Bonds registered in its name for the purposes of payment of the principal or redemption price of and interest on such 2007 Series B Bonds, selecting the.2007 Series B Bonds or portions thereof to. be..redeemed, giving any notice permitted or required to be given to Bondholders hereunder, registering the transfer of 2007 Series B Bonds, obtaining any consent or other action to betaken by Bondholders of the 2007 Series B Bonds and for all other purposes whatsoever; and neither the Trustee nor the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee nor the Authority or any paying agent shall have any responsibility or obligation to any . "Participant" (which shall mean, for purposes of this Section 50.06, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the 2007 Series B Bonds under or through DTC or any Participant, or any other person which is not shown on the registration records as being a Bondholder, with respect to (i)the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal or redemption price of or interest on the 2007 Series B Bonds, (iii) any notice which is permitted or required to be given to Bondholders of 2007 Series B Bonds hereunder, (iv) the selection by DTC or.any Participant of any person to receive payment in the event of a partial redemption of the 2007 Series B Bonds,'or(v) any consent given or other action taken by DTC as Bondholder of 2007 Series B Bonds. Notwithstanding anything to the contrary contained in this Trust Agreement, the Trustee shall pay.all principal of and premium, if any, and interest on the 2007 Series B Bonds only at the times, to the accounts,at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the Authority's obligations with respect to the payment of the principal of and premium, if any, and interest on the 2007 Series B Bonds to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the 2007 Series B Bonds will be transferable to such new nominee in accordance with subsection (e) of this Section 50.06. (c) In the event that the Authority determines that the 2007 Series B Bonds should not be maintained in book-entry form, the Trustee shall,upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of bond certificates. In such event, the 2007 Series B Bonds will be transferable in accordance with subsection (e) of this Section 50.06. DTC may determine to discontinue providing its services with respect to the 2007 Series B Bonds or a portion thereof, at any time by giving written notice of such discontinuance to the Authority or the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the 2007 Series B Bonds will be transferable in accordance with subsection (e) of this Section 50.06. If at any time DTC shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a successor securities depository is not appointed by the Authority within 90 days after the Authority receives notice or becomes aware of such condition, as the case may be, then this Section 50.06 shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and deliver certificates representing the 2007 Series B Bonds as provided below. Whenever DTC requests the Authority and the Trustee to do so, the OHS WEST:260157490.2 11 Trustee and the Authority will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depositoryto maintain custody of all certificates evidencing the 2007 Series B Bonds then Outstanding. In such event, the 2007 Series B Bonds will be transferable to such securities depository in accordance with subsection (e) of this Section 50.06, and thereafter, all references in this Seventh Supplemental Trust Agreement to _ DTC or its nominee shall be deemed to. refer to such successor securities.depository. and. its nominee, as appropriate. (d) Notwithstanding any other provision of this Seventh Supplemental .Trust Agreement to the contrary, so long as all 2007 Series B Bonds Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal of and premium, if any, and interest on each such 2007 Series B Bond and all notices with respect to each such 2007 Series B Bond shall be made and given, respectively, to DTC as provided in or pursuant to the Representation Letter. (e) In the event that any transfer or exchange of 2007 Series B. Bonds is authorized under subsection (b) or (c) of this Section 50.06, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered owner thereof of the 2007 Series B Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.05 and 2.06. In the event 2007 Series B Bond certificates are issued to Bondholders other than Cede & Co., its successor as nominee for DTC as holder of all the 2007 Series B Bonds, another securities depository as holder of all the 2007 Series B Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.05 and 2.06 shall also apply to, among other things, the registration, exchange and transfer of the 2007 Series B Bonds and the method of payment of principal of,premium, if any, and interest on the 2007 Series B Bonds. SECTION 50.07. Compliance with 2007 Series B Continuing Disclosure Agreement. Pursuant to Section 15.08 of the Facility Lease, the County has undertaken all responsibility for compliance with continuing disclosure requirements, and the Authority shall have no.liability to the Owners of the 2007 Series B Bonds or any other person with respect to Securities and Exchange Commission Rule 15c2-12. The County has agreed, under the 2007 Series B Continuing Disclosure Agreement, to perform or cause to be performed all of the provisions thereof to be performed by the Dissemination Agent. Notwithstanding any other provision of this Trust Agreement, failure of the County to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default;however, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations under Section 15.08 of the Facility Lease or under this Section 50.07. For purposes of this Section, `Beneficial Owner" means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). OHS WEST:260157490.2 12 ARTICLE LI ISSUANCE OF BONDS SECTION 51.01. Procedure for the Issuance of 2007 Series B Bonds. At any time after the sale of the 2007 Series B Bonds in accordance with the Act, the Authority shall execute the 2007 Series B Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the 2007 Series B Bonds shall be authenticated and delivered by the Trustee to the purchaser.thereof upon the Written Request of the Authority and upon receipt of payment therefor from the purchaser thereof. Upon receipt of payment for the 2007 Series B Bonds from the purchaser thereof, the Trustee shall, unless otherwise instructed by the Authority, transfer or deposit the proceeds received from such sale (including the good faith deposit received from the purchaser) to the following respective parties or to the following respective accounts or funds, in the following order of priority: (i) deposit the amount of$ in the 2007 Series B Costs of Issuance Fund, which fund is hereby created and which fund the Trustee hereby covenants and agrees to maintain. All money in the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance of the 2007 Series B Bonds upon receipt of a Written Request of the Authority in the form attached hereto as Exhibit C, filed with the Trustee;each of which shall be sequentially numbered and shall state the person(s) to whom payment is to be made, the amount(s)to be paid, the purpose(s) for which the.obligation(s)was incurred and that such payment is a proper charge against said fund. On December 1, 2007, or upon the earlier Written Request of the Authority, any remaining balance in the 2007 Series B Costs of Issuance Fund shall be transferred to the Authority and the 2007 Series B Costs of Issuance Fund shall be closed; (ii) transfer the amount of$ to the Merrithew Escrow Agent for deposit in the Merrithew Escrow Fund; The Trustee shall also receive the amount of $ from the Merrithew Trustee from the reserve for the Merrithew Certificates which amount the Trustee shall deposit in the Reserve Fund in order to cause the Reserve Fund to contain the Reserve Fund Requirement. SECTION 51.02. Reserve Fund Requirement Calculation. Following issuance of the 2007 Series B Bonds, the Reserve Fund Requirement for the Outstanding Bonds will equal $ an amount equal to [125% of average]/[maximum] annual debt service on the Outstanding Bonds. Such amount will be satisfied by the current deposit in the Reserve Fund of $ and the existing Reserve Facilities issued in the aggregate amount of $ , plus the deposit with the Trustee of the [2007 Series B Reserve Facility in the amount of$ ][cash in the amount of$ 1. The Trustee is hereby directed to accept and acknowledge receipt of the [2007 Series B Reserve Facility][cash deposit] prior to the delivery of the 2007 Series B Bonds to the purchaser thereof. The Reserve Fund Requirement shall only be calculated upon the issuance of a Series of Bonds and upon the OHS WEST:260157490.2 13 retirement or defeasance of a Series of Bonds. The Authority shall provide to the Trustee the amount so calculated. SECTION 51.03. Tax Covenants The provisions of Section 6.03 are applicable to the 2007 Series B Bonds, the interest on which is intended by the Authority to be excluded from gross income of the Owner thereof for federal income tax purposes. ARTICLE LII REDEMPTION OF BONDS SECTION 52.01. Extraordinary Redemption. The 2007 Series B Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations, from prepayments made by the County pursuant to Section 7.02 of the Facility Lease, at a redemption price equal to the sum of the principal amount thereof, without premium, plus accrued interest thereon to the Redemption Date. Whenever less than all of the Outstanding Bonds are to be redeemed on any one date, the Trustee shall select, in accordance with written directions from the Authority, the Bonds to be redeemed in part from the Outstanding Bonds so that the aggregate annual principal amount of and interest on Bonds which shall be payable after such Redemption Date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on Bonds Outstanding prior to such Redemption Date. SECTION 52.02. Optional Redemption. The 2007 Series B Bonds maturing on or prior to June 1, 20_, are not subject to optional redemption. The 2007 Series B Bonds maturing on or after'June 1, 20_, are subject to redemption prior to their respective stated maturities at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after June 1, 20_, at the following prices (expressed as a percentage of the principal amount of 2007 Series B Bonds called for redemption), plus accrued interest to the date fixed for redemption: Redemption Period (dates inclusive) Redemption Price June 1, 20_through May 31, 20_ % June 1, 20_through May 31, 20_ June 1, 20—and thereafter SECTION 52.03. Effect of Redemption. All 2007 Series B Bonds redeemed pursuant to the provisions of this Article and Article IV shall be cancelled by the Trustee and shall be destroyed with a certificate of destruction furnished to the Authority upon its request and shall not be reissued. OHS WEST:260157490.2 14 ARTICLE LIII MUNICIPAL BOND INSURANCE; 2007 SERIES B RESERVE FACILITY [TO COME] ARTICLE LIV MISCELLANEOUS PROVISIONS SECTION 54.01. 2007 Series B Bond Insurer. The 2007 Series B Bond Insurer shall have the benefit of all provisions relating to the 1999 Series B Bond Insurer included in the Facility Lease, the Site Lease and the Trust Agreement and any references to the "Bond Insurer" shall include the 2007 Series B Bond Insurer, and the 2007 Series B Bond Insurer is hereby included as a third party beneficiary to the Trust Agreement. SECTION 54.02. ValidityoThe County, the Authority and the Trustee hereby determine that the amendments set forth herein do not adversely .affect the interest of the Owners, shall become binding without the written consents of any Owners, and are in compliance with the provisions of Section 9.01(b) of the Trust Agreement. TheiTrustee is making such determination based solely in reliance upon an Opinion of Counsel and the determination of the County and the Authority and the consent of the Bond Insurer. SECTION 54.03. Terms of 2007 Series B Bonds Subject to the Trust Agreement. Except as in this Seventh Supplemental Trust Agreement expressly provided, every term. and condition contained in the Trust Agreement shall apply to this Seventh Supplemental Trust Agreement and to the 2007 Series B Bonds with the same force and effect as.if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Seventh Supplemental Trust Agreement. This Seventh Supplemental Trust Agreement and all the terms and provisions herein contained shall form part of the Trust Agreement as fully and with the same effect as if all such terms and provisions had been set forth in the Trust Agreement. The Trust Agreement is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as supplemented and amended hereby. SECTION 54.04. Assigmnent Acknowledged. Pursuant to the Trust Agreement; the Base Rental Payments have been assigned to the Trustee and such assignment extends to and includes the Base Rental Payments increased pursuant to the Sixth Amendment to Facility Lease. The assignment of the Base Rental Payments increased pursuant to the Sixth Amendment to Facility Lease to the Trustee is hereby approved, consented to, acknowledged and confirmed. SECTION 54.05. Effective Date of Seventh Supplemental Trust Agreement. This Seventh Supplemental Trust Agreement shall take effect upon its execution and delivery. OHS WEST:260157490.2 15 SECTION 54.06. Execution in Counterparts. This Seventh Supplemental Trust Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. OHS WEST:260157490.2 16 IN WITNESS WHEREOF, the parties hereto have executed this Seventh Supplemental Trust Agreement by their officers thereunto duly authorized as of the day and year first written above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Chair Attest: John B. Cullen Executive Director and Secretary By: Assistant Executive Director THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By: Authorized Officer Acknowledged and Approved: COUNTY OF CONTRA COSTA By: Title: Senior Deputy County Administrator /Debt Manager, County of Contra Costa OHS WESr:260157490.2 17 CONSENT OF BOND INSURER The undersigned, as Bond Insurer of a portion of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series B, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A, the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B and the County of Contra Costa Public Financing Authority, Lease Revenue Bonds (Various Capital Projects), 2003 Series A hereby consents to the execution and delivery of the Seventh Supplemental Trust Agreement dated as of March 1, 2007 between the County of Contra Costa Public Financing Authority and The Bank of New York Trust Company, N.A., as trustee, and to the issuance of the Authority's Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series B for the purposes set forth therein. MBIA INSURANCE CORPORATION By: Authorized Officer OHS WEST:260157490.2 EXHIBIT A [FORM OF 2007 SERIES B BOND] No. _ $ COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS), 2007 SERIES B NEITHER THE FULL FAITH AND CREDIT OF THE AUTHORITY NOR THE COUNTY OF CONTRA COSTA IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE BONDS AND NO TAX OR OTHER SOURCE OF FUNDS OTHER THAN THE REVENUES HEREINAFTER REFERRED TO IS PLEDGED TO PAY THE INTEREST ON OR PRINCIPAL OF THE BONDS. .NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY OF CONTRA COSTA OR THE CONTRA COSTA COUNTY REDEVELOPMENT AGENCY, THE PARTIES TO THE AGREEMENT CREATING THE AUTHORITY. Interest Maturity Dated Rate Date Date CUSIP % June 1, August , 2007 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: DOLLARS The COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and validly existing under and pursuant to the laws of the State of California(the "Authority"), for value received, hereby promises to pay (but only out of the Revenues hereinafter referred to) to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest on such principal sum from the interest payment date next preceding the date of authentication of this Bond (unless this Bond is registered as of an interest payment date or during the period from the OHS WEST:260157490.2 A-1 fifteenth calendar day of the month preceding an interest payment date to such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated prior to November 15, 2007, in which event it shall bear interest from the Dated Date specified above) until the principal hereof shall have been paid at the interest rate per annum specified above, payable on December 1, 2007, and semiannually thereafter on each June l and December 1. Interest due on or before the maturity or prior redemption of this Bond - shall be payable only by check mailed by first-class mail to the registered owner hereof; provided that upon the written request of a Bondholder of $1,000,000 or more in aggregate principal amount of Bonds of the Series of which this Bond is a part received by the Trustee (defined hereinafter) prior to the applicable record date, interest shall be paid by wire transfer in immediately available funds to an account within the United States of America. The principal hereof is payable in lawful money of the United States of America upon presentation of this Bond at the principal office of the Trustee. This Bond is one of a duly authorized issue of bonds of the Authority designated as its "County of Contra Costa Public Financing Authority Lease Revenue Bonds" (the"Bonds") unlimited as to principal amount and is one of a duly authorized series of such Bonds known as, "(Refunding and Various Capital Projects), 2007 Series B" (the "2007 Series B Bonds") issued in an aggregate principal amount of$ , all of like tenor and date (except for such variations,if any, as may be required to designate varying numbers,maturities and interest rates), and is issued under and pursuant to the provisions of the Joint Exercise of Powers Act" (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions of a Trust Agreement, dated as of February 1, 1999, a First Supplemental Trust Agreement, dated as of January 1, 2001 a Second Supplemental Trust Agreement dated as of May 1, 2001, a Third Supplemental Trust Agreement, dated as of June 1, 2002, a Fourth Supplemental Trust Agreement, dated as of July 1, 2002, a Fifth Supplemental Trust Agreement, dated as of July 1, 2003, a Sixth Supplemental Trust Agreement dated as of March 1, 2007, and a Seventh Supplemental Trust Agreement dated as of March 1, 2007 (collectively, as amended from time to time, the "Trust Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (together with any successor as trustee under the Trust Agreement, the "Trustee") (copies of the Trust Agreement are on file at the principal office of the Trustee in San Francisco, California). The Bonds are issued to provide funds to finance and refinance the acquisition, construction, improvement, equipping, remodeling and refinancing of certain public buildings and related facilities, located in the County of Contra Costa (as more fully defined in the Trust Agreement, the "Project"). The Bonds are limited obligations of the Authority and are payable, as to interest thereon and principal thereof, solely from certain proceeds of the Bonds held in certain funds and accounts pursuant to the Trust Agreement and the revenues (as more fully defined in the Trust Agreement, the "Revenues") derived from Base Rental Payments and other payments made by the County of Contra Costa (the "County"), and all interest or other investment income thereon, pursuant to the Facility Lease (Various Capital Projects), dated as of February 1, 1999 (as amended from time to time, including the Sixth Amendment to Facility Lease, dated as of March 1, 2007, the " Facility Lease"), by and between the Authority and the County, and the Authority is not obligated to pay the interest or premium, if any, on and principal of the Bonds except from the Revenues. All Bonds are equally and ratably secured in OHS.WEST:260157490.2 A-2 7 accordance with the terms and conditions of the Trust Agreement by a pledge and assignment of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest or premium, if any, on and principal of the Bonds as provided in the Trust Agreement. The full faith and credit of the Authority, the Contra Costa County Redevelopment Agency (the "Agency") and the County are not pledged for the payment of the interest or premium, if any, on or principal of the Bonds. No tax shall ever be levied to pay the interest on or principal of the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Authority or any of its income or receipts except the Revenues, and neither the payment of the interest on nor principal (or premium, if any) of the Bonds is a debt, liability or general obligation of the Authority, the County or any member of the Authority for which such entity is obligated to levy or pledge any form of taxation. Additional bonds payable from the Revenues may be issued which will rank equally as to security with the Bonds, but only subject to the conditions and upon compliance with the procedures set forth in the.Trust`Agreement. Reference is hereby made to the Act and to the Trust Agreement and any and all amendments thereof and supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights of the registered owners of the Bonds, security for payment of the Bonds, remedies upon default and limitations thereon, and amendment of the Trust Agreement (with or without consent of the registered owners of the Bonds); and all the terms of the Trust Agreement are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Bond, to all the provisions of which the registered owner of this Bond, by acceptance hereof, agrees and consents. The Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as hereinafter provided, as a whole or in part by lot within each stated maturity in integral multiples of Authorized Denominations so that the aggregate annual principal amount of and interest on the Bonds which shall be payable after such redemption date shall be as nearly proportional as practicable to the aggregate annual principal amount of and interest on the Bonds Outstanding prior to such redemption date, from prepayments of Base Rental Payments made by the County from the proceeds received by the County due to a taking of the Facilities or portions thereof under the power of eminent domain and from the net proceeds of title insurance or insurance received for material damage or destruction to the Facilities or portions thereof received by the Authority from the County, all as provided in and under the circumstances and terms prescribed in the Facility Lease and the Trust Agreement, at the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium. The 2007 Series B Bonds maturing on or prior to June 1, 20are not subject to optional redemption. The 2007 Series B Bonds maturing on or after June 1, 20 , are subject to redemption prior to their respective stated maturities at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after June 1, 20at the following prices(expressed as a percentage of the principal amount of 2007 Series B Bonds called for redemption),plus accrued interest to the date fixed for redemption: OHS WEST:260IS7490.2 A-3 ti Redemption Period (dates inclusive) Redemption Price June 1, 20_through May 31, 20_ % June 1, 20 through May 31, 20_ June 1_, 20_and thereafter Notice of redemption of this Bond shall be given by first-class mail not less than thirty(30) days nor more than sixty. (60) days before the redemption date to the registered owner of any Bond selected for redemption, subject to and in accordance with provisions of the Trust Agreement with respect thereto. If notice of redemption has been duly given as aforesaid and money for the payment of the above-described redemption price is held by the Trustee, then this Bond shall, on the redemption date designated in such notice, become due and payable at the above-described.redemption price; and from and after the date so designated, interest on this Bond shall cease to accrue and the registered owner of this Bond shall have no rights with respect hereto except to receive payment of the redemption price hereof. If an Event of Default (as defined in the Trust Agreement) shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Trust Agreement. The Trust Agreement provides that in certain events such declaration and its consequences may be rescinded by the holders of not less than a majority in aggregate principal amount of the Bonds then outstanding or by the Trustee. This Bond is transferable only on a register to be kept for that purpose at the above-mentioned corporate trust office of the Trustee by the registered owner hereof in person or by the duly authorized attorney of such owner upon payment of the charges provided in the Trust Agreement and upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or the duly authorized attorney of such owner, and thereupon a new fully registered Bond or Bonds in the same aggregate principal amount in authorized denominations will be issued to the transferee in exchange therefor. The Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and for all other purposes, whether or not this Bond shall be overdue, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of this Bond shall be made only to such registered owner,which payments shall be valid and effectual to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid. This Bond shall not be entitled to any benefit, protection or security under the Trust Agreement or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee. OHS WEST:260157490.2 A-4 It is hereby certified and recited that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do=exist, have happened and have been performed in due time, form and manner as required by the Act, and by the Constitution and laws of the State of California, that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or laws_ of the State of California and is not in-excess of the amount of Bonds permitted to be issued under the Trust Agreement. IN WITNESS WHEREOF, the County of Contra Costa Public Financing Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and countersigned by the manual or facsimile signature of the Secretary of said Authority, and has caused this Bond to be dated as of the Dated Date specified above. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Chair Countersigned: Secretary OHS WEST:260157490.2 A-5 [FORM OF CERTIFICATE OF AUTHENTICATION TO APPEAR ON 2007 Series B BONDS] This is one of the Bonds described in the within-mentioned Trust Agreement which has been registered and authenticated on THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By Authorized Signatory OHS WEST:260157490.2 A-6 [INSERT STATEMENT OF INSURANCE] OHS WEST:260157490.2 A-7 [FORM OF ASSIGNMENT TO APPEAR ON 2007 Series B BONDS] For value received the undersigned hereby sells, assigns and transfers unto (Taxpayer Identification Number: ) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within bond on the books kept for registration thereof,with full power of substitution in the premises. NOTE: The signature to this Assignment must correspond with the name as.written on the face of the Bond in every particular, without alteration or enlargement or any change whatever. Dated: PLEASE INSERT SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE: Signature Guaranteed: NOTE: Signature must be guaranteed by an eligible guarantor institution. OHS WEST:260157490.2 A-8 EXHIBIT B [FORM OF REQUISITION—COSTS OF ISSUANCE] Date: No. The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, CA 94108 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series B (Written Request of the Authority—2007 Series B Costs of Issuance Fund) Ladies and Gentlemen: This letter is our authorization to you to disburse from the 2007 Series B Costs of Issuance Fund provided for in Section 51.02 of the Trust Agreement dated as of February 1, 1999, as amended, including as amended by the Seventh Supplemental Trust Agreement, dated as of March 1, 2007 (the "Trust Agreement")between the County of Contra Costa Public Financing Authority(the "Authority") and The Bank of New York Trust Company,N.A., as trustee, the amounts indicated on Schedule A attached hereto to the therein-named individuals, firms and,corporations for expenses incident to the issuance of the above-referenced Bonds pursuant to the Trust Agreement. The obligations in the stated amounts have been incurred by the Authority and each item thereof is a proper charge against the 2007 Series B Costs of Issuance Fund. ❑ If checked here you are hereby authorized to close the 2007 Series B Costs of Issuance Fund and transfer any remaining balance (after payment of any amounts indicated in Schedule A) to the Authority. Very truly yours, COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By Assistant Executive Director and Assistant Secretary OHS WEsT:260157490.2 C-1 SCHEDULE A Item No. Payee Amount Pui ose OHS WEST:260157490.2 C-2 ESCROW AGREEMENT by and between COUNTY OF CONTRA COSTA [PUBLIC FINANCING AUTHORITY] and THE BANK OF NEW YORK TRUST COMPANY,N.A. Dated as of March 1, 2007 relating to the OHS West:260167852.2 40511-128 TABLE OF CONTENTS Page SECTION1. DEFINITIONS.......................................................................................................2 SECTION 2. CREATION AND PURPOSE OF ESCROW .......................................................3 SECTION 3. BONDHOLDER NOTICES ..................................................................................4 SECTION 4. ACCOUNTING FOR ESCROW; SUBSTITUTIONS..........................................4 SECTION 5. INVESTMENTS AND REINVESTMENTS ........................................................5 SECTION 6. SUFFICIENCY OF ESCROW..............................................................................5 SECTION 7. TRANSFERS FOR PAYMENT OF REFUNDED BONDS.................................5 SECTION 8. TERMINATION OF ESCROW AGREEMENT; WRITTEN REQUEST OFCOUNTY.........................................................................................................5 SECTION9. FEES AND COSTS...............................................................................................6 SECTION10. REPORTS..............................................................................................................6 SECTION 11. CHARACTER OF DEPOSIT................................................................................6 SECTION 12. EXCULPATORY PROVISIONS..........................................................................7 SECTION 13. TIME OF ESSENCE .............................................................................................8 ;SECTION 14. AMENDMENTS ...................................................................................................8 :SECTION 15. SUCCESSORS ...................................................................................................... 8 SECTION16. NOTICES...............................................................................................................9 SECTION17. SEVERABILITY...................................................................................................9 SECTION 18. LAW GOVERNING............................................................................................ 10 SECTION 19. COUNTERPARTS.............................................................................................. 11 EXHIBIT A REFUNDING REQUIREMENTS......................................................................... 1 EXHIBIT B ESCROWED SECURITIES.................................................................................. 1 EXHIBIT C NOTICE OF DEFEASANCE................................................................................ 1 EXHIBIT D [ESCROW FUND FORWARD SALE AGREEMENT]....................................... 1 EXHIBIT E ELIGIBLE SECURITIES ...................................................................................... 1 EXHIBITF FEE SCHEDULE................................................................................................... 1 OHS West:260167852.2 40511-128 i ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of March 1, 2007, is entered into by and between [COUNTY OF CONTRA COSTA, a political subdivision duly organized and existing under the Constitution and Laws of the State of California(the"County")] [COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority, duly organized and validly existing pursuant to an Agreement entitled"County of Contra Costa Financing authority Joint Exercise of Powers Agreement,"by and between the County of Contra Costa and the Contra Costa County Redevelopment Agency], and THE BANK OF NEW YORK TRUST COMPANY,N.A., duly organized and existing under and by virtue of the laws of the State of California, as trustee and as escrow bank (the"Escrow Agent"). WITNESSETH: WHEREAS, the Escrow Agent, as successor trustee, and the County have heretofore executed the Trust Agreement, dated as of , (the"Original Trust Agreement"), as supplemented by , (the"Trust Agreement"); WHEREAS, the [Authority] [County] has heretofore issued its [$ County of Contra Costa Public Financing Authority Lease Revenue Bonds, Series_(the " Bonds")] [$ County of Contra Costa Certificates of Participation Project) Series of (the" Certificates")pursuant to the Original Trust Agreement and ; WHEREAS,pursuant to Article of the Original Trust Agreement, the [Authority] [County] may issue [Additional Bonds] [Additional Certificates] for, among other purposes,the [refunding] [defeasance] of any[Bonds] [Certificates] then Outstanding,provided that the conditions to the issuance of[Additional Bonds] [Additional Certificates] as set forth in Article_of the Original Trust Agreement are satisfied; WHEREAS,the [Authority] [County] has determined that it is in the [Authority's] [County's] best interests to [defease] [prepay] a portion of the debt service on the [(the"Refunded Bonds")] [the"Certificates"] and to issue [County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A] [County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B] (the"Refunding Bonds")] for such purpose; WHEREAS, Section of the Supplemental Trust Agreement provides for the transfer and deposit of certain proceeds of the Refunding Bonds to the Escrow Fund created hereunder to defease the [Refunded Bonds] [Certificates], and such proceeds shall be in such amount and shall be invested in Eligible Securities under the Trust Agreement so as to insure the full and timely payment of the Refunding Requirements (as hereinafter defined); and, OHS West:260167852.2 40511-128 [WHEREAS, in order to further insure the full and.timely payment of the Refunding Requirements,the Escrow Agent is also being authorized and directed by the County to enter into the Escrow Fund Forward Sale Agreement (herein, the"Forward Agreement") dated as of with (the"Provider"),which Forward Agreement is attached hereto as Exhibit j NOW, THEREFORE, in consideration of the mutual agreements herein contained, in order to secure the payment of the Refunding Requirements as heretofore provided, the parties hereto mutually undertake,promise and agree for themselves, their respective representatives, successors and assigns, as follows: Section 1. Definitions. As used in this Escrow Agreement the following terms have the following, meanings: "Bond Insurer"means MBIA Insurance Corporation, a New York stock insurance company, or any successor thereto as assignee thereof, as insurer of the Refunding Bonds maturing on and after ["Defeased Certificates"means means a portion of the debt service on the Certificates, further defined in Exhibit A hereto.] "Eligible Securities"means noncallable,nonprepayable, obligations set forth in Exhibit B of the Trust Agreement,and specifically listed in Exhibit E attached hereto,which are rated Aaa by Moody's Investors Service. "Escrow Agent"means The Bank of New York Trust Company,N.A., or any successor thereto appointed under this Escrow Agreement. "Escrow Fund"means the fund by that name created pursuant to Section 2 hereof. "Escrowed Securities"means (i) any of those certain Eligible Securities listed in Exhibit B to this Escrow Agreement[, and (ii) any Eligible Security delivered to the Escrow Agent pursuant to the terms of the Forward Agreement]. ["Forward Agreement"means the Escrow Fund Forward Sale Agreement dated as of between the Escrow Agent and the Provider, in the form attached hereto as Exhibit .] ["Refunded Bonds"means a portion of the debt service on the Bonds and the Bonds, further defined in Exhibit A hereto.] "Trustee"means The Bank of New York Trust Company,N.A., as trustee for the Refunded Bonds. "Provider"means OHS West:260167852.2 40511-128 2 "Rating Agency(ies)"means, collectively and severally, Standard&Poor's, a division of the McGraw-Hill Companies, Inc. and Moody's Investors Service. "Rating Confirmation"means written confirmation from each Rating Agency to the effect that the action or amendment proposed to be taken in connection with such Rating Confirmation will not result in a downgrading or withdrawal of the rating on the Refunded Bonds. "Refunding Bonds"means the [County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A] [County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B] issued pursuant to the Trust Agreement. "Refunding Requirements"means all installments of[principal and interest] on the Refunded Bonds, as such payments become due, as shown in Exhibit A to this Escrow Agreement. "State"means the State of California. All other capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Trust Agreement. Section 2. Creation and Purpose of Escrow. A. There is hereby created and established with the Escrow Agent a special and irrevocable trust fund designated as the"County of Contra Costa Escrow Fund" (the"Escrow Fund"). The Escrow Agent shall keep the Escrow Fund separate and apart from all other funds and moneys held by it and shall hold the Escrow Fund in trust for the purposes described herein. B. On the date of the delivery of the Refunding Bonds to the initial purchaser thereof,the Trustee,pursuant to Section .01 of the Trust Agreement,will deposit with the Escrow Agent in escrow, to be held and accounted for in the Escrow Fund and paid out as provided in this Escrow Agreement and in the Trust Agreement, moneys representing a portion of the proceeds from the sale of the Refunding Bonds, in the amount of$ . Such moneys[,together with the Fee Amount of$ delivered under the Forward Agreement,] shall be sufficient for the purchase of the Escrowed Securities and to make the cash deposit to the Escrow Fund and shall be used by the Escrow Agent(i)to purchase the Escrowed Securities and make such cash deposit on such date, and (ii) to comply with the purchase, sale, delivery and payment requirements of the Forward Agreement]. [The Escrow Agent is hereby authorized and directed to enter into the Forward Agreement and to take all actions required thereunder by the Escrow Agent.] [In the event there is any discrepancy or conflicting instructions between this Escrow Agreement and the Forward Agreement,this Escrow Agreement shall prevail.] OHS West:260167852.2 ` 40511-128 3 The amount of initial cash deposit and amount of funds allocated to the purchase of the Escrowed Securities for the Escrow Fund are as follows: Escrow Fund: Beginning Cash: $ Purchase of Escrowed Securities: $ The principal of and interest on the Escrowed Securities and any uninvested cash held hereunder in the Escrow Fund shall be applied by the Escrow Agent to the payment of the Refunding Requirements related to the Escrow Fund. C. [Except as provided in the Forward Agreement, ]the funds held in the Escrow Fund shall not be subject to withdrawal other than to satisfy the Refunding Requirements. D. The County has determined, as verified by the report of an Independent Certified Public Accountant, dated (the"Verification Report"), that the Escrowed Securities are such that, if interest thereon and principal thereof are paid when due, the proceeds from the collection of such interest and principal,together with any uninvested cash held hereunder,will be sufficient to meet the Refunding Requirements. E. The Escrow Agent shall hold all Escrowed Securities,whether acquired as initial investments, subsequent investments or reinvestments hereunder, and the money received from time to time as principal and interest thereon, in trust, to secure and for the payment of the Refunding Requirements and shall collect the principal of and interest on the Escrowed Securities held by it hereunder promptly as such principal and interest become due[, subject only to compliance with the requirements of the Forward Agreement]. Section 3. Bondholder Notices. The Escrow Agent is hereby irrevocably instructed to mail, as soon as practicable, a notice of the defeasance of the Refunded Bonds in the form attached hereto as Exhibit C in accordance with Section of the Trust Agreement. Section 4. Accounting for Escrow; Substitutions. A. The moneys and the Escrowed Securities from time to time accounted for in the Escrow Fund shall not be subject to withdrawal by the County nor otherwise subject to their order except as otherwise provided in Sections 2 and 8 hereof] and in order to comply with the requirements of the Forward Agreement]. B. The County may from time to time direct the Escrow Agent to sell, exchange or substitute Escrowed Securities for other Eligible Securities;provided that there shall be no sale, exchange or substitution of the Escrowed Securities, unless the following are OHS West:260167852.2 40511-128 4 received: (i) the written direction of the County, (ii)receipt by the County, the Escrow Agent and the Bond Insurer of a new Verification Report,prepared by an Independent Certified Public Accountant,verifying the sufficiency of the escrow to pay all Refunding Requirements when due in full on their respective due dates, (iii)receipt of an opinion of nationally recognized bond counsel that such investment will not adversely affect the validity of the Refunding Bonds or the Refunded Bonds under State law(such opinion shall be addressed to the Bond Insurer) and (iv) a Rating Confirmation. [The requirements of this Section 4 shall not apply with respect to the sales from time to time to the Escrow Agent of Qualified Eligible Securities under and pursuant to the terms of the Forward Agreement.] L Section 5. Investments and Reinvestments. [Except in order to comply with the requirements of the Forward Agreement, ]the Escrow Agent shall have no other obligation by virtue of this Escrow Agreement, general trust law or otherwise, to make any investment or reinvestment of any moneys in escrow at any time [except as expressly provided in the Forward Agreement or]except as expressly directed by the County and upon receipt,but only in case of such County direction that securities must be reinvested in Eligible Securities, of(i)the written direction of the County, (ii)receipt by the County and the Escrow Agent of a new Verification Report, prepared by an Independent Certified Public Accountant, verifying the sufficiency of the escrow to pay all Refunding Requirements when due on their respective due dates, (iii)receipt of an opinion of nationally recognized bond counsel that such investment will not adversely affect the validity of the Refunding Bonds or the Refunded Bonds under State law and (iv) a Rating Confirmation. Section 6. Sufficiencv of Escrow. Moneys deposited in the Escrow Fund,including the investment earnings thereon and any uninvested cash, shall be in an amount, as determined by the County,which at all times shall be sufficient to meet the Refunding Requirements not theretofore met. Section 7. Transfers for Payment of Refunded Bonds. The Escrow Agent shall make from time to time such transfers to the Trustee as will assure, to the extent of moneys in the Escrow Fund, the payment of the Refunding Requirements when due, as provided herein and in the Trust Agreement. Section 8. Termination of Escrow Agreement; Written Request of County. When the Escrow Agent shall have transferred,pursuant to Section 7 hereof, such moneys as are required to pay in full and discharge all of the Refunded Bonds, the Escrow Agent, after payment of all fees and expenses of the Escrow Agent, shall immediately pay over to the County or its order the moneys, if any,then remaining in the Escrow Fund and shall make forthwith a final report to the County, and this Escrow Agreement shall terminate. The Trustee shall pay to the County any and all unclaimed moneys as provided in Section [9.02] of the Trust Agreement and this shall constitute the Written Request of the County for such purpose. OHS West:260167852.2 40511-128 5 Section 9. Fees and Costs. A. The Escrow Agent's fees, expenses and reimbursement for costs incurred for and in carrying out the provisions of this Escrow Agreement have been fixed as set forth in Exhibit F. The Escrow Agent shall also be entitled to additional fees, expenses and reimbursement for costs incurred, including but not limited to, legal and accounting services in connection with any litigation or other proceedings which may at any time be instituted involving this Escrow Agreement not due to the negligence or willful misconduct of the Escrow Agent. Under no circumstances shall any fees, expenses or reimbursement of costs of the Escrow Agent or any other party(including without limitation,the cost of any required Verification Report)be paid out of amounts held in the Escrow Fund. B. Payments to the Escrow Agent pursuant to this Section 9 shall not be for deposit in the Escrow Fund, and the fees of and the costs incurred by the Escrow Agent shall not be a charge on and in no event shall be deducted from the Escrow Fund. Section 10. Reports. A. Each month until the termination of this Escrow Agreement, the Escrow Agent shall submit to the County a report covering all money it shall have received and all payments it shall have made or caused to be made hereunder during the preceding one-month period[, including all purchases under the Forward Agreement]. Such report shall be subject to audit by the County or by such Independent Certified Public Accountant, as may be designated by the County. B. The last report shall be made at the time provided in Section 8 hereof. C. Each such report shall also list all Escrowed Securities and Qualified Eligible Securities and the amount of money accounted for in the Escrow Fund on the date of such report, except.for the last report. Section 11. Character of Deposit. A. It is recognized that title to the Escrowed Securities and moneys accounted for in the Escrow.Fund from time to time be vested in the Escrow Agent but subject always to the prior trust, charge and lien thereon of this Escrow Agreement in favor of the owners of the Refunded Bonds and the use thereof required to be made by the provisions hereof. B. The Escrow Agent shall hold all such securities and moneys in the Escrow Fund as special trust funds separate and wholly segregated from all other securities and funds of the Escrow Agent or deposited therein, and shall never commingle such securities or moneys with other securities or moneys. C. No money paid into and accounted for in the Escrow Fund shall ever be considered as a banking deposit and the Escrow Agent shall have no right or title with respect thereto except in its capacity as Escrow Agent hereunder. OHS West:260167852.2 40511-128 6 Section 12. Exculpatory Provisions. A. The duties and responsibilities of the Escrow Agent are limited to those expressly and specifically stated in this Escrow Agreement. B. The Escrow Agent shall not be liable or responsible for any loss resulting from any investment or reinvestment made pursuant to this Escrow,Agreement and made in compliance with the provisions hereof. The Escrow Agent shall not be liable or responsible for the accuracy of any calculations or the sufficiency of any Escrowed Securities, the Escrow Fund or any moneys held by it to meet the Refunding Requirements. C. No provision of this Escrow Agreement shall be construed to relieve the Escrow Agent from liability for its own negligent failure to act or its own willful misconduct. D. The Escrow Agent shall be under no obligation to inquire into or be in any way responsible for the performance or nonperformance by the County of any of its obligations, nor shall it be responsible in any manner for the recitals or statements contained herein or in the Refunded Bonds or any proceedings taken in connection therewith, such recitals and statements being made solely by the County. The Escrow Agent may conclusively rely on any opinion, written request, certificate,written direction or report of the County, the Provider, any certified public accountant, financial advisor or investment bank delivered to it and received in good faith in connection with the transactions contemplated hereby[ and by the Forward Agreement]. E. Nothing in this agreement shall be construed to create any obligations or :liabilities on the part of the Escrow Agent to anyone other than the County, the holders of the Refunded Bonds and the Provider. F. The Escrow Agent may at any.time resign by giving thirty(3 0) days written notice to the County and the Provider of such resignation. The County may remove the Escrow Agent at any time by giving thirty(30) days written notice to the Escrow Agent of such removal. The County shall promptly appoint a successor Escrow Agent by the resignation or removal date. Resignation or removal of the Escrow Agent will be effective only upon acceptance of appointment by a successor Escrow Agent and the transfer of escrowed assets over to the successor Escrow Agent. If the County does not appoint a successor, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent,which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Escrow Agent. After receiving a notice of resignation or giving notice of removal of an Escrow Agent, the County may appoint a temporary Escrow Agent to replace the resigning or removed Escrow Agent until the County appoints a successor Escrow Agent. Any such temporary Escrow Agent so appointed by the County shall immediately and without further act be superseded by the successor Escrow Agent so appointed; provided, that the successor Escrow Agent accepts such appointment and the escrowed assets are transferred over to the successor Escrow Agent. G. The County,to the extent permitted by law, agrees to indemnify the Escrow Agent, its agents and its officers or employees for and hold the Escrow Agent, its agents, OHS West260167852.2 40511-128 7 officers or employees harmless from and against any and all liabilities, obligations, losses, damages,penalties, actions,judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever(including,without limitation,reasonable fees and disbursements of counsel for the Escrow Agent)which may be imposed on, incurred by, or asserted against the Escrow Agent at any time by reason of the performance of its duties as Escrow Agent hereunder, in any transaction arising out of this Escrow Agreement[,the Forward Agreement]or the Trust Agreement or any of the transactions contemplated herein or in the Trust Agreement, unless due to the Escrow Agent's or its officers' or employees' or agents' negligence or willful misconduct. Such indemnity shall survive the termination of this Escrow Agreement or resignation of the Escrow Agent. H. The Escrow Agent may consult with counsel,who may be counsel of or to the County,with regard to legal questions and the opinion of such counsel shall be full and complete authorization in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.. Section 13. Time of Essence. Time shall be of the essence in the performance of the obligations from time to time imposed upon the Escrow Agent by this Escrow Agreement. Section 14. Amendments. This Escrow Agreement may not be revoked or amended by the parties hereto +unless there shall first have been filed with the County and the Escrow Agent (i) a written opinion of nationally recognized bond counsel stating that such amendment will not adversely affect the validity of the Bonds (including the Refunded Bonds) or the Refunding Bonds under State law, (ii) a Rating Confirmation and(iii) unless such amendment is limited to (1) insertion of unintentionally omitted material, correction of mistakes or clarification of ambiguities, (2)pledging of additional legal security to the Refunded Bonds, or(3)providing for the deposit of additional cash and/or securities in the escrow account, the written consent of all the owners of the Refunded Bonds then outstanding and the Bond Insurer's consent. Notice of any amendment to this Escrow Agreement shall be delivered by the Escrow Agent to the Rating Agencies. Section 15. Successors. A. Whenever herein the County or the Escrow Agent is named or is referred to, such provision shall be deemed to include any successor of the County or the Escrow Agent, respectively, immediate or intermediate,whether so expressed or not. The Rating Agencies shall be provided with notice of any change to the Escrow Agent. The successor Escrow Agent must be in place and the escrowed assets transferred over to it before the predecessor Escrow Agent is released. B. All of the stipulations, obligations and agreements by or on behalf of, and other provisions for the benefit of, the County or the Escrow Agent contained herein: OHS West:260167852.2 40511-128 8 (1) Shall bind and inure to the benefit of any such successor; and (2) Shall bind and shall inure to the benefit of any officer,board, authority, agent or instrumentality to whom or to which there shall be transferred by or in accordance with law any right,power or duty of the County or the Escrow Agent, respectively, or of its successor. Section 16. Notices. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if received or sent by first class mail to the following addresses or to such other address as the recipient thereof shall request in writing to the other party hereto: If to the County: County of Contra Costa County Administrator's Office r 651 Pine Street, 10th Floor Martinez, CA 94553-0063 Attn: Senior Deputy County Administrator/Debt Manager If to the Escrow Agent: The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, CA 94108-2527 Attn: Corporate Trust If to the Rating Agencies: Standard&Poor's One Market, Steuart Tower, 15th Floor SanFrancisco, CA 94105-1000 Attn: Municipal Finance Department Moody's Investors Service 99 Church Street New York,NY 10007 Attn: Public Finance Department If to the Bond Insurer: MBIA Insurance Corporation 113 King Street Armonk,NY 10504 Attn: Section 17. Severability. If any section,paragraph, clause or provision of this Escrow Agreement shall for any reason be held to be invalid or unenforceable,the invalidity or unenforceability of such section,paragraph, clause or provision shall not affect any of the remaining provisions of this OHS West:260167852.2 40511-128 9 Escrow Agreement. The Rating Agencies shall be notified of any determination of unenforceability or invalidity of any portion of this Escrow Agreement. Section 18. Law Governing. This Escrow Agreement is made in the State of California and is to be construed under the Constitution and laws of such State. OHS West:260167852.2 40511-128 10 Section 19. Counterparts. This Escrow Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF,the COUNTY OF CONTRA COSTA [PUBLIC FINANCING AUTHORITY] has caused this Escrow Agreement to be signed in its name by its duly authorized officer, and THE BANK OF NEW YORK TRUST COMPANY,N.A.,has caused this Escrow Agreement to be signed in its name by its duly authorized officer, all as of the day and year first above written. COUNTY OF CONTRA COSTA [PUBLIC FINANCING AUTHORITY] By: ATTEST: [Clerk of the Board of Supervisors] [Secretary] THE BANK OF NEW YORK TRUST COMPANY,N.A., as Escrow Agent By: Authorized Officer OHS West:260167852.2 40511-128 11 EXHIBIT A REFUNDING REQUIREMENTS Period Principal Interest Endin>; Due Due Total Total OHS West:260167852.2 40511-128 A-1 EXHIBIT B ESCROWED SECURITIES The following securities will be deposited into the Escrow Fund on Initial Cash Deposit: $ Issue Maturity Coupon Par Price OHS West:260167852.2 40511-128 B-1 EXHIBIT C NOTICE OF DEFEASANCE Notice to the Holders of Certain Outstanding [Bonds] [Certificates] CUSIP# NOTICE IS HEREBY GIVEN that the [COUNTY OF CONTRA COSTA(the "County")] [COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY (the "Authority")has on , from the proceeds of the sale of , irrevocably set aside in an Escrow Fund created for such purpose and held by The Bank of New York Trust Company,N.A.,moneys which the County has determined,when added to the investment earnings therefrom, shall be sufficient to pay the principal of and interest on certain of the outstanding bonds referenced above(the"Bonds"), as such payments become due up to and including , the final maturity for the Bonds. The moneys so deposited in escrow(including the earnings derived from the investment thereof) are irrevocably pledged to the payment of principal,premium and interest on. certain of the outstanding Bonds. Said moneys have been invested in permitted investments pursuant to the Trust Agreement defined in the next paragraph and the supplement thereto dated as of (the" Supplement"),which result in the assignment of "AAA" and"Aaa"ratings on the Bonds by Standard&Poor's, a division of the McGraw-Hill Companies, Inc. and Moody's Investors Service,respectively, and which bear interest and mature on such dates as to insure the payment of interest on the outstanding Bonds as such interest becomes due and to pay the principal on the Bonds on each maturity date therefor, to and including the final maturity date of As a consequence of the foregoing actions and in accordance with the Trust Agreement, dated as of as amended by the Supplemental Trust Agreement and the Supplemental Trust Agreement(collectively, the "Trust Agreement"),between the [County] [Authority] and The Bank of New York Trust Company, N.A., as trustee(the"Trustee"), providing for the Bonds, the Bonds designated by the CUSIP number provided above and chosen for defeasance are deemed paid in accordance with Section of the Trust Agreement. Additional information regarding the foregoing actions may be obtained from The Bank of New York Trust Company,N.A. OHS West:260167852.2 40511-128 C-1 EXHIBIT D [ESCROW FUND FORWARD SALE AGREEMENT] OHS West:260167852.2 40511-128 D-1 EXHIBIT E ELIGIBLE SECURITIES ELIGIBLE SECURITIES FOR DEFEASANCE PURPOSES [TO COME] OHS West:2601678522 40511-128 E-1 EXHIBIT F FEE SCHEDULE OHS West:260167852.2 40511-128 F-1 L&J DRAFT 45--1/31/07 1'12k:L1111aVr1RYOFFICt1i.,SI1T1�;J7I:A"fD,4T,F:UFEBI111AR1' _ ,2007 NEW ISSUE-BOOK ENTRY ONLY RATINGS:Moody's: S&P: See"RATINGS." In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon existing laws, regulations, rulings and court decisions, and assuming among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2007 Series Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In a the further opinion of Bond Counsel, interest on the 2007 Series Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of the interest y on,the 2007 Series Bonds. See "TAX MATTERS"herein. _ $ * . $ E• County of Contra Costa Public Financing Authority County of Contra Costa Public Financing Authority !' Lease Revenue Bonds Lease Revenue Bonds J4� (Refunding and Various Capital Projects) (Medical Center Refunding) 2007 Series A 2007 Series B Dated:Date of Delivery Due:June 1,as shown on inside cover The (the "2007 Series A Bonds") are being issued to: (i) finance or.refinance the construction, acquisition,•improvement and installation of various capital projects(collectively,the"2007 Series A Project");(ii)prepay certain certificates of participation and refund certain lease revenue bonds; (iii)fund a deposit into the Reserve Fund(defined herein);and(iv)pay certain costs associated with the issuance of the 2007 Series A Bonds. The County of Contra Costa Public Financing Authority Lease Revenue Bonds(Medical Center Refunding),2007 Series B (the"2007 Series B Bonds" and together with the 2007 Series A Bonds, the "2007 Series Bonds") are being issued to: (i) prepay on a current basis certain outstanding certificates of participation issued by the Contra Costa County Public Facilities Corporation; and (ii) pay certain costs associated with the issuance of the 2007 Series B _ Bonds. See"PLAN OF FINANCE,"'`ESTIMATED SOURCES AND USES OF FUNDS"and"CERTAIN FORWARD DELIVERY CONSIDERATIONS." Interest on the 2007 Series A Bonds will be payable from their date of issuance on June 1 and December 1 of each year, commencing June 1; 2007. Interest on the 2007 Series B Bonds will be payable from their date of issuance on June 1 and December I of each year,commencing December 1,2007. ' The 2007 Series Bonds will be initially delivered in book-entry form, registered in the name of Cede & Co., as nominee of The Depository Trust Company,New York,New York("DTC"). Principal of,redemption premium,if any,and interest on the 2007 Series Bonds will be aid b The Bank of New _ (" ) P P P Y P Y York Trust Company, N.A., as Trustee, to DTC. DTC is obligated to remit such principal and interest to its DTC Participants for disbursement to the beneficial owners of the 2007 Series Bonds. See APPENDIX G—"DTC AND THE BOOK-ENTRY ONLY SYSTEM." The 2007 Series Bonds are subject to optional,extraordinary and mandatory redemption as described herein. The 2007 Series Bonds are being issued pursuant to a Trust Agreement, dated as of February 1, 1999,as previously supplemented,and with respect to F the 2007 Series A Bonds,as further supplemented by the Sixth Supplemental Trust Agreement dated as of March 1,2007 and with respect to the 2007 Series s B Bonds,as further supplemented by the Seventh Supplemental Trust Agreement dated as of March 1,2007,each by and between the County of Contra Costa Public Financing Authority(the"Authority")and the Trustee and approved by the County. s The 2007 Series Bonds are limited obligations of the Authority payable solely from certain revenues of the Authority, consisting primarily of Base Rental Payments(as defined herein)to be made by the County to the Authority pursuant to a Facility Lease(Various Capital Projects),dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Facility Lease dated as of March 1,2007(the"Facility Lease"),between r the Authority and the County. Pursuant to the Facility Lease, the County will lease the Facilities (defined herein) from the Authority. The County has covenanted in the Facility Lease to take such action as may be necessary to include Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. The County agrees in the Facility Lease to make all Base Rental Payments,subject to abatement in the event of damage to or F destruction or condemnation of all or a portion of the Facilities which results in substantial interference with the County's use and occupancy of the Facilities, except as otherwise described herein. Payment of the principal of and interest on the 2007 Series Bonds,when due, will be insured by a financial guaranty policy to be issued concurrently with the delivery of each series of the 2007 Series Bonds by MBIA Insurance Corporation. See"FINANCIAL GUARANTY INSURANCE" and APPENDIX I­ "SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY." z [MBIA Logo] - THE 2007 SERIES BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM REVENUES AND ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF,OR CHARGE OR LIEN UPON,ANY PROPERTY OF THE AUTHORITY OR THE COUNTY OR ANY OF THEIR INCOME OR RECEIPTS, EXCEPT THE REVENUES (AS DESCRIBED HEREIN. NEITHER THE FULL FAITH NOR THE o; CREDIT OF THE AUTHORITY OR THE COUNTY IS PLEDGED FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF THE 2007 SERIES BONDS. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2007 SERIES BONDS NOR THE OBLIGATION TO MAKE BASE RENTAL PAYMENTS UNDER THE FACILITY LEASE CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE v= AUTHORITY OR THE COUNTY FOR WHICH EITHER ENTITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH EITHER ENTITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER. MATURITY SCHEDULE,PRINCIPAL AMOUNTS,INTEREST RATES AND PRICES/YIELDS (See inside cover) f ' This cover page contains certain information for general reference only. It is not intended to be a summary of security or terms of this issue. Investors L q are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision. The 2007 Series Bonds are offered when, as and if issued by the Authority and received by the Underwriters, subject to approval as to their validity by. ? Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel to the Authority. Certain other legal matters will be passed upon for the F Underwriters by Nixon Peabody LLP, San Francisco, California and for the County and the Authority by County Counsel and by Lofton&Jennings, San Francisco, California, Disclosure Counsel. It is anticipated that the 2007 Series A Bonds in book-entry form, will be available for delivery through the facilities of DTC in New York, New York on or about March_, 2007 and that the 2007 Series B Bonds in book-entry form will be available for delivery through the facilities of DTC in New York,New York on or about August 2,2007. Citigroup Banc of America Securities LLC Dated: 2007 - 3 L *Preliminary,subject to change. L MATURITY SCHEDULE County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects) 2007 Series A Initial Initial Maturity Reoffering Maturity Reoffering Date Principal Interest Price or CUSIP No. Date Principal Interest Price or CUSIP No. (June 1) Amount Rate Yield (21226P)t (June 1) Amount Rate Yield (21226P)t County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding) 2007 Series B Initial Initial Maturity Reoffering Maturity Reoffering Date Principal Interest Price or CUSIP No. Date Principal Interest Price or CUSIP No. (June 1) Amount Rate Yield (21226P)t (June 1) Amount Rate Yield (21226P)t * Preliminary,subject to change. t Copyright, American Bankers Association. CUSIP data herein is provided by Standard and Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. Neither of the Authority nor the Underwriters take any responsibility for the accuracy of such CUSIP numbers. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2007 Series Bonds as a result of various subsequent actions including,but not limited to,a refunding in whole or in part of such maturity. No dealer, broker, salesperson or other person has been authorized by the County or the Authority to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the 2007 Series Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer,solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2007 Series Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein,are intended solely as such and are not to be construed as representations of facts. The information set forth herein has been obtained from the County or the Authority and from other sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall,under any circumstances, create any implication that there has been no change in the affairs of the County or the Authority since the date hereof. This Official Statement is submitted in connection with the sale of the 2007 Series Bonds referred to herein and may not be reproduced or used, in whole or in part,for any other purpose,unless authorized in writing by the County. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Trust Agreement and the Facility Lease. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with one or more nationally recognized municipal securities information repositories. Any statement made in this Official Statement involving any forecast or matter.of estimates or opinion, whether or not expressly stated, is intended solely as such and not as a representation of fact. Certain statements included or incorporated by reference in this Official Statement constitute "forward Looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended (the "Securities Act"). Such forward-looking statements are generally identified by use of the words "plan," "project," "expect," "estimate," "budget' or other similar words. Such forward looking statements include, but are not limited to, statements contained in APPENDIX B—"COUNTY FINANCIAL INFORMATION." Such forward- looking statements refer to the achievement of certain results or other expectations or performance which involved known and unknown risks, uncertainties and other factors. These risks, uncertainties and other factors may cause actual results, performance or achievements to be materially different from any projected results, performance or achievements described or implied by such forward-looking statements. Neither the County nor the Authority plan to issue updates or revisions to such forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based, occur, or if actual results, performance or achievements are materially different from any results, performance or achievements described or implied by such forward-looking statements. The 2007 Series Bonds have not been registered with the Securities and Exchange Commission by reason of the provisions of Section 3(a)(2) of the Securities Act of 1933, as amended. The registration or qualification of the 2007 Series Bonds in accordance with applicable provisions of Securities Laws of the states in which these Bonds have been registered or qualified,and the exemption from registration or qualification in other states,shall not be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the securities or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriters do not guarantee the accuracy or completeness of such information. In connection with this offering, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the 2007 Series 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 Underwriters may offer and sell the 2007 Series Bonds to certain dealers and banks at prices lower than the initial public offering prices stated on the inside cover page and such public offering prices may be changed from time to time by the Underwriters. COUNTY OF CONTRA COSTA, CALIFORNIA BOARD OF SUPERVISORS OF THE COUNTY Mary N. Piepho (District 3) Chair John M. Gioia Gayle B. Uilkema (District 1) (District 2) Susan A. Bonilla Federal D. Glover (District 4) (District S) Vice Chair COUNTY OFFICIALS John B. Cullen Clerk of the Board and County Administrator Stephen J. Ybarra William J. Pollacek Auditor-Controller Treasurer-Tax Collector Paying Agent Silvano Marchesi Gus S. Kramer Stephen L. Weir County Counsel Assessor County Clerk-Recorder SPECIAL SERVICES Orrick, Herrington& Sutcliffe LLP Lofton&Jennings San Francisco, California San Francisco, California Bond Counsel Disclosure Counsel Tamalpais Advisors, Inc. Sausalito, California Financial Advisor The Bank of New York Trust Company,N.A. Chris D. Berens, CPA,P.C. San Francisco, California Omaha,Nebraska Trustee and Escrow Agent Verification Agent 200-06037\pos-5 11 TABLE OF CONTENTS Page Page INTRODUCTION .............................................1 RESERVE FACILITY ....................................25 General; Purpose......................................1 Authority for Issuance.............................2 FINANCIAL GUARANTY INSURANCE.....26 Security and Sources of Payment............2 The MBIA Insurance Corporation Reserve Fund...........................................3 Insurance Policy..........................26 Financial Guaranty Insurance..................3 MBIA Insurance Corporation................27 Certain Risk Factors................................3 Regulation.............................................27 Bondholder's Risks; Forward MBIA Financial Information.................28 Delivery Bond Purchase Incorporation of Certain Contract; Delayed Delivery...........3 Documents by Reference............28 Continuing Disclosure..................:..........4 Reference to Documents..........................4 CERTAIN RISK FACTORS...........................29 Limited Obligation................................29 PLAN OF FINANCE.........................................4 Base Rental Payments Not a Debt 2007 Series A Bonds ...............................4 of the County...............................29 2007 Series B Bonds................................6 Valid and Binding Covenant to Budget and Appropriate..............30 CERTAIN FORWARD DELIVERY Abatement.............................................30 CONSIDERATIONS.........................................7 Limited Recourse on Default................30 General.....................................................7 Limitations on Remedies.......................31 Settlement................................................7 Military Conflicts and Terrorist Additional Risks Related to the Activities.....................................31 Delayed Delivery Period...............9 Risk of Earthquake and Other Natural Disasters.........................32 THE FACILITIES...........................................:11 Hazardous Substances..:. 32 ....................... Limited Liability of Authority to ESTIMATED SOURCES AND USES OF the Owners..................................32 FUNDS.............................................................14 State Funding of Counties.....................33 THE 2007 SERIES BONDS............................14 CONSTITUTIONAL AND STATUTORY General Provisions.................................14 LIMITATIONS ON TAXES, REVENUES Redemption Provisions..........................15 AND APPROPRIATIONS..............................33 Notice of Redemption............................16 Article XIII A of the California Selection of 2007 Series Bonds for Constitution.................................33 Optional Redemption..................16 Legislation Implementing Article Effect of Redemption.............................16 XIII A..........................................33 Article XIII B of the California SECURITY AND SOURCES OF PAYMENT Constitution.................................34 FOR THE BONDS...........................................16 Article XIII C and Article XIII D General...................................................16 of the California Pledge of Revenues................................17 Constitution.................................34 Base Rental Payments............................19 Ventura Decision...................................35 Reserve Fund Proposition 62........................................35 Bond Insurance......................................20 Proposition IA.......................................36 Substitution of Property 21 Future Initiatives....................................37 Insurance................................................21 Additional Bonds..........................:........23 THE AUTHORITY37 ......................................... DEBT SERVICE SCHEDULE........................24 THE COUNTY.......................:........................37 200-06037\pos-5 iii RATINGS ....................................................::..38 VERIFICATION OF MATHEMATICAL COMPUTATIONS..........................................41 ABSENCE OF MATERIAL LITIGATION....38 UNDERWRITING OF THE 2007 SERIES A TAXMATTERS..............................................39 BONDS............................................................41 LEGAL MATTERS.........................................40 FORWARD DELIVERY OF THE 2007 SERIES B BONDS..........................................42 FINANCIAL ADVISOR.................................40 MISCELLANEOUS INFORMATION...........42 CONTINUING DISCLOSURE.......................41 APPENDIX A - GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION ........................ ......................................................................A-1 APPENDIX B - COUNTY FINANCIAL INFORMATION .............................................................B-1 APPENDIX C - EXCERPTS' FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE30, 2006......................................................................:..................................C-1 APPENDIX D - SUMMARY OF THE COUNTY INVESTMENT POLICY...................................D-1 APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS......................................................................................................... E-1 APPENDIX F - PROPOSED FORM OF BOND COUNSEL OPINION.......................................... F-1 APPENDIX G - PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT..............G-I APPENDIX H - DTC AND THE BOOK-ENTRY ONLY SYSTEM................................................H-1 APPENDIX I - SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY ......................... I-1 APPENDIX J - FORM OF DELAYED DELIVERY CONTRACT..................................................J-1 1' Includes all material in the County's Comprehensive Annual Financial Report from the Table of Contents through Note 19 of the Notes to the Basic Financial Statements. The Comprehensive Annual Financial Report in its entirety may be viewed online or downloaded at http://www.co.contra-costa.ca.us. 200-06037\pos-5 iv County of Contra Costa Public Financing Authority County of Contra Costa Public Financing Authority Lease Revenue Bonds Lease Revenue Bonds (Refunding and Various Capital Projects) (Medical Center Refunding) 2007 Series A 2007 Series B INTRODUCTION General; Purpose This Official Statement (which includes the cover page and Appendices hereto) (the "Official Statement") provides certain information concerning the issuance of $ * principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "2007 Series A Bonds"); and $ * principal amount of County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "2007 Series B Bonds" and together with the 2007 Series A Bonds, the "2007 Series Bonds") by the County of Contra Costa Public Financing Authority (the "Authority"). The 2007 Series Bonds are limited obligations of the Authority payable solely from Revenues (as hereinafter defined), consisting primarily of certain base rental payments (the "Base Rental Payments") to be made by the County of Contra Costa(the "County") for the Facilities (as defined herein) pursuant to the Facility Lease (as defined herein). The County leases the Facilities to the Authority pursuant to a Master Site Lease, dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Master Site Lease dated as of March 1, 2007 (collectively, the "Site Lease"). The Facilities are then leased by the Authority to the County pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Facility Lease dated as of March 1, 2007 (collectively, the "Facility Lease"), between the County, as lessee, and the Authority, as lessor. All real property leased by the County from the Authority under the Facility Lease in connection with the Facilities is herein referred to as the "Demised Premises." 2007 Series A Bonds. The proceeds of the 2007 Series A Bonds will be applied to: (i) finance or refinance the construction, acquisition, improvement .and installation of various capital projects (collectively, the "2007 Series A Project"); (ii) prepay certain certificates of participation and refund certain lease revenue bonds; (iii) fund a deposit into the Reserve Fund (defined herein); and (iv) pay certain costs associated with the issuance of the 2007 Series A Bonds. 2007 Series B Bonds. The proceeds of the 2007 Series B Bonds will be applied to: (i) prepay on a current basis certain outstanding Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates") issued by the Contra Costa County Public Facilities Corporation (the "Corporation"); and (ii) pay certain costs associated with the issuance of the 2007 Series B Bonds. See "PLAN OF FINANCE" and "ESTIMATED SOURCES AND USES OF FUNDS." It is anticipated that the 2007 Series B Bonds will be issued and delivered on or about August 2, 2007. See "CERTAIN FORWARD DELIVERY CONSIDERATIONS." *Preliminary,subject to change. 200-06037\pos-5 Authority for Issuance The 2007 Series Bonds will be issued pursuant to the Constitution and the laws of the State of California (the "State"), resolutions adopted by the Authority and the County and a Trust Agreement, dated as of February 1, 1999 (the "Master Trust Agreement"), as previously supplemented, and with respect to the 2007 Series A Bonds as further supplemented by the Sixth Supplemental Trust Agreement dated as of March 1, 2007 (the "Sixth Supplemental Trust Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the "Trustee") and acknowledged by the County and with respect to the 2007 Series B Bonds as supplemented by a Seventh Supplemental Trust Agreement dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement"), between the Authority and the Trustee and acknowledged by the County. The Master Trust Agreement as previously supplemented and as further supplemented by the Sixth Supplemental Trust Agreement and the Seventh Supplemental Trust Agreement is referred to as the "Trust Agreement"). Pursuant to the Trust Agreement, the Authority pledges to the Trustee, for the benefit of the Bondholders (as hereinafter defined), all of the Revenues, defined as the Base Rental Payments made by the County to the Authority under the Facility Lease, interest or other income from any investment of amounts held in any fund or account established pursuant to the Trust Agreement or the Facility Lease (other than the Rebate Fund), and Swap Revenues. Security and Sources of Payment The Authority has previously issued six series of lease revenue bonds pursuant to the Trust Agreement, which are payable on a parity with the 2007 Series Bonds. The prior lease revenue bonds consist of the following: • $74,685,000 principal amount of Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A (the "1999 Series A Bonds"); • $18,030,000 principal amount of Lease Revenue Bonds (Various Capital Projects), 2001 Series A (the"2001 Series A Bonds"); • $23,775,000 principal amount of Lease Revenue Bonds (Various Capital Projects), 2001 Series B (the "2001 Series B Bonds"); • $12,650,000 principal amount of Lease Revenue Bonds (Various Capital Projects), 2002 Series A (the"2002 Series A Bonds"); • $25,440,000 principal amount of Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B (the"2002 Series B Bonds"); and • $18,500,000 principal amount of Lease Revenue Bonds (Various Capital Projects), 2003 Series A (the "2003 Series A Bonds" and collectively, with the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds, the 2002 Series A Bonds and the 2002 Series B Bonds, the "Prior Bonds"). The Authority may in the future issue additional bonds under the Trust Agreement ("Additional Bonds") secured on a parity with the Prior Bonds and the 2007 Series Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Additional Bonds." The Prior Bonds and the 2007 Series Bonds, together with any Additional Bonds issued pursuant to the Trust Agreement, are herein referred to as the "Bonds." 200-06037\pos-5 2 The County has covenanted under the Facility Lease that so long as the Facilities are available for the County's use and occupancy, it will take such action as may be necessary to include all Base Rental Payments and Additional Payments (as defined below) in its annual budgets and to make the necessary annual appropriations therefor. The County has timely made to date all Base Rental Payments and Additional Payments required under the Facility Lease for the Facilities. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS." Base Rental Payments are subject to complete or partial abatement in the event of substantial interference with the use and occupancy by the County of the Facilities caused by damage to or destruction or condemnation of the Facilities. See "CERTAIN RISK FACTORS" and "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Pledge of Revenues." Abatement of Base Rental Payments under the Facility Lease could result in 2007 Series Bondholders receiving less than the full amount of principal and interest on the 2007 Series Bonds, except to the extent proceeds of insurance or moneys in the Reserve Fund (as described herein) are available to make payments of principal of or interest on the 2007 Series Bonds (or the relevant portion thereof) during periods of abatement of Base Rental. Reserve Fund Pursuant to the Trust Agreement, a reserve fund (the "Reserve Fund") is established for the benefit of the Bondholders in an amount equal to the Reserve Requirement (as defined herein). Amounts on deposit in the Reserve Fund are available to pay the Prior Bonds, the 2007 Series Bonds and any Additional Bonds. See"SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Reserve Fund." Financial Guaranty Insurance 2007 Series A Bonds. As additional security for the 2007 Series A Bonds, payment of the principal of and interest on the 2007 Series A Bonds when due will be insured by a financial guaranty insurance policy to be issued by MBIA Insurance Corporation (the "Bond Insurer") simultaneously with the delivery of the 2007 Series A Bonds. See "FINANCIAL GUARANTY INSURANCE" and APPENDIX I— "SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY." 2007 Series B Bonds. The Bond Insurer has issued a forward commitment to insure the timely payment of principal of and interest on the 2007 Series B Bonds, if and when issued pursuant to the terms and conditions of its Forward Commitment to issue a Financial Guaranty Insurance Policy dated 2007 (the "Forward Bond Insurance Commitment"). See "THE FINANCIAL GUARANTY INSURANCE," APPENDIX I—"SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY" and "CERTAIN FORWARD DELIVERY CONSIDERATIONS." Certain Risk Factors For a discussion of certain risk factors associated with investment in the 2007 Series Bonds, see "CERTAIN RISK FACTORS"as well as other factors discussed throughout this Official Statement. Bondholder's Risks; Forward Delivery Bond Purchase Contract; Delayed Delivery An investment in the 2007 Series B Bonds involves certain additional risks due to the delayed delivery of the 2007 Series B Bonds and that the delivery of the 2007 Series B Bonds is subject to satisfaction of certain conditions precedent. For a discussion of certain factors that should be considered by prospective investors in evaluating an investment in the 2007 Series B Bonds, see "CERTAIN FORWARD DELIVERY CONSIDERATIONS—Additional Risks Related to the Delayed Delivery Period." 200-06037\pos-5 3 Accordingly, each prospective purchaser of the 2007 Series B Bonds should make an independent evaluation of all of the information presented in this Official Statement, including the information under the captions "CERTAIN FORWARD DELIVERY CONSIDERATIONS" and "CERTAIN RISK FACTORS" in order to make an informed investment decision. Continuing Disclosure The County has covenanted for the benefit of the beneficial owners of the Certificates to provide certain financial information and operating data relating to the County by no later than nine months after the end of each fiscal year(which fiscal year currently ends June 30), commencing with the report due for the Fiscal Year ended June 30, 2007 (each an "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed with each National Recognized Municipal Securities Repository and with any then existing State Repository (collectively, the "Repositories"). The notices of material events will be filed with the Repositories. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in APPENDIX G—"FORM OF 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). Reference to Documents The summaries and descriptions in this Official Statement of the Trust Agreement, the Facility Lease, the Site Lease, the Continuing Disclosure Agreement, and other agreements relating to the 2007 Series Bonds are qualified in their entirety by reference to such documents, and the descriptions herein of the 2007 Series Bonds are qualified in their entirety by the form thereof and the information with respect thereto included in such documents. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Trust Agreement and the Facility Lease. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Certain Definitions." PLAN OF FINANCE 2007 Series A Bonds A portion of the proceeds of the 2007 Series A Bonds will be used by the Authority to: (i)finance and refinance various capital projects,of the County described below (collectively, the "2007 Series A Project"); (ii) refund certain outstanding lease revenue bonds and prepay certain certificates of participation; (iii) fund a deposit into the Reserve Fund; and (iv) pay certain costs associated with the issuance of the 2007 Series A Bonds. 2007 Series A Project. The County presently anticipates that the capital projects described below will constitute the 2007 Series A Project, although the County may amend the 2007 Series A Project from time to time by filing a notice of change with the Trustee. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement—The 2007 Series A Bonds." • The County expects to use proceeds of.the 2007 Series A Bonds in the approximate amount of $15.25 million to construct an approximately 53,000 square foot, four- story District Attorney's office headquarters to be located on an approximately 0.57 acre site at 950 Ward Street in Martinez, California. Construction is expected to commence in winter 2007 and be completed in 2009. The County expects to contribute approximately $11.7 million in other County funds toward costs for this component of the 2007 Series A Project. 200-06037\pos-5 4 • The County expects to use proceeds of the 2007 Series A Bonds in the approximate amount of$5.00 million to construct an approximately 12,000 square foot addition to the existing approximately 31,200 square foot County Public Works Department Administrative office building located on an approximately 1.35 acre site at 255 Glacier Drive in Martinez, California. Construction of improvements is expected to commence in winter 2006 and be completed in December 2007. The County expects to contribute approximately $1.8 million in other County funds toward costs for this component of the 2007 Series A Project. • The County expects to use proceeds of the 2007 Series A Bonds in the approximate amount of $2.10 million to expand approximately 15 examination rooms at the County's Pittsburg Health Center located at 2311 Loveridge Road in Pittsburg, California. Construction of improvements is expected to commence in January 2007 and be completed in September 2007. The County expects to contribute approximately $200,000 million in other County funds toward costs for this component of the 2007 Series A Project. • The County expects to use proceeds of the 2007 Series A Bonds in the approximate amount of $2.20'million to exercise an option to purchase two parcels of land in Concord, California, one of which is located at 3052 Willow Pass Road, and is improved with two, two-story office buildings, comprising approximately 9,246 aggregate square feet, that were originally constructed in 1981 and are used as the Concord Health Center. The second parcel is located at 2948 Willow Pass Road and has been improved with a 26-space lighted parking lot that provides additional parking for the Concord Health Center. • The County expects to use proceeds of the 2007 Series A Bonds in the approximate amount of $7.80 million to acquire, finance and refinance various other capital improvements located within the County. The Authority expects to use the remaining.proceeds of the 2007 Series A Bonds to prepay the 1997 Certificates (as defined herein) and refund and defease a portion of the Prior Bonds (the "Refunded Prior Bonds"). Prepayment and Refunding. The Trustee executed and delivered $34,910,000 aggregate principal amount of the Authority's Certificates of Participation (Capital Projects Program), Series of 1997 (the "1997 Certificates") that were delivered pursuant to a trust agreement, dated as of August 1, 1997 (the "1997 Trust Agreement"), by and between the County, the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the "1997 Trustee"). The 1997 Certificates were delivered to refund Certificates of Participation (1991) County Buildings Acquisition Project which were delivered to finance the costs of acquiring and improving certain County administration facilities and certain related capital improvements thereto and to provide funds to acquire and renovate other County buildings. The Refunded Prior Bonds were issued pursuant to the Trust Agreement. Each Series of Refunded Prior Bonds was issued to finance the costs of constructing, improving and acquiring certain County facilities and related capital improvements thereto. Upon the deposit of moneys and securities, together with certain moneys released from the 1997 Trust Agreement with respect to the 1997 Certificates, into an escrow fund (the "1997 Escrow Fund") established pursuant to an Escrow Agreement dated as of March 1, 2007 (the "1997 Escrow Agreement") by and between the County and The Bank of New York Trust Company, N.A., as escrow agent (the "Escrow Agent"), the 1997 Certificates will no longer be deemed outstanding under the 1997 Trust Agreement. The amount on deposit in the 1997 Escrow Agreement will be invested in United States Treasury Securities and will be sufficient, together with interest earnings thereon, to timely prepay the 200-06037\pos-5 5 1997 Certificates at a prepayment price equal to the principal amount thereof, plus the prepayment premium and accrued and unpaid interest through the prepayment date. Upon the deposit of money and securities into an escrow fund (the "Refunded Bonds Escrow Fund") established pursuant to an Escrow Agreement, dated as of March 1, 2007 (the "Refunded Bonds Escrow Agreement") by and between the County and the Escrow Agent, the Refunded Prior Bonds will no longer be deemed outstanding under the Trust Agreement. The amount on deposit in the Refunded Bonds Escrow Fund will be invested in United States Treasury Securities and will be sufficient, together with interest earnings thereon, to redeem the Refunded Prior Bonds at a redemption price equal to the principal amount thereof, plus the redemption premium and accrued and unpaid interest to the redemption date. The mathematical computations.used to determine the sufficiency of the escrow deposit to prepay the 1997 Certificates and the escrow deposit to refund the Refunded Prior Bonds will be verified by Chris D. Berens, CPA, P.C., Omaha, Nebraska (the "Verification Agent"). See "VERIFICATION OF MATHEMATICAL COMPUTATIONS." 2007 Series B Bonds The Authority intends to issue $ * aggregate principal amount of 2007 Series B Bonds on or about August 2, 2007 to: (i) establish an irrevocable escrow to refund on a current basis the $ outstanding principal amount of Contra Costa County Public Facilities Corporation Certificates of Participation (Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "Merrithew Certificates"); and (ii) pay certain costs associated with the issuance of the 2007 Series B Bonds. The Authority expects to enter into a forward bond purchase contract with the Underwriters in connection with the delivery of the 2007 Series B Bonds. The forward delivery of the 2007 Series B Bonds is necessary to comply with certain federal income tax requirements for a current refunding of the 2007 Series B Bonds. See "CERTAIN FORWARD DELIVERY CONSIDERATIONS." The Bond Insurer has issued a forward commitment to insure the timely payment of principal of and interest on the 2007 Series B Bonds, if and when issued. The Merrithew Certificates were executed and delivered pursuant to a Trust Agreement dated as of May 1, 1992, as amended and supplemented by a First Supplemental Trust Agreement, dated as of February 1, 1997 (collectively, the "Merrithew Trust Agreement'), by and among the County, the Corporation and U.S. Trust Company of California, N.A. (predecessor to The Bank of New York Trust Company, N.A.), as trustee (the "Merrithew Trustee"). The Merrithew Certificates were issued to refund and prepay the outstanding Certificates of Participation (Merrithew Memorial Hospital Replacement Project), Series of 1992 that were issued to finance the construction, acquisition and equipping of the Merrithew Memorial Hospital, now known as the Contra Costa Regional Medical Center. Upon the deposit of moneys and securities, together with certain moneys released from the Merrithew Trust Agreement with respect to the Merrithew Certificates, into an escrow fund (the "Merrithew Escrow Fund") established pursuant to an Escrow Agreement, dated as of March 1, 2007, (the "Merrithew Escrow Agreement") by and between the County and the Escrow Agent, the Merrithew Certificates will no longer be deemed outstanding under the Merrithew Trust Agreement. The amount on deposit in the Merrithew Escrow Fund will be invested in United States Treasury Securities and will be sufficient, together with interest earnings thereon, to prepay the Merrithew Certificates at a prepayment price equal to aggregate principal amount thereof, plus a prepayment premium and accrued and unpaid interest through November 1, 2007. The sufficiency of the mathematical computations used to determine the sufficiency of the escrow deposit to prepay and defease the Merrithew Certificates will be verified by the Verification Agent. See "VERIFICATION OF MATHEMATICAL COMPUTATIONS." 200-06037\pos-5 6 CERTAIN FORWARD DELIVERY CONSIDERATIONS General The Authority expects to enter into a forward delivery bond purchase contract dated , 2007 (the "Forward Delivery Purchase Contract") for the 2007 Series B Bonds with Citigroup Global Markets Inc., as representative (the "Representative") on its own behalf and on behalf of itself and Banc of America Securities LLC (collectively, the "Underwriters"). Subject to the terms of the Forward Delivery Purchase Contract, the Authority expects to issue and deliver the 2007 Series B Bonds on or about August 2, 2007, or on such later date as is mutually agreed upon by the Authority and the Representative (the "Settlement Date"). The following is a description of certain provisions of the Forward Delivery Purchase Contract. The following description is not to be considered a full statement of the terms of the Forward Delivery Purchase Contract and accordingly is qualified by reference thereto and is subject to the full text thereof. Settlement The issuance of the 2007 Series B Bonds and the Underwriters' obligations under the Forward Delivery Purchase Contract to purchase, accept delivery of and pay for the 2007 Series B Bonds on the Settlement Date are conditioned upon the performance by the Authority and the County of their obligations thereunder, including, without limitation, the delivery of an opinion, dated the Settlement Date, of Bond Counsel, substantially in the form and to the effect as set forth in APPENDIX F—"PROPOSED FORM OF BOND COUNSEL OPINION" to this Official Statement, together with a reliance letter from Bond. Counsel addressed to the Underwriters, and the delivery of written evidence satisfactory to the Representative that, as of the Settlement Date, Moody's Investors Service ("Moody's") and Standard& Poor's Ratings Services, a division of The McGraw Hill Company ("S&P") have rated the 2007 Series B Bonds and the delivery of written evidence satisfactory to the Representative that the financial guaranty insurance policy for the 2007 Series B Bonds has been issued in substantially in the form set forth in APPENDIX I to this Official Statement. See "RATINGS" herein. The issuance of the 2007 Series B Bonds is further contingent upon the delivery of certain certificates and legal opinions, and the satisfaction of other conditions as of the Settlement Date. Events which may prevent those conditions from being satisfied include, among others: (a) legislation is enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either House of Congress by any committee of such House, or passed either House of Congress, or a decision is rendered by a court of the United States or the United States Tax Court, or a ruling is made or a regulation is proposed or made by the Treasury Authority of the United States or the Internal Revenue Service, with respect to the federal taxation of interest received on obligations of the general character of the 2007 Series B Bonds, which, in the opinion of Bond Counsel has, or will have, the effect of making such interest subject to inclusion in gross income for purposes of federal income taxation, except to the extent such interest is includable in gross income on the date hereof, (b) as a result of any legislation, regulation, ruling, order, release, court decision or judgment or action by the U.S. Department of the Treasury, the Internal Revenue Service, or any agency of the State either enacted, issued, effective, adopted or proposed, or for any other reason Bond Counsel cannot issue an opinion substantially in the form and to the effect set forth in APPENDIX F to this Official Statement or to the effect that: (i)the interest on the 2007 Series B Bonds is (x) not includable in gross income of the holders thereof for federal income tax purposes by virtue of Section 103 of the Internal *Preliminary,subject to change. 200-06037\pos-5 7 Revenue Code of 1986, as amended (the "Code") (or comparable provisions of any successor federal tax laws), and (y) not subject to personal income taxes imposed by the State, or(ii)to the extent such opinion cannot be rendered under clause (i), of this subsection, and notwithstanding a change in law from that existing on the date of closing which affects the treatment, for tax purpose, at settlement the interest on the 2007 Series B Bonds is not subject to (x) any currently imposed federal income tax and (y) personal income taxes imposed by the State; (c) legislation shall have been enacted, or actively considered for enactment with an effective date prior to delivery of and payment for the 2007 Series B Bonds (the "Settlement"), or a decision by a court of the United States is rendered, the effect of which is that: (i) the 2007 Series B Bonds or the Trust Agreement, as the case may be, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or(ii) the Trust Indenture Act of 1939, as amended and as then in effect, or (iii) the offering or sale of the 2007 Series B Bonds would be in violation of the Securities Exchange Act of 1934, as amended and then in effect; (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering, or sale of the 2007 Series B Bonds as contemplated by the Forward Delivery Purchase Contract or by the Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939,as amended and as then in effect; (e) an official published ruling, regulation, guidance, release or official announcement, or temporary or proposed regulation, is made or is proposed by the U.S. Department of the Treasury or the Internal Revenue Service after the date of the Forward Delivery Purchase Contract with respect to the provisions of Internal Revenue Service Circular 230 (31 C.F.R. Part 10)(collectively, a"Ruling"); and: (i) any counsel delivering an opinion pursuant to the Forward Delivery Purchase Contract determines that compliance with such Ruling would require a modification to the form of opinion approved thereunder, including the form of Bond Counsel opinion attached to the Official Statement (without any amendments or supplements made subsequent to the date of the Forward Delivery Purchase Contract); or (ii) a determination is made by Bond Counsel that one or more "significant Federal tax issues" contained in a "separately provided written advice" prepared by Bond Counsel pursuant to and as a result of the application of the Ruling as then in effect or as then proposed should be discussed in an amendment or supplement to the Official Statement, or any subsequent disclosure document; and such modification to the form of opinion or discussion of"significant Federal tax issues"as set forth in(i) or (ii) above would, in the judgment of the Representative: (A) adversely affect the market for the 2007 Series B Bonds, the market value of the 2007.Series B Bonds or the ability of the Underwriters to enforce contracts for the sale of the 2007 Series B Bonds; or(B) limit the ability of the Underwriters to market the 2007 Series B Bonds to certain classes of investors; (f) an event of default has occurred and is continuing, technical or otherwise, under,any of the Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease or the Merrithew Trust Agreement; or 200-06037\pos-5 8 (g) the Bond Insurer notifies the Authority that the Bond Insurer is canceling its Forward Bond Insurance Commitment to issue the financial guaranty insurance policy with respect to the 2007 Series B Bonds. During the period of time between the date of this Official Statement and the Settlement'Date (the "Delayed Delivery Period"), certain information contained in this Official Statement could change in a material respect. The Authority has agreed to amend or supplement this Official Statement with an updated Official Statement not more than 25 days nor less than 10 days prior to the Settlement Date. The Underwriters may not refuse to purchase the 2007 Series B Bonds by reason of "general market or credit changes," including, but not limited to, (a) changes in the uninsured ratings anticipated to be assigned to the 2007 Series B Bonds or the ratings assigned to the claims paying abilities of the Bond Insurer or assigned to the 2007 Series B Bonds as a result of the issuance of the Bond Insurance Policy, or (b) changes in the financial condition, operations,performance, properties or prospects of the Authority or the Bond Insurer prior to the Settlement Date. All purchasers of the 2007 Series B Bonds are required to execute and deliver to the Underwriters a"Delayed Delivery Contract" substantially in the form included in Appendix J. The Representative has advised the Authority that the 2007 Series B Bonds will be sold only to investors who execute the Delayed Delivery Contract in substantially the form included in APPENDIX J. The proposed form of Delayed Delivery Contract is attached as Appendix J at the request and for the convenience of the Underwriters. The Authority will not be a party to the Delayed Delivery Contracts and the Authority is not in any way responsible for the performance thereof or for any representations or warranties contained therein. The rights and obligations under the Forward Delivery Purchase Contract are not conditioned or dependent upon the performance of any Delayed Delivery Contract. Additional Risks Related to the Delayed Delivery Period During the Delayed Delivery Period, certain information contained in this Official Statement could change in a material respect. Any changes in such information will not permit the Underwriters to terminate the Forward Delivery Purchase Contract unless the change reflects an event described under"— Settlement." In addition to the risks set forth above, purchasers of the 2007 Series B Bonds are subject to certain additional risks, some of which are described below. Ratings Risk. The long-term debt obligations insured by the Bond Insurer's financial guaranty insurance policy are currently rated "Aaa" by Moody's and "AAA" by S&P. See "RATINGS." No assurances can be given that the ratings assigned to the 2007 Series B Bonds on the Settlement Date will not be different from those currently assigned to long-term debt obligations insured by the Bond Insurer. Issuance of the 2007 Series B Bonds and the Underwriters' obligations under the Forward Delivery Purchase Contract are not conditioned upon the assignment of any particular insured or underlying ratings for the 2007 Series B Bonds or the maintenance of the initial ratings of the 2007 Series B Bonds. Secondary Market Risk. The Underwriters are not obligated to make a secondary market in the 2007 Series B Bonds and no assurances can be given that a secondary market will exist for the 2007 Series B Bonds during the Delayed Delivery Period. Purchasers of the 2007 Series B Bonds should assume that the 2007 Series B Bonds will be illiquid throughout the Delayed Delivery Period. Market Value Risk. The market value of the 2007 Series B Bonds as of the Settlement Date may be affected by a variety of factors .including, without limitation, general market conditions,,the ratings then assigned to the 2007 Series B Bonds, the financial condition and business operations of the County or the Bond Insurer and federal, state and local income tax and other laws. The market value of the 2007 Series B Bonds as of the Settlement Date could therefore be higher or lower than the price to be paid by the initial purchasers of the 2007 Series B Bonds and that difference could be substantial. Neither the 200-06037\pos-5 9 Authority nor the Underwriters make any representation as to the expected market price of the 2007 Series B Bonds as of the Settlement Date. Further, no assurance can be given that the introduction or enactment of any future legislation will not affect the market price for the 2007 Series B Bonds as of the Settlement Date or thereafter or not have a materially adverse impact on any secondary market for the 2007 Series B Bonds. Tax Law Risk. Subject to the additional conditions of settlement described under "—Settlement" above, the Forward Delivery Purchase Contract obligates the Authority to deliver and the Underwriters to acquire the 2007 Series B Bonds if the Authority delivers an opinion of Bond Counsel substantially in the form and to the effect as set forth in APPENDIX F—"PROPOSED FORM OF BOND COUNSEL OPINION." During the Delayed Delivery Period, new legislation, new court decisions, new regulations, or new rulings may be enacted, promulgated or interpreted that might prevent Bond Counsel from rendering its opinion or otherwise affect the substance of such opinion. Notwithstanding that the enactment of new legislation, new court decisions or the promulgation of new regulations or rulings might diminish the value of, or otherwise affect, the exclusion of interest on the 2007 Series B Bonds for purposes of federal income taxation payable on"state or local bonds,"the Authority might be able to satisfy the requirements for the delivery of the 2007 Series B Bonds. In such event, the purchasers would be required to accept delivery of the 2007 Series B Bonds. Prospective purchasers are encouraged to consult their tax advisors regarding the likelihood of any changes in tax law and the consequences of such changes to such purchasers. [See "TAX MATTERS—Proposed Circular 230 Rules" herein for a discussion of certain matters relating to the proposed Circular 230.rules, as presently proposed.] Bond Insurance Policy. The Bond Insurer has issued its Forward Bond Insurance Commitment to issue a financial guaranty insurance policy pursuant to which the Bond Insurer will agree, upon the terms and conditions to be set forth therein, to issue on the Settlement Date,the Bond Insurance Policy to insure the scheduled payment of principal and interest on the 2007 Series B Bonds. No assurance is made that such conditions will be satisfied and that the financial guaranty insurance policy will be delivered by the Bond Insurer. In the event the financial guaranty insurance policy is not delivered by the Bond Insurer,the 2007 Series B Bonds will not be issued. See"FINANCIAL GUARANTY INSURANCE." Termination of Forward Delivery Purchase Contract. The Representative, on behalf of the Underwriters, may terminate the Forward Delivery Purchase Contract by notification to the Authority and the County at any time on or prior to the Settlement Date if any of the events described above in items (a) through (g) under"—Settlement"occurs. 200-06037\pos-5 10 THE FACILITIES The County leases the Facilities to the Authority pursuant to the Site Lease, and the Authority leases back the Facilities to the County pursuant to the Facility Lease. The County covenants in the Facilities Lease to the use of the Facilities for County and public purposes. Pursuant to the Facility Lease, the County and the Authority may substitute other properties for the Facilities or portions thereof upon the satisfaction of certain conditions. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Substitution of Property." The Facilities consist of a number of County properties and the sites thereof. The Facilities include site development, landscaping, utilities, equipment, furnishings, improvements and appurtenant and related facilities located on the Demised Premises. The first two facilities listed on the table on the next page comprise the 2007 Series A Facilities. Upon issuance and delivery of the 2007 Series B Bonds, the Contra Costa Regional Medical Center (formerly known as the Merrithew Memorial Hospital), will be added as a Facility under the Facility Lease. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 11 7 00 kn C11 6R � 69 w Q N 00 N n N N a� 00 O N N 4 p f a O cq N O O O O O O O O F• N N H N N N N N N w w 0 o v¢i oo on (U o o W o W � rn C 0 0 0 0 W O w O 00 V cn N O m �? �p C14 Cl) tV C �t N M Lrl N d' N N a x � , na v d d o uo c c�cl o C y FID kr) r N 00 N 00 00 N M L A O O CC 00 O O � � O O D v N CD N N N N ' N N N cdcd N cC 0 s3 cd cz ai cd � o .> o Q o W o 0 o > o M E o E o fl cd Ca cd *- cd V] cC fl C� cfG=, o cdU ? U � U U b U w U a U � U cq U U Q ~ o Q O o 3 o Q g 7;b eliU o Q • . o -Lo o ' O � ooQv,'IT .� o .op ^o No w 0 0 No o �, `d d N N N U - N � p 0 t� •Y yTi � Y O Q + U . U y O .0 N ca UbDo o o o ca b cqs '°c V3 o N x o N ° °? U co v o U o o >, v a> L 3 > ti cl .r R oE ti U ¢ c�a U D W W w 200-06037\pos-5 12 v C M m C y ♦•r M O p O O O 00 N 00 O O O 'G � O 00 00 DD vl O � � w Ew y �o 00 00 3 0 0 0 0 0 0 E.r (l a N N N N N N N N N ON _ M I N U C c QQ O G u w 0 0 0 C) 0 0 0 o vi w o n pC L bA O O O N N O vl M w 00 W y O N o. Ls, y as 00 00 C � V1 O r- d u o+ O O b v d Q O b O vi 06 k d U 6,q 6F3 O •bp �O �o 1.0 N �o N 00 M c`d �,. O 0 00 00 00 0 00 0 o rn 00 o L Y caca. o rn O rn o rn N a 8 ¢ � > a1 o abi o a o > cd b C�sCd >❑ t y •� aCi cC E 0 0 0 o c b o o � .? ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of funds related to the issuance of the 2007 Series Bonds. 2007 2007 Series A Bonds Series B Bonds SOURCES: Principal Amount of 2007 Series Bonds.................................. Net Original Issue Discount/Premium..................................... Transfer from the 1997 Trust Agreement................................ Transfer from the Merrithew Trust Agreement....................... TOTALSOURCES............................................................... USES: Deposit to 2007 Series A Project Fund................................... Deposit to 1997 Escrow Fund................................................. Deposit to Refunded Bonds Escrow Fund.............................. Deposit to Merrithew Escrow Fund........................................ Deposit to Reserve Fund......................................................... Deposit to 2007 Series Costs of Issuance Fundst.................... Net Underwriters' Discount.................................................... TOTALUSES ..................................................................... fi Includes legal and professional fees,financial guaranty insurance policy premium[s],printing costs and other miscellaneous costs of issuance. See"UNDERWRITING OF THE 2007 SERIES A BONDS"and"FORWARD DELIVERY OF THE 2007 SERIES B BONDS." THE 2007 SERIES BONDS General Provisions The 2007 Series Bonds are limited obligations of the Authority payable solely from Revenues, consisting primarily of Base Rental Payments to be made by the County under the Facility Lease. The 2007 Series Bonds will be prepared in the form of fully registered bonds and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the 2007 Series Bonds. Ownership interests in the 2007 Series Bonds may be purchased in book-entry form only, in the denominations hereinafter set forth. See APPENDIX H—"DTC AND THE BOOK-ENTRY ONLY SYSTEM." Ownership interests in 2007 Series Bonds will be in $5,000 denominations or any integral multiple thereof. The 2007 Series Bonds will mature on the dates (each a "Maturity Date") and in the principal amounts, and the interest payable thereon will be computed at the rates, all as set forth on the inside cover page of this Official Statement. 2007 Series A Bonds. Interest on the 2007 Series A Bonds will be calculated on the basis of a 360-day year composed of twelve 30-day months and is payable on June 1 and December 1 (each an "Interest Payment Date") of each year, commencing June 1, 2007. The 2007 Series A Bonds will be dated and bear interest from their date of issuance. 200-06037\pos-5 14 2007 Series B Bonds. Interest on the 2007 Series B Bonds will be calculated on the basis of a 360-day year composed of twelve 30-day months and is payable on June 1 and December 1 (each an "Interest Payment Date")of each year,commencing December 1, 2007. The 2007 Series B Bonds will be dated and bear interest from their date of issuance. Redemption Provisions Optional Redemption. The 2007 Series A Bonds maturing on or prior to June 1, 20 are not subject to optional redemption. The 2007 Series A Bonds maturing on or after June 1, 20_are.subject to optional redemption prior to their respective stated maturities, at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after June 1, 20_ at the following prices (expressed as a percentage of the principal amount of the 2007 Series A Bonds called for redemption),plus accrued interest thereon to the date fixed for redemption: 2007 Series A Bonds Redemption Period (dates inclusive) Redemption Price June 1, 20_through May 31, 20_ % June 1, 20_through May 31, 20_ June 1, 20_and thereafter The 2007 Series B Bonds maturing on or prior to June 1, 20 are not subject to optional redemption. The 2007 Series B Bonds maturing on or after June 1, 20_ are subject to optional redemption prior to their respective stated maturities, at the written direction of the Authority, from any moneys deposited by the Authority or the County, as a whole or in part on any date (in such maturities as are designated in writing by the Authority to the Trustee) on or after June 1, 20 at the following prices (expressed as a percentage of the principal amount of the 2007 Series B Bonds called for redemption), plus accrued interest thereon to the date fixed for redemption: 2007 Series B Bonds Redemption Period ,(dates inclusive) Redemption Price June 1,.20 through May 31, 20_ % June 1, 20_through May 31, 20_ June 1, 20_and thereafter Extraordinary Redemption. The 2007 Series Bonds are subject to redemption by the Authority on any date prior to their respective stated maturities, upon notice as provided in the Trust Agreement, as a whole or in part by lot within each stated maturity of the 2007 Series Bonds in Authorized Denominations, from prepayments of Base Rental Payments made by the County from the net proceeds received by the County due to the taking of the Facilities or portions thereof under the power of eminent domain, or from the net proceeds of title insurance or insurance received for damage to or destruction of the Facilities or portions thereof, under the circumstances described in the Trust Agreement and the Facility Lease. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance." The redemption price will be equal to the principal amount of the 2007 Series Bonds to be redeemed and accrued interest thereon to the date of redemption, without premium. Whenever less than all of the Outstanding Bonds are to be redeemed on any one date,the Trustee will select; in accordance with written instructions from the Authority, the Bonds to be redeemed so that the aggregate annual amounts of principal of and interest on the Bonds which will be payable after such redemption date will be as nearly 200-06037\pos-5 15 proportional as practicable to the aggregate annual amounts of principal of and interest on the Bonds outstanding prior to such redemption date. Notice of Redemption Notice of redemption is to be mailed, first class postage prepaid, to the respective Owners of any 2007 Series Bonds designated for redemption at their addresses appearing on the registration books required to be kept by the Trustee not less than 30 nor more than 60 days prior to the redemption date. Each notice of redemption will state the date of such notice, the date of issue of the Bonds, the Series,the redemption date, the redemption price, and the CUSIP number of the maturity or maturities, and, if less than all of any such maturity is to be redeemed, the distinctive certificate numbers of the 2007 Series Bonds to be redeemed, and in the case of each 2007 Series Bond called for redemption in part, state the amount which is to be redeemed. Each such notice will also state that from and after the redemption date, interest on the 2007 Series Bonds to be redeemed will cease to accrue. Failure to receive such notice will not invalidate any of the proceedings taken in connection with such redemption. Selection of 2007 Series Bonds for Optional Redemption The Authority will designate which maturities of Bonds of a Series are to be redeemed. Whenever less than all the Outstanding 2007 Series Bonds of a Series maturing on any one date are to be redeemed, the Trustee will select the 2007 Series Bonds of such Series and maturity date to be redeemed from the Outstanding 2007 Series Bonds of such Series payable on such maturity date by lot. For purposes of such selection, 2007 Series Bonds will be deemed to be composed of$5,000 portions, and any such portion may be separately redeemed. In the event 2007 Series Bonds subject to sinking fund redemption are designated for redemption, the Authority may designate which sinking account payments are allocated to such redemption. Effect of Redemption If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the 2007 Series Bonds called for redemption is held by the Trustee, then on the redemption date designated in such notice 2007 Series Bonds for such Series so called for redemption will become due and payable, and from and after the date so designated interest on such 2007 Series Bonds will cease to accrue, and the Owners of such 2007 Series Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. SECURITY AND SOURCES OF PAYMENT FOR THE BONDS General The Bonds are secured by the Revenues, which consist primarily of Base Rental Payments to be made by the County under the Facility Lease. Pursuant to the Facility Lease, the Authority leases the Facilities to the County. As rental for the use and occupancy of the Facilities, the County covenants to pay Base Rental Payments to the Authority, which payments are pledged to the Trustee for the benefit of the Owners of the Bonds. The Base Rental Payments, which are subject to abatement are calculated. to generate sufficient Revenues to pay principal of and interest on the Bonds when due. The County has covenanted in the Facility Lease to include all Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. By the 15th day of the month immediately preceding each Interest Payment Date, the County must pay to the Trustee Base Rental Payments (to the extent required under the Facility Lease) which are scheduled to be sufficient to pay, 200-06037\pos-5 16 when due, the principal of and interest on the Bonds. Base Rental Payments are not subject to acceleration. To date, the County has timely made all Base Rental Payments and Additional Payments due under the Facility Lease for the use and occupancy of the Facilities. Under the Facility Lease, the County agrees to pay Additional Payments for the payment'of all expenses and all costs of the Authority and the Trustee related to the lease of the Facilities, including expenses of the Trustee payable by the Authority under the Trust Agreement, and fees of accountants, attorneys and consultants. The County is responsible for repair and maintenance of the Facilities during the term of the Facility Lease. The Base Rental Payments will be abated proportionately during any period in which by reason of any damage to or destruction of the Facilities, there is substantial interference with the use and occupancy of the Facilities by the County, in the proportionin which the cost of that portion of the Facilities rendered unusable bears to the cost of the whole of the Facilities. During any such period of abatement, except to the extent that amounts held by the Trustee in the Revenue Fund or the Reserve Fund are otherwise available to pay the Bonds, Revenues will not be available to pay the Bonds. Such abatement will continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Facility Lease will continue in full force and effect and the County waives any right to terminate the Facility Lease by virtue of any such damage or destruction. If the whole of the Facilities, including the Demised Premises, or so much thereof as to render the remainder unusable, is taken under power of eminent domain, the term of the Facility Lease will cease as of the day possession is so taken. If less than the whole of the Facilities is taken by eminent domain, there will be a partial abatement of the rental due under the Facility Lease in an amount equivalent to the amount by which the annual payments of principal of and interest on the Bonds then Outstanding will be reduced by the application of the award in eminent domain to the redemption of Outstanding Bonds. If the County defaults under the Facility Lease,the Authority may (i)terminate the Facility Lease and take possession of the Facilities for the term of the Site Lease or(ii)retain the Facility Lease and seek to hold the County liable for all Base Rental Payments and Additional Payments thereunder (without acceleration) as they become due on an annual basis. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Facility Lease-Default and Remedies." Base Rental Payments and Additional Payments may not be accelerated. See"CERTAIN RISK FACTORS." Pledge of Revenues General. The Revenues consist primarily of the Base Rental Payments made by the County to the Authority. In accordance with the Trust Agreement, all Revenues are irrevocably pledged to and will be used for the punctual payment of interest and premium, if any, on and principal of the Bonds and Reserve Facility Costs, if any, and the sums due and payable by,the Authority in connection with any Swaps, if any, and will not be used for any other purpose while any of the Bonds remain Outstanding; provided, however, that out of the Revenues may be applied such sums as are.permitted under the Trust Agreement. This pledge constitutes a first lien on the Revenues in accordance with the terms of the Trust Agreement. The Authority has directed that all Base Rental Payments be paid directly to the Trustee to be held in trust by the Trustee in the Revenue Fund for the benefit of the Bondholders. The County has covenanted under the Facility Lease that as long as the Facilities are available for the County's use and occupancy, it will take such action as may be necessary to include all. Base Rental Payments and Additional Payments due under the Facility Lease in its annual budgets and to make the necessary annual appropriations therefor. The County has timely made to date all Base Rental Payments and Additional Payments due under the Facility Lease for the Bonds. 200-06037\pos-5 17 Courthouse Funds. The County has covenanted that, subject to applicable law, it will utilize moneys in the County's Criminal Justice Facility Temporary Construction Fund and Courthouse Temporary Construction Fund (collectively, the "Courthouse Funds") to pay to the Authority in immediately available funds (from amounts on hand from time to time in the Courthouse Funds): (i) the amount due as Base Rental attributable to financing and refinancing the Bray Courthouse and the Family Law Center(collectively,the "Court Project"), or(ii)the amount necessary to replenish the portion of the Reserve Fund allocable to the Courts Project. The obligation of the County to make amounts in the Courthouse Funds available for construction of court facilities began in 1982 and 1983. The pledge of such funds to repay the Courts Project debt service was approved by the Board of Supervisors on December 8, 1998 (with respect.to the 1999 Series A Bonds) and on October 17, 2000 (with respect to the 2001 Series A Bonds) and continues until the Bonds allocable to the Courts Project mature in 2026 or are redeemed or defeased. The County's obligation to make payments from the Courthouse Funds is not subject to abatement. Notwithstanding the foregoing, nothing prevents the County from utilizing the Courthouse Funds for any other lawful purpose, the only obligation under the Facility Lease being that the County must utilize any moneys therein available, pursuant to applicable law, including the restricted purposes for which the respective funds may be expended, to pay the Base Rental attributable to the Courts Project when the same is otherwise due and payable to replenish the Reserve Fund as specified below, but there is no obligation on the County to set aside moneys in such fund in each fiscal year to pay such portion of the Base Rental. The average annual amount of revenues received from the Courthouse Funds for the past five years is approximately $_million and the amount of Base Rental allocable to the Courts Project is estimated to be $_ million annually. See also APPENDIX B—"COUNTY FINANCIAL INFORMATION—Trial Court Funding." Medi-Cal Payments. Pursuant to Section 14085.5 of the State Welfare and Institutions Code (commonly referred to as "SB 1732") hospitals that contract to provide in patient hospital services under the States Medi-Cal program ("Medi-Cal") or that contract with county organized health systems and satisfy specified criteria are eligible to receive supplemental reimbursement payments from the State to pay a portion of the debt service on revenue bonds issued to finance certain capital projects. Any hospital receiving such supplemental reimbursement payments pursuant to SB 1732 is required to deposit such amounts in a special account to be used exclusively for the payment of debt service on the revenue bonds issued to finance the capital project. The obligation of the State to make the supplemental reimbursement payments is subject to annual appropriation in the Budget Act adopted by the State legislature and assigned by the Governor each Fiscal Year. As described in SB 1732, the amount of the supplemental reimbursement payment made in any Fiscal Year is equal to the amount of the debt service on the revenue bonds issued to finance the capital project multiplied by the ratio of the total paid Med-Cal patient days to the total patient days, provided, however,that the percentage determined pursuant to the ratio of total paid Med-Cal patient days to total patient days be decreased by more than 10% of the initial ratio so determined prior to the retirement of the debt. The Contra Costa Regional Medical Center (formerly Merrithew Memorial Hospital) is a capital project as described under, and has been receiving supplemental reimbursement payments pursuant to SB 1732. Historically, the County has received an average of approximately _% of the debt service payable with respect to the Merrithew Certificates. Although the State is permitted to adjust the supplemental reimbursement payment annually as described above, the percentage of debt service payable with respect to the Merrithew Certificates can not be reduced to less than approximately 54.6% even if the Medi-Cal participation in the County were to fall below that percentage. 200-06037\pos-5 18 Under the Facility Lease the County has covenanted and pledged that all supplemental reimbursement payments received by the County pursuant to SB 1732 will be used to make Base Rental Payments with respect to the Contra Costa Regional MedicalCenter The supplemental reimbursement payments under SB 1732 and Medi-Cal payments are dependent upon the continued existence for the Medi-Cal program and appropriations for such program through the State budget process. See also "CERTAIN RISK FACTORS—State Funding of Counties" and APPENDIX B—"COUNTY FINANCIAL INFORMATION." Base Rental Payments Base Rental Payments are calculated on an annual basis for twelve-month periods commencing on June 1 and ending on May 31, and each annual Base Rental Payment is divided into two interest components, due on June 1 and December 1, and one principal component, due on June 1, except that the first Base Rental Payment period commenced on the original date of recordation of the Facility Lease (March 4, 1999) and ended on May 31, 1999. Each Base Rental Payment with respect to the 2007 Series Bonds will be payable on the 15th day of the month immediately preceding its due date. Each annual Base Rental Payment (to be payable in installments as aforesaid) will be for the use of the Facilities for the twelve-month period commencing on June l of the period in which such installments are payable (except the first Base Rental period which commenced on the date of recording of the Facility Lease). The Trust Agreement requires that Base Rental Payments be deposited in the Revenue Fund maintained by the Trustee. In accordance with the Trust Agreement, the Trustee will transfer such amounts as are necessary to the Interest Account or the Principal Account, as the case may be, to pay principal of and interest on the Bonds as the same become due and payable. On each Principal Payment Date, following the payment of principal of and interest on the Bonds, any excess amount in the Revenue Fund will be transferred to the Reserve Fund, as necessary, and thereafter returned to the County. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement—Creation of Funds and Accounts." THE OBLIGATION OF THE COUNTY TO MAKE BASE RENTAL PAYMENTS IS AN OBLIGATION PAYABLE FROM AMOUNTS IN THE GENERAL FUND OF THE COUNTY, AND DOES NOT CONSTITUTE A DEBT OF THE COUNTY, THE AUTHORITY OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR AN OBLIGATION FOR WHICH THE COUNTY MUST LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, ANY FORM OF TAXATION. Reserve Fund The Trust Agreement requires the Reserve Fund (which secures all of the Bonds)to be funded in an amount equal to the Reserve Fund Requirement. The Reserve Fund Requirement is defined in the Trust Agreement to mean with respect to all Outstanding Bonds an amount equal to the lesser of: (i) the maximum annual debt service attributable to the Outstanding Bonds and (ii) 125% of average annual debt service attributable to the Outstanding Bonds;provided that with respect to the calculation of the Reserve Fund Requirement upon the issuance of an Additional Series of Bonds, the Reserve Fund Requirement will be the lease of(i) or (ii) above, or the amount derived by the addition on 10% of the proceeds from eth sale of such Series of Additional Bonds to the Reserve Fund. 200-06037\pos-5 19 Following the delivery of the 2007 Series A Bonds, the Reserve Fund Requirement will be equal to $ *. Following the delivery of the 2007 Series B Bonds, the Reserve Fund Requirement will be equal to $ *. The Trust Agreement permits the Reserve Fund to be funded with cash, permitted investments, a surety bond, an insurance policy, or a letter of credit, or any combination thereof, as described therein. In connection with the issuance of the Prior Bonds, the Authority deposited a Reserve Facility (as defined herein) and a 2002 Series B Reserve Investment (as defined herein) in the Reserve Fund. Proceeds of the 2007 Series A Bonds in the amount of $ will be deposited in the Reserve Fund on the date the 2007 Series A Bonds are delivered. Proceeds of the 2007 Series B Bonds in-the amount of $ and amounts held in the Certificate Reserve Fund established pursuant to the 1997 Trust Agreement will be deposited in the Reserve Fund upon the delivery of the 2007 Series B Bonds. See also "RESERVE FACILITY." The portion of the Reserve Fund Requirement determined by reference to the 1999 Series A Bonds, the 2001 Series A Bonds, the 2001 Series B Bonds and the 2002 Series A Bonds and the 2003 Series A Bonds was satisfied through the issuance of surety bonds (collectively, the "Reserve Facility") issued by the Bond Insurer. The 2002 Series'B Reserve Investment (defined herein), as well as the Reserve Facility, will be available to pay the Prior Bonds, the 2007 Series A Bonds, the 2007 Series B Bonds and any parity Bonds. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement—Creation of Funds and Accounts—Reserve Fund." Moneys in the Reserve Fund will be applied solely for the purpose of funding the Interest Account or the Principal Account, in that order, in the event of any deficiency in either account on an Interest Payment Date or a Principal Payment Date; provided that, so long as the Authority is not in default under the Trust Agreement, certain excess amounts in the Reserve Fund will be transferred to the Revenue Fund. The Trust Agreement requires that, as a condition to the issuance of Additional Bonds, an amount will be deposited in the Reserve Fund so that following such deposit there will be on deposit in the Reserve Fund an amount at least equal to the Reserve Fund Requirement for all Outstanding Bonds. For the definition of the term "Reserve Fund Requirement," see APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Certain Definitions." Bond Insurance 2007 Series A Bonds. As additional security for the 2007 Series A Bonds, payment of the principal of and interest on the 2007 Series A Bonds when due will be insured by a financial guaranty insurance policy to be issued by MBIA Insurance Corporation (the "Bond Insurer") simultaneously with the delivery of the 2007 Series A Bonds. See "FINANCIAL GUARANTY INSURANCE." 2007 Series B Bonds. The Bond Insurer has issued its Forward Bond Insurance Commitment to insure the timely payment of principal of and interest on the 2007 Series B Bonds, if and when issued. Prior Bonds. The Bond Insurer also provided a financial guaranty insurance policy for all of the Outstanding Prior Bonds. * Preliminary,subject to change. 200-06037\pos-5 20 Substitution of Property The County and the Authority, with the written consent of the Bond Insurer, may substitute other real property as part of the Facilities for purposes of the Facility Lease provided the County has filed with the Authority and the Trustee, with copies to each rating agency then providing a rating for the Bonds, all of the following: (a) Executed copies of the Facility Lease or amendments thereto containing the amended description of the Facilities, including the legal description of the Demised Premises as modified, if necessary. (b) A Certificate of the County with copies of the Facility Lease or the Site Lease as applicable, or amendments thereto containing the amended description of the Facilities stating that such documents have been duly recorded in the official records of the County Recorder of the County. (c) A Certificate of the County, together with an appraisal performed by an independent appraiser, evidencing that the annual fair rental value of the Facilities which will constitute the Facilities after such substitution will be at least equal to 100% of the maximum amount of Base Rental Payments becoming due in the then current year ending May 31 or in any subsequent year ending May 31. (d) A Certificate of the County stating that, based upon review of such instruments, certificates or any other matters described in such Certificate of the County, the County has good merchantable title to the Facilities, which will constitute the Facilities after such substitution. The term "good merchantable title" shall mean such title as is satisfactory and sufficient for the needs and operations of the County. (e) A Certificate of the County stating that such substitution does not adversely affect the County's use and occupancy of the Facilities. (f) An Opinion of Bond Counsel stating that such amendment or modification (i) is authorized or permitted by the Constitution and laws of the State and by the Trust Agreement; (ii)complies with the terms of the Constitution and laws of the State and of the Trust Agreement; (iii)will, upon the execution and delivery thereof, be valid and binding upon the Authority and the County; and (iv) will not cause the interest on the Bonds to be included in gross income for federal income tax purposes. There is no requirement that any substitute Facilities be of the same or a similar nature or function as the then existing Facilities. The Bond Insurer may require additional conditions to the substitution of Facilities. Insurance The Facility Lease requires the County to maintain or cause to be maintained,throughout the term of the Facility Lease, insurance against loss or damage to any structures constituting any part of the Facilities by fire and lightning, with extended coverage insurance, vandalism and malicious mischief insurance and sprinkler system leakage insurance, and earthquake insurance, if available on the open market from reputable insurance companies at a reasonable cost as determined by the County. Such extended coverage insurance will, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance will be in an amount equal to the replacement cost(without deduction for depreciation) of all structures constituting any part of the Facilities, excluding the cost of excavations, of grading and filling, and of the land(except that such insurance may be subject to deductible clauses for any one loss of not to exceed $250,000 or comparable amount adjusted for inflation or more in the case of earthquake 200-06037\pos-5 21 insurance), or in the alternative, will be in an amount and in a form sufficient (together with moneys held under the Trust Agreement), in the event of total or partial loss, to enable all Bonds then Outstanding to be redeemed. In the event of any damage to or destruction of any part of the Facilities caused by the perils covered by such insurance, the Authority, except as hereinafter described, will cause the proceeds of such insurance to be utilized for the repair, reconstruction or replacement of the damaged or destroyed portion of the Facilities, to at least the same condition as they were in prior to the damage or destruction, insofar as the same may be accomplished by the use of said proceeds. The Trustee will hold such proceeds in the Insurance and Condemnation Fund and will permit withdrawals upon written request for such purposes. Any balance of said proceeds not required for such repair, reconstruction or replacement will be treated . by the Trustee as Base Rental Payments and applied in the manner.provided by the Trust Agreement. Alternatively, if the proceeds of such insurance together with any other moneys then available for such purpose are at least sufficient to redeem an aggregate principal amount of Outstanding Bonds equal to the amount of Base Rental attributable to the portion of the Facilities so destroyed or damaged (determined by reference to the proportion which the cost of such portion of the Facilities bears to the cost of the Facilities), the Authority, with the written consent of the County, may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Facilities and thereupon will cause said proceeds to be used for the redemption of Outstanding Bonds pursuant to the provisions of the Trust Agreement. The Authority and the County covenant to promptly apply for federal or State disaster aid in the event that the Facilities are damaged or destroyed as a result of an earthquake occurring at any time. Any proceeds received as a result of such disaster aid will be used to repair, reconstruct, restore or replace the damaged or destroyed portions of the Facilities, or, at the option of the County and the Authority, to redeem Outstanding Bonds if such use of such disaster aid is permitted. As an alternative to providing the fire and extended coverage insurance, or any portion thereof, required by the Facility Lease, the County may provide a self-insurance method or plan of protection if and to the extent such self-insurance method or plan of protection will afford reasonable coverage for the risks required to be insured against, in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State other than the County. So long as such method or plan is being provided to satisfy the requirements of the Facility Lease, there will be filed with the Trustee a statement of an actuary, insurance consultant or other qualified person (which may be the Risk Manager of the County), stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of the Facility Lease and, when effective, would afford reasonable coverage for the risks required to be insured against. There will also be filed a certificate of the County setting forth the details of such substitute method or plan. In the event of loss covered by any such self-insurance method, the liability of the County under the Facility Lease will be limited to the amounts in the self-insurance reserve fund or funds created under such method. The Facility Lease requires the County to maintain or cause to be maintained, rental interruption or use and occupancy insurance to cover loss, total or partial, of the rental income from or the use of the Facilities as the result of any of the hazards covered by the fire and extended coverage insurance required by the Facility Lease described in the preceding paragraphs (provided that earthquake insurance will be required only if it is available on the open market from reputable insurance companies at a reasonable cost, as determined by the County), in an amount sufficient to pay the part of the total rent attributable to the portion of the Facilities rendered unusable (determined by reference to the proportion which the cost of such portion bears to the cost of the Facilities) for a period of at least two years, except that such insurance may be subject to a deductible clause of not to exceed $250,000 (or comparable amount adjusted for inflation or more in the case of earthquake coverage). Any proceeds of such insurance will be used by the Trustee to reimburse to the County any rental theretofore paid by the County under the Facility Lease attributable to such structure for a period of time during which the payment of rental under 200-06037\pos-5 22 the Facility Lease is abated, and any proceeds of such insurance not so used will be applied to pay Base Rental Payments and Additional Payments. The County is required under the Facility Lease to purchase commercial insurance to cover damage due to earthquake if it is available on the open market from reputable insurance companies at a reasonable cost, as determined by the County. The County has purchased an earthquake insurance policy for all of its property, including the Facilities (excluding the Solar Electric Panels described under "THE FACILITIES"), through the California State Association of Counties Excess Insurance Authority ("CSAC- EIA"). The County's current earthquake insurance coverage expires on March 31, 2007 and has a policy limit of$350 million with a 5% per unit deductible. The County is in the "Zone A" designation, which has the highest potential for an earthquake among all zone designations. No assurance is given that the County will continue to maintain earthquake insurance in the future. See "CERTAIN RISK FACTORS—Risk of Earthquake and Other Natural Disasters" and APPENDIX B—"COUNTY FINANCIAL INFORMATION— Insurance and Self-Insurance Programs." The County is also required to obtain certain liability insurance coverage in protection of the Authority and the Trustee. Additional Bonds Additional Bonds may, with.the consent of the Bond Insurer(who also must consent as insurer of the Outstanding Prior Bonds), be issued on a parity with the Prior Bonds and the 2007 Series A Bonds upon the terms and subject to the conditions set forth in the Trust Agreement. See APPENDIX E- "SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement—Additional Bonds." (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 23 * p A / 5 \ / ƒ m § � � � \ CIA . \ a A /J ® . "00. . � § a \ . \ L \ \ A t 2 M % 4 . ? j .g - k \ � / ƒ L. ƒ � \� ƒ \\ . . / % � .- 7 a . . 2 y@n 7P: OS-® RESERVE FACILITY The Reserve Facility provides that upon notice from the Trustee to the Bond Insurer to the effect that insufficient amounts are on deposit .in the Revenue Fund to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest on the Bonds, the Bond Insurer will promptly deposit with the Trustee an amount sufficient to pay the principal of and interest on the Bonds or the available amount of the Reserve Facility, whichever is less. Upon the later o£ (i)three days after receipt by the Bond Insurer of a Demand for Payment in the form attached to the Reserve Facility, duly executed by the Trustee; or (ii) the payment date of the Bonds as specified in the Demand for Payment presented by the Trustee to the Bond Insurer, the Bond Insurer will make a deposit of funds in an account with State Street Bank and Trust Company,N.A., in New York,New York, or its successor, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee (as specified in the Demand for Payment) subject to the Surety Bond Coverage. The available amount of the Reserve Facility is the initial face amount of the Reserve Facility less the amount of any previous deposits by the Bond Insurer with the Trustee which have not been reimbursed by the Authority. The Authority and the Bond Insurer have entered into Financial Guaranty Agreements at the time of issuance of each series of Bonds (collectively, the "Agreement"). Pursuant to the Agreement, the Authority is required, but only from available Revenues, to reimburse the Bond Insurer the amount of such deposit made by the Bond Insurer with the Trustee under the Reserve Facility. Such reimbursement shall be made only after all required deposits to the Principal Account and the Interest Account have been made. Under the terms of the Agreement, the Trustee is required to reimburse the Bond Insurer, with interest, until the initial face amount of the Reserve Facility is reinstated. No optional redemption of Bonds may be made until the Bond Insurer's Reserve Facility is reinstated. The Reserve Facility is held by the Trustee in the Reserve Fund and is provided as an alternative to the Authority depositing funds or using other eligible methods to satisfy the Reserve Fund Requirement for Outstanding Bonds. The Reserve Facility was issued by the Bond Insurer in the aggregate amount of$10,842,186.55 (of which $2,881,760.68 expires on June 1, 2027 and $7,960,425.87 expires on June 1, 2028). The premium for the Reserve Facility was fully paid by the Authority at the time of delivery of each prior series of Bonds. 1n connection with the issuance of the 2002 Series B Bonds, the Authority invested funds in the amount of$1,585,359.48 in a guaranteed investment contract (the "2002 Series B Reserve Investment") which terminates on June 1, 2019. The 2002 Series B Reserve Investment, as well as the Reserve Facility, will be available to pay the unrefunded Prior Bonds, the 2007 Series A Bonds, the 2007 Series B Bonds and any parity Bonds. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Trust Agreement—Creation of Funds and Accounts—Reserve Fund." 200-06037\pos-5 25 FINANCIAL GUARANTY INSURANCE The following information has been furnished by MBIA Insurance Corporation (the "Bond Insurer')for use in this Official Statement. Reference is made to APPENDIX I for a specimen of the Financial Guaranty Insurance Policy (as used in this Section, the "Policy'). None of the Authority, the County or the Underwriters make any representation as to the accuracy or completeness of this information or as to the absence of material adverse changes in this information subsequent to the date hereof. See also "CERTAIN FORWARD DELIVERY CONSIDERATIONS. " The MBIA Insurance Corporation Insurance Policy MBIA Insurance Corporation ("MBIA") does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Policy and MBIA set forth under the heading "FINANCIAL GUARANTY INSURANCE." Additionally, MBIA makes no representation regarding the 2007 Series A Bonds or the advisability of investing in the 2007 Series A Bonds. The Policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Redevelopment Agency to the Paying Agent or its successor of an amount equal to (i) the principal of(either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the 2007 Series A Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless MBIA elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any Owner of the 2007 Series A Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy law (a "Preference"). The Policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any 2007 Series A Bonds. The Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of 2007 Series A Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Policy also does not insure against nonpayment of principal of or interest on the 2007 Series A Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the 2007 Series A Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the Paying Agent or any owner of a 2007 Series A Bonds the payment of an insured amount for which is then due,that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New.York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such 2007 Series A Bonds or presentment of such other proof of ownership of the 2007 Series A Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the 2007 Series A Bonds as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such owners of the 2007 Series A Bonds in 200-06037\pos-5 26 any legal proceeding related to payment of insured amounts on the 2007 Series A Bonds, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the insured amounts due on such 2007 Series A Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. MBIA Insurance Corporation. MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company(the"Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation.under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA, either directly or through subsidiaries, is licensed to do business in the Republic of France,the United Kingdom and the Kingdom of Spain and is subject to regulation under the laws of those jurisdictions. The principal executive offices of MBIA are located at 113 King Street, Armonk, New York 10504 and the main telephone number at that address is(914)273-4545. Regulation As a financial guaranty insurance company licensed to do business in the State of New York, MBIA is subject to the New York Insurance Law which, among other things, prescribes minimum capital requirements and contingency reserves against liabilities for MBIA, limits the classes and concentrations of investments that are made by MBIA and.requires the approval of policy rates and forms that are employed by MBIA. State law also regulates the amount of both the aggregate and individual risks that may be insured by MBIA,the payment of dividends by MBIA,changes in control with respect to MBIA and transactions among MBIA and its affiliates. The Policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. Financial Strength Ratings of MBIA Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa." Standard & Poor's, a division of The McGraw-Hill Companies, Inc., rates the financial strength of MBIA"AAA." Fitch Ratings rates the financial strength of MBIA"AAA." Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the 2007 Series A Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the 2007 Series A Bonds. MBIA does not guaranty the market price of the 2007 Series A Bonds nor does it guaranty that the ratings on the 2007 Series A Bonds will not be revised or withdrawn. 200-06037\pos-5 27 MBIA Financial Information As of December 31, 2005,.MBIA had admitted assets of$11.0 billion (audited),total liabilities of $7.2 billion (audited), and total capital and surplus of $3.8 billion (audited), each as determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of September 30, 2006; MBIA had admitted assets of $11.5 billion (unaudited), total liabilities of $7.0 billion (unaudited), and total capital and surplus of $4.4 billion (unaudited), each as determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. For further information concerning MBIA, see the consolidated financial statements of MBIA and its subsidiaries as of December 31,2005 and December 31,2004 and for each of the three years in the period ended December 31, 2005, prepared in accordance with generally accepted accounting principles, included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 and the consolidated financial statements of MBIA and its subsidiaries as of September 30, 2006 and for the nine month periods ended September 30, 2006 and September 30, 2005 included in the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2006, which are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof. Copies of the statutory financial statements filed by MBIA with the State of New York Insurance Department are available over the Internet at the Company's web site at http://www.mbia.com and at no cost, upon request to MBIA at its principal executive offices. Incorporation of Certain Documents by Reference The following documents filed by the Company with the Securities and Exchange Commission (the"SEC") are incorporated by reference into this Official Statement: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 2005; and (2) The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006. Any documents, including any financial statements of MBIA and its subsidiaries that are included therein or attached as exhibits thereto,filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the Company's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, and prior to the termination of the offering of the 2007 Series A Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a part hereof from the respective dates of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. 200-06037\pos-5 28 The Company files annual, quarterly and special reports, information statements and other information with the SEC.under File No. 1-9583. Copies of the Company's SEC filings (including(1)the Company's Annual Report on Form 10-K for the year ended December 31, 2005, and (2)the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006) are available (i) over the Internet at the SEC's web site at http://www.sec.gov; (ii) at the SEC's public reference room in Washington, D.C. (iii) over the Internet at the Company's web site at http://www.mbia.com; and(iv) at no cost, upon request to MBIA at its principal executive offices. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code. CERTAIN RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of 2007 Series Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations, which may be relevant to investing in the 2007 Series Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Limited Obligation The 2007 Series Bonds are not County debt and are limited obligations of the Authority. Neither the full faith and credit of the Authority nor the County is pledged for the payment of the interest on or principal of the 2007 Series Bonds nor for the payment of Base Rental Payments. The Authority has no taxing power. The obligation of the County to pay Base Rental Payments when due is an obligation payable from amounts in the General Fund of the County. The obligation of the County to make Base Rental Payments under the Facility Lease does not constitute an obligation of the County for which the County is obligated to levy or pledge any form of taxation or for which the County has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the County to make Base Rental Payments under the Facility Lease constitute a debt or indebtedness of the Authority,the County,the State or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restrictions. Base Rental Payments Not a Debt of the County The Base Rental Payments due under the Facility Lease (and insurance, payment of costs of repair and maintenance of the Facilities, taxes and other governmental charges and assessments levied against the Facilities) are not secured by any pledge of taxes or any other revenues of the County but are payable from any funds lawfully available to the County. The County may incur other obligations in the future payable from the same sources as the Base Rental Payments. In the event the County's revenue sources are less than its total obligations,the County could choose to fund other municipal services before making Base Rental Payments. The same result could occur if, because of State constitutional limits on expenditures, the County is not permitted to appropriate and spend all of its available revenues. The County's appropriations, however, have never exceeded the limitations on appropriations under Article XIII B of the California Constitution. For information on the County's current limitations on appropriations, see "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS—Article XIII B of the California Constitution." 200-06037\pos-5 29 I Valid and Binding Covenant to Budget and Appropriate Pursuant to the Facility Lease, the County covenants to take such action as may be necessary to include Base Rental Payments due in its annual budgets and to make necessary appropriations for all such payments. Such covenants are deemed to be duties imposed by law, and it is the duty of the public officials of the County to take such action and do such things as are required by law in the performance of the official duty of such officials to enable'the County to carry out and perform such covenants. A court, however, in its discretion may decline to enforce such covenants. Upon issuance of the 2007 Series Bonds, Bond Counsel will render its opinion (substantially in the form of APPENDIX F—"PROPOSED FORM OF BOND COUNSEL OPINION") to the effect that, subject to the limitations and qualifications described therein, the Facility Lease constitutes a valid and binding obligation of the County. As to the Authority's practical realization of remedies upon default by the County, see "—Default and Remedies" and "—Limitations on Remedies." Abatement In the event of loss or substantial interference in the use and occupancy of the Facilities by the County caused by damage or destruction or condemnation of the Facilities, Base Rental Payments (except for the portion of debt service attributable to the Courts Project, which will not be abated to the extent Courthouse Funds are available for the payment thereof) will be subject to abatement. In the event that the Facilities or any component thereof, if damaged or destroyed by an insured casualty, could not be replaced during the period of time that proceeds of the County's rental interruption insurance will be available in lieu of Base Rental Payments plus the period for which funds are available from the Reserve Fund or the Revenue Fund, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of the Facilities or such component of the Facilities or redemption of the Bonds, there could be insufficient funds to make payments to Owners in full. See APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS—Facility Lease—Abatement." It is not possible to predict the circumstances under which such an abatement of rental may occur. In addition,there is no statute,case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Facilities could be substantially higher or lower than its value at the time of issuance of the 2007 Series Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the 2007 Series Bonds. Limited Recourse on Default The enforcement of remedies provided in the Facilities Lease and the Trust Agreement could be both expensive and time consuming. The Trustee has no interest in the Authority's title to the Demised Premises, and has no right to terminate the Facility Lease or reenter or relet the Facilities. Upon the occurrence of one of the "events of default" described below, the County will be deemed to be in default under the Facility Lease and the Authority may exercise any and all remedies available pursuant to law or granted pursuant to the Facility Lease. Upon any such default, including a failure to pay Base Rental Payments, the Authority may either (1) terminate the Facility Lease and seek to recover certain damages or (2) without terminating the Facility Lease, (i) continue to collect rent from the County on an annual basis by seeking a separate judgment each year for that year's defaulted Base Rental Payments and/or (ii) reenter the Facilities and relet them. In the event of default, there is no right to accelerate the total Base Rental Payments due over the term of the Facility Lease, and the Trustee has no possessory interest in the Facilities and is not empowered to sell the Facilities. 200-06037\pos-5 30 Events of default under the Facility Lease include (i) the failure of the County to make rental payments under the Facility Lease when the same become due and payable, (ii) the failure of the County to keep, observe or perform any term, covenant or condition of the Facility Lease to be kept or performed by the County for a period of 60 days after notice of the same has been given to the County, and (iii) the bankruptcy or insolvency of the County. Upon a default, the Trustee may elect to proceed against the County to recover damages pursuant to the Facility Lease. Any suit for money damages would be subject to statutory and judicial limitations on lessors' remedies under real property leases, other terms of the Facility Lease and limitations on legal remedies against counties in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Limitations on Remedies The rights of the Bondholders are subject to the limitations on legal remedies against counties in the State, including applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally, now or hereafter in effect, and to the application of general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law. Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the County, there are no involuntary petitions in bankruptcy. If the County were to file a petition under Chapter 9 of the Bankruptcy Code, the Bondholders, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Facility Lease, and from taking any steps to collect amounts due from the County under the Facility Lease. All legal opinions with respect to the enforcement of the Facility Lease and the Trust Agreement will be expressly subject to a qualification that such agreements may be limited by bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors' rights generally and by applicable principles of equity if equitable remedies are sought. Military Conflicts and Terrorist Activities Military conflicts and terrorist activities may adversely impact the finances of the County. The County is unable to determine the effect of future terrorist events, if any, on, among other things, the County's current and future budgets, tax revenues, available reserves and additional public safety expenditures. The County conducted a review of certain existing safety and security measures after the events of September 11, 2001 and participates in additional security and public safety precautions taken in conjunction with "code" designations (i.e., red, orange, yellow) announced by the federal government. Such precautions include coordination of safety and medical personnel, although specific anti-terrorist programs are not divulged publicly. The County does not guarantee that such actions will be adequate in the event that terrorist activities are directed against the County or its residents. The County cannot guarantee that additional safety or security related precautions taken by or affecting the County will not have a material adverse financial impact on the County. Although, the County maintains various insurance coverage on its properties, including sabotage and terrorism coverage for real and personal property, the County makes no representation that this insurance coverage will continue to be maintained in the future or as to the ability of any insurer to fulfill its obligations under any insurance policy. See also APPENDIX 13---"COUNTY FINANCIAL INFORMATION— Insurance and Self-Insurance Programs." 200-06037\pos-5 31 There are three petroleum refineries located within the County, and during Fiscal Year 2005-06, the owners of these refineries were the top three principal property taxpayers in the County. A terrorist act against any of these refineries or any principal taxpayer resulting in damage or destruction to company facilities or infrastructure could have a significant impact on revenues of the County. See also APPENDIX A—"GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION—ECONOMIC AND DEMOGRAPHIC INFORMATION—Principal Taxpayers." Risk of Earthquake and Other Natural Disasters There are several earthquake faults in the greater San Francisco Bay Area that could result in damage to the Facilities, the 2007 Series A Project, buildings, roads, bridges, and property within the County in the event of an earthquake. Past experiences, including the 1989 Loma Prieta earthquake, measuring 7.1 on the Richter scale with an epicenter approximately 60 miles south of the County, have resulted in minimal damage to the infrastructure and property in the County. Earthquake faults that could affect the County include but may not be limited to the Hayward Fault in the western part of the County, and the Concord/Green Valley,Diablo and Calaveras Faults within the eastern portions of the County. The Facility Lease does not require the County to maintain insurance on the Facilities against certain risks such as earthquakes unless such insurance is available from a reputable insurance company at a reasonable cost to the County. The County has purchased an earthquake insurance policy that expires on March 31, 2007 to cover all County property, including the Facilities. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Insurance" and. APPENDIX B—"COUNTY FINANCIAL INFORMATION— Insurance and Self-Insurance Programs." Hazardous Substances Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance whether or not the owner (or.operator) has or had anything to do with creating or handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly and adversely affect the operations and finances of the County. Although the County handles, uses and stores certain hazardous substances, including but not limited to, solvents, paints, certain other chemicals on or near the Demised Premises, the County knows of no existing hazardous substances which require remedial action on or near the Demised Premises. However, it is possible that such substances do currently or potentially exist and that the County is not aware of them. Limited Liability of Authority to the Owners Except as expressly provided in the Trust Agreement, the Authority will not have any obligation or liability to the Owners of the 2007 Series A Bonds with respect to the payment when due of the Base ' Rental Payments by the County, or with respect to the performance by the County of other agreements and covenants required to be performed by it contained in the Facility Lease, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement. 200-06037\pos-5 32 State Funding of Counties The County receives a significant portion.of its funding from subventions by the State. In Fiscal Year 2006-07, approximately 28% of the General Fund Budget is expected to consist of payments from the State. As a result, decreases in the revenues received by the State can affect subventions made by the State to the County and other counties in the State. The potential impact of State budget actions on the County in particular, and other counties in the State generally, in this and future fiscal years is uncertain at this time but is expected to be materially adverse. For a discussion of the potential impact of State budget actions for Fiscal Year 2005-06 and Fiscal Year 2006-07 on the County in particular, and other counties in the State generally, see APPENDIX B—"COUNTY FINANCIAL INFORMATION—State Budget Acts." CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS Described below are certain measures which have impacted or may in the future impact the County's General Fund Budget. Article XIII A of the California Constitution In 1978, California voters approved Proposition 13, adding Article XIII A to the California Constitution. Article XIII A was subsequently amended on several occasions in various respects. Article XIII A limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters voting on such indebtedness and or bonded indebtedness incurred by a school district, community college district or county office of education for the construction, reconstruction, rehabilitation or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities approved by 55% of the voters voting on the proposition. Article XIII A defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash" or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be increased at a rate not to exceed 2% per year to account for inflation. Article XIII A has been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, and to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster or in the event of certain transfers to children or spouses or of the elderly or disabled to new residences. Legislation Implementing Article XIII A Legislation has been enacted and amended a number of times since 1978 to implement Article XIII A. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 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. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to. a local agency continues as part of its allocation in future years. 200-06037\pos-5 33 Article XIII B of the California Constitution On October 6, 1979, California voters approved Proposition 4, known as the Gann Initiative, which added Article XIII B to the California Constitution. Propositions 98 and 111, approved by the California voters in 1988 and 1990, respectively, substantially modified Article XIII B. The principal effect of Article XIII B is to limit the annual appropriations of the State and any city, county, school district, authority, or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living and.population. The initial version of Article XIII B provided that the "base year" for establishing an appropriations limit was the 1978-79 fiscal year, which was then adjusted annually to reflect changes in population,.consumer prices and certain increases in the cost of services provided by these public agencies. Proposition 111 revised the method for making annual adjustments to the appropriations limit by redefining changes in the cost of living and in population. It also required that beginning in Fiscal Year 1990-91 each appropriations limit must be recalculated using the actual 1986-87 appropriations limit and making the applicable annual adjustments as if the provisions of Proposition 111 had been in effect. Appropriations subject to limitations of a local government under Article XIII B include generally any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity and the proceeds of certain State subventions to that entity, exclusive of refunds of taxes. Proceeds of taxes include, but are not limited to all tax revenues plus the proceeds to an entity of government from (1)regulatory licenses, user charges and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation), (2) the investment of tax revenues, and' (3) certain subventions received from the.State. Article XIII B permits any government entity to change the appropriations limit by a vote of the electors in conformity with statutory and constitutional voting effective for a maximum of four years. As amended by Proposition 111, Article XIII B provides for testing of appropriations limits over consecutive two-year periods. If an entity's revenues in any two-year period exceed the amounts permitted to be spent over such period,the excess has to be returned by revising tax rates or fee schedules over the subsequent two years. As amended by Proposition 98, Article XIII B provides for the payment of a portion of any excess revenues to a fund established to assist in financing certain school needs. Appropriations for"qualified capital outlays" are excluded from the limits of Proposition 111. For Fiscal Year 2006-07, the County's Article XIII B limit is estimated to be $6,192,765,567 and budgeted appropriations subject to limitation are estimated to be $311,499,207. The County has never exceeded its Article XIII B appropriations limit and does not anticipate having any difficulty in operating within the appropriations limit. Article XIII C and Article XIII D of the California Constitution On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to, Vote on Taxes Act." Proposition 218 adds Articles XIII C and XIII D to the California Constitution and contains a number of interrelated provisions affecting the ability of the County to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of Proposition 218 likely will be determined by the courts with respect to a number of the matters discussed below, and it is not possible at this time to predict with certainty the outcome of such determination. Article XIII C requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the County require a majority vote and taxes for specific purposes,even if deposited in the County's General Fund, require a two-thirds vote. Further, any general purpose tax which the County imposed, extended or increased without voter approval after December 31, 1994 may continue to be imposed only if approved by a majority'vote in an election which must be held within two years of November 5, 1996. The County believes that no existing County- 200-06037\pos-5 34 imposed taxes deposited into its General Fund will be affected by the voter approval requirements of Proposition 218, although as indicated below certain tax levies may be affected by Proposition 62. The voter approval requirements of Proposition 218 reduce the flexibility of the County to raise revenues for the General Fund, and no assurance can be given that the County will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs. Article XIII D also adds several provisions making it generally more difficult for local agencies to levy and maintain fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that assessments must confer a "special benefit," as defined in Article XIII D, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. The County estimates that in Fiscal Year 2006-2007 it will collect no such fees and assessments. Article XIII C also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the County will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the County's General Fund. If such repeal or reduction occurs, the County's ability to repay the Notes and the Series B Notes could be adversely affected. Ventura Decision For a discussion of the Ventura Decision and its impacts, see APPENDIX B—"COUNTY FINANCIAL INFORMATION—Pension Plan—Impact of the Ventura Decision." Proposition 62 On September 28, 1995, the California Supreme Court, in the case of Santa Clara County Local Transportation Authority v. Guardino, upheld the constitutionality of Proposition 62. In this case, the court held that a countywide sales tax of one-half of one percent was a special tax that, under Section 53722 of the Government Code, required a two-thirds voter approval. Because the tax received an affirmative vote of only 54.1%, this special tax was found to be invalid. The decision did not address the question of whether or not it should be applied retroactively. Following the California Supreme Court's decision upholding Proposition 62, several actions were filed challenging:taxes imposed by public agencies since the adoption of Proposition 62, which was passed in November.1986. On June 4, 2001,the California Supreme Court released its decision in one of these cases,Howard Jarvis Taxpayers Association v. City of La Habra, et al. ("La Habra'). In this case, the court held that public agency's continued imposition and collection of a tax is an ongoing violation, upon which the statute of limitations period begins anew with each collection. The court also held that, unless another statute or constitutional rule provided differently, the statute of limitations for challenges to taxes subject to Proposition 62 is three years. Accordingly, a challenge to a tax subject to Proposition 62 may only be made for those taxes received within three years of the date the action is brought. The County has no taxes to which Proposition 62 could apply. 200-06037\pos-5 35 Proposition 1A The California Constitution and existing statutes give the legislature authority over property taxes, sales taxes and the VLF. The State legislature has authority to change tax rates,the items subject to taxation and the distribution of tax revenues among local governments, schools, and community college districts. The State has used this authority for many purposes, including increasing funding for local services, reducing State costs, reducing taxation, addressing concerns regarding funding for particular local governments, and restructuring local finance. The California Constitution generally requires the State to reimburse the local governments when the State "mandates" a new local program or higher level of service. Due to the ongoing financial difficulties of the State, it has not provided in recent years reimbursements for many mandated costs. In other cases, the State has "suspended"mandates, eliminating both responsibility of the local governments for complying with the mandate and the need for State reimbursements. On November 3, 2004, the voters of the State approved Proposition IA that amended the California Constitution to, among other things, reduce the State Legislature's authority over local government revenue sources by placing restrictions on the State's access to local government's property, sales and vehicle license fee revenues. , Proposition IA generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to a county for any fiscal year under the laws in effect as of November 3, 2004. The measure also specifies that any change in how property tax revenues are shared among local governments within a county must be approved by two-thirds of both houses of the Legislature (instead of by majority vote). Finally, the measure prohibits.the State from reducing the property tax revenues provided to a county as replacement for the local sales tax revenues redirected to the State and pledged to pay debt service on State deficit-related bonds approved by voters in March 2004. If the State reduces the VLF rate below its current level of 0.65% of the vehicle value, Proposition 1A requires the State to provide local governments with equal replacement revenues. Proposition IA provides two significant exceptions to the above restrictions regarding sales and property taxes. First, beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues if. the Governor proclaims that the shift is needed due to a severe State financial hardship, the legislature approves the shift with a two-thirds vote of both houses and certain other conditions are met. The State must repay local governments for their property tax losses, with interest, within three years. Second, Proposition IA allows the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition IA amends the California Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates. Beginning in Fiscal Year 2005-06, if the State does not provide. funding for the activity that has been determined to be mandated, the requirement on cities, counties or special districts to abide by the mandate would be suspended. In addition, Proposition IA expands the definition of what constitutes a mandate to encompass State action that transfers to cities, counties and special districts financial responsibility for a required program for which the State previously had complete or partial financial responsibility. This provision does not apply to mandates relating to schools or community colleges, or to those mandates relating to employee rights. Proposition IA restricts the State's authority to reallocate local tax revenues to address concerns regarding funding for specific local governments or to restructure local government finance. For example, the State could not enact measures that changed how local sales tax revenues are allocated to cities and counties. In addition, measures that reallocated property taxes among local governments in a 200-06037\pos-5 36 county would require approval by two-thirds of the members,of each house of the legislature (rather than a majority vote). As a result, Proposition IA could result in fewer changes to local government revenues than otherwise would have been the case. Future Initiatives Article.XIII A, Article XIII B, Article XIII C, Article XIII D, and Proposition 62 and IA, were adopted as measures that qualified for the ballot through California's initiative process. From time to time other initiative measures could be adopted, further affecting the County's revenues. THE AUTHORITY The Authority is a joint powers authority, organized pursuant to a Joint Exercise of Powers Agreement, dated as of April 7, 1992 (the "JPA Agreement"), between the County and the Contra Costa County Redevelopment Agency (the "Agency"). The JPA Agreement was entered into pursuant to the California Government Code, commencing with Section 6500. The Authority is a separate entity constituting a public instrumentality of the State of California and was formed for the public purpose of assisting in financing and refinancing projects for the benefit of the County and the Agency. The Authority is governed by a five member Board of Directors. The Board of Supervisors of the County constitutes the Board of Directors of the Authority. The Executive Director and Secretary of the Authority is the County Administrator and Clerk of the Board of Supervisors, the Assistant Executive Director of the Authority is the County Community Development Director, the Deputy Executive Directors of the Authority are the Senior Deputy County Administrator/Debt Manager and the County Deputy Director-Redevelopment, the.Treasurer of the Authority is the County's Auditor-Controller and the Assistant Secretary of the Authority is the Senior Deputy County Administrator/Debt Manager, The Authority's powers include, but are not limited to, the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise the powers common to its members and necessary to accomplish the purposes for which it was formed. These powers include the power to make and enter into contracts; to employ agents and employees; to acquire, construct, manage, maintain and operate buildings, works or improvements; to acquire, hold or dispose of property within the County; and to incur debts, liabilities or obligations. THE COUNTY The County of Contra Costa lies northeast of the San Francisco Bay and is the ninth most populous county in California. The County seat is in the City of Martinez. Major industries in the County include petroleum refining and telecommunications. The General Fund Adopted Budget for Fiscal Year 2006-07 is approximately $1.23 billion. For certain economic, demographic and financial information with respect to the County, see APPENDIX A—"GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION," APPENDIX B— "COUNTY FINANCIAL INFORMATION" and APPENDIX C—"EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2006." 200-06037\pos-5 37 RATINGS Certain information was supplied by the Authority and the County to the rating agencies to be considered in evaluating the 2007 Series Bonds. Such ratings express only the views of the rating agencies and are not a recommendation to buy, sell or hold the 2007 Series Bonds. An explanation of the significance of the ratings may be obtained from Moody's Investors Service ("Moody's"), 99 Church Street, New York, New York 10007; Standard & Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P"), 55 Water Street, New York, New York 10041; and Fitch Ratings ("Fitch"), One State Street Plaza,New York,New York 10004. There is no assurance that such ratings will continue for any given period of time or that they will not be reduced or withdrawn entirely by the rating agencies, or either of them, if in their, or its,judgment, circumstances so warrant. The Authority, the County and the Trustee undertake no responsibility to oppose any such revision or withdrawal. Any such downward revision or withdrawal may have an adverse effect on the market price of the 2007 Series Bonds. 2007 Series A Bonds. Moody's, S&P and Fitch, have assigned the 2007 Series Bonds ratings of and "_," respectively, with the understanding that upon delivery of the 2007 Series A Bonds, the policy insuring payment when due of the principal of and interest on the 2007 Series A Bonds will be issued by the Bond Insurer. See "FINANCIAL GUARANTY INSURANCE" and APPENDIX I— "SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY." 2007 Series B Bonds. On the delivery date of the 2007 Series B Bonds,Moody's, S&P and Fitch are expected to assign ratings of"_," "_" and " ," respectively, to the 2007 Series B Bonds; with the understanding that upon delivery of the 2007 Series B Bonds the Bond Insurer will, pursuant to its forward commitment, issue its policy insuring payment when due of the principal of and interest on the 2007 Series B Bonds. See"FINANCIAL GUARANTY INSURANCE"and APPENDIX 1—"SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY." No assurance can be given, however,that such ratings will be assigned or that such ratings, if assigned, will not be different from the ratings currently assigned to the long-term debt obligations of the Bond Insurer. See "CERTAIN FORWARD DELIVERY CONSIDERATIONS." ABSENCE OF MATERIAL LITIGATION At the time of delivery of and payment for the 2007 Series Bonds, the County and the Authority will each certify that there is no action, suit, litigation, inquiry or investigation before or, by any court, governmental agency, public board or body served, or to the best knowledge of the County or the Authority threatened, against the County or the Authority in any material respect affecting the existence of the County or the Authority or the titles of their officers to their respective offices or seeking to prohibit, restrain or enjoin the sale or delivery of the 2007 Series Bonds, the Trust Agreement,,the Facility Lease, the Site Lease or the payment of Base Rental Payments or challenging, directly or inirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Authority. Various legal actions are pending against the County. The aggregate amount of the uninsured liabilities of the County which may result from all legal claims currently pending against it will not, in the opinion of the County, materially affect the County's finances or impair its ability to make Base Rental Payments under the Facility Lease. 200-06037\pos-5 38 TAX MATTERS [TO BE REVISED BY BOND COUNSEL] In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2007 Series Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the opinion that interest on the 2007 Series Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in APPENDIX F hereto. The amount (if any) by which the issue price of the 2007 Series Bonds of any given maturity date is less than the amount to be paid on such date (excluding amounts stated to be interest and payable at least annually over the term of such Bonds) constitutes "original issue discount,"the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the 2007 Series Bonds which is excluded from gross income for federal income tax purposes and which is exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the 2007 Series Bonds is the first price at which a substantial amount of such maturity of the 2007 Series Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).' The original issue discount with respect to 2007 Series Bonds of any maturity date accrues daily over the term to such maturity date on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Owners of the 2007 Series Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2007 Series Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. 2007 Series Bonds purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium for bonds, like Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax exempt interest received, and a purchaser's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such purchaser. Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2007 Series Bonds. The Authority and the County have covenanted to comply with certain restrictions designed to assure that interest on the 2007 Series Bonds will not be included in gross income for federal income tax purposes. Failure to comply with these covenants may result in interest on the 2007 Series Bonds being included in federal gross income, possibly from the date of issuance of the 2007 Series Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring(or not occurring) after the date of issuance of the 2007 Series Bonds may adversely affect the value of the 2007 Series Bonds or the tax status of interest on the 2007 Series Bonds. 200-06037\pos-5 39 Certain agreements, requirements and procedures contained or referred to in the Trust Agreement, the Facility Lease, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the 2007 Series Bonds) may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any 2007 Series Bond or the interest thereon if any such change occurs or action is taken upon the advice or approval of counsel other than Bond Counsel. Although Bond Counsel has rendered an opinion that interest on the 2007 Series Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of the 2007 Series-Bonds, or the accrual or receipt of interest on the 2007 Series Bonds, may otherwise affect a Bondholder's federal or State tax liability. The nature and extent of these other tax consequences will depend upon the Bondholder's particular tax status and the Bondholder's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. In addition, no assurance can be given that any future legislation, including amendments to the Code, if enacted into law, or changes in interpretation of the Code, will not cause interest on the 2007 Series. Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Bondholders of the 2007 Series Bonds from realizing the full current benefit of the tax status of such interest. Prospective purchasers of the 2007 Series Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation. Further, no assurance can be given that the introduction or enactment of any such future legislation, or any action of the Internal Revenue Service ("IRS"), including but not limited to regulation, ruling, or selection of .the 2007 Series Bonds for audit examination, or the course or result of any IRS examination of the 2007 Series Bonds, or obligations which present similar tax issues,will not affect the market price for the 2007 Series Bonds. LEGAL MATTERS Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Bond Counsel, will render an opinion with respect to the validity of the 2007 Series Bonds. Copies of such approving opinion will be available at the time of delivery of the 2007 Series Bonds. The form of the legal opinion proposed to be delivered by Bond Counsel is included as APPENDIX F to this Official Statement. Bond Counsel undertakes no responsibility for the accuracy, completeness, or fairness of this Official Statement. Certain legal matters will be passed upon for the County and the Authority by County Counsel, and by Lofton & Jennings, San Francisco, California, Disclosure Counsel, and for the Underwriters by Nixon Peabody LLP, San Francisco, California. Compensation paid to Bond Counsel and Disclosure Counsel is contingent on the sale of the 2007 Series Bonds. FINANCIAL ADVISOR The County has retained Tamalpais Advisors Inc., Sausalito, California as financial advisor (the "Financial Advisor") to the County and the Authority in connection with the issuance of the 2007 Series Bonds. The Financial Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or negotiable instruments. Compensation paid to the Financial Advisor is contingent on the delivery of the 2007 Series Bonds. 200-06037\pos-5 40 CONTINUING DISCLOSURE The County will undertake all responsibilities for any continuing disclosure to Owners of the 2007 Series Bonds as described below. The County will enter into a Continuing Disclosure Agreement with the Trustee, to be dated the date of delivery of the 2007 Series Bonds (the "Continuing Disclosure Agreement"), which provides for certain disclosure obligations on the part of the County. Under the Continuing Disclosure Agreement,the County will covenant for the benefit of Owners and Beneficial Owners of the 2007 Series Bonds to provide certain financial information and operating data relating to the County by not later than nine months after the end of its fiscal year(which fiscal year currently ends on June 30), commencing with the report for the fiscal year ending June 30, 2007 (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events (the "Listed Events"), if material. The Annual Report is to be filed with each Nationally Recognized Municipal Securities Information Repository and with any then- existing State Repository for the State of California. Currently, there is no State Repository for the State of California. The notices of material events are to be filed with the Municipal Securities Rulemaking Board. These covenants will be made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the"Rule"). The County has not failed to comply with any prior such undertaking under the Rule. For a form of the Continuing Disclosure Agreement, see APPENDIX G—"PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT." VERIFICATION OF MATHEMATICAL COMPUTATIONS Upon delivery of the 2007 Series A Bonds and the 2007 Series B Bonds, Chris D. Berens, CPA, P.C., Omaha, Nebraska (the "Verification Agent"), will deliver a report stating that it has reviewed and confirmed the mathematical accuracy of certain computations relating to the adequacy of the funds and/or securities deposited in the 1997 Escrow Fund, the Refunded Bonds Escrow Fund and the Merrithew Escrow Fund and the interest thereon, if any, to pay, when due, the redemption price and interest on the 1997 Certificates, the Refunded Prior Bonds and the Merrithew Certificates on the specified payment or redemption date thereof. UNDERWRITING OF THE 2007 SERIES A BONDS Pursuant to the terms of a Bond Purchase Agreement dated , 2007 (the "Purchase Agreement"), among the Authority,the County and Citigroup Global Markets Inc. and Banc of America Securities LLC (the "Underwriters"), the Underwriters will purchase all of the 2007 Series A Bonds, if any are purchased. The Underwriters purchased the 2007 Series A Bonds, at a price of $ (representing the principal amount of the 2007 Series A Bonds, plus an original issue premium in the amount of $ and less an Underwriters' discount in the amount of The obligation of the Underwriters to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement. 200-06037\pos-5 41 FORWARD DELIVERY OF THE 2007 SERIES B BONDS Pursuant to the terms of a Forward Delivery Bond Purchase Contract dated , 2007 (the "Forward Delivery Purchase Contract"), among the Authority, the County and the Underwriters, the Underwriters have agreed to purchase the 2007 Series B Bonds on or after , 2007 (the "Settlement Date"). The Underwriters will purchase the 2007 Series B Bonds, at a price of $ (representing the principal amount of the 2007 Series B Bonds, plus an original issue premium in the amount of $ and. less an Underwriters' discount in the amount of $ ). The Forward Delivery Purchase Contract provides that the Underwriters will purchase all of the 2007 Series B Bonds if any are purchased. The delivery of the 2007 Series B Bonds is also subject to the satisfaction of certain conditions as described herein. See "CERTAIN FORWARD DELIVERY CONSIDERATIONS." MISCELLANEOUS INFORMATION References are made herein to certain documents, reports and laws that are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents, reports and laws for full and complete statements of the contents thereof. Copies of documents referred to herein are available upon written request from the County: 651 Pine Street, 10th Floor, Martinez, California 94553-0663; Attention: Senior Deputy County Administrator. The County may impose a charge for copying, mailing and handling. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority (or the County) and the purchasers or Owners of any of the 2007 Series Bonds. The execution and delivery of this Official Statement has been duly authorized by the Board of Directors of the Authority and approved by the County Board of Supervisors. COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: John B. Cullen Executive Director 200-06037\pos-5 42 APPENDIX A GENERAL COUNTY ECONOMIC AND DEMOGRAPHIC INFORMATION General The County of Contra Costa; California (the "County") was incorporated in 1850 as one of the original 27 counties of the State of California(the "State"), with the City of Martinez as the County seat. It is one of the nine counties in the San Francisco-Oakland Bay Area. The County covers about 733 square miles and extends from the northeastern shore of the San Francisco Bay easterly about 50 miles to San Joaquin County. The County is bordered on the south and west by Alameda County and on the north by the Suisun and San Pablo Bays. The western and northern shorelines are highly industrialized, while the interior sections are suburban/residential, commercial and light industrial. The County contains 19 incorporated cities, including Richmond in the west,Antioch in the northeast, and Concord in the center. A large part of the County is served by the San Francisco Bay Area Rapid Transit District ("BART"), which has enabled the expansion of both residential and commercial development throughout much of the County. In addition, economic development along the Interstate 680 corridor in the County has been substantial and has accounted.for significant job creation in the Cities of Concord, Walnut Creek and San Ramon. County Government The County has a general law form of government. A five-member Board of Supervisors, each member of which is elected to a four-year term, serves as the County's legislative body. Also elected are the County Assessor, Auditor-Controller, Clerk-Recorder, District Attorney-Public Administrator, Sheriff.-Coroner and Treasurer-Tax Collector. A County Administrator appointed by the Board of Supervisors runs the day-to-day business of the County. The current County Administrator is John B. Cullen. Population The County is the ninth most populous county in California,. with its population reaching approximately 1,029,377 as of January 1, 2006. This represents an increase of approximately 4.7% compared to the County's population as of January 1, 2002. The availability of rapid transit, close proximity to major employment hubs in San Francisco and Oakland, and relatively affordable existing and new housing have combined to attract more residents to the County over the past decade. While population grew in every city in the County during the last decade, population growth has been strongest in unincorporated areas as well as in the eastern portion of the County, particularly in Antioch and Brentwood. 200-06037\pos-5 A-1 The following is a summary of the County's population levels since 2002. Table A-1 COUNTY OF CONTRA COSTA POPULATION' (AS OF JANUARY 1) 2002 2003 2004 2005 2006* Antioch 96,878 99,422 101,097 100,913 100,945 Brentwood 29,685 33,094 37,246 42,050 45,892 Clayton 10,993 10,994 11,045 10,967 10,924 Concord 124,963 125,104 125,484 124,720 124,436 Danville 43,067 43,269 43,459 4352.16 43,052 El Cerrito 23,547 23,561 23,517 23,375 23,471 Hercules 20,169 20,515 21,814 23,330 23,834 Lafayette 24,447 24,433 24,421 24,284 24,191 Martinez 36,769 36,938 36,985 36,770 36,582 Moraga 16,529 16,531 16,516 16,417 16,338 Oakley 26,196 27,036 27,670 28,228 29,074 Orinda 17,860 17,854 17,849 17,771 17,693 Pinole 19,457 19,555 19,638 19,579 19,465 Pittsburg 60,000 61,146 61,791 62,521 62,979 Pleasant Hill 33,409 33,719 33,786 33,594 33,462 Richmond 101,212 101,502 102,162 102,877 103,468 San Pablo 30,689 30,842 31,187 31,302 31,216 San Ramon 46,887 47,120 48,855 50,958 53,137 Walnut Creek 65,980 66,080 66,466 66,415 66,111 Unincorporated Areas 154,681 157,496 157,956 159,814 163,107 TOTAL 983,418 996,211 1,008,944 1,019,101 1,029,377. California 35,008,671 35,691,442 36,271,091 36,728,196 37,172,015 * Preliminary. Totals may not equal sums due to independent rounding. Source: State Department of Finance for 2002-2006. Industry and Employment The County has one of the fastest growing work forces among Bay Area counties, with growth in its employment base being driven primarily by the need to provide services to an increasing local population. The County has experienced an immigration of white-collar jobs due .to the relocation of companies from costlier locations in the Bay Area. 200-06037\pos-5 A-2 As shown below, the County's civilian labor force was 511,900 in 2005. The County has achieved a lower average unemployment rate than the State in each of 2001 through 2005. Table A-2 COUNTY OF CONTRA COSTA EMPLOYMENT AND UNEMPLOYMENT OF RESIDENT LABOR FORCE WAGE AND SALARY EMPLOYMENT BY INDUSTRY ANNUAL AVERAGES(IN THOUSANDS) 2001 2002 2003 2004 20051 County Civilian Labor Force(1) 508.4 512.9 512.0 511.0 511.9 Employment 487.9 483.7 480.8 483.3 487.3 Unemployment 20.5 29.2 31.2 27.7 24.6 Unemployment Rate: County 4.0% 5.7% 6.1% 5.4% 4.8% State of California 5.4% 6.7% 6.8% 6.2% 5.4% Wage and Salary Employment(2) 2001 2002 2003 2004 2005 Agriculture 2.1 2.1 2.0 0.8 0.9 Mining and Construction 30.1 28.0 27.5 29.0 30.8 Manufacturing 22.8 21.9 20.6 20.6 19.8 Wholesale Trade 9.7 10.1 9.3 9.0 8.8 Retail Trade 43.2 43.4 42.2 43.4 44.2 Transportation and Public Utilities 8.9 9.3 7.9 7.5 7.4 Information 16.8 16.0 13.8 14.0 13.3 Finance,Insurance, and Real Estate 28.6 30.8 32.4 32.6 34.3 Professional and Business Services 48.8 48.0 45.1 45.9 47.0 Education and Health Services 39.5 40.3 40.4 41.0 41.1 Leisure and Hospitality 26.6 29.1 29.8 30.3 31.5 Other Services 11.5 13.6 13.3 13.9 14.1 Government 49.6 50.5 50.2 49.3 50.8 TOTAL 131 333.3 343.2 334.3 337.3 344.0 t Most recent annual data available. (1) Based on place of residence. (2) Based on place of work. (3) "Total"may not be precise due to independent rounding. Source: State of California, Employment Development Department, and Labor Market Information Division, March 2004 benchmark. Major Employers Major industries in the County include petroleum refining, telecommunications, financial and retail services, steel manufacturing, prefabricated metals, chemicals, electronic equipment, paper products and food processing. Most of the County's heavy manufacturing is located along the County's northern boundary fronting on the Suisun Bay and San Pablo Bay leading to San Francisco Bay and the Pacific Ocean. 200-06037\pos-5 A-3 The County is located in the region east of the San Francisco Bay known as the "East Bay," which also includes the County of Alameda. The following Table A-3 provides a listing of major employers headquartered or located in the County and their employment levels. Table A-3 MAJOR EMPLOYERS IN THE EAST BAY WITH EMPLOYEES IN THE COUNTYM Primary Location Firm in County Product or Service Employment SBC Communications Inc. San Ramon Telecommunications 10,600 U.S.Postal Service Countywide Postal Services 10,000 Chevron/Texaco(2) Countywide Energy,Oil&Gas 8,730 County of Contra Costa(2) Martinez County Government 8,381 Safeway Countywide Supermarkets 7,922 Bank of America Countywide Banking 7,081 Bio-Rad Laboratories Inc. Hercules Biotech tests 5,200 John Muir/Mt. Diablo Health System(z) Walnut Creek Health Care 4,900 Kaiser Permanente Medical Center(2) Walnut Creek,Martinez Health Care 4,730 Lucky Stores Countywide Supermarkets 4,631 Wells Fargo&Co. Countywide Banking 4,000 AT&T Countywide Telecommunications. 4,000 Mt. Diablo Unified School District(2) Concord K-12 Education 3,600 West Contra Costa Unified School District(2) Richmond K-12 Education 3,360 Coopervision/Ocular Sciences Inc. Concord Contact lenses 3,144 Pacific Gas&Electric Countywide Gas&Electric Service 3,000 Longs Drug Stores(2) Walnut Creek Retail Drug Stores 2,900 San Ramon Valley Unified School District Danville K-12 Education 2,200 Contra Costa Newspapers(2) Walnut Creek Newspaper Publishing 1,417 Round Table Franchise Corp. Countywide Pizza Restaurants 1,230 Tosco Martinez Oil Refinery 1,200 Hill Physicians Med.Group Countywide Health Care 1,050 USS Posco Industries Pittsburg Steel Manufacturing 1,000 Shell Martinez Refining Co.(Equilon) Martinez Oil Refinery 930 (1) Sources: East Bay Business Times, Book of Lists, 2005 and San Francisco Business Times, Book of Lists, 2005. Data is for the reported entity's latest fiscal year. (2) Headquartered in the County. Effective Buying Income "Effective buying income" ("EBI") is a classification developed exclusively by Sales & Marketing Management magazine to distinguish it from other sources reporting income statistics. EBI is defined as "money income" less personal tax and nontax payments - a number often referred to as "disposable" or "after-tax" income. Money income is the aggregate of wages and salaries, net farm and nonfarm self-employment income, interest, dividends, net rental and royalty income,.Social Security and railroad retirement income, other retirement and disability income, public assistance income, unemployment compensation, Veterans Administration payments, alimony and child support, military family allotments, net winnings from gambling and other periodic income. Money income does not include money received from the sale of property (unless the recipient is engaged in the business of selling property); the value of"in-kind" income such as food stamps, public housing subsidies, medical care, employer contributions for pensions, etc.; withdrawal of bank deposits; money borrowed; tax refunds; exchange of money between relatives living in the same household; gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. EBI is computed by deducting . from money income all personal income taxes (federal, state and local), personal contributions to social 200-06037\pos-5 A-4 insurance (Social Security and federal retirement payroll deductions), and taxes on owner-occupied nonbusiness real estate. The total effective buying income for the County in 2005, as reported by Sales & Marketing Management in its Survey of Buying Power, was $27,273,658 and the median household effective buying income was $56,165. This compares to 2005 median household effective buying incomes of$51,514 for the City and County of San Francisco, $51,415 for Alameda County, $59,703 for San Mateo County,. $62,614 for Santa Clara County and $39,414 for Los Angeles County. Table A-4 below presents the latest available total effective buying income and median household effective buying income for the County, the State and the nation for the calendar years 2001 through 2005. Table A-4 COUNTY OF CONTRA COSTA EFFECTIVE BUYING INCOME CALENDAR YEARS 2001 THROUGH 2005 Total Effective Median Household Buying Income Effective Year and Area . ($in 000's) Buying Income 2005' County $27,273,658 $56,165 State 705,108,410 43,915 United States 5,692,909,567 39,324 2004 County $25,962,828 $54,862 State 674,721,020 42,924 United States 5,466,880,008 38,201 2003 County $24,571,388 $54,448 State 647,879,427 42484 United States 5,340,682,818 38,035 2002 County $23,902,953 $56,507 State 650,521,407 43,532 United States 5,303,481,498 38,365 2001 County $28,823,698 $60,189 State 652,190,282 44,464 United States 5,230,824,904 39,129 t Most recent data available. Source: Sales&Marketing Management,Survey of Buying Power. 200-06037\pos-5 A-5 Commercial Activity Commercial activity comprises an important part of the County's economy, with taxable transactions totaling approximately $13.5 billion in 2005, the most recent year for which complete annual data is available. Presented in Table A-5 below is a summary of taxable transactions in the County from 2001 to 2005. Table A-6 COUNTY OF CONTRA COSTA TAXABLE TRANSACTIONS 2001 To 2005' ($IN 000'S) 2001 2002 2003 2004 2005 Apparel Stores $346,190 $357,690 $377,571 $411,121 $451,401 General Merchandise Stores 1,683,803 1,684,336 1,720,973 1,794,677 1,840,754 Specialty Stores 1,229,075 1,307,403 1,241,320 1,313,316 1,339,013 Food Stores 583,947 584,948 589,826 596,922 607,168 Packaged Liquor Stores 68,428 70,304 70,956 75,410 78,796 Eating and Drinking Places 878,955 903,540 928,874 994,733 1,049,124 Home Furnishings and Appliances- 467,402 473,024 486,829 502,711 483,977 Building Materials and Farm Implements 850,622 876,203 925,708 1,080,813 1,092,471 Automotive Group 2,673,955 2,618,035 2,515,146 2,730,407 2,901,766 All other Retail Stores 240,131 249,287 248,381 282,690 306,410 Total Retail Outlets 8,942,822 9,044,346 9,025,114 9,697,365 10,072,084 Business and Personal Services 540,959 517,165 512,140 506,336 524,750 All Other Outlets 2,772,940 2,597,913 2,686,041 2,786,837 2,883,241 TOTAL ALL OUTLETS $12,256,721 $12,159,424 $12,223,295 $12,990,538 $13,480,075 Source: State Board of Equalization. Much of the County's commercial activity is concentrated in central business districts of its cities and unincorporated towns. . Regional shopping centers, numerous smaller centers and several "big box" warehouse stores serve County residents. The County is served by all major banks including Bank of America and Wells Fargo Bank. In addition there are numerous local banks and branches of smaller California and foreign banks. There are over 30 savings and loan associations in the County, including Washington Mutual, World Savings and California Federal. Construction Activity The value of residential building activity increased by 37.0% in calendar year 2005 from calendar year 2004 levels. The increase was due to the unprecedented number of building permits issued in the prior year for residential construction primarily in Antioch, Brentwood, Pittsburgh, and Oakley compared to the actual rate of construction. Within the County, Antioch, Brentwood, Oakley and Pittsburg accounted for approximately 46% of all new homes constructed in the County during the first eight months of calendar year 2005. 200-06037\pos-5 A-6 The following.Table A-6 provides a summary of residential building permit valuations and number of new dwelling units authorized in the County since calendar year 2001. Table A-6 COUNTY OF CONTRA COSTA RESIDENTIAL BUILDING PERMIT VALUATIONS CALENDAR YEARS 2001 THROUGH 2005 Valuation($in thousands) Number of New Dwelling Units Calendar Residential Single Multiple Year New Family Family Total 2001 $917,085 4,152 984 5,136 2002 1,219,608 5,076 729 5,805 2003 1,263,360 4,965 1,930 6,895 2004 1,113,572 4,222 1,261 5,483 2005 1,525,515 5,452 860 6,312 Source: Construction Industry Research Board. An approximately 5,979 acre development located east of the City of San Ramon will add 11,000 new homes in the County. The development known as "Dougherty Valley" is expected to be constructed in nine phases with complete buildout in 2015. All phases of construction of Dougherty Valley have been approved by the County and approximately 8,900 homes have been constructed to date. On August 1, 2000 the Board of Supervisors unanimously adopted an amendment to the Contra Costa County General Plan, 1995-2010, modifying the boundaries of the County's Urban Limit Line. This action reduced the growth limit line by 22 square miles, by removing approximately 14,000 acres from future development. The two regions primarily affected by this amendment were eastern Contra Costa County and the Tassajara Valley in.the south-central part of the County. Two cities within the County lost lawsuits challenging the environmental justifications for the boundary shift. On November 8, 2005 the voters of the City of Antioch and the City of Pittsburgh passed Measure K and Measure P, respectively. These Measures established Urban Limit Lines for each City and prohibit future urban development unless an amendment to the Urban Limit Line is approved by the voters of the respective city. In Antioch,the approval of Measure K also reduces the aggregate number of planned housing units, limits the annual number of housing units to be constructed to 600, and requires additional developer contributions to roadway construction and school improvements. In the City of Pittsburg, Measure P also "prezoned" certain land within the new urban limit line but outside of current City limits to permit future annexation. Transportation Availability of a broad transportation network has been one of the major factors in the County's economic and population growth. Interstate 80 connects the western portion of the County to San Francisco and the central portion of the County to Sacramento and points north via Interstate 5,the major north-south highway from Mexico to Canada. Interstate 680 connects the central County communities to the rest of the Bay Area and portions of the Central Valley of the State via State Routes 4 and 24, the County's major east-west arteries. 200-06037\pos-5 A-7 Caltrans is currently widening Interstate 80 in the western portion of the County at a cost of $200 million, has constructed a replacement span on the Carquinez Bridge on Interstate Highway 80 and is constructing a new span parallel to the existing Benicia—Martinez Bridge on Interstate Highway 680 at a cost of$1.1 billion. The Benicia—Martinez Bridge project, which includes a new five lane bridge and rail span to accommodate future light rail, a new 17-lane toll plaza,.and a two-way bike pedestrian lane, is expected to be completed in October 2007. Ground transportation is available to County residents from the following service providers: • Central Contra Costa Transit Authority provides local bus service to the central area of the County including Walnut Creek,Pleasant Hill and Concord. • BART connects the County to Alameda County, San Francisco and Daly City and Colma in San Mateo County with two main lines, one from the San Francisco area to Richmond and the other to the Concord/Walnut Creek/Pittsburg/Bay Point area. BART has 43 stations and 104 miles of roadway in its system. BART completed an extension to the San Francisco International Airport which opened in June 2003. • AC Transit, provides local bus service and connects Contra Costa communities to San Francisco and Oakland. • Other bus service is provided by Greyhound. • Commuter rail service is provided by the Capital Corridor, with daily runs between.the Bay Area and Sacramento that stop at the new intermodal facility in Martinez,the County seat. • The Santa Fe and Union Pacific Railroads' main lines serve the County, both in the industrial coastal areas and the inland farm section. Commercial water transportation and docking facilities are available through a number of port and marina locations in the County. The Port of Richmond on San Francisco Bay and several privately owned industrial docks on both San Pablo and Suisun Bays serve the heavy industry located in the area. The Port of Richmond, owned and operated by the City of Richmond, covers 202 acres and handles nearly 20 million metric tons of cargo annually. The majority of the shipments are bulk liquids, primarily crude oil, with the remainder consisting of scrap metal, autos, and gypsum rock. Major scheduled airline passenger and freight transportation for County residents is available at either Oakland or San Francisco International Airports, located about 20 and 30 miles, respectively, from the County. In addition there are two general aviation fields, one located in Byron and the other in Concord. Environmental Control Services Water. The East Bay Municipal Utilities District ("EBMUD") and the Contra Costa County Water District("CCCWD") supply water to the County. With EBMUD supplies water to the western part of the County, including Alamo, Crockett, Danville, Diablo, Hercules, Lafayette, Moraga, Orinda, Pinole, portions of Pleasant Hill, Richmond, Rodeo, San Pablo, San Ramon Selby and portions of Walnut Creek. Approximately 89% of its supply is from the Mokelumne River watershed stored at the 69.4 billion gallon capacity.Pardee Dam in Ione, California. EBMUD is entitled to 325 million gallons per day under a contract with the State Water Resources Control Board, plus an additional 119 million gallons per day in a single dry year under a contract with the U.S. Water and Power Resources Service (formerly the U.S. Bureau of Reclamation). 200-06037\pos-5 A-8 CCCWD obtains its water from the Sacramento-San Joaquin Delta and serves approximately 500,000 customers in the central and eastern part of the County, including Antioch, Bay Point, Clayton, Clyde, Concord, Martinez, Oakley, portions of Pleasant Hill, Pittsburg and portions of Walnut Creek. It is entitled under a contract with the U.S. Water and Power Resources Service to purchase 195,000 acre- feet per year. Water purchased by CCCWD has ranged between 80,000 and 110,000 acre-feet annually. In addition, a number of industrial users and several municipalities draw water directly from the San Joaquin River under their own riparian rights, so that actual water usage in the service area averages about 125,000 acre-feet annually. To provide expanded water storage capacity, CCCWD constructed the Los Vaqueros Reservoir with a capacity of 100,000 acre-feet south of the City of Antioch. In spring 2004,the voters within CCCWD approved the preparation of an economic analysis, a technical feasibility report and environmental review to expand the reservoir. It is expected that a draft feasibility report and an environmental impact statement/environmental impact report will be completed in late 2007. Sewer. Sewer services for the County are provided by approximately 20 sanitation districts and municipalities. Federal and State environmental requirements, plus grant money available from these two sources, resulted in upgrading, expanding and/or building new facilities by approximately 14 agencies. Flood Control. The Contra Costa County Flood Control District (the "District") has been in operation since 1951 to plan, build, and operate flood control projects in unincorporated areas of the County except for the Delta area on its eastern border. The Delta is interspersed with inland waterways that fall under the jurisdiction of the U.S. Army Corps of Engineers and the State Department of Water Resources. The District is responsible for meeting requirements set forth by the Environmental Protection Agency ("EPA") with respect to addressing potential pollutants in nonspecific groundwater runoff. The County is not presentlyable to estimate the cost of compliance with EPA requirements, although such costs may be significant. Education and Health Services Education. Public school education in the County is available through nine elementary school districts, two high school districts and seven unified school districts. These districts provide 145 elementary schools, 45 middle, charter,junior high and intermediate schools, 29 high schools, and a number of preschools, adult schools, and special education facilities. In addition, there are 110 private schools with six or more students in the County. School enrollment as of November 2005 numbered approximately 166,000 students in public schools and 18,500 in regular graded private schools. Higher education is available in the County through a combination of two-year community colleges and four-year colleges. The Contra Costa County Community College District has campuses in Richmond, Pleasant Hill and Pittsburg. California State University East Bay (formerly California State University Hayward) operates a branch campus, called Contra Costa Center, in the City of Concord where late afternoon and evening classes in business, education and liberal arts are offered. St. Mary's College of California, a four-year private institution, is located on a 100-acre campus in Moraga. Also located within the County is the John F. Kennedy University with campuses in Pleasant Hill and Pittsburg and the UC Berkeley Extension, Contra Costa Center in San Ramon. In addition, County residents are within easy commuting distance of the University of California,Berkeley. Health Services. There are 12 privately operated hospitals and one public hospital in the County, with a combined total of approximately 1,900 beds. Four of the private hospitals are run by Kaiser Permanente, the largest health maintenance organization in the United States. Kaiser has opened a new hospital in Richmond with new critical care beds, surgical suites and a full service emergency department. The Walnut Creek-based John Muir/Mt. Diablo Health System operates hospitals at its Walnut Creek and Concord Campuses and outpatient services at its Brentwood Campus and in Rossmoor. 200-06037\pos-5 A-9 Doctors Medical Center. Doctors Medical Center is operated by the West Contra Costa Health Care District (the "Health Care District"). This 247 bed facility is located in a region of the County with a population of approximately 250,000, a large portion of whom are low income. Doctors Medical Center, located in the western portion of the County, provides medical services to the general public and, is a critical component of the County Emergency Medical Services system. In September 2006 the Health Care District declared a financial emergency and authorized the filing of a bankruptcy petition in an effort to keep the hospital open. On September 19, 2006 and September 26, 2006 the Board of Supervisors received updates from the Health Care District regarding possible closure of the hospital. On October 1, 2006 the Health Care District filed a voluntary petition for Chapter 9 bankruptcy protection. On October 31, 2006, the Board of Supervisors approved the general structure of a recovery plan to maintain services at Doctors Medical Center. The participants in the recovery plan are the County, the Health Care District, the physician groups that independently admit patients to the hospital, the State and the bankruptcy court and all participants have approved the general structure. The recovery plan, in part, includes: (i) execution of a joint powers financing agreement between the County and Doctors Medical Center to establish a joint management board on which the County will have majority representation; (ii)execution of an agreement between the County and the Health Care District for the temporary transfer, in installments, from the County General Fund, through June 30, 2007 of up to $10 million to the State'•s General Fund, which funds will be matched by the federal government and used by the State to provide enhanced Medi-Cal payments to Doctors Medical Center; and (iii) annual reallocation of approximately $2.5 million of ad valorem property tax revenues that would otherwise be allocated to the Health Care District in each of four successive years commencing with the Fiscal Year beginning July 1, 2007, to the County, to repay the County's transfer discussed in(ii)above. The recovery plan has been executed by each participant. If the recovery plan is not successful and Doctors Medical Center is closed, demand at the County public hospital (described below) and other hospitals in the area is expected to increase. The County is unable to predict the eventual impact future closure of Doctors Medical Center, if it occurs, would have on the financial condition of the County. Contra Costa Regional Medical Center. The public hospital is Contra Costa Regional Medical Center ("CCRMC"), a 164-bed facility that the County rebuilt and re-opened to the public in 1998 on the existing campus in Martinez. Since completion of the hospital in 1998, the County added a public health/clinical laboratory in 2001 on the CCRMC campus, converted the former Los Medanos Hospital into the Pittsburg Health Center, completed construction of an ambulatory care clinic on the campus of CCRMC, expanded clinics in Antioch, Concord and Brentwood and is in the planning stage of replacing a clinic in Richmond and constructing expansions to the clinics on the CCRMC campus and at the Pittsburg Health Center. 200-06037\pos-5 A-10 APPENDIX B COUNTY FINANCIAL INFORMATION Introduction California counties administer numerous health and social service programs as theadministrative agent of the State and pursuant to State law. Many of these programs have been either wholly or partially funded with State revenues which have been subject each year to the State budget and appropriation process. Currently, the County is required to provide health care to all indigents, administer welfare programs, provide justice facilities (courts and jails) and administer the property tax system.and real estate recordings. Due to competing program priorities and the lack of available State funds, some of these programs have had reduced State support without a corresponding reduction in program responsibilities for county governments. The result has been that the County has diverted its local discretionary contribution from optional local services to maintain mandated services. The Board of Supervisors has responded to this trend in part by instituting measures to improve management, thereby reducing costs while increasing productivity and maintaining services with diminished funding. The level of intergovernmental revenues that the County receives from the State in Fiscal Year 2006-07 and in subsequent fiscal years is likely to be affected by the financial condition of the State. State Budgets Currently, approximately 28% of the County's Fiscal Year 2006-07 General Fund Budget consists of.payments from the State. The financial condition of the State has an impact on the level of these revenues. In past years the State reduced revenues to counties to help solve the State's budget problems, although Proposition IA provides certain protections to counties. The State has also diverted other revenues such as cigarette taxes and trailer coach in lieu taxes from counties to the State. Property tax revenues received by local governments declined more than 50% following passage of Proposition 13. Subsequently, the State Legislature enacted measures to provide for the redistribution of the State's General Fund surplus to local agencies, the reallocation of certain State revenues to local agencies and the assumption of certain governmental functions by the State to assist municipal agencies to raise revenues. Total local assistance from the State General Fund was budgeted at approximately 75% of General Fund expenditures in recent years, including the effect of implementing reductions in certain aid programs to counties. To the extent the State should be constrained by its Article XIII B appropriations limit, or its obligation to conform to Proposition 98, or other fiscal considerations, the absolute level, or the rate of growth, of State assistance to local governments may be reduced. Any such reductions in State aid could compound the serious fiscal constraints already experienced by many local governments, particularly counties. For a description of Proposition IA, Proposition 13, Article XIII B and Proposition 98, see "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS— Proposition IA." 200-06037\pos-5 B-1 The following information concerning the State has been obtained from publicly available information on the State Department of Finance, the State Treasurer and the California Legislative Analysts Office websites. The estimates and projections provided below are based upon various assumptions which may be affected by numerous factors, including future economic conditions in the State and the nation, and there can be no assurance that the estimates will be achieved. For further information and discussion of factors underlying the State's projections, see the aforementioned websites. While the County believes such information to be reliable the County takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information. State Budget Acts Fiscal Year 2005-06. The 2005-06 Budget Act (the "State 2005 Budget Act") was adopted by the Legislature on July 7, 2005, along with a number of implementing measures, and signed by the Governor on July 11, 2005. The State 2005 Budget Act reflected an improving State fiscal picture brought about by better- than-expected growth in General Fund revenues. After taking into account the higher revenues and other offsetting factors (including higher Proposition 98 funding requirements under current law) the resulting operating shortfall of the State for Fiscal Year 2005-06 was estimated at $4.9 billion. At the same time, the State 2005 Budget Act included approximately $6 billion in savings and related budget solutions in order to maintain budgetary balance, including, among other solutions, the Education Revenue Augmentation Fund (the "BRAF")transfer from redevelopment agencies in the aggregate amount of$250 million. The State 2005 Budget Act funded the Proposition 42 transfer of general fund sales taxes to transportation special funds, and included significant increases in both K-12 and higher education. The State 2005 Budget Act did not use any of the remaining$3.7 billion in deficit-financing bonds authorized by Proposition 57. Pursuant to Proposition IA, which, among other things, amended the California Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates,the vehicle license fee ("VLF") was reduced from 2% to 0.65% of the value of the vehicle. In order to protect local governments, the reduction in VLF revenue to cities and counties from this rate change was to be replaced by an increase in the amount of property tax they receive. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES,REVENUES AND APPROPRIATIONS—Proposition IA." Under Proposition IA, for Fiscal Years 2004-05 and 2005-06 only, the increased property taxes that cities and counties receive was reduced by $700 million. In future years, local governments will receive the full value of the VLF revenue that they would have received under the prior law. Also for these two Fiscal Years, Proposition IA required redevelopment agencies to shift $250 million in property tax revenue they would otherwise receive to certain schools, and special districts shifted $350 million to certain schools. The State prepaid the $1.2 billion VLF "gap" loan that was due to local governments in Fiscal Year 2006-07 in August 2005. For a more detailed description of Proposition IA, see "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS- Proposition IA." Fiscal Year 2006-07. The 2006-07 Budget Act (the "State 2006 Budget Act") was adopted by the Legislature on June 27, 2006 and signed by the Governor on June 30, 2006. The State 2006 Budget Act assumes Fiscal Year 2006-07 revenues of$94.4 billion and expenditures of$101.3 billion, resulting in an operating short-fall of$7 billion, which partly reflects the prepayment of$2.8 billion in budgetary debt obligations, leaving the State General Fund with a year-end reserve of$2 billion, compared to the $9 billion year-end reserve in Fiscal Year 2005-06. 200-06037\pos-5 B-2 The State 2006 Budget Act, among other things, (i) allocates new revenues to K-12 and community college education, increases funding for higher education, and prepays approximately $2.8 billion in budgetary debt, which is roughly consistent with the Governor's budget revision released on May 13, 2006; (ii) funds a budget stabilization account; (iv) makes augmentations to health,resources, corrections and local governments (including increases in funding for county block grants for California Work Opportunity and Responsibility Kids, Child Welfare Services, and foster care; additional funding for local law enforcement and local flood control; and largely one-time funding to hospitals to increase patient capacity to meet public health emergencies, such as an avian flu pandemic); and (v) makes the first payment of a proposed settlement in the amount of$2.9 billion, which will be paid over six years commencing in Fiscal Year 2007-08, related to a lawsuit involving school funding. The State 2006 Budget Act does not include any ERAF transfers from redevelopment agencies. 2007-08 Fiscal Year Governor's Budget. The 2007-08 Governor's Budget (the "2007 Governor's Budget"), released on January 10, 2007, estimates that the State net operating deficit for Fiscal Year 2007-08 will be eliminated by using $840 million of funds available from prior years. The 2007 Governor's Budget is balanced by using a large part of the Fiscal Year 2006-07 ending fund balance. After taking into consideration the adjustments of$1.688 billion for the repayment or required prepayment under the Budget Stabilization Act of prior obligations, including $1.6 billion to prepay the State's economic recovery bonds, the effective net operating deficit for Fiscal Year 2007-08 is proposed to be zero. The 2007-08 Governor's Budget projects to end Fiscal Year 2007-08 with a $2.1 billion total reserve, including $1:5 billion in the Budget Stabilization Account pursuant to Proposition 58 (enacted in 2004). State General Fund revenues and transfers for Fiscal Year 2007-08 are projected at$102.3 billion, an increase of$7.3 billion compared with revised estimates for Fiscal Year 2006-07. The Legislative Analyst's Office, the State's nonpartisan fiscal and policy advisor (the "LAO"), released a report following release of the 2007 Governor's Budget in which the LAO estimates that if the assumptions contained in the 2007 Governor's Budget were to hold, then the result would produce both (1) a balanced budget with a healthy reserve in Fiscal Year 2007-08 and (2) significantly reduce the State's ongoing structural shortfall. However, the LAO .estimates that even if all of the proposals contained in the 2007 Governor's Budget were adopted, it is likely that the actual amount of budget savings,and new revenue would fall short of the levels estimated. State General Fund expenditures for Fiscal Year 2007-08 are projected at $103.1 billion, an increase of$1.0 billion, or less than 1.0%, compared to expenditures for Fiscal Year 2006-07. No ERAF transfers from redevelopment agencies are included in the 2007 Governor's Budget. The County cannot predict whether the State Legislature will enact future legislation requiring additional or increased future shifts of tax increment revenues or other revenues to the State and/or to schools, whether through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on the distribution of future County revenues. The County cannot predict the final outcome of State budget negotiations, the impact that such negotiations will have on its finances and operations or the actions to be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures. 200-06037\pos-5 B-3 County Budget Process The County is required by State law to adopt a balanced budget by August 30 of each year, although the Board of Supervisors may, by resolution, extend the date on a permanent basis or for a limited period,to October 2. The County's budget process involves a number of steps. First, upon release of the Governor's proposed budget in January, the County Administrator prepares a preliminary forecast of the County's budget based on current year expenditures, the assumptions and projections contained in the Governor's proposed budget and other projected revenue trends. Second, the County Administrator develops and presents a proposed budget (the "Proposed Budget") to the Board of Supervisors. Absent the adoption of a Final Budget by June 30, the Proposed Budget is passed into the new Fiscal Year as the spending authority until a Final Budget is adopted. Third, the County Administrator prepares a Preliminary/Recommended Budget (the "Recommended Budget") that is presented to the Board of Supervisors. Between January and the time the State adopts its own budget, (which is legally due no later than June 15), representatives of the County Administrator monitor, review and analyze the State budget and all adjustments made by the State legislature. Upon adoption of the final State budget, the County Administrator recommends revisions to the Proposed Budget or, dependent on timing, the Recommended Budget to align County expenditures with approved State revenue. Fourth, after conducting public hearings and deliberating the details of the budget, the Board of Supervisors adopts the County's Final Budget(the "Final Adopted Budget")by August 30, or by October 2 if the Board of Supervisors has adopted a resolution to extend the deadline. In order to ensure that the budget remains in balance throughout the Fiscal Year, the County Administrator monitors actual expenditures and revenue receipts each month. In the event of a projected year-end deficit, steps are taken, in accordance with the State Constitution, to reduce expenditures. On a quarterly basis, the County Administrator's staff prepares a report that details the activity within each budget category and provides summary information on the status of the budget. Actions that are necessary to ensure a healthy budget status at the end of the fiscal year are recommended in the quarterly budget status reports. Other items which have major fiscal impacts are also reviewed quarterly. The County's ability to increase its revenues is limited by State laws that prohibit the imposition of fees to raise general revenue, except to recover the cost of regulation or provision of services. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES, REVENUES AND APPROPRIATIONS" in the forepart of this Official Statement. The County Administrator expects to convene workshops with respect to the County's Fiscal Year 2007-08 budget on April 17, 2007 and anticipates that the County will adopt its Fiscal Year 2007-08 budget on May 1, 2007. Recent County General Fund Budgets Set forth below is a description of the County's comparative budgetary and expenditure experience for Fiscal Years 2004-05 through 2006-07. For a summary of the actual audited financial results of the County for Fiscal Year 2005-06, see "EXCERPTS FROM THE AUDITED, FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2006" in APPENDIX C to this Official Statement. 200-06037\pos-5 B-4 Fiscal Year 2004-05. The County's Fiscal Year 2004-05 Actuals (the actual experience or actual expenditures) were approximately 2.3% higher than the actuals for the prior Fiscal Year. General Fund expenditures decreased by $6.1 million or 0.6% compared to the Fiscal Year 2003-04 Adjusted Budget. The County closed a projected $53 million budget deficit primarily through the implementation of additional 10% reductions in all County department budgets, requiring departments to absorb increases in wage and benefit costs that were not offset by revenues through staff reductions, and the use of one-time resources, specifically fund balance in the amount of$19.3 million. Actual revenues in Fiscal Year 2004- 05 were approximately 1.4% higher and total actual expenditures were approximately 1.5% higher than the actual budgeted amounts for Fiscal Year 2003-04. The County participated in a securitization of its portion of the VLF "backfill" revenues due from the State as a participant in the California Statewide Communities Development Authority Revenue Anticipation Notes (Vehicle License Fee Program) financing. These notes were issued on March 17, 2005 and defeased on August 4, 2005 as a result of the early repayment by the State of the VLF"backfill" amounts required under Proposition IA. See "CONSTITUTIONAL AND STATUTORY LIMITATION ON TAXES, REVENUES AND APPROPRIATIONS—Proposition IA" and "—State Budget. Acts—Fiscal Year 2005-06." Fiscal Year 2005-06. The County's Fiscal Year 2005-06 Final Adopted Budget, adopted on June 28, 2,005 was 8.33% higher than the Fiscal Year 2004-05 actual experience (or Actuals). General Fund expenditures increased by $55 million or 4.7% compared to the Fiscal Year 2004-05 Actuals. The County closed a projected $50-60 million General Fund budget gap by requiring that all County department budgets absorb salary and benefit cost increases without increasing individual budget allocations and through the use of $43 million in one-time resources (fund balance). The 2005-06 Adopted Budget did not, however, budget $10.2 million of VLF "true-up" funds (representing the difference between the actual and the estimated VLF adjustment amount for Fiscal Year 2004-05). The Fiscal Year 2005-06 Final Adopted Budget included a 5% cost of living increase for probation safety employees effective October 15, 2005; however, no other cost of living salary increases were budgeted for such Fiscal Year. The County also took steps to reduce its workers compensation costs through proactive review by the County of the type, scope and provider of medical services to employees making workers' compensation claims. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 B-5 Table B-1 COUNTY OF CONTRA COSTA GENERAL FUND BUDGET FOR FISCAL YEARS 2005-06 AND 2006-07 ($IN 000'S) Final Adopted Final Adopted Budget Budget 2005-06 2006-07 Requirements General Government $144,578 $151,552 Public Protection 330,588 340,143 Health and Sanitation 266,558 240,788 Public Assistance 375,992 398,918 Education 332 330 Public Ways and Facilities 92,668 99,508 Recreation and Culture 375 0 Reserves and Debt Service 10,000 100 TOTAL REQUIREMENTS 1 221 091 1 231 339 Available Funds Property Taxes $218,831 $259,670 Fund Balance Available 43,414 9,509 Other Taxes 25,594 27,230 Licenses,Permits and Franchises 13,928 14,005 Fines,Forfeitures and Penalties 15,490 13,840 Use of Money and Property 3,565 4,111 Intergovernmental 593,228 618,283 Charges for Current Services i96,657 206,034 Other Revenue 110,387 78,657 TOTAL AVAILABLE FUNDS $1,221,091 $1,231,339 Source: County Auditor-Controller. Fiscal Year 2006-07. The County's Fiscal Year 2006-07 Final Adopted Budget, adopted on May 2,2006 is 5% lower than the Fiscal Year 2005-06 actuals experience (Actuals). General Fund expenditures decreased by $69 million or 5% compared to the Fiscal Year 2005-06 Actuals. The County adopted a budget which balances annual expenditures with annual revenue and closed a projected $43 million General Fund budget gap. The gap was closed by requiring that all County department budgets absorb salary and benefit cost increases without increasing individual budget allocations; cutting a net of $30 million in on-going appropriations in the General Fund; and increasing revenue a net of$6 million. The County also cut a net of$5.7 million in on-going appropriations in the Hospital Enterprise Fund and increased revenue a net of$800,000 for a total Hospital Enterprise Fund impact of$6.5 million. Additionally, the County Administrator has identified four major areas of focus for Fiscal Year 2006-07: improving the County's fiscal health; providing services more efficiently and effectively; improving the County's credibility; and developing greater use of teams and partnerships to address issues. Focusing on these areas for improvement will allow the County to better manage its resources, lower its expense growth, improve its revenues, and build a reasonable reserve. .200-06037\pos-5 B-6 The County expects its revenues to grow at historically average rates and continues taking steps to reduce workers compensation costs and minimize employee compensation growth. See "—Contract Negotiations." Ad Valorem Property Taxes The County administers the property tax levy and collection system for the County and all local governments in the County. Taxes are levied for each fiscal year on taxable real and personal property that is situated in the County as of the preceding January 1. For assessment and collection purposes, property is classified either as "secured" or"unsecured," and is listed accordingly on separate parts of the as roll. The "secured roll" is that part of the assessment roll containing State assessed property and property secured by a lien on real property which is sufficient, in the opinion of the Assessor, to secure payment of the taxes. Other property is assessed on the"unsecured roll." Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared to be in default on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus a redemption penalty of one and one half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the tax-defaulted property is declared to be subject to the County Treasurer-Tax Collector's power of sale and may be subsequently sold by the County Treasurer- Tax Collector. Legislation established the "supplemental roll" in 1984, which directs the County Assessor to re- assess real property, at market value, on the date the property changes ownership or upon completion of construction. Property on the supplemental roll is eligible for billing 30 days after the reassessment and notification to the new assessee. The resultant charge (or refund) is a one-time levy on the increase (or decrease) in value for the period between the date of the change in ownership or completion of construction and the date of the next regular tax roll upon which the assessment is entered. Billings are made on a monthly basis and are due on the date mailed. If mailed between the months of July through October, the first installment becomes delinquent on December 10 and the second on April 10. If mailed within the months of November through June, the first installment becomes delinquent on the last day of the month following the month of billing. The second installment becomes delinquent on the last day of the fourth month following the date the first installment is delinquent. Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of one and one-half percent per month begins to accrue beginning November 1. The taxing authority has four ways of collecting unsecured personal property taxes: (1) by filing a civil action against the taxpayer; (2) by filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) by filing a certificate of delinquency for recordation in the County Recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) by the seizure and sale of personal property, improvements or possessory interest, belonging to the taxpayer. The County and its political subdivisions operate under the Teeter Plan pursuant to provisions of Sections 4701 through 4717 of the.California Revenue and Taxation Code. See "—The Teeter Plan." Pursuant to those sections,the accounts of all political subdivisions that levy taxes on the County tax rolls are credited with 100% of their respective tax levies regardless of actual payments and delinquencies. The County Treasury's cash position (from taxes) is protected by a special fund(the"Tax Losses Reserve 200-06037\pos-5 B-7 Fund") into which all County-wide delinquent penalties are deposited. The County has used this method since Fiscal Year 1950-51. (Seethe "—The Teeter Plan—Tax Losses Reserve Fund.') Major property tax assessment appeals by businesses and the oil industry total approximately $4.9 billion in disputed value, with potential loss of revenue in the millions to various units local government, within the County, including the County. Of the total amount, an aggregate of approximately $2.9 billion was attributable to appeals by oil refineries. A recent history of County tax levies, delinquencies and the Tax Losses Reserve Fund cash balances as of June 30th is shown in Table B-2 below. Table B-2 COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATION AND AD VALOREM PROPERTY TAXATION FOR FISCAL YEARS 1997-98 THROUGH 2006-07 Balance in Secured Current Tax % Levy Tax Losses Fiscal Year Assessed Property Delinquencies Delinquent Reserve Fund June 30 Valuation Tax Levies (June 30) (June 30) (June 30) 1997-98 $70,314,800,892 $892,581,453 $15,547,736 1.74% $19,508,732 1998-99 73,699,554,452 939,437,116 15,375,159 1.64 21,550,142 1999-00 78,346,533,416 981,579,866 15,904,158 1.62. 23,054,893 2000-01 84,627,977,952 1,062,831,354 16,738,410 1.57 24,535,061 2001-02 93,490,199,701 1,187,173,140 20,551,776 1.73 27,032,058 2002-03 100,925,700,794 1,293,561,117 25,574,249 1.98 30,347,321 2003-04 109,072,548,285 1.,402,895,299 27,325,421 1.95 20,167,593 2004-05 118,776,276,503 1,584,132,373 26;598,823 1.68 23,134,013 2005-06 131,125,213,168 1,720,977,608 35,699,290 2.07 26,334,817 2006-07 (est.) 146,523,464,934 1,904,000,000 N/A N/A N/A Source: County Auditor-Controller. The Teeter Plan In 1949, the California Legislature enacted an alternative method for the distribution of secured property taxes to local agencies. This method, known as the Teeter Plan, is set forth in Sections 4701-4717 of Revenue and Taxation Code of the State of California(the"Law"). Generally,the Teeter Plan provides for a tax distribution procedure by which secured roll taxes are distributed to taxing agencies within the County included in the Teeter Plan on the basis of the tax levy, rather than on the basis of actual tax collections. The County deposits in the Tax Losses Reserve Fund (defined below) all future delinquent tax payments, penalties and interest, and a complex tax redemption distribution system for all participating taxing agencies is avoided. While the County bears the risk of loss on delinquent taxes that go unpaid, it benefits from the penalties associated with these delinquent taxes when they are paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the elimination of collection risk. The constitutionality of the Teeter Plan was upheld in Corrie v. County of Contra Costa, 110 Cal. App. 2d 210 (1952). The Teeter Plan was named after Desmond Teeter,the then Auditor-Controller of the County who originated this method of tax distribution. The County was the first Teeter Plan county in the State. 200-06037\pos-5 B-8 Tax Losses Reserve Fund. Pursuant to the Law, the County is required to establish a tax losses reserve fund(the "Tax Losses Reserve Fund")to cover losses that may occur in the amount of tax liens as a result of special sales of tax-defaulted property (i.e., if the sale price of the property is less than the amount owed). During each fiscal year, the Tax Losses Reserve Fund is reviewed and when the amount of the fund exceeds certain levels,the excess may be credited to the County General Fund as provided by Sections 4703 and 4703.2 of the California Revenue and Taxation Code. State law allows any county to draw down their tax losses reserve fund to a balance equal to (i) one percent of the total of all taxes and assessments levied on the secured roll for that year, or(ii) 25% of the current year delinquent secured tax levy. As of July 1, 2006, the balance in the Tax Losses Reserve Fund was $26.3 million, net of approximately $9.0 million that was transferred to the County's General Fund in Fiscal Year 2005-06. In addition, pursuant to the Law,the County has established a tax resources account to compensate for losses that may occur as a result of uncollected current property taxes. Largest Taxpayers The ten largest taxpayers in the County, as shown on the Fiscal Year 2005-06 secured tax roll,. and the approximate amounts of their property tax payments are shown below. These ten taxpayers paid a total.of approximately $125 million in taxes, or approximately 8% of the County's Fiscal Year 2005-06 secured tax collection. Table B-3 COUNTY OF CONTRA COSTA TEN LARGEST PROPERTY TAXPAYERS FISCAL YEAR 2005-06(t) % of Total Taxpayer Total Taxes County Tax Roll(Z) Chevron $39,466,378.30 2.38% Equilon Enterprise 20,400,059.00 1.23 PG&E 12,129,448.00 0.73 Tesoro Petroleum 11,265,374.00 0.68 Tosco Corporation 9,726,634.00 0.59 Windemere 8,224,297.00 0.50 Sunset Land Company 7,773,599.00 0.47 Pacific Bell 5,752,848.00 0.35 Walnut Creek Mutual 5,319,198.00 0.32 Delta Energy Company 5,123,645.00 0.31 TOTAL TEN LARGEST TAXPAYERS 125,161,480.30 7.56 Other Taxpayers 1,529,429,419.52 92.44 TOTAL $1,654,590,899.82 100.00% (1) Most recent data available. (2) Column does not total due to rounding. Source: County Treasurer-Tax Collector. 200-06037\pos-5 B-9 Taxation of State-Assessed Utility Property The State Constitution provides that most classes of property owned or used by regulated utilities be assessed by the State Board of Equalization (the "SBE") and taxed locally. Property valued by the SBE as an operating unit in a primary function of the utility taxpayer is known as "unitary property," a concept designed to permit assessment of the utility as a going concern rather than assessment of each individual element of real and personal property owned by the utility taxpayer. State-assessed unitary and "operating nonunitary" property (which excludes nonunitary property of regulated railways) is allocated to the counties based on the situs of the various components of the unitary property. Except for unitary property of regulated railways and certain other excepted property, all unitary and operating nonunitary property is taxed at special county-wide rates and distributed to taxing jurisdictions according to statutory formulae generally based on the distribution of taxes in the prior year. In 1999, the SBE adopted a rule that provides for local assessment of certain investor-owned electric utility facilities. As a result of this rule, the County Assessor currently assesses three power plants located in the County. However, assessment of certain power plants has been transferred to the SBE, so the portion of the County's total net assessed valuation constituting unitary property subject to SBE assessment has increased (see further discussion below). For Fiscal Year 2005-06, approximately 2.13% of the County's total net assessed valuation constitutes property subject to State assessment by the SBE, for which approximately $24 million of property taxes were collected in Fiscal Year 2005-06. The portion of Fiscal Year 2005-06 tax collections through the SBE assessment methodology attributable to the County General Fund was approximately $4.8 million. Pursuant to Assembly Bill 81 (California Legislature 2001-2002 Regular Session), commencing with the January 1, 2003 property tax lien date, the SBE assesses certain electric generation facilities. The legislation provides that the assessed value and revenues derived from such assessed property is allocated to local jurisdictions in the same manner as locally assessed property based on the location of the property and not under the unitary property formulae. The County estimates that, should cities annex property underlying existing power plants, the resultant revenue allocation could annually decrease County General Fund revenue by approximately $1.5 million based on the current Fiscal Year. Trial Court Funding Assembly Bill 233 ("AB 233"), which was adopted by the State Legislature in 1997 and became effective January 1, 1998, transferred responsibility from the counties to the State for local trial court funding commencing in Fiscal Year 1997-98. Under the legislation,the State assumed a greater degree of responsibility for trial court operations costs starting in Fiscal Year 1997-98. The County continues to be obligated to provide court facilities for all judicial officers and support positions authorized prior to July 1, 1996. This includes those judicial officers and positions that replace officers and positions created prior to July 1, 1996. However, AB 233 does,not require that the County finance new capital facility expenditures related to judicial officers and support staff required for any judgeships authorized during the period from January 1, 1998 to June 30, 2001. Senate Bill 1732 ("Trial Court Facilities Act") created the Court Facilities Trust Fund, for the deposit of county payments for operation, repair, modification and maintenance of the transferred court facilities, with a formula for each county's payment and for the deposit of new monies raised through various fee increases, fines and penalty surcharges; and the State Court Facilities Corporation Fund, funded with State court penalty assessments, parking surcharges and filing fee surcharges on civil actions. 200-06037\pos-5 B-10 Redevelopment Agencies The California Community Redevelopment Law authorizes city or county redevelopment agencies to issue bonds payable from the allocation of tax revenues resulting from increases in full cash values of properties within designated project areas. In effect, local taxing authorities other than the redevelopment agency realize tax revenues only on the "frozen" tax base. The following Table B-4 shows redevelopment agency full cash value increments and tax allocations for agencies within the County. Table B-4 COUNTY OF CONTRA COSTA COMMUNITY REDEVELOPMENT AGENCY PROJECTS FULL CASH VALUE INCREMENTS AND TAX ALLOCATIONS(t) FISCAL YEARS 1997-98 THROUGH 2006-07 Full Cash Total Tax Fiscal Year Base Year Value(2) Value Increment(3) Allocations(4) 1997-98 $2,198,412,524 $5,687,404,922 $60,454,787 1998-99 2,343,330,103 6,080,461,083 64,427,525 1999-00 2,480,670,587 6,660,417,603 69,321,686 2000-01 2,704,690,573 7,446,872,533 76,886,217 2001-02 3,578,860,177 8,835,385,357 91,289,481 2002-03 3,433,942,598 10,070,678,634 103,955,708 2003-04 3,600,771,960 11,403,833,690 116,813,986 2004-05 2,881,589,675(5) 12,875,417,794 131,478,464 2005-06 2,577,582,263 15;510,491,418 148,064,971 2006-07 3,386,185,381 18,788,651,087 175,384,368 (1) Full cash values for all redevelopment projects above the"frozen"base year valuations. These data represent growth in full cash values generating tax revenues for use by the community redevelopment agencies. (2) The Base Year Values for Fiscal Years 1997-98 through 2005-06 were reduced to exclude project areas with negative increment. ' (3) Does not include unitary and operating non-unitary utility roll values which are determined by the State Board of Equalization on a county-wide basis. (4) Actual tax revenues collected by the County which have been or will be paid to the community redevelopment agencies. (5) Decrease reflects the removal of an undevelopable parcel from a redevelopment project area. Source: County Auditor-Controller. Accounting Policies,Reports and Audits Except as mentioned below, the County believes that its accounting policies used in preparation of its audited financial statements conform to generally accepted accounting principles applicable to counties.. The County's governmental funds and fiduciary funds use the modified accrual basis of accounting. This system recognizes revenues when they become available and measurable. Expenditures, with the exception of unmatured interest on general long-term debt, are recognized when the fund liability is incurred. Proprietary funds use the accrual basis of accounting, whereby revenues are recognized when they are earned and become measurable, while expenses are recognized when they are incurred. The County Treasurer-Tax Collector also holds certain trust and agency funds not under the control of the Board of Supervisors, such as those of school districts, which are accounted for on a cash basis. 200-06037\pos-5 B-11 The California Government Code requires every county to prepare an annual financial report. The County Auditor-Controller prepares the Comprehensive Annual Financial Report for the County. This annual report covers financial operations of the County, County districts and service areas, local autonomous districts and various trust transactions of the County Treasury. Under California law, independent audits are required of all operating funds undefthe control of the Board of Supervisors. The County has had independent audits for more than 40 years. See-APPENDIX C—"EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2006." In addition to the above-mentioned audits, the County Grand Jury may also conduct management audits of certain offices of the County. The County, like other State and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into these categories as follows: (i) governmental funds; (ii) proprietary funds; and (iii) fiduciary funds. Governmental Funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government- wide financial statements, .governmental fund financial statements focus on near-term inflows and outflows of resources that are available for spending as well as on balances of resources that are available for spending at the end of the Fiscal Year. The County maintains 28 individual governmental funds (e.g. General Fund, special revenue funds, debt service funds, capital projects funds and permanent fund) for reporting purposes. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund,the Contra Costa County Fire Protection District Special Revenue Fund, and the Land Development Special Revenue Fund. Proprietary Funds are used to account for information of the same type as the government-wide financial statements, only in more detail. There are of two different types: (i) Enterprise Funds (used to report the same functions presented as business-type activities in the government-wide financial statements) and (ii) Internal Service Funds (an accounting device used to accumulate and allocate costs internally among the County's various functions). Fiduciary Funds are used to account for resources held for the benefit of entities legally separate from the County and individuals, which are not part of the reporting entity. Fiduciary Funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's own programs. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 B-12 Presented in Table B-5 on the following page is the. County's Schedule of Revenues, Expenditures and Changes in Fund Balances for the County General Fund as of June 30th for the five most recent fiscal years for which audited financial statements are available. More detailed information from the County's audited financial report for the fiscal year ending June 30, 2006 appears in APPENDIX C to this Official Statement. Table B-5 COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEARS 2001-02 THROUGH 2005-06 ($IN THOUSANDS) 2001-02 2002-03 2003-04 2004-05 2005-06 REVENUES Taxes $200,571 $211,866 $210,032 $237,828 $237,521 Licenses,permits&franchises 23,782 13,614 17,593 12,736 14,442 Fines,forfeitures&penalties 14,508 14,007 27,443 16,620 14,167 Use of money&property 10,527 7,312 5,412 5,454 13,371 Intergovernmental revenues 506,352 505,878 508,679 530,155 578,249 Charges for services 155,713 173,062 186,508 183,774 213,553 Other revenue 74,613 75,776 88,489 76,892 86,745 TOTAL REVENUES 986,066 1,001,515 1,044,156 1,063,459 1,194,048 EXPENDITURES General government 128,375 133,565 131,387 127,686 145,803 Public protection 254,070 284,683 294,449 285,743 307,005 Health&sanitation 172,613 193,337 204,188 197,686 179,305 Public assistance 315,112 326,917 335,236 357,657 381,600 Education 205 257 306 290 304 Public ways and facilities 45,679 34,733 38,419 51,884 66,929 Recreation and Culture - - - - 294 Interest 2,215 1,145 432 - 2,181 Capital outlay 7,415 2,620 1,973 6,388 - TOTAL EXPENDITURES 925,684 977,257 1,006,390 1,027,352 1,083,421 Excess(deficiency)of Revenues over(under) Expenditures 60,382 24,258 37,766 36,107 110,627 OTHER FINANCING SOURCES(USES) Transfers in 23,568 26,017 30,288 24,775 21,352 Transfers out (76,347) (84,735) (87,978) (94,093) (91,609) Capital lease financing 7,415 3,627 1,973 6,388 1,705 TOTAL OTHER FINANCING SOURCES(USES) (42,872) (55,091) (55,717) (62,930) (68,552) NET CHANGE IN FUND BALANCES 17,510 (30,833) (17,951) (26,823) 42,075 FUND BALANCE AT BEGINNING OF YEAR, as Previously Reported 144,607 169,402 138,569 119,886 93,063 Adjustment to beginning fund balance 7,285 0 (732) 0 0 FUND BALANCE AT BEGINNING OF YEAR, as Restated 151,892 169,402 137,837 93,063 93,063 Residual equity transfers in 0 0 0 0 0 Residual equity transfers out 0 0 0 0 0 FUND BALANCE AT END OF YEAR $169,402 $138,569 $119,886 $93,063 $135,138 Source: County Auditor-Controller. 200-06037\pos-5 B-13 County Employees A summary of County employees follows: Table B-6 COUNTY OF CONTRA COSTA COUNTY EMPLOYEES' As of Number of June 30 Employees 1997 6,974 1998 7,215 1999 7,749 2000 8,325 2001 8,640 2002 8,779 2003 8,785 2004 8,670 2005 8,381 2006 8,423 1 Represents full-time equivalent employees. Excludes temporary or seasonal employees. Source: County Auditor-Controller. Contract Negotiations County employees are represented in 31 bargaining units by 14 labor organizations, the principal ones being Public Employees Union, Local One and Local 2700 of the American Federation of State County and Municipal Employees ("AFSCME") which, combined, represent approximately 50% of all County employees in a variety of classifications. Three new labor organizations have been informally recognized by the Board of Supervisors; the Probation Peace Officers Association of Contra Costa County; the Contra Costa County Defender's Association; and the Contra Costa County Deputy District Attorneys' Association. All three of these labor organizations are proceeding with the process for formal recognition. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 B-14 The Memorandums of Understanding (the "MOUS") of the employee organizations that have expired remain in full force and effect. Table B-7 summarizes the labor organizations at the County, contract expiration dates and status of negotiations. Table B-7 COUNTY OF CONTRA COSTA LABOR ORGANIZATION UNIT CONTRACT EXPIRATION DATES Contract Labor Organization Expiration Date AFSCME Local 512,Professional and Technical Employees 09/30/08 AFSCME Local 2700, United Clerical, Technical and Specialized Employees 09/30/08 California Nurses Assn. 01/31/08 Deputy Sheriff's Assn.; Management Unit 06/30/08) Deputy Sheriff's Assn., Rank and File Unit 06/30/08) District Attorney Investigator's Assn. 09/30/05('1 East County Firefighters Assn 09/30/04 ') East Diablo Firefighters, IAFF, Local 1230 03/31/06(') Physicians and Dentists of Contra Costa(PDOCC) 09/30/08. Public Employees Union, FACS Site Supervisor Unit, Local One 09/30/08 Public Employees,Union, Local One 09/30/08 SEN Local 250, Health Care Workers Union 09/30/08(2) SEN Local 535, Rank and File Unit and Service Line Supervisors Unit 09/30/08 United Chief Officers' Assn. 06/30/06(') United Professional Firefighters, IAFF Local 1230 03/31/06(') Western Council of Engineers 09/30/08 (1) Negotiations are in process and the employees continue to work for the County pursuant to the terms of the existing MOUS. (2) Represents State employees whose compensation is established by the County,and for which the County is responsible for payment of a portion of such compensation. Source: Contra Costa County Human Resources Department. Contra Costa County Treasurers Investment Pool State law requires that all moneys of the County, County school districts, and certain special districts in the County be held in the County Treasury by the Treasurer. The Treasurer has authority to implement and oversee the investment of such funds in the County Pool in accordance with Section 53600 et seq, of the Government Code. The Treasurer accepts funds only from agencies located within the County. The moneys on deposit are predominantly derived from local government revenues consisting of property taxes, State and federal funding and other fees and charges. As of June 30, 2006, there were 40 participants in the County Pool, the largest being the County. The County, County agencies, and school and community college districts(who are required by State law to be members of the County Pool) represented an aggregate of approximately 89.6% of the County Pool's investments as of June 30, 2006. The Contra Costa County Investment Policy (the "Policy") governs the County's investments in the County Pool. The Policy has historically been more restrictive than that mandated under the Government Code. Although the Policy permits reverse repurchase agreements between the County and primary dealers with the Federal Reserve Bank of New York, the County currently does not intend to engage in such transactions. The County has an oversight committee (the "Treasury Oversight Committee") that meets quarterly to monitor and report on all investment activities of the Treasurer's Office. The current Policy was revised by the Treasury Oversight Committee, submitted by the Treasurer and approved by the Board of Supervisors on June 6, 2006. All funds of the County and investment 200-060371pos-5 B-15 activities are governed by the Policy, which sets forth the following primary objectives, in order of priority: 1. Preservation of capital. 2. Liquidity i.e. funds shall be invested only until the date of anticipated need or for a lesser period. 3. Yield i.e. generation of a favorable return on investment without compromise of the first two objectives. For a summary of the Policy, see APPENDIX D—"SUMMARY OF THE COUNTY INVESTMENT POLICY." As of September 30, 2006, investments in the County Pool were held for the following local agencies in the indicated amounts: Table B-8 CONTRA COSTA COUNTY INVESTMENT POOL INVESTMENTS HELD BY TYPE OF LOCAL AGENCY (AS OF SEPTEMBER 30,2006) Percent Number Local Agency Par Value of Total of Agencies County of Contra Costa and Agencies $652,157,652.50 31.64% 1 School Districts 1,057,753,660.71 51.32 19 Community College District 106,911,752.29 5.19 . 1 Other Public Agenciest 244,236,942.86 . 11.85 19 TOTAL $2,061,060,008.36 100.00% 40 t Sanitation,Fire and Transportation Authorities,and two Joint Power Authorities are the only voluntary participants in the Pool. All other participants are required by State law to be members of the County Pool. As of June 30, 2006, the Pool had approximately 32.1% of its assets invested in U.S. Treasury and federal agency securities. Another approximately 54.07% of the Pool's assets were invested in cash and highly liquid short-term money market instruments (repurchase agreements, certificates of deposit, bankers' acceptances, and commercial paper). As of September 30, 2006, the detailed composition; cost, and market value of the Pool were as follows: Table B-9 CONTRA COSTA COUNTY INVESTMENT POOL. INVESTMENT BY TYPE AS OF SEPTEMBER 30,2006 Type of Investment Cost Market Value % of Totalt Cash $7.0,564,368.94 $70,564,368.94 3.43% U.S. Treasuries 29,244,221.17 30,172,415.03 1.47 U.S. Agencies—Federal, State and Local 629,648,483.20 630,442,290.26 30.64 Money Market 1,041,567,255.29 1,041,922,324.57 50.64 Other 284,195,399.80 284,581,723.53 13.83 TOTAL $2,055,219,728.40 $2,057,683,122.33 100.00% t Column does not total due to independent rounding. 200-06037\pos-5 B-16 The Pool is highly liquid, with approximately 93.2% of the portfolio having a maturity of less than one year and an average weighted days to maturity of 65.6 days. The maturity distribution of the Pool's portfolio as of September 30, 2006 is presented in the following table. Table B-10 CONTRA COSTA COUNTY INVESTMENT POOL MATURITY DISTRIBUTION As OF JUNE 30,2006 Amount % of Term to Maturity (Cost Basis) Totals Less than 1 year $1,920,566,455.01 93.18% 1 to 2 years 63,439,110.20 3.08 2+years to 3 years 59,5,87,366.19 2.89 3+years to 4 years 12,658,000.00 0.61 4+years to 5 years 4,809,076.96 0.23 TOTAL $2,061,060,008.36 100.00% t Column does not total due to independent rounding. The mix of investments is designed to ensure that sufficient liquid funds are available to meet disbursement requirements. Funds on hand at the end of each of the past five fiscal years in excess of disbursement requirements were as follows: Table B-11 CONTRA COSTA COUNTY INVESTMENT POOL FUNDS ON HAND Fiscal Year Ending September 30 Available Funds ($ in millions) 2002 $1,325 2003 1,604 2004 1,545 2005 1,655 2006 2,421 Pension Plan Description. The Contra Costa County Employees' Retirement Association (the "Association") is a cost-sharing multiple-employer defined pension benefit plan governed by the County Employees' Retirement Law of 1937, as amended (the "County Employees' Retirement Law"). The plan was established on July 1, 1947 and covers substantially all of the employees of the County, its special districts,the Housing Authority of the County and 16 other member agencies. The plan provides for retirement, disability, and death and survivor benefits, in accordance with the County Employees' Retirement Law. Annual cost-of-living adjustments to retirement benefits can be granted by the Board of Retirement of the Association (the "Board of Retirement") as provided by State statutes. 200-06037\pos-5 B-17 The Board of Retirement is responsible for the general management of the Association and is comprised of 12 members, one of whom is a safety alternate,one of whom is a retiree alternate and one of whom is the alternate appointee of the Board of Supervisors. Five members are appointed by the Board of Supervisors, including the alternate appointee of the Board of Supervisors; four members, including the safety alternate, are elected by the active membership of the Association; and two members, including the retiree. alternate are elected by retirees. The County Treasurer serves as an ex-officio member of the Board of Retirement. Members of the Board of Retirement, with the exception of the County Treasurer, serve three-year terms of office, with no term limits. The Board of Retirement has exclusive control of all retirement system investments and is responsible for establishing investment objectives, strategies and policies. The State Constitution and the Act authorize the Board of Retirement to invest in any investment deemed prudent in the opinion of the Board of Retirement. See"—Investment Policy of the Association." The Association is divided into seven separate benefit sections in accordance with the County Employee's Retirement Law. These sections are known as: General Tier I-Enhanced; General Tier I- Non-Enhanced; General Tier II; General Tier III-Enhanced; General Tier III-Non-Enhanced; Safety- Enhanced and Safety-Non-Enhanced. On October 1, 2002, the Board of Supervisors adopted Resolution No. 2002/608, providing enhanced benefit changes equal to 3% of eligible salary per year of service to safety employees retiring at age 50 (commonly known as 3% at 50) and 2% of eligible salary per year of service to general employees retiring at age 55 (commonly known as 2% at 55), effective July 1, 2002 and January 1, 2003, respectively. The enhanced benefits did not apply to bargaining units represented by the California Nurses Association or to the nonrepresented employees.,within similar classifications as employees in bargaining units represented by the California Nurses Association, or to the supervisors and managers of those employees until January 1, 2005. In addition, each special district that is a participant of the Association and whose staff are not County employees covered by Resolution No. 2002/608, could elect to participate in the enhanced benefits. Legislation was signed by the Governor in 2006 that allowed the County and the Deputy Sheriffs Association to agree to different retirement benefits for different bargaining units of the Association. Pre- existing legislation authorized the County to reach agreement with its unions on modified retirement benefits for new hires. In 2006, the County and all units of the Deputy Sheriffs Association agreed upon a new safety retirement tier for sworn Sheriffs personnel hired after December 31, 2006. This new tier provides benefits equal to 3% of eligible salary per year of service to safety employees retiring at age 50; however, the annual COLA to the pension benefit is lower than that provided under existing safety tier; and the calculation of final average salary is based on a 36 month period rather than a 12 month period. Legislation was signed by the Governor in 2002 which allowed the County, effective October 1, 2002, to provide Tier III to all new employees, to move those previously in Tier II to Tier III as of that date, and to apply all future service as Tier 111. Tier III was originally created October 1, 1998 and made available to all members with five or more years of Tier II service who elected to transfer to Tier III coverage. As of December 31, 2003, Tier II includes only the employees described above for whom the County did not adopt the enhanced benefits and employees of one special district agency. County employees who were moved to Tier III effective October 1, 2002, continue to have Tier II benefits for service prior to that date unless the service is converted to Tier III. The Safety section covers all employees in active law enforcement, active fire suppression work or certain other"safety"classifications as designated by the Board of Retirement. 200-06037\pos-5 B-18 Effective November 1, 2002, an additional flat monthly retiree benefit of$200 is provided for all former members who retired prior to January 1, 1983, and are currently receiving pension benefits (including spousal continuance benefits). The cost of this benefit improvement, as determined by the actuary of the Association in July 2002 was $22,955,000 and has been funded by the Association. Service retirement benefits are based on age, length of service and final average salary. For the Tier I, Tier III and Safety sections, the retirement benefit is based on the 12 highest consecutive pay months, in accordance with Government Code Section 31462. For Tier 11, the benefit is based on a three- year average salary. TABLE B-12 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION SCHEDULE OF FUNDING PROGRESS ($ in 000's) Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL) AAL Funded Covered of-Covered Valuation Assets(i) Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) b-a/c 12/3 1/01(2) $2,613,220 $2,983,551 $370,331 87.6% $523,621 70.7% 12/31/02(3) 3,296,736 3,677,624 380,888 89.6 580,415 65.6 12/31/03(4) 3,538;722 4,141,390 602,668 85.5 600,274 100.4 12/31/04 3,673,858 4,481,243 807,385 82.0 619;132 130.4 12/31/05(5) 4,062,057 4,792,428 730,371 84.8 627,546 116.4 (1) Restated to exclude non-valuation reserves. (2) Adjusted to reflect the action by the Board of Retirement to revise the annual investment return assumption to 8.35% (3) Adjusted to reflect the action by the Board of Retirement to revise the annual investment return assumption to 8%, and receipt of$319.1 million from pension obligation bonds issued by the County on May 1,2003. (4) Adjusted to reflect the action by the Board of Retirement to change the annual investment return assumption to 7.9%. (5) Reflects the action by the Board of Retirement to revise the inflation rate assumption to 3.75%: Source: Association Comprehensive Annual Financial Report for the Year Ended December 31, 2005 and the Association Actuarial Valuation and Review as of December 31,2005. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 B-19 During calendar year 2005, 7,726 County employees were active members of the Association, representing approximately 83.9% of the Association's active membership. Listed in Table B-13 is a summary of member population in the Association and in Table B-14 are the payments made by the County employers to the Association for normalretirement costs as well, as in certain years, UAAL amortized payments. Table B=13 COUNTY OF CONTRA COSTA RETIREMENT ASSOCIATION MEMBER POPULATION . Vested and Year Ended Total Association Terminated Retired Members Ratio of Non- December 31 Active Members Memberst and Beneficiaries Actives to Actives 2001 9,229 955 5,487 0.70% 2002 9,611 1,067 5,619 0.70 2003 9,476 1,248 5,936 0.76 2004 9,358 1,517 6,118 0.82 2005 9,205 1,731 6,437 0.89 f Includes terminated members due a refund of member contributions. Source: Association Actuarial Valuation and Review as of December 31,2005. Table B-14 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Year Annual Annual Ended Required Percentage December 31 Contribution Contributed 2001 $58,642,407 94.1% 2002 58,319,678(') 98.6 2003 108,728,047(2) 100.0 2004 118,245,418 100.0 2005 147,165,108(3) 100.0 (1) The contribution percentage is less than 100% due to action taken by the Retirement Board to phase-in, over three years, increased contribution requirements associated with the significant actuarial assumption changes and the expansion of earnable compensation required by the"Ventura Decision." See"—Impacts of the Ventura Decision." (2) Excludes Contra Costa County pension obligation bond proceeds of$319,094,719. (3) Excludes the Contra Costa Consolidated Fire District and Moraga-Orinda Fire District pension obligation bond proceeds in the amounts of$124,917,000 and$28,317,911,respectively. Source: Association Comprehensive Annual Financial Report for the Year Ended December 31, 2005 and the Association Actuarial Valuation and Review as of December 31,2005. CCCERA Funding Status. The actuarial report prepared by the Association's independent actuary, The Segal Company, reflects the financial status of the Association as of December 31, 2005. The market value of the plan's assets as of such date was $4,221,722,252 and the return on assets was 10.8%. The value of the plan's unfunded actuarial accrued liability ("UAAL") as of December 31, 2005 is estimated by the actuary to be $730,370,881 using a 7.9% actuarial rate of return. This includes the County's portion of the liability in the amount of $575,291,881 as well as that of the other entities comprising the Association. The GASB Statement No. 25 liabilities calculated for 2005, as shown in the 200-06037\pos-5 B-20 actuarial valuation and review as of December 31, 2005, showed that the funded ratio was approximately 84.8%. The County Employee's Retirement Law authorizes the Board of Retirement to grant annual automatic and ad hoc cost-of-living adjustment (a "COLA") to all eligible retired members. The Act requires the Board of Retirement to grant an annual automatic COLA, effective April I of each year. This benefit is based on the San Francisco-Oakland-San Jose area Consumer Price Index and is limited to 3% for Tier I, Tier III and Safety members, and 4% for Tier II members. The Government Code allows the granting of a supplemental cost-of-living benefit, on a prefunded basis to eligible retirees whose unused Consumer Price Index increase accumulations equal or exceed 20%. This supplemental is a permanent part of the retirees' monthly benefit and is known as"New Dollar Power." In 2000, the Governor signed legislation that permits 1937 Retirement Act counties to provide increased retirement benefits equal to (a) 3% of eligible salary per year of service to safety employees retiring at age 50, and (b)2% of eligible salary per year of service to regular employees retiring at age 55. If approved by the County Board of Supervisors, the cost of such benefits would have to be paid by the employers, employees or CCCERA or some combination of all three. The Board of Retirement requested an actuarial study which refined projections regarding cost of such benefits. The actuary completed the study and found that the UAAL would increase by $199,000,000 if the new benefits were approved. The annual cost to pay for the new benefit and to amortize the UAAL would be $29,192,072. A Memorandum of Understanding ("MOU") addressing the source of payment for these additional benefits for safety employees and for general and miscellaneous employees was drafted. Pursuant to the MOU, $100,000,000 of the cost of the benefit would be funded from CCCERA's unrestricted reserves and safety employees would pay the. remaining $99.0 million from a portion of the cost of living adjustment ("COLA") increases included in their compensation. The MOU sets forth a four year agreement beginning on July 1, 2002 under which safety employees will receive 5% to 6% COLAs out of which 2.25% is applied toward the new benefit in year 1, with additional 2.25% increments applied in years 2 through 4. The MOU provides a three year agreement beginning on October 1, 2002 for general and miscellaneous members under which they will receive a 5% COLA in year 1 and 3% COLAs in years 2 and 3. The actuarial valuation and review of December 31, 2005 updated the amount of unrecognized net investment gains and losses to be booked by the Association over the next 4.5 years. The total unrecognized investment gain as of December 31, 2005 was approximately $147,229,420. In October 2006, CCCERA updated the Market Stabilization Account to include the Association's investment results for the January 1, 2006 through June 30, 2006 period. The total unrecognized, investment gain as of June 30, 2006 was approximately $163,328,396. See Table B-16—"Market Stabilization Account (Deferred Return)." A portion of these amounts will be added or subtracted to the UAAL of the County over the five year market stabilization period. The Association has established and maintains various reserves and designations from member and County contributions and the accumulations of investment income thereof, after satisfying investment and administrative expenses, including a Market Stabilization Account. The Market Stabilization Account represents the deferred return developed by the smoothing of realized and unrealized gains and losses based on five-year smoothing. This method smoothes only the semi-annual deviation of total market return (net of expenses) from the applicable return target per annum. An 8.35% assumed rate was used in determining .contribution rates for the period January 1, 2003, through June 30, 2004. As of December 31, 2003, the Market Stabilization Account was in a negative position due to market losses over three of the four prior years. As of June 30, 2006, the net balance in the Market Stabilization Account was $163,328,396. See Table 13-16—"Market Stabilization 200-06037\pos-5 B-21 Account (Deferred Return)." The assumed rate of return from July 1, 2004 through June 30,2005 was 8.00% and is 7.9%for the Fiscal Years thereafter. Table B-15 sets forth the balances as of December 31,2005, in reserves and designated net assets: Table B-15 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION RESERVES AND DESIGNATED NET ASSETS ASSUMING A 7.9%ACTUARIAL RATE OF RETURN (AS OF DECEMBER 31,2005) Category Amount Valuation Reserves $4,062,057,143 Post Retirement Death Benefit 12,435,689 Statutory Contingency Reserve(one percent) 0 Market Stabilization Account 147,229,420 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS $4,221,722,252 Source: Association Comprehensive Annual Financial Report for the Year Ended December 31,2005. Table B-12 sets forth the schedule for recognizing estimated deferred gains and losses. The actual amounts recognized in future years may vary depending on whether the rate of return on the Association's assets is equal to the assumed rate of return, currently 7.9%. Table B-16 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION MARKET STABILIZATION ACCOUNT(DEFERRED RETURN) (As OF JUNE 30,2006) Amount Applied to: Remaining Ending Period Amount 2006 2007 2008 2009 2010 June 2002 $(23,238,391) $(23,238,391) — — — — December 2002 (53,812,530) (26,906,265) $(26,906,264) — — — June 2003 38,161,393 12,720,464 25,440,929 — — — December 2003 97,432,557 24,358,139 48,716,279 $24,358,139 — — June 2004 (28,588,544) (5,717,709) (11,435,417) (11,435,418) — — December 2004 114,017,158 19,002,860 38,005,719 38,005,719 $19,002,859 — June 2005 (37,303,452) (5,329,065) (10,658,129) (10,658,129) (10,658,129) — December 2005 57,242,793 7,155,349 14,310,698 14,310,698 14,310,698 $7,155,349 June.2006 (582,588) (64,732) (129,464) (129,464) (129,464) (129,464) TOTAL $163,328,396 $1,980,651 $77,344,349 $54,451,546 $22,525,965 $7,025,885 Source: Association records. The revenues of the Association by source, net assets at the end of the year and the total return on market value for the five years ending December 31, 2005 are set forth in Table B-17. 200-06037\pos-5 B-22 Table B-17 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION SCHEDULE OF REVENUES,NET ASSETS AT MARKET VALUE AND RETURN ON MARKET VALUE 2001 THROUGH 2005 Source of Revenues Net Assets at Total Investment Market Value Return Year Employee Employer Income/ End.of on Market (December 31) Contributions Contributions Loss (t1 Year(2) Value(3) 2001 $18,681,239 $55,182,505 $(114,531,847) $2,704,728,752 (2.4)% 2002 26,605,875 57,474,043 (267,980,549) 2,365,537,423 (9.5) 2003 51,602,939 427,822,766(4) 608,574,613 3,313,494,947 23.5 2004 65,297,397 118,245,418 416,012,994 3,718,615,896 13.4 2005 73,474,816 300,300,01951 342,383,194 4,221,722,252 10.8 (1) Net of investment expenses. (2) Net of benefits paid, administrative costs, refund of contributions and other deductions. See also APPENDIX C— "EXCERPTS FROM THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE ASSOCIATION FOR THE FISCAL YEAR ENDED JUNE 30,2006." (3) Before deduction of administrative fees and investments costs. (4) Includes proceeds in the amount of$319,094,719 of pension obligation bonds issued by the County in 2003. (5) Includes proceeds in the amount of $153,134,911 of pension obligation bonds issued by the Moraga-Orinda Fire Protection District and the Contra Costa County Fire Protection District in 2005. Sources: Association Comprehensive Annual Financial Reports for the years Ended December 31, 2001 through 2005 and Actuarial Valuation Reports as of December 31,2000 through 2005. Investment, Policy of the Association. The Board of Retirement adopted its investment guidelines in 1985 and has amended those guidelines,the most recent amendment having been adopted on December 14, 2005 (the "Investment Policy"). The Investment Policy prescribes, among other things, asset class targets for investment of Association finds. The asset allocation targets and their associated ranges, which are a function of the returns and risks from various asset class and the nature of the Association's liabilities, currently are set forth in Table B-18. Table B-18 CONTRA COSTA COUNTY EMPLOYEES'RETIREMENT ASSOCIATION INVESTMENT POLICY ASSET ALLOCATION TARGETS (As OF JANUARY 2007) Current Investment Asset Type Allocation Allocation Range Domestic Equity 43.0% 35%to 55% International Equity 11.5 7 to 13 Domestic Fixed Income 23.0 19 to 35 High Yield Fixed Income 2.0 1 to 4 International Fixed Income 4.0 3 to 7 Commodities 2.0 0 to 3 Real Estate 9.0 5 to 12 Alternative Investments' 5.0 0 to 7 Cash 0.5 0 to 2 TOTAL 100.0% t CCERA does not have any hedge fund investments. Source: Association. 200-06037\pos-5 B-23 The Association contracts with 35 investment managers who are responsible for investment of their respective portion of the portfolio. The Investment Policy prescribes investment guidelines to be followed by the investment managers as well as monitoring procedures regarding their performance. In April 2005 the Association adopted new asset allocation targets, increasing the target for the domestic equity to 43%, and decreasing the international equity target to 11.5%, the domestic fixed income target to 23%, the real estate target to 9% and the cash equivalent target to 0.5%. A 2% target allocation was also established for commodities and high yield fixed income. The new target allocations are reflected in the revision to the Investment Policy adopted on December 14, 2005. The Association issues a stand-alone financial report, which is available at its office located at 1355 Willow Way, Suite 221, Concord, California 94520. For additional information on the County's pension plan, see APPENDIX C—"EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2006." Impact of the Ventura Decision. On August 14, 1997, the Supreme Court of the State of California rendered a decision in the matter of Ventura County Deputy Sheriff's Association v. Board of Retirement of Ventura County Employees'Retirement Association which held that compensation not paid in cash, even if not earned by all employees in the same grade or class, must be included in "compensation earnable" and "final compensation" on which an employee's pension is based. This California Supreme Court decision became final on October 1, 1997, requiring, among other things, certain items such as vacation buy-back to be included in the calculations that determine the retirement benefits that a retiree is eligible to receive. The court decision pertains to defined pension plans governed by the County Employees' Retirement Law of 1937, such as the pension plans of many counties in the State, including the County. In addition, two lawsuits against the County on similar issues have been filed by certain retired County employees. The CCCERA has settled its litigation of these two cases that were consolidated into one case, entitled Vernon D. Paulson, et al. v. Board of Retirement of the Contra Costa Employees'Retirement Association, et al. The consolidated lawsuit was brought on behalf of a class of retired members of the Association regarding the inclusions and the exclusions from "final" compensation that are used in calculating members' retirement benefits as a result of the Ventura decision. A settlement agreement was entered into with all parties and each employer was invoiced for their share of the $34.2 million additional liability plus interest up to the.date of the payment. On May 20, 2003, the actuary for CCCERA completed the final true-up for the Paulson settlement. The total settlement cost was $149,346,218. After making certain transfers, the net Paulson liability was $34,230,204, of which $24,821,154 was the responsibility of the County. The County elected to amortize this payment over 19.5 years commencing August 1, 2004. Post Employment Benefits The County provides post-employment medical and dental benefits to employees based upon the bargaining unit contracts. Employees hired after January 1, 2007 are required to work for 15 years for the County to be eligible. Additionally, to be eligible, the retiring employee is required to have been a member in a participating health plan on the date of retirement. The cost of the premiums associated with these benefits is recognized on a pay-as-you-go basis when the County makes the payment. The number of employees, retirees and PERS survivors (for which the County makes a payment) participating in this benefit program and the contributions made by the County are set forth in Table B-19. 200-06037\pos-5 B-24 Table B-19 CONTRA COSTA COUNTY POST EMPLOYMENT BENEFIT SUMMARY Fiscal Year Number of County Contribution (As of June 30) Participating Retireest ($in 000's) 2002 4,040 $16,335 2003 4,386 20,644 2004 4,633 25,216 2005 4,890 26,543 2006 5,049 29,389 f Includes retirees and dependents receiving benefits. Source: Association Records. In June 2004, the Governmental Accounting Standards Board ("GASB") issued Statement No. 45 ("GASB 45"), which addresses how state and local governments should account for and report their costs and obligations related to post-employment health care and other non-pension benefits ("OPEB"). GASB 45 generally requires that employers account for and report the annual cost of OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner as they currently do for pensions. Annual OPEB costs for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. The provisions of GASB 45 may be applied prospectively and do not require governments to fund their OPEB plans. An employer may establish its OPEB liability at zero as of the beginning of the initial year of implementation. However, the unfunded actuarial liability is required to be amortized over future periods on the income statement. GASB 45 also established disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions, and for certain employers, the extent to which the plan has been funded over time. These disclosure requirements will be effective for the County's Fiscal Year ending June 30, 2008. GASB 45 is likely to result in a substantial increase in the annual expense recognized by the County for post-retirement health care benefits. If those expenses are not funded as determined by the actuary (the "Actuary"), a substantial liability will accumulate over time and will be reported on the statement of net assets. On February 28, 2006, the County retained the services of Buck Consultants LLP, an independent actuary, to determine the extent of the County's OPEB liability. In an actuarial analysis delivered to the County on April 25, 2006, the Actuary estimated the accumulated post-employment benefit obligation (the "APBO") as of January 1, 2006 for all participants (i.e. active employees, retirees and surviving spouses) of County entities under the current contribution schedule. The APBO is defined as the actuarial ployee service rendered to a particular date. present value of benefits attributed to em 200-06037\pos-5 B-25 Table B-20 shows the APBO, Normal Cost and ARC for County employees only, calculated at a 4.5% and 7.9% discount rates. Table B-20 CONTRA COSTA COUNTY POST EMPLOYMENT HEALTH BENEFITS PLAN APBO,NORMAL COST,AND ARC AS OF JANUARY 1,2006 4.5%Discount Rate 7.9%Discount Rate (PAYGO) (Fully Funded) APBO $2,377,514,000 $1,318,565,000 Normal Cost 124,135,000 52,736,000 ARC 203,385,000 96,688,000 Source: Buck Consultants LLP. The amounts above include the liability associated with the subsidization of retiree premiums by active employees. This occurs because the over age 65 retiree medical costs are much higher than active employee costs but the retiree rates are the same as the active rates due to the pooling of the costs in the underwriting process. Approximately $424,583,000 of the liability is caused by this rate subsidy, or 16.0% of the total liability under the 4.5%discount rate assumption. Table B-21 shows the normal cost ("NC"), which is equal to the amount of benefit to be earned by the active employees for service in calendar year 2006, calculated (i) at a discount rate of 4.5% (reflecting the current pay-as-you-go ("PAYGO") funding method), and (ii) at a discount rate of 7.9% (reflecting a fully funded postretirement medical plan). Table B-21 CONTRA COSTA COUNTY POST EMPLOYMENT HEALTH BENEFITS PLAN APBO AND NORMAL COST AS OF JANUARY 1,20061 APBO @ 4.5% APBO @ 7.9% NC @ 4.5% NC @ 7.9% PA( YGO) (Fully Funded) PAYGO (Fully Funded) Active Employees $1,605,649,000 $779,265,000 $130,604,000 $55,182,000 Retirees 919,840,000 614,568,000 0 0 Survivors 46,161,000 31,754,000 0 0 TOTAL $2,571,650,000 $1,425,587,000 $130,604,000 $55,182,000 t Information presented in this Table B-20 includes all County entities included in the County's audited financial statements and utilizing County sponsored health benefit programs. Source: Buck Consultants LLP. GASB 45 also requires the calculation of an Annual Required Contribution (the "ARC") which consists of the normal cost and a not greater than 30 year amortization of the unfunded actuarial accrued liability (the "UAAL") for the post-retirement medical and dental benefit. However, there is no requirement under GASB 45 that the ARC actually be funded. This UAAL is calculated as the APBO less any assets held for the plan. For fiscal years beginning after December 15, 2006, GASB 45 requires that these post-retirement medical plan liabilities be recognized on an accounting basis, if there are no dedicated assets or funding arrangements. 200-06037\pos-5 B-26 Table B-22 shows the ARC for all County entities for. Fiscal Year 2006-07 under the current health benefit plan using the two discount rate assumptions described above. Table B-22 CONTRA COSTA COUNTY POST EMPLOYMENT HEALTH BENEFITS PLAN ANNUAL REQUIRED CONTRIBUTION FOR FISCAL YEAR 20061 4.5% Discount Rate 7.9% Discount Rate (PAYGO) (Fully Funded) Total APBO $2,571,650,000 $1,425,587,000 Assets 0 0 UAAL $2,571,650,000 $1,425,587,000 Annual Required Contribution Normal Cost $130,604,000 $55,182,000 30 Year Amortization of UAAL 85,721,000 47,519,000 ARC $216,325,000 $102,701,000 t Information presented in this Table B-20 includes all County entities included in the County's audited financial statements and utilizing County sponsored health benefit programs. Source: Buck Consultants LLP. Long Term Obligations The County has never defaulted on the payment of principal or interest on any of its indebtedness. Following is a brief summary of the County's general obligation debt, lease obligations and direct and overlapping debt. No General Obligation Debt. The County has no direct general obligation bonded indebtedness, the last issue having been redeemed in Fiscal Year 1977-78. The County has no authorized and unissued general obligation debt. Lease Obligations. The County has made use of various lease arrangements with private and public financing entities, nonprofit corporations, the County of Contra Costa Public Financing Authority and the Contra Costa County Public Facilities Corporation for the use and acquisition of capital assets. i These capital lease obligations have terms ranging from five to 30 years. The longest capital lease ends in 2028. Certain of the lease obligations of the County reflect annual payments made for debt service on lease revenue bonds and certificates of participation issued to finance capital projects, some of which are being refunded by the Series 2007 Bonds. For a summary of the County's lease obligations as of June 30, 2006, see APPENDIX C—"EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2006—Notes to General Purpose Financial Statements." Pension Obligation Bonds. The County issued pension obligation bonds in 1994 (a portion of which were restructured in 2001) and 2003 to refund debentures issued to evidence its statutory obligation to make pension payments with respect to its UAAL to CCCERA. See also "—Pension Plan." 200-06037\pos-5 B-27 Fiscal year debt service for the County's lease obligations and pension obligation bonds outstanding as of January 1, 2007 is shown in Table B-23 below. Table B-23 COUNTY OF CONTRA COSTA OUTSTANDING LEASE OBLIGATIONS AND PENSION OBLIGATION BONDS AS OF JANUARY 1,2007 Fiscal Year Ending Total Lease Total POB Total 6/30 Debt Service(l) Debt Service Debt Service(2) 2007 $32,926,916 $52,060,999 $84,987,915 2008 32,493,969 52,064,234 84,558,203 2009 30,265,494 55,312,572 85,578,066 2010 28,899,829 56,135,041 85,034,870 2011 28,551,432 59,549,809 88,101,241 2012 27,608,319 63,262,284 90,870,603 2013 27,030,242 67,939,535 94,969,777 2014 26,667,123 68,401,566 95,068,689 2015 26,585,981 35,409,894 61,995,875 2016 26,504,291 36,914,525 63,418,816 2017 24,098,698 38,484,360 62,583,058 2018 23,577,948 40,114,901 63,692,849 2019 23,477,223. -_ 41,,821,636 65,298,859 2020 21,946,605 43,600,400 65,547,005 2021. 21,833,256 45,452,243 67,285,499 2022 19,061,116 47,382,397 66,443,513 2023 19,062,917 — 19,062,917 2024 8,592,437 — 8,592,437 2025 8,609,394 — 8,609,394 2026 6,810,795 — 6,810,795 2027 5,584;538 — 5,584,538 2028 3,081,750 — 3,081,750 TOTAL(2) 473,270,273 $803,906.396 $1,277,176.669 (1) Includes the obligations to be prepaid or refunded by the Series 2007 Bonds. Excludes deductions based upon estimated reimbursement from the State for County hospital and pension obligation bond debt service and estimated earnings on various debt service and debt service reserve funds and debt service on the Series 2007 Bonds. (2) Totals do not add due to independent rounding. Source: County Auditor-Controller. 200-06037\pos-5 B-28 Direct and Overlapping Debt. The County contains numerous municipalities, school districts and special purpose districts, as well as the overlapping East Bay Municipal Utility District, which has issued general obligation bonded and lease indebtedness. Set forth in Table B-24 below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics Inc. that summarizes such indebtedness as of February 1, 2007. The Debt Report is included for general information purposes only and the County does not guaranty the completeness or accuracy of the information contained in the Debt Report. The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap.the boundaries of the County. Such long-term obligations generally are not payable from revenues of the County (except as indicated) nor are they necessarily obligations secured by land within the County. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. (Remainder of this Page Intentionally Left Blank) 200-06037\pos-5 B-29 Table B-24 CONTRA COSTA COUNTY DEBT STATEMENT 2006-07 Assessed Valuation: $146,407,238,208 (includes unitary utility valuation) Redevelopment Incremental Valuation: 17.084.076,955 Adjusted Assessed Valuation: $129,323,161,253 OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Debt 2/1/07 Bay Area Rapid Transit District 32.322% $ 28,179,936 East Bay Municipal Water District and Special District No. 1 50.355&6.373 3,383,919 Contra Costa Community College District 100. 112,900,000 Martinez Unified School District 100. 29,962,135 Mt.Diablo Unified School District 100. 222,500,000 Pittsburg Unified School.District 100. 54,935,000 San Ramon Valley Unified School District 100. 298,610,607 West Contra Costa Unified School District 100. 536,503,520 Acalanes and Liberty Union High School Districts 100. 177,981,053 Brentwood Union School District 100. 48,624,410 Lafayette School District 100. 24,610,000 Oakley Union School District 100. 25,050,000 Walnut Creek School District 100. 29,245,000 Other School Districts Various 48,998,966 Cities and City Special Tax Districts 100. 19,054,977 East Bay Regional Park District 46.998 78,594,755 West Contra Costa Healthcare District Parcel Tax Obligations 100. 25,315,000 Community Facilities Districts 100. 277,672,984 1915 Act Assessment Bonds(Estimate) 100. 465.228.850 TOTAL GROSS OVERLAPPING TAX AND ASSESSMENT DEBT $2,507,351,112 Less: East Bay Municipal Utility District(100%self-supporting) 1,057.455 TOTAL NET OVERLAPPING TAX AND ASSESSMENT DEBT $2,506,293,657 DIRECT AND OVERLAPPING GENERAL FUND DEBT: Contra Costa County General Fund Obligations 100. % $ 295,455,000(1) Contra Costa County Pension Obligations 100. 537,005,000 Contra Costa County Office of Education Certificates of Participation 100. 900,000 Alameda-Contra Costa Transit District Certificates of Participation 11.413 2,157,628 Antioch Unified School District Certificates of Participation 100. 14,171,325 West Contra Costa Unified School District General Fund Obligations 100. 26,075,000 Other School District General Fund Obligations Various 27,206,300 City of Antioch General Fund Obligations 100. 29,912,560 City of Concord General Fund and Judgment Obligations 100. 34,765,000 City of Pittsburg Pension Obligations 100. 39,566,056 City of Richmond General Fund Obligations 100. 41,222,791 City of Richmond Pension Obligations 100. 22,825;000 City of San Ramon General Fund Obligations 100. 19,415,000 Other City General Fund Obligations 100. 55,164,790 Contra Costa County Fire Protection District Pension Obligations 100. 128,280,000 . San Ramon Valley Fire Protection District Certificates of Participation 100. 17,080,000 Other Special District Certificates of Participation 100. 2.685.000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $1,293,886,450 GROSS COMBINED TOTAL DEBT $3,801,237,562(2) NET COMBINED TOTAL DEBT $3,800,180,107 (1) Excludes lease revenue 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 2006-07 Assessed Valuation: Total Gross Overlapping Tax and Assessment Debt.....................................1.71% Total Net Overlapping Tax and Assessment Debt.........................................1.71% Ratios to Adjusted Assessed Valuation: Combined Direct Debt ($833,765,000).......................................................0.64% Gross Combined Total Debt..........................................................................2.94% Net Combined Total Debt..............................................................................2.94% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06: $0 Source: California Municipal Statistics,Inc. 200-06037\pos-5 B-30 Future Financings The County may undertake an approximately $16 million financing to acquire, construct and improve various capital projects within the County in the next six months and may undertake other financings for various capital improvements over the next few years. Insurance and Self-Insurance Programs The County .self-insures its unemployment, dental, management long-term disability and employee medical insurance plans. The County self-insures its workers' compensation exposure to $750,000 per occurrence and purchases commercial insurance to provide protection for up to an additional $150 million per occurrence. For its public and automobile. liability exposures, the County purchases $25 million of commercial insurance, excess of a$1 million per occurrence self-insured retention. The County's airports are protected by a commercial liability insurance policy that provides up to $100 million in coverage that is subject to neither a deductible nor a self-insured retention. With respect to the medical malpractice liability exposure, the County purchased coverage in the amount of$1.5 million through'the California State Association of Counties Excess Insurance Authority Pooling Fund (self-insured retention) and $10 million in commercial coverage on a claims made basis. The County has a$500,000 self-insured retention. The County's buildings, equipment and other property are commercially insured for losses up to $600 million per occurrence for "All Risk" coverage. There is a $50,000 deductible for "All Risk" coverage. Flood coverage is insured for $550 million on a shared aggregate with a $100,000 minimum deductible. There is a $500,000 maximum deductible for property located within a 100-year flood plain. .The County is insured for earthquake in the amount of$225 million with a 5% deductible per location. The County has $100 million Boiler and Machinery coverage. The County also maintains a separate insurance policy,to cover the Sheriff-Coroner's two helicopters up to $50 million. All claims,with the exception of dental claims, are handled by County staff. During the last three years, one fire loss, two medical malpractice liability, and one general liability claim have been incurred by the County that will involve payment by a commercial insurance company. Except for the County's airports and a portion of the excess workers' compensation insurance,the commercial insurance has been purchased through the California State Association of Counties' Excess Insurance Authority, a joint powers authority, whose purpose is to obtain "group" commercial insurance for its membership, which includes the County. 200-06037\pos-5 B-31 Internal Service Funds are used to account for all self-insurance activities. It is the County policy to periodically infuse capital into each Fund to sufficiently cover the payment of claims, including those that either will or may require payment sometime in the future. As of June 30, 2006, the Internal Service Funds had approximately $93 million in assets and $121 million in actuarial liabilities as determined by an independent actuary based upon past experience by the-County. Current and future liabilities for the workers' compensation, public liability, automobile liability, and medical malpractice liability funds are determined annually by an outside actuarial firm, while the others are determined by county management personnel. In the County's opinion the Internal Service Funds are sufficiently funded, with an allowance for future investment income,to pay both known claims and those that may have been incurred but are not presently known. For additional information on the County's insurance coverage, see APPENDIX C—"EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30, 2006—NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS." 200-06037\pos-5 B-32 APPENDIX C EXCERPTS' FROM THE AUDITED . FINANCIAL STATEMENTS OF THE COUNTY FOR THE FISCAL YEAR ENDED JUNE 30,2006 t Includes all material in the County's Comprehensive Annual Financial Report from the Table of Contents through Note 19 of the Notes to the Basic Financial Statements. The Comprehensive Annual Financial Report in its entirety may be viewed online or downloaded at http://www.co.contra-costa.ca.us. 200-06037\pos-5 C-1 APPENDIX C SUMMARY OF THE COUNTY INVESTMENT POLICY CONTRA COSTA COUNTY INVESTMENT POLICY JUNE 2006 OBJECTIVES AND STANDARDS Standard for Governing Bodies or Persons Authorized to Make Investment Decisions for Local Agencies Governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part to an overall strategy, investments as authorized by law. Trustee's Objectives Regarding Funds When investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its controls. INSTRUMENTS AUTHORIZED FOR INVESTMENT Instruments Authorized for Investment (a) Bonds issued by the local agencies, including bonds payable solely out of the revenues from a revenue-producing property, owned, controlled, or operated by the local agency or by a department, board, agency or authority of the local agency. (b) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department,board,agency or authority of the state. (d) Bonds,notes, warrants or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the local agency, or by a department, board, agency or authority of the local agency. 200-06037\pos-5 D-1 (e) Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. (f) Bankers acceptances otherwise known as bills of exchange or time drafts drawn on and accepted by a commercial bank. Purchases of banker's acceptances may not exceed 180 days maturity or 40 percent of the agency's money that may be invested pursuant to this section. However, no more than 30 percent of the agency's money may be invested in the banker's acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6, commencing with Section 11501, of the California Public Utilities Code). (g) Commercial paper of"prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by a nationally recognized statistical-rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph(2): (1) The entity meets all of the following criteria: (A) Is organized and operating within the United States as a general corporation. (B) Has total assets in excess of five hundred million dollars($500,000,000). (C) Has debt other than commercial paper, if any, that is rate "A" or higher by a NRSRO. (2) The entity meets the following criteria: (A) is organized within the. United States as a special purpose corporation, trust or limited liability company. (B) Has programwide credit enhancements including, but not limited to, overcollateralization, letters of credit or surety bond. (C) Has commercial paper that is rated "A-1" or higher or the equivalent by an NRSRO. Eligible commercial paper shall have,a maximum maturity of 270 days or less. Local agencies, other than counties or a city and county, may invest no more than 25 percent of their money in eligible commercial paper. Local agencies, other than counties or a city and county, may purchase no more than 10 percent of the outstanding commercial paper of any single issuer. Counties or a city and county may invest in commercial paper pursuant to the concentration limits in subdivision (a) of Section 53635 of the Government Code. Following are the concentration limits (Government Code Section 53635, subdivision (a)): 1. Not more than 40 percent of the local agency's money may be invested in eligible commercial paper. 2. Not more than 10 percent of the local agency's money may be invested pursuant to this section may be invested in the outstanding commercial paper of any single issuer. 3. No more than 10 percent of the outstanding commercial paper of any single corporate issuer may be purchased by the local agency. (h) Negotiable certificates of deposit issued by a nationally- or state-chartered bank or a savings association or federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency's money that may be invested pursuant to this section. 200-06037\pos-5 D-2 For purposes of this section, negotiable certificates of deposits do not come within Article 2(commencing with Government Code Section 53630), except that the amount so invested shall be subject to the limitations of California Government Code Section 53638. The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the money are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or any person with investment decision making authority in the administrative office manager's office, budget office, auditor-controller's office, or treasurer's office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. Investments in repurchase agreements or reverse repurchase agreements of any securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in this section. 1. "Repurchase agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third-party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. (A) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date and maturity. (B) Investments in repurchase agreements may be made on any investment authorized in this section when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day. 2. "Reverse repurchase agreement" means a sale.of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. 3. Reverse repurchase agreements may be utilized only when all of the following conditions are met: The security to be sold on reverse repurchase agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio; the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. 4. Investments in reverse repurchase agreements shall only be made with primary dealers of the Federal Reserve Bank of New York, or with a nationally-or state-chartered bank that has or has had a significant banking relationship with a local agency..."Significant banking relationship" means any of the following activities of a bank: 200-06037\pos-5 D-3 (A) Involvement in the creation, sale, purchase, or retirement of a local agency's bonds, notes, or other evidence of indebtedness. (B) Financing of a local agency's activities. (C) Acceptance of a local agency's securities or funds as deposits. (i) Medium-term notes of a maximum of five-years maturity issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of"A" or its equivalent or better by a nationally-recognized rating service. Purchases of medium-term notes may not exceed 30 percent of the agency's surplus money that may be invested pursuant to this section. (j) Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to 0), inclusive, or subdivision (m) or (n) and that comply with the investment restrictions of this article and Article 2. (k) Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.). If investment is in shares issued pursuant to paragraph (2), the company shall have met the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. (B) Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars($500,000,000). The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20% of the agency's surplus money that may be invested pursuant to this section. However, no more than 10% of the agency's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph(1). (1) Moneys held by a trustee or fiscal agent and pledged to the payment of security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are not specific statutory provision, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance. (m) Notes, bonds, or other obligations that are at all times secured by a valid first-priority security interest in securities of the types listed by California Government Code Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by California Government Code Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform 200-06037\pos-5 D-4 Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (n) Any mortgage pass-through security, collateralized mortgage obligation, mortgage- backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum of five years' maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA" or its equivalent-or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20% of the agency's surplus money that may be invested pursuant to this section. (o) Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 of the Government Code that invests in the securities and obligations authorized in subdivisions (a) to (n), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing shares shall have retained an investment adviser that meets all of the following criteria: (i) the adviser is registered or exempt from registration with the Securities and Exchange Commission; (ii) the adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a),to (n) inclusive; (iii) the adviser has assets under management in excess of five hundred million dollars($500,000,000). (p) Local Agency Investments -LAIF 1. All money in the Local Agency Investment Fund shall be held in trust in the custody of the Treasurer. 2. All money in the Local Agency Investment Fund is nonstate money. That money shall be held in a trust account or accounts. The Controller shall be responsible for maintaining those accounts to record the Treasurer's accountability, and shall maintain a separate account for each trust deposit in the Local Agency Investment Fund. 3. That money shall be subject to audit by the Department of Finance and to cash count as provided for Sections 13297, 13298, and 13299. It may be withdrawn only upon the order of the depositing entity or its disbursing officers. The system that the Director of Finance has established for the handling, receiving, holding and disbursing of state agency money shall be used for the money in the Local Agency Investment Fund. 4. All money in the Local Agency Investment Fund shall be deposited, invested and reinvested in the same manner and to the same extent as if it were state money in the State Treasury. (q) Investment Trust of California - CalTRUST. Pursuant to Government Codes 6500, 6502, 53601, 53630 and 53635, CaITRUST was established on January 9, 2003. The purpose of the trust is to serve as a*vehicle for public agencies to jointly exercise their common power to invest funds, including tax-exempt bond proceeds. All investment activities will be in accordance with applicable California laws governing the investment of funds by public agencies. Government code 53610 (o) includes as permissible investment shares of beneficial interest issued by a joint powers authority organized pursuant'to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (n), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment 200-06037\pos-5 D-5 advisor that meets all of the following criteria: (i) the advisor is registered or exempt from registration with the Securities and Exchange Commission; (ii) the advisor has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (n), inclusive; (iii) the advisor has assets under management in excess of five hundred million dollars($500,000,000). EXISTENCE AND APPROPRIATION OF FUND; INVESTMENT AND DISTRIBUTION OF DEPOSITS There is in the State Treasury the Local Agency Investment Fund, which fund is hereby created. Notwithstanding California Government Code Section 13340, all money in the fund is hereby appropriated without regard to fiscal years to carry out the purpose of this section. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. Notwithstanding any other provisions of law, a local governmental official, with the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provisions of law, an officer of any nonprofit corporation whose membership is confined to public agencies or public officials, or an officer of a qualified quasi- governmental agency, with the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provision of law or of this section, a local agency, with the approval of its governing body, may deposit in the Local Agency Investment Fund proceeds of the issuance of bonds, notes, certificates of participation, or other evidences of indebtedness of the agency pending expenditure of the proceeds for the authorized purpose of their issuance. In connection with these deposits of proceeds, the Local Agency Investment Fund is authorized to receive .and disburse moneys, and to provide information, directly with or to an authorized officer of a trustee or fiscal agency engaged by the local agency, the Local Agency Investment Fund is authorized to hold investments in the name and for the account of that trustee or fiscal agent, and the Controller shall maintain a separate account for each deposit of proceeds. The local governmental unit,the nonprofit corporation, or the quasi-governmental agency has the exclusive determination of the length of time its money will be on deposit with the Treasurer. The trustee or fiscal agent of the local governmental unit has the exclusive determination of the length of time proceeds from the issuance of bonds will be on deposit with the Treasurer. The Local Investment Advisory Board shall determine those quasi-governmental agencies which qualify to participate in the Local Agency Investment Fund. The Treasurer may refuse to accept deposits into the fund if, in the judgement of the Treasurer, the deposit would adversely affect the state's portfolio. The Treasurer may invest the money of the fund in securities prescribed in California Government Code Section 16430. The Treasurer may elect to have the money of the fund invested through the Surplus Money Investment Fund as provided in Article 4 (commencing with California Government Code Section 16470)of Chapter 3 of Part 2 of Division 4 of Title 2. 200-06037\pos-5 D-6 Money in the fund shall be invested to achieve the objective of the fund, that is to realize the maximum return consistent with safe and prudent treasury management. All instruments of title of all investments of the fund shall remain in the Treasurer's vault or be held in safekeeping under control of the Treasurer in any federal reserve bank, or any branch thereof, or the Federal Home Loan Bank of San Francisco, with any trust company, or the trust department of any state or national bank. Immediately at the conclusion of each calendar quarter, all interest earned and other increment derived from investments shall be distributed by the Controller to the contributing governmental units or trustees or fiscal agents, nonprofit corporations, and quasi-governmental agencies in amounts directly proportionate to the respective amounts deposited in the Local Agency Investment fund and the length of time the amounts remained therein. An amount equal to the reasonable costs incurred in carrying out the provisions of this section, not to exceed a maximum of one-half of one percent of the earnings of this fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be credited as reimbursements to the state agencies having incurred costs in carrying out the provisions of this section. The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. FURTHER RESTRICTIONS/LIMITATIONS BY GOVERNMENT CODE AND COUNTY TREASURER Further Restrictions Set By Treasurer Reverse repurchase agreements will be used strictly for the purpose of supplementing income with a limit of 10 percent of the total portfolio without prior approval of the Treasurer. Swaps and Trades will each be approved on a per-trade basis by Treasurer or Assistant Treasurer. SBA loans require prior approval of the Treasurer in every transaction. Repurchase Agreements will generally be limited to Wells Fargo Bank, Bank of America or other institutions with whom the County treasury has executed tri-party agreements. Collateral will be held by a third party to the transaction that may include the trust department of particular banks. Collateral will be only securities that comply with California Government Code Section 53601. Securities purchased through brokers will be held in safekeeping at the Bank of New York or as designated by the specific contract(s)for government securities and tri-party repurchase.agreements. Bank C.D.s or non-negotiable C.D.s will be collateralized at 105 percent by government securities or 150 percent by current mortgages. There will be no waiver of the first $100,000 collateral except by special arrangement with the Treasurer. All investments purchased by the Treasurer's Office shall be of investment grade. The minimum credit rating of purchased investments shall be as defined by California Government Code Section 53600 et. seq. All legal securities issued by a tobacco-related company are prohibited. A tobacco-related company is defined as an entity that makes smoking products from tobacco used in cigarettes, cigars or snuff or for smoking in pipes or a company that has total revenues of 15 percent or more from the sale of such products. The tobacco-related issuers restricted from any investment are British American Tobacco, Gallaher Group PLC, Imasco Ltd., Lowes Companies, Phillip Morris, Inc., R3 Reynolds Tobacco 200-06037\pos-5 D-7 Holdings, Inc., Brooke Groupe LTD., UST, Inc. and Universal Corp. However, tobacco-related companies will not be limited to the foregoing list. Additional companies will be prohibited as long as said entities fall within the definition of tobacco-related companies. Financial futures or financial option contracts will each be approved on a per trade basis by the County Treasurer. Prohibited Investments by Government Code A local agency shall not invest any funds pursuant to this Article or pursuant to Article 2 (commencing with California Government Code Section 53630) in inverse floaters, range notes or interest-only strips that are derived from a pool of mortgages. A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with California Government Code Section 53630) in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply tolocal agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.) that are authorized for investment pursuant to subdivision(k) of California Government Code Section 53601. Instruments Authorized for Investments: Maturity Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months.prior to the investment. Quality of Investment Instruments,Issuers and Sources Regular financial review and analysis of issuers and sources of securities such as banks and brokerage firms shall be performed. These will be based on credit-rating services' evaluations, financial documents such as audits, Form 10-Q filings to the Securities and Exchange Commission and other reliable financial information. GLOSSARY Agencies A colloquial term for securities issued by the federal agencies. Bankers Acceptances A time bill of exchange drawn on and accepted by a commercial bank to finance the exchange of goods. When a bank "accepts" such a bill, the time draft becomes, in effect, a predated, certified check payable to the bearer at some future specified date. Little risk is involved for the investor because the commercial bank assumes primary liability once the draft is accepted. Basis Point One basis point is equal to 1/100 of one percent. For example, if interest rates increase from 8.25%to 8.50%,the difference is referred to as a 25-basis-point increase. Blue Sky Laws Common term for state securities law, which vary from state to state. Generally refers to provision related to prohibitions against fraud, dealer and broker regulations and securities registration. 200-06037\pos-5 D-8 Book Value Refers to value of a held security as carried in the records of an investor. May differ from current market value of the security. Certificates of Deposit(C/Ds) Certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified rate of return. They are issued in two forms, negotiable and non-negotiable. • Negotiable Certificates of Deposit May be sold by one holder to another prior to maturity. This is possible because the issuing bank agrees to pay the amount of the deposit plus interest earned to the bearer of the certificate at maturity. • Non-Negotiable Certificates of Deposit These certificates are collateralized and are not money market instruments since they cannot be traded in the secondary market. They are issued on a fixed- maturity basis and often pay higher interest rates than are permissible on other savings or time-deposit accounts. Commercial Paper Short-term, unsecured promissory notes issued in either registered or bearer form and usually backed by a line of credit with a bank. Maturities do not exceed 270 days and generally average 30-45 days. Coupon Rate The annual rate of interest payable on a security expressed as a percentage of the principal amount. CUSIP Numbers CUSIP is an acronym for Committee on Uniform Security Identification Procedures. CUSIP numbers are identification numbers assigned each maturity of a security issue and usually printed on the face of each individual security in the issue. The CUSIP numbers are intended to facilitate identification and clearance of securities. Inverse Floaters An adjustable interest rate note keyed to various indices such as LIBOR, commercial paper, federal funds, treasuries and derivative structures. The defined interest rate formula is the opposite or inverse of these indices. Interest rates and pay dates may reset daily, weekly, monthly, quarterly, semi-annually or annually. Liquidity Usually refers to the ability to convert assets (such as investments) into cash. Mark to Market Valuing the inventory of held securities at its current market value. Market Value Price at which a security can be traded in the current market. Maturity The date upon which the principal of a security becomes due and payable to the holder. Medium-Term Notes (MTNs) Corporate debt obligations continuously offered in a broad range of maturities. MTNs were created to bridge the gap between commercial paper and corporate bonds. The key characteristic of MTNs is that they are issued on a continuous basis. Money Market Instruments Private and government obligations of one year or less. Offer The price of a security at which a person is willing to sell. 200-06037\pos-5 D-9 Par Value The stated or face value of a security expressed as a specific dollar amount marked on the face of the security; the amount of money due at maturity. Par value should not be confused with market value. Premium The amount by which the price paid for a security exceeds par value, generally representing the difference between the nominal interest rate and the actual or effective return to the investor. Range Notes A security whose rate of return is pegged to an index. The note defines the interest rate minimum or floor and the interest rate maximum or cap. An example of an index may be federal funds. The adjustable rate of interest is determined within the defined range of the funds. Repurchase Agreement or RP or REPO An agreement consisting of two simultaneous transactions whereby the investor purchases securities from a bank or dealer and the bank or dealer agrees to repurchase the securities at the same price on a certain future date. The interest rate on a RP is that which the dealer pays the investor for the use of his funds. Reverse repurchase agreements are the mirror image of the RPs when the bank ordealer purchases securities from the investor under an agreement to. sell them back to the investor. Settlement Date The date used in price and interest computations, usually the date of delivery. SLUGS An acronym for State and Local Government Series. SLUGS are special United States Government securities sold by the Secretary of the Treasury to states, municipalities and other local government bodies through individual subscription agreements. The interest rates and maturities of SLUGS are arranged to comply with arbitrage restrictions imposed under Section 103 of the Internal Revenue Code. SLUGS are most commonly used for deposit in escrow in connection with the issuance of refunding bonds. STRIPS US Treasury acronym for "separate trading of registered interest and principal of securities." Certain registered Treasury securities can be divided into separate interest and principal components,which may then be traded as separate entities. SWAP Generally refers to an exchange of securities, with essentially the same par value, but may vary in coupon rate, type of instrument, name of issuer and number of days to maturity. The purpose of the SWAP may be to enhance yield, to shorten the maturity or any benefit deemed by the contracting parties. Treasury Securities Debt obligations of the United States Government sold by the Treasury Department in the form of bills, notes and bonds: • Bills Short-term obligations that mature in one year or less and are sold at a discount in lieu of paying periodic interest. • Notes Interest-bearing obligations that mature between one year and 10 years. • Bonds Interest-bearing long-term obligations that generally mature in 10 years or more. Zero-Coupon Security A security that makes no periodic interest payments but instead is sold at a deep discount from its face value. 200-060371pos-5 D-10 APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS 200-06037\pos-5 E-1 APPENDIX F. PROPOSED FORM OF BOND COUNSEL OPINION 200-06037\pos-5 F-1 APPENDIX G PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of , 2007, is executed and delivered by the COUNTY OF CONTRA COSTA, CALIFORNIA (the "County"), and The Bank of New York Trust Company,N.A., as successor trustee (the "Trustee") in connection with the issuance by the County of Contra Costa Public Financing Authority (the "Authority") of$ Lease Revenue Bonds (Refunding.and Various Capital Projects), 2007 Series A and $ Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (collectively, the "Bonds"). The Bonds are being issued pursuant to a Trust Agreement dated as of February 1, 1999, as supplemented by a First Supplemental Trust Agreement dated as of January 1, 2001, a Second Supplemental Trust Agreement dated as of May 1, 2001, a Third Supplemental Trust Agreement dated as of June 1, 2002, a Fourth Supplemental Trust Agreement dated as of July 1, 2002, a Sixth Supplemental Trust Agreement dated as of March 1, 2007 and a Seventh Supplemental Trust Agreement dated as of March 1, 2007 (collectively, the "Trust Agreement"), between the Authority and the Trustee. Pursuant to the Facility Lease dated as of February 1, 1999, as amended by the First Amendment to Facility Lease dated as of January 1, 2001, the Second Amendment to Facility Lease dated as of May 1, 2001, the Third Amendment to Facility Lease dated as of June 1, 2002, the Fourth Amendment to Facility Lease dated as of July 1, 2002 and the Sixth Amendment to Facility Lease dated as of March 1, 2007 (collectively, the "Facility Lease"), the County has covenanted to comply with its obligations hereunder and to assume all obligations for Continuing Disclosure with respect to the Bonds. The County and the Dissemination.Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the County, the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order .to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement,which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, .to make investment decisions concerning the ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Disclosure Representative" shall mean the County Administrator, Director,Capital Facilities and Debt Management or his or her designee, or such other officer or employee as the County shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean the County, or any successor Dissemination Agent, which may be designated in writing by the County and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. 200-06037\pos-5 G-1 "National Repository" shall mean any.Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories approved by the Securities and Exchange Commission as of the date of this Agreement are set forth at the following website: http://www.sec.gov/consumer/nrmsir.htm. "Participating Underwriters" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and the State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State"shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as the state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Agreement,there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The County shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the County's fiscal year (presently June 30), commencing with the report for the 2006-07 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the County may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the County's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(f). (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the County shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent); provided, however, that the County may distribute the Annual Report itself after providing written notice to the Trustee and the Dissemination Agent. If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the County to determine if the County is in compliance with the first sentence of this subsection(b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to each Repository, the Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) to the extent the County has provided the Annual Report to the Dissemination Agent, file a report with the County and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report hasbeen provided pursuant to this Disclosure 200-06037\pos-5 G-2 Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The County's Annual Report shall contain or include by reference the following: 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" (report changes in "— Debt Service Schedule"); (b) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Recent County General Fund Budgets"(update Table'B-1 "COUNTY OF CONTRA COSTA GENERAL FUND BUDGET"); (c) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Ad Valorem Property Taxes" (update Table B-2 "COUNTY OF.CONTRA COSTA SUMMARY OF ASSESSED VALUATION AND AD VALOREM PROPERTY TAXATION"); (d) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Accounting Policies, Reports and Audits" (update Table B-5 "COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES"); (e) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Pension Plan" (update Table B-12 "CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION SCHEDULE OF FUNDING PROGRESS"); (f) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Long Term Obligations" (update Table B-23—"CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND PENSION OBLIGATION BONDS"). Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the County or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The County shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5 and to the extent applicable, the County shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. principal and interest payment delinquencies; 200-06037\pos-5 G-3 2. non-payment related defaults; 3. modifications to rights of Holders of Bonds; 4. optional, contingent or unscheduled bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds; 8. unscheduled draws on the debt service reserves reflecting financial difficulties; 9. unscheduled draws on credit enhancements reflecting financial difficulties; 10. substitution of credit or liquidity providers, or their failure to perform; and 11. release, substitution or sale of property securing repayment of the Bonds. (b) The Trustee shall, promptly upon obtainingactual knowledge at its principal corporate trust office as specified in Section 12 hereof of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the County promptly notify the Trustee in writing whether or not to report the event pursuant to subsection (f); provided that, failure . by the Trustee to so notify the Disclosure Representative and make such request shall not relieve the County of its duty to report Listed Events as required by this Section 5. (c) Whenever the County obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the County shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the County has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the County shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection(f). (e) If in response to a request under subsection (b), the County determines that the Listed Event would not be material under applicable federal securities laws, the County shall so notify the Trustee in writing and instruct the Trustee not to report the occurrence: (f) If the Trustee has been instructed by the County to report the occurrence of a Listed Event, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Trust Agreement. (g) The Trustee may conclusively rely on an opinion of counsel that the County's instructions to the Trustee under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. Each party's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds,the County shall give notice of such termination in the same manner as for a Listed Event under Section 5(f). SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the County pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent,the County shall be the Dissemination Agent. 200-06037\pos-5 G-4 SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the County, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the County provided such amendment does not impose any greater duties, nor risk of liability, on the Trustee or the Dissemination Agent, as the case may be), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 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; and (c) The amendment or waiver either(i) is approved by the Holders of the Bonds in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the*consent of Holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement,the County shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the County. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial.statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the County chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the County shall have no obligation under this Agreement toupdate such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the County, the Trustee.or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee (and, at the written request of any Participating Underwriters or the Holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent indemnified to its satisfaction), or any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County, the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the 200-06037\pos-5 G-5 County, the Trustee and the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties Immunities and Liabilities of Trustee and Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the County, to the extent permitted by law, agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or willful misconduct. The Trustee shall be paid reasonable compensation for the services provided hereunder. The obligations of the County under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the County: County of Contra Costa County Administrator's Office 651 Pine Street, 6`h Floor Martinez, CA 94553-0063 Attention: Lisa Driscoll, Senior Deputy County Administrator and Debt Manager Telephone: (925) 335-1093 Fax: (925) 646-1228 If to the Trustee: The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, California 94108 Attention: Corporate Trust Department Telephone: (415)263-2416 Fax: (415) 399-1647 Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s)to which subsequent notices or communications should be sent. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the County, the Trustee, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. 200-06037\pos-5 G-6 SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts,'each of which shall be an original and all of which shall constitute but one and the same instrument. COUNTY OF CONTRA COSTA By Chair of the Board of Supervisors County of Contra Costa, State of California Attest: John B. Cullen, Clerk of the Board of Supervisors and County Administrator By Chief Clerk of the Board of Supervisors THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By Authorized Officer 200-06037\pos-5 G-7 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: County of Contra Costa Name of Issue: County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A; and County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B Date of Issuance: _, 2007 NOTICE IS HEREBY GIVEN that the County of Contra Costa (the "County") has not provided an Annual Report with respect to the above-named Bonds as required by Section 38.07 of the Sixth Amendment to Facility Lease, dated as of March 1, 2007, by and between the County of Contra Costa Public Financing Authority and the County. The County anticipates that the Annual Report will be filed by Dated: THE BANK OF NEW YORK TRUST COMPANY,N.A., on behalf of COUNTY OF CONTRA COSTA By: cc: County of Contra Costa 200-06037\pos-5 G-8 APPENDIX H DTC AND THE BOOK-ENTRY ONLY SYSTEM The information in this Appendix H concerning The Depository Trust Company, New York, New York ("DTC') and DTC's book-entry system has been obtained from DTC and the County takes no responsibility for the completeness or accuracy thereof. The County 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 2007 Series Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2007 Series Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2007 Series 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 Appendix. 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. The Depository Trust Company ("DTC"),New York,NY, will act as securities depository for the 2007 Series Bonds. The 2007 Series Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for each maturity of the 2007 Series Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC,the world's largest depository, 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 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 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 ("DTCC"). 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", "GSCC", "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 and www.dtc.org. Purchases of the 2007 Series Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2007 Series Bonds on DTC's records. The ownership interest of each actual purchaser of each 2007 Series Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations 200-06037\pos-5 H-1 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 2007 Series Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2007 Series Bonds, except in the event that use of the book-entry system for the 2007 Series Bonds is discontinued. To facilitate subsequent transfers, all 2007 Series 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 2007 Series 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 2007 Series Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2007 Series 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 2007 Series Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2007 Series Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of the 2007 Series Bonds may wish to ascertain that the nominee holding the 2007 Series 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2007 Series 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 2007 Series 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 2007 Series 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 County, 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 County, subject to any 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 2007 Series Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County, 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. 200-06037\pos-5 H-2 AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE 2007 SERIES BONDS, THE COUNTY WILL SEND NOTICES TO HOLDERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY 'PARTICIPANT, OR OF ANY PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OR SUFFICIENCY OF THE PROCEEDINGS RELATING TO ANY OTHER ACTION PREMISED ON SUCH NOTICE. THE COUNTY HAS NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF BENEFICIAL OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO BENEFICIAL OWNERSHIP OF INTERESTS IN THE 2007 SERIES BONDS. THE COUNTY CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE 2007 SERIES BONDS RECEIVED BY DTC TO DTC PARTICIPANTS OR THAT THE PARTICIPANTS OR OTHERS WILL DISTRIBUTE PAYMENTS WITH RESPECT TO THE 2007 SERIES BONDS RECEIVED TO THE BENEFICIAL OWNERS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE COUNTY IS NOT RESPONSIBLE OR LIABLE FOR THE FAILURE OF DTC OR ANY PARTICIPANT TO MAKE ANY PAYMENT WITH RESPECT TO THE 2007 SERIES BONDS OR AN ERROR OR DELAY RELATING THERETO. 200-06037\pos-5 H-3 APPENDIX I SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY 200-06037\pos-5 I-1 APPENDIX J FORM OF DELAYED DELIVERY CONTRACT 2007 Citigroup Global Markets Inc. [Address] Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "2007 Series B Bonds") Ladies and Gentlemen: The undersigned (the "Purchaser").hereby agrees to purchase from Citigroup Global Markets Inc. ("Citigroup"), when, as, and if issued and delivered to Citigroup by the County of Contra Costa Public Financing Authority(the"Authority")and Citigroup agrees to sell to the Purchaser. Par Amount Maturity Date Interest Rate CUSIP Number Yield in aggregate principal amount of the above-referenced 2007 Series B Bonds offered by the Authority under the Preliminary Official Statement dated , 2007 and the Official Statement dated 2007 (the "Official Statement"), receipt and review of copies of which (including without limitation the sections entitled "FORWARD DELIVERY OF THE 2007 SERIES B BONDS" therein) is hereby acknowledged, at a purchase price (plus accrued interest, if any, from the date of initial delivery of the 2007 Series B Bonds),at the interest rates, principal amounts, and maturity dates shown above, and on the further terms and conditions set forth in this Delayed Delivery Contract. The Purchaser hereby purchases and agrees to accept delivery of such 2007 Series B Bonds from Citigroup on , 2007 (the "Settlement Date"). Payment for the 2007 Series B Bonds which the Purchaser has agreed to purchase on the Settlement Date shall be made to Citigroup or its order on the Settlement Date upon delivery to the Purchaser of the 2007 Series B Bonds then to be purchased by the Purchaser through the book-entry system of The Depository Trust Company. Upon issuance by the Authority of the 2007 Series B Bonds and purchase thereof by Citigroup, the obligation of the Purchaser to take delivery hereunder shall be unconditional except in the event that between the date of this Delayed Delivery Contract and the Settlement Date, (a) as a result of any legislation, regulation, ruling, order, release, court decision or judgment or action by the U.S.Department 200-06037\pos-5 J-1 of the Treasury, the Internal Revenue Service, or the Securities and Exchange Commission either issued, effective, adopted or proposed, (i) Bond Counsel cannot issue an opinion substantially in the form and to the effect set forth in APPENDIX F to the Official Statement or to the effect that(1)the interest on the 2007 Series B Bonds is (x) not includable in the gross income of the holders thereof for federal income tax purpose by virtue of Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") (or the comparable provisions of any successor federal income tax laws) and (y) not subject to personal income taxes imposed by the State, or (2) to the extent such opinion cannot be rendered under clause (1).above, and notwithstanding a change in law from that existing on the date of closing which affects the treatment, for tax purposes, at settlement the interest on the 2007 Series B Bonds is not subject to (x) any currently imposed federal income tax and (y) personal income taxes imposed by the State, or (ii) the offering or sale of the 2007 Series B Bonds would be in violation of any provision of the Securities Act of 1933, as amended (the "1933 Act"), the Securities and Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended, or the offering or sale of the 2007 Series B Bonds would be subject to registration under the 1933 Act or similar federal law; (b) if for any other reason, Bond Counsel is not able to render its opinion substantially in the form attached as APPENDIX F to the Official Statement; (c) the occurrence of an event of default, technical or otherwise, under the Trust Agreement, the Facility Lease or the Site Lease; (d) the Bond Insurer fails to issue its financial guaranty insurance policy with respect to the 2007 Series B Bonds on the Settlement Date; or (e) the 2007 Series B Bonds are not rated by both Moody's Investors Service and Standard&Poor's Ratings Service on the Settlement Date. . The Purchaser represents and warrants that, as of the date of this Delayed Delivery Contract, the Purchaser is not prohibited from purchasing the 2007 Series B Bonds hereby agreed to be purchased by it under the laws of the jurisdiction to which the Purchaser is subject. This Delayed Delivery Contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party without the written consent of the other. The Purchaser acknowledges that Citigroup is entering into an agreement with the Authority to purchase the 2007 Series B Bonds in reliance in part on the performance by the Purchaser of its obligations hereunder. The Purchase agrees that it will at all times satisfy the minimum initial and maintenance margin requirements of Regulation T of the Board of Governors of the Federal Reserve System, Rule 431 of the New York Governors of the Federal Reserve System, Rule 431 of the New York Stock Exchange, Inc., and any other margin regulations applicable to Citigroup. This Delayed Delivery Contract may be executed by either of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. It is understood that the acceptance by Citigroup of any Delayed Delivery Contract(including this one) is in Citigroup' sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this Delayed Delivery Contract is acceptable to Citigroup, it is requested that Citigroup sign the form.of acceptance below and mail or deliver one of the counterparts hereof to the Purchaser at its address set forth below. This will become a binding contract between Citigroup and the Purchaser when such counterpart is so mailed or delivered by Citigroup. This Delayed Delivery Contract does not constitute a customer confirmation pursuant to Rule G-15 of the Municipal Securities Rulemaking Board. The Authority shall be deemed a third party beneficiary of this Delayed Delivery Contract. 200-060371pos-5 J-2 This Delayed Delivery Contract shall be construed and administered under the laws of the State of New York. Purchaser Address Telephone By: Name: Title: Accepted: CITIGROUP GLOBAL MARKETS INC. Name: Title: 4 200-06037\pos-5 J-3 L&J DRAFT 1/31/07 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of , 2007, is executed and delivered by the COUNTY OF CONTRA COSTA, CALIFORNIA (the "County"), and The Bank of New York Trust Company, N.A., as successor trustee (the "Trustee") in connection with the issuance by the County of Contra Costa Public Financing Authority (the "Authority") of$ Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A and $ Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (collectively, the `Bonds"). The Bonds are being issued pursuant to a Trust Agreement dated as of February 1, 1999, as supplemented by a First Supplemental Trust Agreement dated as of January 1, 2001, a Second Supplemental Trust Agreement dated as of May 1, 2001, a Third Supplemental Trust Agreement dated as of June 1, 2002, a Fourth Supplemental Trust Agreement dated as of July 1, 2002, a Sixth Supplemental Trust Agreement dated as of March 1, 2007 and a Seventh Supplemental Trust Agreement dated as of March 1, 2007 (collectively, the "Trust Agreement"), between the Authority and the Trustee. Pursuant to the Facility Lease dated as of February 1, 1999, as amended by the First Amendment to Facility Lease dated as of January 1, 2001, the Second Amendment to Facility Lease dated as of May 1, 2001, the Third Amendment to Facility Lease dated as of June 1, 2002, the Fourth Amendment to Facility Lease dated as of July 1, 2002 and the Sixth Amendment to Facility Lease dated as of March 1, 2007 (collectively, the "Facility Lease"), the County has covenanted to comply with its obligations hereunder and to assume all obligations for Continuing Disclosure with respect to the Bonds. The County and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the County, the Trustee and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the County pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning the ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Disclosure Representative" shall mean the County Administrator,Director, Capital Facilities and Debt Management or his or her designee, or such other officer or employee as the County shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean the County, or any successor Dissemination Agent, which may be designated in writing by the County and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. 06037\cda-1 "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories approved by the Securities and Exchange Commission as of the date of this Agreement are set forth at the following website: http://www.sec.gov/consumer/nrmsir.htm. "Participating Underwriters" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository"shall mean each National Repository and the State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designated by the State as the state repository for the purpose of the Rule-and recognized as such by the Securities and Exchange Commission. As of the date of this Agreement,there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The County shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the County's fiscal year(presently June 30), commencing with the report for the 2006-07 Fiscal Year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the County may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the County's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(f). (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report. to Repositories, the County shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent); provided, however, that the County may distribute the Annual Report itself after providing written notice to the Trustee and the Dissemination Agent. If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the County to determine if the County is in compliance with the first sentence of this subsection(b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to each Repository, the Municipal Securities Rulemaking Board and the State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) to the extent the County has provided the Annual Report to the Dissemination Agent, file a report with the County and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure 06037\cda-1 2. Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The County's Annual Report. shall contain or include by reference the following: 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" (report changes in "— Debt Service Schedule"); (b) APPENDIX 13--"COUNTY FINANCIAL INFORMATION—Recent County General Fund Budgets"(update Table B-1 "COUNTY OF CONTRA COSTA GENERAL FUND BUDGET"); (c) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Ad Valorem Property Taxes" (update Table B-2 "COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATION AND AD VALOREM PROPERTY TAXATION"); (d) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Accounting Policies, Reports and Audits" (update Table B-5 "COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES"); (e) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Pension Plan" (update Table B-12 "CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION SCHEDULE OF FUNDING PROGRESS"); (f) APPENDIX B—"COUNTY FINANCIAL INFORMATION—Long Term Obligations" (update Table B-23—"CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND PENSION OBLIGATION BONDS"). Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the County or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The County shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of.this Section 5 and to the extent applicable, the County shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. principal and interest payment delinquencies; 06037\cda-1 3 2. non-payment related defaults; 3. modifications to rights of Holders of Bonds; 4. optional, contingent or unscheduled bond calls; 5. defeasances; 6. rating changes; 7. adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds; 8. unscheduled draws on the debt service reserves reflecting financial difficulties; 9. unscheduled draws on credit enhancements reflecting financial difficulties; 10. substitution of credit or liquidity providers, or their failure to perform; and 11. release, substitution or sale of property securing repayment of the Bonds. (b) The Trustee shall, promptly upon obtaining actual knowledge at its principal corporate trust office as specified in Section 12 hereof of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the County promptly notify the Trustee in writing whether or not to report the event pursuant to subsection (f); provided that, failure by the Trustee to so notify the Disclosure Representative and make such request shall not relieve the County of its duty to report Listed Events as required by this Section 5. (c) Whenever the County obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the County shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the County has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the County shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence pursuant to subsection(f). (e) If in response to a request under subsection (b), the County determines that the Listed Event would not be material under applicable federal securities laws, the County shall so notify the Trustee in writing and instruct the Trustee not to report the occurrence. (f) If the Trustee has been instructed by the County to report the occurrence of a Listed Event, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Trust Agreement. (g) The Trustee may conclusively rely on an opinion of counsel that the County's instructions to the Trustee under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of Reporting Obligation. Each party's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the County shall give notice of such termination in the same manner as for a Listed Event under Section 5(0. SECTION 7. Dissemination Agent. The County may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement,.and may discharge any such Agent, with or without appointing a .successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the County pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the County shall be the Dissemination Agent. 06037\cda-I 4 SECTION 8. Amendment; Waiver. Notwithstanding any other.provision of this Disclosure Agreement, the County, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the County provided such amendment does not impose any greater duties, nor risk of liability, on the Trustee or the Dissemination Agent, as the case may be), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 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; and (c) The amendment or waiver either(i) is approved by the Holders of the Bonds in the same manner as provided in the Trust Agreement for amendments to the Trust Agreement with the consent of Holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement,the County shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the County. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the County from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the County chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the County shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the County, the Trustee or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee(and, at the written request of any Participating Underwriters or the Holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but only to the extent indemnified to its satisfaction), or any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County, the Trustee or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the 06037\cda-1 5 County, the Trustee and the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties Immunities and Liabilities of Trustee and Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the County, to the extent permitted by law, agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or Trustee's respective negligence or willful misconduct. The Trustee shall be paid reasonable compensation for the services provided hereunder. The obligations of the County under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the County: County of Contra Costa County Administrator's Office 651 Pine Street, 6`h Floor Martinez, CA 94553-0063 Attention: Lisa Driscoll, Senior Deputy County Administrator and Debt Manager Telephone: (925) 335-1093 Fax: (925) 646-1228 If to the Trustee_: The Bank of New York Trust Company,N.A. 550 Kearny Street, Suite 600 San Francisco, California 94108 Attention: Corporate Trust Department Telephone: (415) 263-2416 Fax: (415) 399-1647 Any person may, by'written notice to the other persons listed above, designate a different address or telephone number(s)to which subsequent notices or communications should be sent. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the County, the Trustee, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds,and shall create no rights in any other person or entity. 06037\cda-I 6 SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. COUNTY OF CONTRA COSTA By Chair of the Board of Supervisors County of Contra Costa, State of California Attest: John B. Cullen, Clerk of the Board of Supervisors and County Administrator 0 By Chief Clerk of the Board of Supervisors THE BANK OF NEW YORK TRUST COMPANY,N.A., as Trustee By Authorized Officer 06037\cda-1 7 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: County of Contra Costa Name of Issue: County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds(Refunding and Various Capital Projects), 2007 Series A; and County of Contra Costa Public Facilities Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B Date of Issuance: , 2007 NOTICE IS HEREBY GIVEN that the County of Contra Costa (the "County") has not provided an Annual Report with respect to the above-named Bonds as required by Section 38.07 of the Sixth Amendment to Facility Lease, dated as of March 1, 2007, by and between the County of Contra Costa Public Financing Authority and the County. The County anticipates that the Annual Report will be filed by Dated: THE BANK OF NEW YORK TRUST COMPANY,N.A., on behalf of COUNTY OF CONTRA COSTA By: cc: County of Contra Costa . 06037\cda-1 A-1 Nixon Peabody Draft#2 1/26/07 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (REFUNDING AND VARIOUS CAPITAL PROJECTS) 2007 SERIES A BOND PURCHASE CONTRACT 52007 County of Contra Costa Public Financing Authority County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 County of Contra Costa County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 Ladies and Gentlemen: Citigroup Global Markets Inc., acting on behalf of itself and as representative (the "Representative") of Banc of America Securities LLC (collectively, the"Underwriters"), hereby offers to enter into this Bond Purchase Contract (the "Purchase Contract") with the County of Contra Costa Public Financing Authority (the "Authority") and the County of Contra Costa (the "County"), which, upon acceptance will be binding upon the Authority, the County and the Underwriters. This offer is made subject, to acceptance of this Purchase Contract by the Authority and the County on or before 11:59 p.m. California time on the date hereof, and, if not accepted;-will be subject to-withdrawal by the Underwriters upon written notice delivered-to- -- the Authority and the County at any time prior to such acceptance. Any authority, discretion or other power conferred upon the Underwriters by this Purchase Contract may be exercised by the Representative alone. Capitalized terms used in this Purchase Contract and not otherwise defined herein shall have the meanings given to such terms as set forth in the Trust Agreement(defined below). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations set forth in this Purchase Contract, the Underwriters agree to purchase from the Authority, and the Authority agrees to sell and deliver to the Underwriters,.all (but not less 10242938.3 than all) of the $ aggregate principal amount of the County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "2007 Series A Bonds"). The purchase price for the 2007 Series A Bonds shall be $ (representing the aggregate principal amount of the 2007 Series A Bonds, plus/less a [net] original issue premium/discount in the amount of$ , less an Underwriters' discount in the amount of From the purchase price for the 2007 Series A Bonds, the Underwriters shall withhold and hereby agree to wire on the Closing Date the financial guaranty insurance policy premium in the amount of$ in immediately-available funds to MBIA Insurance Corporation(the"Insurer"). Section 2._. .._The.200.7 Series A Bonds. The 2007 Series A Bonds.are being issued pursuant to the Constitution and the laws of the State of California (the "State"), resolutions adopted by the Authority and the County and a Trust Agreement, dated as of February 1, 1999 (the"Master Trust Agreement"), as previously supplemented, and as further supplemented by the Sixth Supplemental Trust Agreement, dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement" and collectively with the Master Trust Agreement, the "Trust Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the"Trustee"). The 2007 Series A Bonds shall be dated their date of delivery and shall have the maturities and bear interest at the rates per annum and have the yields or be sold at the prices all as set forth on Schedule I attached hereto. The proceeds of the 2007 Series A Bonds will be applied to: (i) finance or refinance the construction, acquisition, improvement and installation of various capital projects (collectively, the "2007 Series A Project"); (ii) refund certain lease revenue bonds (the "Prior Bonds") and certain certificates of participation (the "1997 Certificates" and collectively with the Prior Bonds, the "Defeased Obligations"); (iii) fund a deposit into the Reserve Fund; and (iv) pay certain costs associated with the issuance of the 2007 Series A Bonds. In connection with the refunding and defeasing of the Defeased Obligations, a portion of the proceeds of the 2007 Series A Bonds will be deposited into separate escrow funds (collectively, the "Escrow Funds") established by the Escrow Agreement, dated as of March 1, 2007 (the "Prior Bonds Escrow Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as escrow agent (the "Escrow Agent") relating to the refunding of the Prior Bonds and the Escrow Agreement, dated as of March 1, 2007 (the "1997 Certificates Escrow Agreement" and collectively with the Prior Bonds Escrow Agreement, the "Escrow Agreements"), [between/among] the County [, the Contra Costa Public Facilities Corporation] and the Escrow _.._.._..... - __ .. Agent relating to the refunding-of the 1997-Certificates:- - - _._.. .___ ._.__ _.. .. .. .. .. ..._ .... Simultaneously with the sale of the 2007 Series A Bonds, the Authority will sell its Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "2007 Series B Bonds") pursuant to a separate forward delivery bond purchase contract. The 2007 Series A Bonds shall be payable and subject to redemption as provided in the Trust Agreement and as set forth in the Official Statement (defined below). The 2007 Series A Bonds are limited obligations of the Authority payable solely from certain revenues of the Authority, consisting primarily of Base Rental Payments to be made by the County to the Authority pursuant to a Facility Lease(Various Capital Projects), dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Facility Lease, dated as of March 1, 2007 (the"Sixth Amendment to Facility Lease" and collectively with the Master Facility Lease, the "Facility Lease"), between - 2 - 10242938.3 the Authority and the County. The Authority and the County have entered into a Master Site Lease, dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (the "Sixth Amendment to Master Site Lease" and collectively with the Master Site Lease, the "Site Lease"), pursuant to which the County has leased the Facilities to the Authority. Pursuant to the Trust Agreement,the Authority has .assigned to the Trustee certain of its interests in the Facility Lease, including the right to receive Base Rental Payments. The payment of principal of and interest on the 2007 Series A Bonds when due will be guaranteed under a financial guaranty insurance policy (the "2007 Series A Bond Insurance .. Policy") to be issued by the-Insurer simultaneously with.the delivery of the 2007 Series A Bonds. . Section 3. Delivery of the Official Statement and Other Documents. The Authority has delivered to the Underwriters a Preliminary Official Statement, relating to the 2007 Series A Bonds dated , 2007, including the cover page and appendices thereto (the "Preliminary Official Statement") and will deliver to the Underwriters within seven Business Days of the date hereof and not later than three Business Days prior to the Closing Date (as defined below), such number of copies of the final Official Statement dated the date hereof relating to the 2007 Series A Bonds, including all information which was permitted to be omitted from the Preliminary Official. Statement by Securities and Exchange Commission Rule I5c2-12 ("Rule 15c2-12") and any amendments or supplements to such official statement as have been approved by the Authority and the County, in consultation with the Underwriters (collectively, the "Official Statement'), as the Underwriters may reasonably request in order for the Underwriters to comply with the rules of the Municipal Securities Rulemaking Board (the "MSRB") and paragraph (b)(4).of Rule 15c2-12. Prior to the date hereof, the Authority delivered to the Representative a certificate pursuant to Rule 15c2-12(b)(1), relating to the Preliminary Official Statement, in substantially the form attached hereto as Exhibit A. The Authority consents to the use by the Underwriters prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the 2007 Series A Bonds. The Underwriters agree that from the time the Official Statement becomes available until the earlier of. (i) 90 days from the End of the Underwriting Period (as defined below), or(ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository,but in no case less than 25 days following the End of the Underwriting Period, each Underwriter shall send, no later than the next business day - ---- following a request for a-copy-thereof,by-first class-snail-or-other equally,prompt means,to-any - Potential Customer, as defined in the Rule, on request, a single copy of the Official Statement. The Representative agrees to: (1) provide the .Authority and the County with final pricing information on the 2007 Series A Bonds, which shall include, by maturity, the orders, net designations, investor and allocations on a timely basis prior to Closing Date, (2) promptly file a copy of the Official Statement, including any supplements prepared by the Authority and the County with a nationally recognized municipal securities information repository, (3) promptly notify the Authority and the County of the end of the underwriting period (as such term is defined in Rule 15c2-12), and (4) take any and all other actions necessary to comply with applicable Securities and Exchange Commission rules and MSRB rules governing the offering, sale and delivery of the 2007 Series A Bonds to ultimate purchasers. - 3 - 10242938.3 As used in this Purchase Contract, the term "End of the Underwriting Period" for the 2007 Series A Bonds shall mean the earlier of(i) the Closing Date (unless the Authority and the County shall have been notified in writing to the contrary by the Representative on or prior to the Closing Date) or(ii) the date on which the End of the Underwriting Period for the 2007 Series A Bonds has occurred under Rule 15c2-12, provided, however, that the Authority and the County may treat as the End of the Underwriting Period for the 2007 Series A Bonds the date specified as such in a notice from the Representative stating the date which is the End of the Underwriting Period. The County will undertake, pursuant to a Continuing Disclosure Agreement, dated as of the..Closing-Date-(the".Continuing Disclosure.Agreement'-' .),.-between the_County-and--the..Trustee,._. to provide certain annual financial information and notices of the occurrence of certain events, if material. A form of the Continuing Disclosure Agreement will be set forth in the Official Statement. The Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the Prior Bonds Escrow Agreement and the 2007 Series A Bonds shall be collectively referred to herein as the "Authority Legal Documents." The Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the 1997 Certificates Escrow Agreement and the Continuing Disclosure Agreement shall be collectively referred to herein as the "County Legal Documents." The Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the Escrow Agreements, the Continuing Disclosure Agreement and the 2007 Series A Bonds shall be collectively referred to herein as the"Legal Documents." Section 4. Public Offering. It shall be a condition to the obligation of the Underwriters to purchase, accept delivery of, and pay for the 2007 Series A Bonds that the entire $ principal amount of the 2007 Series A Bonds authorized by the Trust Agreement shall be delivered by the Authority to the Underwriters on the date of Closing (defined below). The Underwriters agree to make a bona fide public offering of all of the 2007 Series A Bonds, at not in excess of the initial public offering yields or prices set forth on Schedule I attached hereto; provided, however, that the 2007 Series A Bonds may be offered and sold to certain dealers (including dealers depositing the 2007 Series A Bonds into investment trusts) at prices lower than such initial public offering prices or yields. The Underwriters reserve the right to make - --concessions-.-to- dealer-s---and--to change--such-initial---public-offering -prices--or-- -yields--.as---the-- - -- ---� Representative reasonably deems necessary in connection with the marketing of the 2007 Series A Bonds. The Representative also reserves the right to: (i) over-allot or effect transactions that stabilize or maintain the market price of the 2007 Series A Bonds at a level above that which might otherwise prevail in the open market and (ii) discontinue such stabilizing, if commenced, at any time. Following the initial public offering of the 2007 Series A Bonds, the offering prices may be changed from time to time by the Underwriters. Section 5. Representations, Warranties and Agreements of the Authority. The Authority represents and warrants to the Underwriters that: -4- 10242938.3 (a) The Authority has taken official action by resolution (the "Authority Resolution") adopted by a majority of the members of the Authority Board of Directors at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, on , 2007, all action necessary to be taken by it for the execution and delivery of the Authority Legal Documents to be executed by it and this Purchase Contract and for the due performance of the Authority Legal Documents and this Purchase Contract, and to execute and deliver the Official Statement, and any and all action as may be required on the part of the Authority to carry out, give effect to and consummate the transactions contemplated hereby and thereby has been taken, and the Authority Resolution has not been modified or amended and is in full force and effect; (b) The Authority is a joint exercise of powers agency duly organized and validly existing pursuant to the Constitution and laws of the State with the full power and authority to adopt the Authority Resolution, to issue the 2007 Series A Bonds for the purposes described in the Official Statement and to execute and deliver the Official Statement and enter into and perform its duties under the Authority Legal Documents and this Purchase Contract, and to consummate the transactions contemplated hereby and thereby; (c) This Purchase Contract, the Master Trust Agreement, the Master Facility Lease and the Master Site Lease constitute, and upon their issuance and delivery, the Authority Legal Documents to be executed by it will each constitute,--legal, valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or creditors' rights generally, and the execution and delivery of the Authority Legal Documents to be executed by it and this Purchase Contract, and compliance with the provisions of the Authority Legal Documents and the Purchase Contract will not conflict with or constitute a breach of or a default under any applicable law or administrative regulation of the State or the United States, or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor will any such execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such California or federal law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the Authority Legal Documents; -- - --------- he Authorit is not-in-material breach-of-or-in material default-under-any existing law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time. or the giving of notice or both, would constitute a material default under any such instrument; (e) At the time of the Authority's acceptance hereof and at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period, the Official Statement (excluding therefrom information relating to DTC, the book-entry system, the 2007 Series A Bond Insurance Policy and the Insurer, as to which no representation is made) does not and will not contain any untrue statement of a material fact or omit to state a material - 5 - 10242938.3 fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (f) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any California or federal court, public board or body pending or, to the best knowledge of the Authority after due inquiry, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Authority, or the titles of its members or officers, (ii) enjoin or restrain the issuance, sale or delivery of the 2007 Series A Bonds or the receipt of Base Rental Payments under the Facility Lease or challenging, directly or indirectly, the location of the Facilities, or the proceedings to _. _.---__---_lease.the-Facilities..-from.the-Authority, (iii) in any.-way question or affect-any-authority..for the issuance of the 2007 Series A Bonds, or the validity or enforceability of the Authority Legal Documents or this Purchase Contract, (iv) in any way question or affect this Purchase Contract, the Authority Legal Documents or the transactions contemplated by this Purchase Contract, the Official Statement, the documents referred to in the Official Statement, or any other agreement or instrument to which the Authority is a party relating to the issuance of the 2007 Series A Bonds, or (v) in any way question or affect the federal tax-exempt status of the interest on the 2007 Series A Bonds; (g) If, between the date hereof and the date which is 25 days after the End of the Underwriting Period, any event-occurs, or facts or -conditions-become known-of which the Authority has knowledge and which in the reasonable opinion of Orrick, Herrington & Sutcliffe LLP, San Francisco, California ("Bond Counsel"), Lofton&Jennings, San Francisco, California ("Disclosure Counsel"), Nixon Peabody LLP, San Francisco, California ("Underwriters' Counsel"), or counsel to the County or the Authority, might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, the Authority will notify the Underwriters, and, if in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will forthwith prepare and furnish to the Underwriters (at the expense of the Authority and the County) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Representative) 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-­ under ircumstances--under which they were made, not misleading. If such notification shall occur subsequent to the Closing, the Authority shall forthwith provide to the Underwriters such certificates as the Underwriters may reasonably deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the 2007 Series A Bonds, the Authority will furnish such information with respect to itself as the Representative may from time to time reasonably request; (h) If the information contained in the Official Statement is amended or supplemented pursuant to Section 5(g), at the time of such supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times - 6- 10242938.3 subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period for the 2007 Series A Bonds, the portions of the Official Statement so supplemented or amended, including any financial and statistical data contained therein, (excluding therefrom information relating to DTC, the book-entry system, the 2007 Series A Bond Insurance Policy and the Insurer), will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (i) Except as may be required under Blue Sky or other securities laws of any state, _..__..there_is_no consent,.approval,.._authorization_or..other__order..of,...or..filing or registration with,-or-.---. certification by, any regulatory authority having jurisdiction over the Authority required for the execution and delivery of this Purchase Contract or the execution, delivery and sale of the 2007 Series A Bonds or the consummation by the Authority of the other transactions contemplated by the Official Statement, this Purchase Contract, or the Authority Legal Documents; 0) The 2007 Series A Bonds will be issued in accordance with the Trust Agreement, and the 2007 Series A Bonds and the Trust Agreement will conform in all material respects to the descriptions thereof contained in the Official Statement under the captions "INTRODUCTION," "PLAN OF FINANCE," "THE 2007 SERIES BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," and APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" to the Official Statement; and the Continuing Disclosure Agreement conforms to the summary thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE" and in APPENDDC G—"PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT" to the Official Statement; (k) The 2007 Series A Bonds will be validly issued and outstanding obligations of the Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will provide, for the benefit of the holders from time to time of the 2007 Series A Bonds, a legally valid and binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the funds and accounts pledged under the Trust Agreement, subject only to the provisions of the Trust Agreement permitting the application thereof on the terms and conditions set forth in the Trust Agreement; (1) The Authority shall apply the proceeds of the 2007 Series A Bonds, and earnings _ ...._.._..._.._....._...-thereon,.in.accordancewith_.the-Trust Agreement.and.as.described-in_the.Official.S.tatement;_ ...._...._... _._._...._.._..... ... .__ (m) The Authority is not presently contemplating taking any action which, to its knowledge, would result in a.material adverse change in the market price or marketability of the 2007 Series A Bonds; (n) The Authority is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding; - 7 - 10242938.3 (o) Any certificate signed by an authorized officer of the Authority delivered to the Underwriters shall be deemed a representation and warranty by the Authority to the Underwriters as to the statements made therein; and (p) At the Closing Date, each of the representations and certifications of the Authority in the Authority Legal Documents to be executed by it and in this Purchase Contract is and will be true, accurate and complete. Section 6. Representations, Warranties and Agreements of the County. The County represents and warrants to the Underwriters that: (a) The County has taken official action by Resolution No. (the County Resolution") adopted by a majority of the members of the County Board of Supervisors at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, on , 2007, all action necessary to be taken by it for the execution and delivery of the County Legal Documents to be executed by it and this Purchase Contract and for the due performance of the County Legal Documents and this Purchase Contract, and to execute and deliver the Official Statement, and any and all action as may be required on the part of the County to carry out, give effect to and consummate the transactions contemplated hereby and thereby has been taken, and the County Resolution'has not been modified or amended and is in full force and effect; (b) The County is a political subdivision, duly organized and existing under the laws of the Constitution and the State and has all necessary power and authority to adopt the County Resolution, to enter into and perform its duties under the County Legal Documents and this Purchase Contract, and to execute and deliver the Official Statement, and to consummate the transactions contemplated hereby and thereby; (c) This Purchase Contract, the Master Facility Lease and the Master Site Lease constitute, and upon their issuance and delivery, the County Legal Documents to be executed by it will each constitute, legal, valid and binding obligations of the County enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or creditors' rights generally; and the execution and delivery of the County Legal Documents to be executed by it and this Purchase Contract; and compliance with the provisions of the County Legal Documents and this Purchase Contract will not conflict with or constitute.,breach.of or a default under any applicable,jaw or.administrative_regulation of.the State or the United States, or any applicable judgment or decree or any lease, loan agreement, indenture,bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject, nor will any such execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the County under the terms of any such California or federal law, administrative regulation, judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the County Legal Documents; (d) The County is not in material breach of or in material default under any existing law or administrative regulation of the State or the United States or any applicable judgment or - 8 - 10242938.3 decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute a material default under any such instrument; (e) At the time of the County's acceptance hereof and at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period, the Official Statement (excluding therefrom information relating to DTC, the book-entry system, the 2007 Series A Bond Insurance Policy and the Insurer, as to which no representation is made) does not and will not contain any untrue statement of a material fact or omit to state a material fact required to-be-stated therein-or.necessary-to_make-the statements_therein, in-the.light of the_____.________..__.__.._. circumstances under which they were made,not misleading; (f) There is no action, suit, proceeding or investigation before or by any court, public board or body pending or, to the best knowledge of the County after due inquiry, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the County, or the titles of its members or officers, (ii) enjoin or restrain the issuance, sale and delivery of the 2007 Series A Bonds or the payment of Base Rental Payments under the Facility Lease or challenging, directly or indirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Authority, (iii) in any way question or affect any authority for the issuance of the 2007 Series A Bonds, or the validity- or enforceability of the 2007 Series A Bonds, the County Legal Documents or this Purchase Contract, (iv) in any way question or affect this Purchase Contract, the County Legal Documents or the transactions contemplated by this Purchase Contract, the Official Statement, the documents referred to in the Official Statement, or any other agreement or instrument to which the County is a party relating to the issuance of the 2007 Series A Bonds or (v) in any way question or affect the federal tax-exempt status of the interest on the 2007 Series A Bonds; (g) If, between the date hereof and the date which is 25 days after the End of the Underwriting Period, any event occurs, or facts or conditions become known of which the County has knowledge and which in the reasonable opinion of Bond Counsel, Disclosure Counsel, Underwriters' Counsel, or counsel to the County or the Authority, might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the -circumstances--under which---they-were made;--not...misleading,--the---County--will--.notify--the-- ---- Underwriters, and, if in the opinion of the Representative, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the County will forthwith prepare and furnish to the Underwriters (at the expense of the County and the Authority) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Representative) 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 under which they were made, not misleading. If such notification shall occur subsequent to the.Closing, the County shall forthwith provide to the Underwriters such certificates as the Underwriters may reasonably deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. For the purposes of this - 9 - 10242938.3 subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the 2007 Series A Bonds, the County will furnish such information with respect to itself as the Representative may from time to time reasonably request; (h) If the information. contained in the Official Statement is amended or supplemented pursuant to Section 6(g), at the time of such supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period for the 2007 Series A Bonds, the portions of the Official Statement so supplemented or amended, including any financial and statistical data contained therein, _..._ _._.___.._(excluding._ther-efrom .information.relating to-DTC,._the book-entry.-system,_-the_2007_.Series A. Bond Insurance Policy and the Insurer), will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (i) The County will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may request in order to qualify the 2007 Series A Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate, and will use its best efforts to continue such qualification in effect so long as required for distribution of the 2007 Series A Bonds, and consents to and ratifies the use of the Official Statement by the Underwriters in obtaining such qualifications; provided, however, that in no event shall the County be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject; (j) Except as may be required under Blue Sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the County required for the execution and delivery of this Purchase Contract or the execution, delivery and sale of the 2007 Series A Bonds or the consummation by the County of the other transactions contemplated by the Official Statement, this Purchase Contract, or the County Legal Documents; (k) The 2007 Series A Bonds will be issued in accordance with the Trust Agreement, and the 2007 Series A Bonds and the Trust Agreement will conform in all material respects to ............._._.._...._the.descriptions-thereof.contained_in.the.Official-Statement.under,the.-captions..`_`INTRODUCTION,.'..'......_.._.____...._..... ..._ "PLAN OF FINANCE," "THE 2007 SERIES BONDS," "SECURPTY AND SOURCES OF PAYMENT FOR THE BONDS," and APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" to the Official Statement; and the Continuing Disclosure Agreement conforms to the summary thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE" and in APPENDIX G—"PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT" to the Official Statement; (1) The 2007 Series A Bonds will be validly issued and outstanding obligations of the Authority, entitled to the benefits of the Trust Agreement, and the Trust Agreement will provide, for the benefit of the holders from time to time of the 2007 Series A Bonds, a legally valid and binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the funds - 10- ]0242938.3 and accounts pledged under the Trust Agreement, subject only to the provisions of the Trust Agreement permitting the application thereof on the terms and conditions set forth in the Trust Agreement; (m) Except as disclosed in the Official Statement, there has not been any materially adverse change in the financial condition of the County since June 30, 2006 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. The financial statements of, and other financial information regarding the County in the Official Statement fairly present the financial position and results of the operations of the County as of the dates and for the periods therein set forth (i)the audited ....financial.statements_have.._been_-prepared__in.accordance_with_the_generally-accepted-.accounting ..__._____. .______ principles consistently applied, and (ii) the other financial information in the Official Statement has been determined on a basis substantially consistent with that of the County's audited financial statements included in the Official Statement; (n) The County is not presently contemplating taking any action which, to its knowledge, would result in a material adverse change in the market price or marketability of the 2007 Series A Bonds; . (o) The County is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money_ or any agreement under which any _ such obligation is or was outstanding; (p) Any certificate signed by any official of the County and delivered to the Underwriters pursuant to this Purchase Contract or any document contemplated hereby shall be deemed a representation and warranty by the County to the Underwriters as to the statements made therein and that such officer shall have been duly authorized to execute the same; (q) At the Closing Date, each of the representations and certifications of the County in the County Legal Documents to be executed by it and in this Purchase Contract is and will be true, accurate and complete; and (r) The County has never failed to comply with any prior continuing disclosure undertakings under Rule 15c2-12. Section 7. The Closing. At 8:00 A.M., California time, on 2007 (the "Closing Date"), or on such earlier or later date as may be agreed upon by the Representative the Authority and the County, the Authority and the County will deliver or cause to be delivered to the Representative the 2007 Series A Bonds in definitive form, duly executed, together with the other documents hereinafter mentioned, and, subject to the terms and conditions of this Purchase Contract, the Representative will accept delivery of the 2007 Series A Bonds through the facilities of The Depository Trust Company, New York, New York ("DTC") by initial deposit with the Trustee (in care of DTC) through DTC's F.A.S.T. procedures, or such other place as shall have been mutually agreed upon by the Underwriters, the Authority and the County, and pay the purchase price of the 2007 Series A Bonds as set forth in Section 1 of this Purchase Contract by wire transfer in immediately available funds to the order of the Trustee (or by such other form of payment in immediately available funds as shall have been mutually - 11 - 10242938.3 agreed upon by the Authority, the County and the Underwriters) (such delivery and payment being herein referred to as the "Closing"). The Closing shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, San Francisco, California or at such other location as shall be mutually agreed upon by the Issuer,the County and the Representative. The 2007 Series A Bonds in definitive form shall be evidenced by typewritten, lithographed or word-processed Bonds in authorized denominations. The 2007 Series A Bonds will be made available for inspection by the Trustee not less than one business day prior to the Closing. The 2007 Series A Bonds shall be issued in fully registered form and shall be prepared and delivered as one Bond for each maturity registered in the name of Cede & Co., as nominee DTC._-.It_is.anticipated that-CUSIP-identification numbers.will_be_inserted-on-the 2007 Series______.-_..__ A Bonds, but neither the failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure or refusal by the Underwriters to accept delivery of the 2007 Series A Bonds in accordance with the terms of this Purchase Contract. Section 8. Conditions to the Obligations of the Underwriters. The Underwriters hereby enter into this Purchase Contract in reliance upon the representations and warranties of the Authority and the County contained herein and the representations and warranties to be contained in the documents and instruments to be delivered on the Closing Date and upon the performance by the Authority, the County and the Trustee of their respective obligations both on and-as of the date hereof and as of the Closing Date. - Accordingly, the obligations of the Underwriters under this Purchase Contract to purchase, to accept delivery of and to pay for the 2007 Series A Bonds shall be subject, at the option of the Underwriters, to the accuracy in all material respects of the representations and warranties of the Authority and.the County contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the Authority, the County and the Trustee made in any certificate or document furnished pursuant to the provisions hereof, to the performance by the Authority, the County and the Trustee of their respective obligations to be performed hereunder and under the Legal Documents, at or prior to the Closing Date, and also shall be subject to the following additional conditions: (a) The Underwriters shall receive, within seven.business days after the date hereof and not later than three Business Days prior to the Closing Date, copies of the Official Statement (including all information permitted to have been omitted from the Preliminary Official Statement by the Rule 15c2-12 and any amendments or supplements as have been approved by - ---the Underwriters);-in-such reasonable-quantity as.the-Underwriters-shall.have requested; - - (b) At the Closing, the Legal Documents shall have been duly authorized, executed and delivered by the respective parties thereto, and the Official Statement shall have been duly authorized, executed and.delivered by the Authority and the County, all in substantially the forms heretofore submitted to the Underwriters, with only such changes as shall have been agreed to in writing by the Underwriters, and shall be in full force and effect, and the County Resolution and the Authority Resolution shall each be in full force and effect; (c) At the time of the Closing Date, all necessary action of the County and the Authority relating to the execution and delivery of the 2007 Series A Bonds will have been taken - 12 - ]0242938.3 and will be in full force and effect and will not have been amended, modified or supplemented; and (d) At or prior to the Closing Date, the Underwriters shall have received the following documents, in each case satisfactory in form and substance to the Underwriters: (1) Resolutions and Lezal Documents. The Legal Documents, each duly executed and delivered by the respective parties thereto and a certified copy of the County Resolution and the Authority Resolution; (2) Preliminary and Final Official Statement. The Preliminary Official Statement and the Official Statement, with the Official Statement, including each supplement or amendment, if any, thereto, executed on behalf of the Authority and the County by a duly authorized officer of the Authority; (3) Opinion of Bond Counsel. The approving opinion of Bond Counsel dated the Closing Date, substantially in the form attached as Appendix E to the Official Statement, and a reliance letter with respect thereto addressed to the Underwriters and the Insurer; (4) Supplemental Opinion of Bond Counsel. A supplemental opinion of Bond Counsel, dated the Closing Date and addressed to the Underwriters, to the effect that: (i)this Purchase Contract has been duly executed and delivered by the Authority and (assuming due authorization, execution and delivery by, and validity with respect to, the Underwriters and the County) constitutes a valid and binding agreement of the Issuer subject to (A) bankruptcy or other laws affecting creditors'.rights and (B) the application of equitable principles, (ii) the 2007 Series A Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended (no opinion need be expressed with respect to the 2007 Series A Bond Insurance Policy); and (iii) the statements contained in the Official Statement under the captions "INTRODUCTION," "PLAN OF FINANCE," "THE 2007 SERIES A BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "TAX MATTERS" and contained in APPENDDc D—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS," and APPENDDC E---"PROPOSED FORM OF BOND COUNSEL OPINION" insofar as such statements summarize certain provisions of the Trust Agreement, the Facility Lease, the Site Lease, the 2007 Series A Bonds, and Bond Counsel's opinion concerning certain federal tax matters relating to the 2007 Series A Bonds, are accurate_in..all material respects;._.....,__..__.__.._..._.__.,._____,__._.___ (5) Opinion of County Counsel. An opinion of County Counsel, as counsel to the County, with respect to the 2007 Series A Bonds, dated the Closing Date and addressed to the County and the Underwriters, in substantially the form of Exhibit B; (6) Opinion o Authority Counsel. An opinion of County Counsel, as counsel to the Authority, with respect to the 2007 Series A Bonds, dated the Closing Date and addressed to the Authority and the Underwriters, in substantially the form of Exhibit C; (7) Opinion of Disclosure Counsel. The opinion of Disclosure Counsel, dated the Closing Date and addressed to the Authority, the County and the Underwriters, to the effect that, (i) based upon the information made available to them in the course of their participation in - 13 - 10242938.3 the preparation of the Official Statement and without passing on and without assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to their attention which would cause them to believe that the Official Statement, as of its date or as of the date of their opinion (except for any financial or statistical data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry or The Depository Trust Company, the Insurer or the 2007 Series A Bond Insurance Policy, included therein, or Appendices B, C,D, E, G and H attached thereto, as to which no opinion or view need be expressed), contained or contains any untrue statement of a material fact or omitted or omits to state a material fact - ---- --required--to--be stated therein-or-necessary to--make the--statements--therein,-in--the-light of-the - - circumstances under which they were made,not misleading; (8) Opinion of Underwriters' Counsel. An opinion of Underwriters' Counsel, dated the Closing Date and addressed to the Underwriters, to the effect that, (i) based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without 'assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to the attention of the attorneys rendering legal services in connection with such representation which cause them to believe that the Official Statement, as of its date or as of the Closing Date (except for any financial or statistical data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry or The Depository Trust Company, the Insurer or the 2007 Series A Bond Insurance Policy, included therein, or any of the appendices attached thereto, as to which no opinion or view need be expressed) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) the 2007 Series A Bonds are exempt from registration under the Securities Act of 1933, as amended, (iii)the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended and (iv) assuming the due authorization, execution and delivery of the Continuing Disclosure Agreement by the County and the enforceability thereof, the Continuing Disclosure Agreement satisfies Section (b)(5)(i) of Rule 15c2-12, which requires an undertaking for the benefit of the holders, including beneficial owners, of the 2007 Series A Bonds, to provide certain annual financial information and event notices to various information repositories -atlhe time"andIn-them anner required by the-Rule 15c2=12; _.'. (9) County Bring-Down Certi icate. A certificate,of the County dated the Closing Date and executed by a duly authorized officer of the County to the effect that: (i) The representations and warranties of the County contained in Section 6 hereof are true and correct on and as of the date of Closing as if made on the Closing Date; (ii) The information contained in the Official Statement (including any financial and statistical data contained therein) is true and correct in all material respects and the information in the Official Statement (including any financial and statistical data - 14- 10242938.3 contained therein) does not omit any statement or information which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading; (iii) The County has duly authorized by the County Resolution the execution and delivery of the County Legal Documents to be executed by it and the taking of any and all such action as may be required on the part of the County to carry out, give effect to and consummate the transactions contemplated thereby, and the County Resolution was adopted at a meeting duly noticed and at which a quorum was present, and the County Resolution has not been modified or amended and is in full force --. -and.effect;- ..__.__ ._ ---..--- -.-_-.. _ _-- (iv) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the County that has not been obtained is or will be required for the issuance and delivery of the 2007 Series A Bonds or the consummation by the County of the other transactions contemplated by the County Legal Documents and the Official Statement, except as such may be required for the state securities or blue sky laws; (v) The execution and delivery by the County of the County Legal Documents to be executed by it and compliance with the terms of the. County Legal Documents, will not conflict with, or result in a violation or breach of, or constitute a default under, any lease, indenture, bond, note, resolution or any other agreement or instrument to which the County is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the County or any of its activities or properties; (vi) The County is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject which breach or default would materially adversely affect the ability of the County to perform its obligations under the County Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and (vii) [Except as disclosed in the Official Statement,] there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or, to the best knowledge of the County after due inquiry, threatened, affecting the existence of the County or seeking to prohibit, restrain or enjoin the issuance and delivery of the 2007 Series A Bonds, or in any way contesting or affecting the validity or enforceability of the 2007 Series A Bonds, this Purchase Contract or the County Legal Documents or contesting the powers of the .County to enter into, adopt or perform its obligation under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated hereby and by the Official Statement, or which, in any way, would materially adversely affect the validity of the 2007 Series A Bonds, the County - 15 - 10242938.3 Legal Documents, or any agreement or instrument to which the County is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby and by the Official Statement or the exemption from taxation as set forth herein; (10) Authority Bring-Down Certificate. A certificate of the Authority dated the Closing Date and executed by a duly authorized officer of the Authority to the effect that: (i) The representations and warranties of the Authority contained in Section 5 hereof are true and correct on and as of the date of Closing as if made on the Closing Date; __ (ii) The information contained in the Official Statement(including any financial and statistical data contained therein) is true and correct in all material respects and the information in the Official Statement (including any financial and statistical data contained therein) does not omit any statement or information which is necessary to make the statements and information therein, in the light of the circumstances under which they were made,not misleading; (iii) The Authority has duly authorized by the Authority Resolution the execution and delivery,of the.Authority Legal Documents to. be executed by it and the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and consummate the transactions contemplated thereby, and the Authority Resolution was adopted at a meeting duly noticed and at which a quorum was present, and the Authority Resolution has not been modified or amended and is in full force and effect; (iv) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Authority that has not been obtained is or will be required for the issuance and delivery of the 2007 Series A Bonds or the consummation by the Authority of the other transactions contemplated by the Authority Legal Documents and the Official Statement, except as such may be required for the state securities or blue sky laws; (v) The execution and delivery by the Authority of the Authority Legal Documents to be executed by it and compliance with the terms of the Authority Legal _. _... _. Documents, will not conflict with, or result in a violation or breach of, or constitute a default under, any lease, indenture, bond, note, resolution or any other agreement or instrument to which the Authority is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Authority or any of its activities or properties; (vi) The Authority is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject which breach or default would materially adversely affect the ability of the Authority to - 16- 10242938.3 perform its obligations under the Authority Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and (vii) [Except as disclosed in the Official Statement,] there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or, to the best knowledge of the Authority after due inquiry, threatened, affecting the existence of the Authority or seeking to prohibit, restrain or enjoin the issuance and delivery of the 2007 Series A Bonds, or in any way contesting or affecting the validity or enforceability of this Purchase Contract_or.the.Authority-Legal.Documents or contesting.-the powers of the._ Authority to enter into, adopt or perform its obligation under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated hereby and by the Official Statement, or which, in any way, would materially adversely affect the validity of the 2007 Series A Bonds, the Authority Legal Documents, or any agreement or instrument to which the Authority is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby and by the Official Statement or the exemption from taxation as set forth herein; (11) Opinion of-Counsel to Trustee. The opinion of Counsel to the Trustee, dated the Closing Date, addressed to the Authority, the County and the Underwriters, to the effect that: (A) the Trustee has been duly incorporated as a national banking association under the laws of the United States and is in good standing under the laws of the United States, duly qualified to do business and to exercise trust powers therein, having full power and authority to enter into and to perform its duties as Trustee under the Trust Agreement and as dissemination agent under the Continuing Disclosure Agreement, and has full power and authority to execute and deliver the Trust Agreement and the Continuing Disclosure Agreement, and to perform its obligations thereunder; (B)the 2007 Series A Bonds have been validly authenticated, registered and delivered by the Trustee; (C)no authorization, approval, consent or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Trustee, or, to such counsel's knowledge after reasonable investigation, any other entity, is required for the valid authorization, execution, delivery and performance by the Trustee of the Sixth Supplemental Trust Agreement and the Continuing Disclosure Agreement; and (D)the execution and delivery of the Sixth Supplemental Trust Agreement and the Continuing - - --Disclosure Agreement,and-compliance by the Trustee with the provisions of the-foregoing under the circumstances contemplated thereby, does not in any material respect conflict with or constitute on the part of the Trustee a breach or default under any agreements or other instrument to which the Trustee is a party (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or consent decree to which the Trustee is subject; (12) Opinion of Counsel to Escrow Agent. The opinion of Counsel to the Escrow Agent, dated the Closing Date, addressed to the Authority, the County and the Underwriters, to the effect that: (A) the Escrow Agent has been duly incorporated as a national banking association under the laws of the United States and is in good standing under the laws of - 17 - 10242938.3 the United States, duly qualified to do business and to exercise trust powers therein, having full power and authority to enter into and to perform its duties as Escrow Agent under the Escrow Agreements, and has full power and authority to execute and deliver the Escrow Agreements and to perform its respective obligations thereunder; (B) no authorization, approval, consent or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Escrow Agent, or, to such counsel's knowledge after reasonable investigation, any other entity, is required for the valid authorization, execution, delivery and performance by the Escrow Agent of the Escrow Agreements; and(C)the execution and delivery of the Escrow Agreements, and compliance by the Escrow Agent with the provisions of the foregoing under the circumstances contemplated thereby, does not in any material respect - -- conflict with--or-constitute on the-part--of-the Escrow-Agent a--breach or-default under- any - - - agreements or other instrument to which the Escrow Agent is a party(and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or consent decree to which the Escrow Agent is subject; (13) Trustee By-laws. Certified copies of excerpts from the bylaws of the Trustee authorizing the execution and delivery of the Sixth Supplemental Trust Agreement and Continuing Disclosure Agreement; (14) Escrow A eg nt By-laws. Certified copies of excerpts from the bylaws of the Escrow Agent authorizing the execution and delivery of the Escrow Agreements; (15) Certi acate of the Trustee. A certificate of the Trustee, dated the Closing Date, signed by a duly authorized official, satisfactory in form and substance to the Underwriters, to the effect that: (A)the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being qualified to enter into and perform its duties under the Trust Agreement and the Continuing Disclosure Agreement and to authenticate and deliver the 2007 Series A Bonds to the Underwriters pursuant to the Trust Agreement; (B)the Trustee is duly authorized to enter into the Sixth Supplemental Trust Agreement and the Continuing Disclosure Agreement and to authenticate and deliver the 2007 Series A Bonds to the Underwriters pursuant to the Trust Agreement; (C) the 2007 Series A Bonds have been duly authenticated and delivered by the Trustee; (D)the execution and delivery of the Sixth Supplemental Trust Agreement and the Continuing Disclosure Agreement and compliance with the provisions on the part of the Trustee -- - contained-therein;does-not-conflict-with-or constitute-a-breach-of or-default-under any-law;- administrative regulation, judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the Trustee is a party or is otherwise subject (except that no representation or warranty is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the Trust Agreement under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Trust Agreement; and (E)to the best knowledge of the Trustee after reasonable investigation, it has not been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any - 18 - 10242938.3 such action or other proceeding threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain, or enjoin the execution and delivery of the 2007 Series A Bonds, or in any way contesting or affecting the validity or enforceability of the Trust Agreement or the Continuing Disclosure Agreement, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the 2007 Series A Bonds or the Trust Agreement or the Continuing Disclosure Agreement or the power and authority of the Trustee to enter into and perform its respective duties under such agreements and to authenticate and deliver the 2007 Series A Bonds to the Underwriters; (16) Certificate of the Escrow Agent. A certificate of the Escrow Agent, dated the Closing Date, signed by a duly authorized official, satisfactory in form and substance to the Underwriters, to the effect that: (A)the Escrow Agent is a national banking association organized and existing under and by virtue of the laws of the United States,having the full power and being qualified to enter into and perform its duties under the Escrow Agreements; (B)the Escrow Agent is duly authorized to enter into the Escrow Agreements; (C)the execution and delivery of the Escrow Agreements and compliance with the provisions on the part of the Escrow Agent contained therein, does not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the Escrow Agent is a party or is otherwise subject - (except that no representation or warranty is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Escrow Agent pursuant to the Escrow Agreements under the terms of any such law, administrative regulation,judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Escrow Agreements; and (D)to the best knowledge of the Escrow Agent after reasonable investigation, it has not been.served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against the Escrow Agent, affecting the existence of the Escrow Agent, or the titles of its officers to. their respective offices or seeking to prohibit, restrain, or enjoin or in any way contesting or affecting the validity or enforceability of the Escrow Agreements, orcontesting the powers of the Escrow Agent or its authority to enter into, adopt or perform its obligations under the foregoing to which it is a party, -wherein an'urifavorable-decision�rulln'g or riding would'materially'adversely-affect the validityor enforceability of the Escrow Agreements or the power and authority of the Escrow Agent to enter into and perform its duties under the Escrow Agreements; (17) Rating Letters. Evidence that any ratings described in the Official Statement are in full force and effect as of the Closing Date; (18) Bond Insurance Policy. A copy of the 2007 Series A Bond Insurance Policy insuring the payment of the principal of and interest on the 2007 Series A Bonds issued by the Insurer; - 19 - 10242938.3 (19) Opinion of Counsel to Insurer. The opinion of Counsel to the Insurer addressed to the County and the Underwriters, dated the Closing Date, to the effect that (A)the 2007 Series A Bond Insurance Policy is a legal, valid and binding obligation of the Insurer enforceable in accordance with its terms, and (B)the statements in the Preliminary Official Statement and the Official Statement under the caption "MUNICIPAL BOND INSURANCE POLICY," and contained in APPENDIX H—"SPECIlAEN MUNICIPAL BOND INSURANCE POLICY" accurately reflect and fairly represent the information purported to be shown therein; (20) Report of Verification Agent. A certificate of Berens-Tate Consulting Group (the "Verification Agent"), independent certified public accountants, dated the Closing .___._Date,._to__the effect.that:. .(i) it.has_verified the mathematical._accuracy.relating.to computation forecasted receipts of principal and interest on the [Defeasance Securities] and the forecasted payments of principal and interest when due or with respect to the Defeased Obligations to provide for the payment of the Defeased Obligations; and (ii) consents to the use of its name in the Preliminary Official Statement and the Official Statement; (21) Arbitrage and Tax certifications. Arbitrage and tax certifications by the Authority and the County in ' form and substance acceptable to Bond Counsel and the Underwriters; (22) 8038-G. Evidence that the federal tax.information form 8038-G has been prepared for filing; (23) Joint Exercise of Powers Agreement and Statement of Roster. A certified copy of the Authority's Joint Exercise of Powers Agreement and Statement of Roster; (24) Title Policy. A title policy satisfactory to the Underwriters relating to the Facilities; (25) California Debt and Investment Advisory Commission Filings. Evidence of the preliminary and final filings with the California Debt and Investment Advisory Commission pursuant to Section 8855(g) and 53583 of the California Government Code; (26) DTC Letter of Representations. A copy of the executed Blanket Letter of Representations by and between the Authority and The Depository Trust Company, New York, New York, relating to the book entry system for the 2007 Series A Bonds; (27) Blue Sky Survey Memoranda. Copies of blue sky survey memoranda with respect to the 2007 Series A Bonds; and (28) Miscellaneous. Such additional legal opinions, certificates, instruments and documents as the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of Closing, of the Authority's and the County's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Authority and the County on or prior to the date of Closing of all agreements then to be performed and all conditions then to be satisfied by the Authority and the County. - 20- 10242938.3 All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriters. Receipt of, and payment for, the 2007 Series A Bonds shall constitute evidence of the satisfactory nature of such as to the Underwriters. The performance of any and all obligations of the Authority and the County hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriters may be waived by the Underwriters in their sole discretion. If the Authority or the County shall be unable to satisfy the conditions to the obligations of.the._Underwriters_to.--.purchase, accept delivery--of.and__pay. -for-the 2007..Series._A_ Bonds__.. . contained in this Purchase Contract, or if the obligations of the Underwriters to purchase, accept delivery of and pay for the 2007 Series A Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate, and none of the Underwriters, the Authority or the County shall be under further obligation hereunder; provided, however, that the respective obligations of the Authority, the County and the Underwriters set forth in Section 10 hereof shall continue in full force and effect. Section 9. Termination by Underwriters. The Underwriters shall have the right to terminate their obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the 2007 Series A Bonds by notifying the County of its election to do-so if, after the execution hereof and prior to Closing: (1) legislation (including any amendments thereto), resolution, rule or regulation (including any amendments thereto) shall be introduced in, considered by or be enacted by any governmental body, department or political subdivision of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the opinion of the Representative would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Series A Bonds on the terms and in the manner contemplated in the Official Statement; (2) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery of the 2007 Series A Bonds as contemplated by the Official Statement(exclusive of any amendment or supplement thereto); (3) the declaration of a banking moratorium by federal, New York or California authorities, or trading in the Authority's outstanding securities shall have been suspended by the Securities and Exchange Commission or the New York Stock Exchange or-the--NASDAQ--National--Market-or-trading-,in-securities-generally-orr-the-New-York-Stock Exchange or the NASDAQ National Market shall have been suspended or limited or minimum prices shall have been established on either of the New York Stock Exchange or the NASDAQ National Market; (4) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the 2007 Series A Bonds or obligations of the general character of the 2007 Series A 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 Underwriters which, in the opinion of the Representative would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Series A Bonds on the terms and in the manner contemplated in the Official Statement; (5) legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress -21 - 10242938.3 or recommended for passage by the President of the United States, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed) issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that securities of the general character of the 2007 Series A Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt from qualification under the Trust Indenture Act of 1939, as amended, or that the execution, offering or sale of obligations of the general character of the 2007 Series A Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement, otherwise is or would be in violation of the - -- - --federal-- securities-laws- as- amended and then-in---effect;--(6)--(i)- legislation-(including-any -- amendment thereto) shall have been introduced in or adopted by either House of the Congress of the United States or recommended to the Congress or otherwise endorsed for passage by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation is proposed for consideration by either such committee by any member thereof or presented as an option for consideration by either such committee by the staff of such committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or a bill to amend the Internal Revenue Code shall be filed in either house, or(ii) a decision shall have been rendered by any federal or state court, or (iii) an order, filing, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or any other agency of the United States, or(iv) a release or official statement shall have been issued by the President of the United States or by the Treasury Department of the United States or by the Internal Revenue Service, the effect of which, in any such case described in clause (i), (ii), (iii), or(iv), would be to impose, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the 2007 Series A Bonds or upon income of the general character to be received by the Authority, other than as imposed on the 2007 Series A Bonds and income therefrom under the federal tax laws in effect on the date hereof, in such a manner as in the judgment of the Representative would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Series A Bonds on the terms and in the manner contemplated in the Official Statement; (7) action is taken by or on behalf of the State or the California Franchise Tax Board, with the purpose or effect, directly or indirectly, of imposing California personal income taxation upon such interest as would be received by the Owners of the 2007 Series A Bonds; (8) the wrt rawa or owngra mg or any notice o an inten a or potentia owngra ing o any rating of the obligations of the Authority (including the rating to be issued with respect to the 2007 Series A Bonds) by a "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act of 1933 as amended which, in the opinion of the Representative would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the 2007 Series A Bonds on the terms and in the manner contemplated in the Official Statement; (9) any event occurring, or information becoming known which, in the judgment of the Representative, 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 therein, in the light of the circumstances under which they were made, not misleading; (10) any change or development involving a prospective change in the -22 - 10242938.3 condition of the County, financial or otherwise, or in the operations of the County from those set forth in the Official Statement that makes the 2007 Series A Bonds, in the judgment of the Representative, impracticable or inadvisable to offer, sell or deliver the 2007 Series A Bonds on the terms and in the manner contemplated by the Official Statement; (11) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred; or (12)the purchase of and payment for the 2007 Series A Bonds by the Underwriters, or the resale of the 2007 Series A Bonds by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority,board, agency or commission. Section 10. Expenses. (a) The Underwriters shall be under no obligation to pay, and the.Authority..or..the...County shall_pay-the following.expenses.-incident.to_the-.performance-of_the_-.._:._-.._- Authority's and the County's respective obligations hereunder: (i)the fees and disbursements Bond Counsel and Disclosure Counsel; (ii)the cost of printing and delivering the 2007 Series A Bonds, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to this Purchase Contract); (iii)the fees and disbursements of Tamalpais Advisors, Inc., Financial Advisor to the Authority and the County, accountants, and other advisers, experts or consultants retained by the Authority or the County; (iv) the expenses (included in the expense component of the spread) incurred on behalf of the Authority's and the County's employees which are incidental to implementing this Purchase Contract, including, but not limited to, meals, transportation, lodging, and entertainment of such employees; and (v) any other expenses and costs of the Authority or the County incident to the performance of their respective obligations in connection with the authorization, issuance and sale of the 2007 Series A Bonds, including out-of-pocket expenses and regulatory expenses, and any other expenses agreed to by the parties. (b) The Underwriters shall pay all expenses incurred by them in connection with the public offering and distribution of the 2007 Series A Bonds including, but not limited to: (i)the fees and disbursements of Underwriters' Counsel; (ii) all advertising expenses in connection with the offering of the 2007 Series A Bonds; and (iii) all fees of the California Debt and Investment Advisory Commission and out-of-pocket disbursements and expenses incurred by the Underwriters in connection with the offering and distribution of the 2007 Series A Bonds, except as provided in(a) above or as otherwise agreed to by the Underwriters and the County. Section I.I. Notices. Any notice or other communication to be given to the County or the Authority under this Purchase Contract may be given by delivering the same in writing at the ------ County's- address-or the-Authority's -address- set forth- above ---and any- notice -or- other............ communication to be given to the Underwriters under this Purchase Contract may be given by delivering the same in writing to the Representative, Citigroup Global Markets Inc., One Sansome Street, 28th Floor, San Francisco, California 94104, Attention: Michael T. Gomez, Director. Section 12. Parties in Interest; Force and Effect. This Purchase Contract is made solely for the benefit of the Authority, the County and the Underwriters (including their successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Authority's and the County's representations, warranties and agreements contained in this Purchase Contract shall remain operative and in full force and effect regardless of- (a) any investigations made by or on behalf of the Underwriters; or(b) delivery of -23 - 10242938.3 23 - 10242938.3 and payment for the 2007 Series A Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 10 shall survive any termination of this Purchase Contract. Section 13. Unenforceable Provisions. If any provision of this Purchase Contract shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any constitution, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperable or unenforceable in any other case or circumstance, or of rendering any other ....._.___.____.._..__.._provision or._.provisions..of_this Purchase Contract-invalid, inoperative-or_unenforceable__to.any_ extent whatsoever. Section 14. Counterparts. This Purchase Contract may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Purchase Contract by signing any such counterpart. Section 15. Governing Law; Venue. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State. Any and all disputes or legal actions or proceedings arising out of this Purchase Contract or any document related hereto shall be filed and maintained in a court of competent jurisdiction for matters arising in Contra Costa County; provided that the Authority or the County may waive the requirement of venue. By execution of and delivery of this Purchase Contract, the parties hereto accept and consent to the aforesaid jurisdiction. Section 16. Headings. The headings of the.sections of this Purchase Contract are inserted for convenience only and shall not be deemed to be a part hereof. Section 17. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof by an authorized officer of the County and the.Authority, and shall be valid and enforceable as of the time of such acceptance. -24 - 10242938.3 Very truly yours, CITIGROUP GLOBAL MARKETS INC. BANC OF AMERICA SECURITIES LLC By: CTTIGROUP GLOBAL MARKETS INC., as Representative By: Director COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Authorized Officer COUNTY OF CONTRA COSTA By: Authorized Officer - 25 - 10242938.3 SCHEDULEI 2007 SERIES A MATURITIES,AMOUNTS, RATES,YIELDS AND PRICES Maturity Principal Interest Price or June 1 Amount Rate Yield I-1 10242938.3 EXHIBIT A FORM OF THE CERTIFICATE OF THE COUNTY REGARDING PRELIMINARY OFFICIAL STATEMENT County of Contra Costa County of Contra Costa Public Financing Authority Public Financing Authority Lease Revenue Bonds Lease Revenue Bonds (Refunding and Various Capital Projects) (Medical Center Refunding) 2007 Series A 2007 Series B The undersigned hereby states and certifies: 1. That he is the duly qualified and acting Executive Director of the County of Contra Costa Public Financing Authority(the".Authority") and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; 2. That there has been delivered to Citigroup Global Markets Inc. and Banc of America Securities LLC, as underwriters (collectively, the "Underwriters") of the captioned Bonds, a Preliminary Official Statement, relative to the captioned Bonds, dated , 2007 (including the cover page and all appendices thereto, in printed form and in electronic form in all material respects consistent with such printed form, the"Preliminary Official Statement"), which the Authority deems final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12; and 3. The Authority hereby approves the use and distribution by the Underwriters of the Preliminary Official Statement. Dated: , 2007 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Executive Director A-1 10242938.3 EXHIBIT B FORM OF OPINION OF COUNTY COUNSEL [Letterhead of County Counsel] [Closing Date] County of Contra Costa Martinez, California Citigroup Global Markets Inc., as Representative of the Underwriters San Francisco, California Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A Ladies and Gentlemen: The undersigned is the duly qualified and acting County Counsel of the County of Contra Costa (the "County"), and I have been acting for this office, the County and the County of Contra Costa Public Financing Authority (the "Authority") in connection with the issuance and delivery by the Authority of its Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "2007 Series A Bonds"). I have examined originals (or copies certified or otherwise identified to my satisfaction) of such documents, records and other instruments as I deem necessary or appropriate for the purposes of this opinion, including, without limitation: (i)those documents relating to the existence, organization and operation of the County; (ii) Resolution No. , adopted by a majority of the County Board of Supervisors on 2007 (the"Resolution"); (iii) all necessary documentation of the County relating to the authorization, execution and delivery of the Trust Agreement, dated as of February 1, 1999 (the "Master Trust Agreement"), as previously supplemented, and as further supplemented by the Sixth Supplemental Trust Agreement, dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement" and collectively with the Master Trust Agreement, the "Trust Agreement"),. ----between the-Authority and The-Bank-of New York Trust Company;N.A.,-as successor trustee (the "Trustee"); the Facility Lease (Various Capital Projects), dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Facility Lease, dated as of March 1, 2007 (the "Sixth Amendment to Facility Lease" and collectively with the Master Facility Lease, the "Facility Lease"), between the Authority and the County; the Master Site Lease, dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (the "Sixth Amendment to Master Site Lease" and collectively with the Master Site Lease, the "Site Lease"); the Escrow Agreement, dated as of March 1, 2007 (the "Escrow Agreement"), [between/among] the County [, the Contra Costa Public Facilities Corporation] and The Bank of New York Trust Company, N.A., as escrow agent (the "Escrow Agent'); the Continuing Disclosure Agreement, dated as of the Closing Date(the"Continuing Disclosure Agreement"),between the County and the Trustee; B-1 10242938.3 the Bond Purchase Contract, dated , 2007, relating to the 2007 Series A Bonds (the "Purchase Contract"), among the Authority, the County and Citigroup Global Markets Inc., acting on behalf of itself and as representative of Banc of America Securities LLC (collectively, the "Underwriters"); and the Official Statement relating to the 2007 Series A Bonds, dated 2007 (the "Official Statement"). The Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the Escrow Agreement and the Continuing Disclosure Agreement shall be collectively referred to herein as the "County Legal Documents." All capitalized terms used herein and not otherwise defined shall have the meaning given to such terms as set forth in the Trust Agreement. Based on the foregoing,.I.am of the opinion that: . 1. The County is a political subdivision, organized, operating and existing under the Constitution and laws of the State of California, and the County has duly and validly adopted the Resolution at a meeting of the Board of Supervisors 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 throughout and the Resolution has not been modified or amended and is in full force and effect. 2. The County has the full legal right, power and authority to execute and deliver the County Legal Documents to be executed by it and perform its obligations and duties-under the County Legal Documents and the Purchase Contract and the transactions contemplated by the Official Statement, and the County has complied with the provisions of applicable law in all matters relating to the transactions contemplated by each of the County Legal Documents, the Purchase Contract and the Official Statement. 3. Each of the County Legal Documents and the Purchase Contract has been duly authorized, executed and delivered by the County, is in full force and effect and, assuming due authorization, execution and delivery by the other parties thereto with respect to the County Legal Documents and the Purchase Contract, each constitutes a legal, valid and binding agreement of the County enforceable against the County in accordance with its respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and to the application of equitable principles if equitable remedies are sought. Except.as may.be..._described in the_ Official.Statement,_no..approyal,.consent or......- authorization of any governmental or public agency, authority or person is required for the adoption of the Resolution or the execution and delivery by the County of the County Legal Documents to be executed by it or the Purchase Contract or the performance by the County of its obligations under the County Legal Documents or the Purchase Contract which has not been obtained (provided that no opinion is expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution of the 2007 Series A Bonds by the Underwriters). 5. The issuance of the 2007 Series A Bonds, the execution and delivery of the County Legal Documents to be executed by it and the Purchase Contract by the County, the adoption of the Resolution, and compliance with the provisions of the County Legal Documents, B-2 10242938.3 the Purchase Contract and the Resolution and the performance by the County of its obligations thereunder will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, existence or operation of the County, or any commitment, agreement or other instrument to which the County is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance,judgment, order or decree to which the County (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the County and its affairs. 6. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court,public board or body pending or, to the best of my knowledge after due inquiry, _._._threatened in any way affecting.the existence of the County or.the..titles of its officers to_their respective offices, in any way contesting or affecting the validity of the County Legal Documents or the Purchase Contract, the issuance, sale or delivery of the 2007 Series A Bonds or any of, the transactions contemplated by the Official Statement, or the validity of the proceedings taken by the County in connection with the authorization, issuance and sale of the 2007 Series A Bonds or the execution or delivery of the County Legal Documents, the Purchase Contract or the Official Statement, wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated thereby, or which, in any way, would adversely affect the validity or enforceability of the Resolution,the 2007 Series A Bonds, the County Legal Documents or the Purchase Contract, or in any material respect affect the ability of the County to perform its obligations-under the County Legal Documents or the Purchase Contract or any other applicable agreement, or any action on the part of the County contemplated by-any of said documents, or asserting that the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. 7. Without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements.contained in the Official Statement and making no representation that such Counsel has independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available in the course of the participation by County Counsel in the preparation of the Official Statement, nothing has come to his attention which would lead him to believe that the Official Statement as of its date or as of the date hereof (excluding therefrom information relating to DTC, the book-entry system, the 2007 Series A Bond Insurance Policy and the.Insurer, as to which no opinion is expressed) contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required-to-be•stated therein or necessary-to make the statementsAherein;-in the light-of,the - - circumstances under which they were made, not misleading. Very truly yours, County Counsel B-3 10242938.3 EXHIBIT C FORM OF OPINION OF AUTHORI'T'Y COUNSEL [Letterhead of Authority Counsel] [Closing Date] County of Contra Costa Public Financing Authority - Martinez, California Citigroup Global Markets Inc., as Representative of the Underwriters San Francisco, California Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A Ladies and Gentlemen: The undersigned is the duly qualified and acting counsel to the County of Contra Costa Public Financing Authority (the "Authority"), and in connection with the issuance and delivery by-the Authority of its Lease Revenue Bonds (Refunding and Various Capital Projects), 2007 Series A (the "Bonds"). I have examined originals (or copies.certified or otherwise identified to my satisfaction) of such documents, records and other instruments as I deem necessary or appropriate for the purposes of this opinion, including, without limitation: (i)those documents relating to the existence, organization and operation of the Authority; (ii) Resolution No. , adopted by a majority of the Authority Board of Directors on , 2007 (the "Resolution"); (iii) all necessary documentation of the Authority relating to the authorization, execution and delivery of the Trust Agreement, dated as of February 1, 1999 (the "Master Trust Agreement"), as previously supplemented, and as further supplemented by the Sixth Supplemental Trust Agreement, dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement" and collectively with the Master Trust Agreement, the "Trust Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the "Trustee"); the - - Facility-Lease.(Various Capital-Projects), dated as-of February--1-, 1999,-as-previously-amended;-r- -- ---- and as further amended by the Sixth Amendment to Facility Lease, dated as of March 1, 20075 (the "Sixth Amendment to Facility Lease" and collectively with the Master Facility Lease, the "Facility Lease"), between the Authority and the County of Contra Costs (the "County"); the Master Site Lease, dated as of February 1, 1999, as previously amended, and as further amended by the Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (the "Sixth Amendment to.Master Site Lease" and collectively with the Master Site Lease, the "Site Lease"); the Escrow Agreement, dated as of March 1, 2007 (the "Escrow Agreement"), between the Authority and The Bank of New York Trust Company, N.A., as escrow agent (the "Escrow Agent"); the Bond Purchase Contract, dated , 2007, relating to the 2007 Series A Bonds (the "Purchase Contract"), among the Authority, the County and Citigroup Global Markets Inc., acting on behalf of itself and as representative of Banc of America Securities LLC (collectively, C-1 10242938.3 the "Underwriters"); and the Official Statement relating to the 2007 Series A Bonds, dated 2007 (the "Official Statement"). The Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the Escrow Agreement and the 2007 Series A Bonds shall be collectively referred to herein as the "Authority Legal Documents." All capitalized terms used herein and not otherwise defined shall have the meaning given to such terms as set forth in the Trust Agreement. Based on the foregoing, I am of the opinion that: 1. The Authority is a joint exercise of_powers. agency_duly organized.and_validly, existing pursuant to the Constitution and laws of the State of California with the full power and authority to adopt the Authority Resolution, and the Authority has duly and validly adopted the Resolution at a meeting of the Board of Directors of the Authority 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 throughout and the Resolution has not been modified or amended and is in full force and effect. 2. The Authority has the full legal right, power and authority to issue, sell and deliver the 2007 Series A Bonds, and to execute and deliver the Authority Legal Documents to be executed.by it and perform its obligations and duties.under the Authority Legal Documents and the Purchase Contract and the transactions contemplated by the Official Statement, and the Authority has complied with the provisions of applicable law in all matters relating to the transactions contemplated by each of the Authority Legal Documents, the Purchase Contract and the Official Statement. 3. Each of the Authority Legal Documents, the Purchase Contract and the Official Statement has been duly authorized, executed and delivered by the Authority, is in full force and effect and, assuming due authorization, execution and delivery by the other parties thereto with respect to the Authority Legal Documents and the Purchase Contract, each.constitutes a legal, valid and binding agreement of the Authority enforceable against the Authority in accordance with its respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and to the application of equitable principles if equitable remedies are sought. 4. ....... . Except as...may,be.described,in,the_Official__Statement,no_approval,_consent or__.__ __...___. . authorization of any governmental or public,agency, authority or person is required for the adoption of the Resolution, the issuance of the 2007 Series A Bonds or the execution and delivery by the Authority of the Authority Legal Documents to be executed by it, the Purchase Contract or the Official Statement or the performance by the Authority of its obligations under the Authority Legal Documents, the Purchase Contract or the Official Statement which has not been obtained (provided that no opinion is expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution of the 2007 Series A Bonds by the Underwriters). 5. The issuance of the 2007 Series A Bonds, the execution and delivery of the Authority Legal Documents to be executed by it, the Purchase Contract and the Official C-2 10242938.3 Statement by the Authority, the adoption of the Resolution, and compliance with the provisions of the Authority Legal Documents, the Purchase Contract and the Resolution and the performance by the Authority of its obligations thereunder will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, existence or operation of the Authority, or any commitment, agreement or other instrument to which the Authority is a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance, judgment, order or decree to which the Authority (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Authority and its affairs. _. .. .._6. _._...._..There.is.no.action, suit, proceeding, inquiry or investigation at law or.in.equity, or _ before any court,public board or body pending or, to the best of my knowledge after due inquiry, threatened in any way affecting the existence of the Authority or the titles of its officers to their respective offices, in any way contesting or affecting the validity of the Authority Legal Documents or the Purchase Contract, the issuance, sale or delivery of the 2007 Series A Bonds or any of the transactions contemplated by the Official Statement, or the validity of the proceedings taken by the Authority in connection with the authorization, issuance and sale of the 2007 Series A Bonds or the execution or delivery of the Authority Legal Documents, the Purchase Contract or the Official Statement, wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated thereby, or which, in any way, would adversely affect the validity or enforceability of the Resolution, the Authority Legal Documents or the Purchase Contract, or in any material respect affect the ability of the Authority to perform its obligations under the .Authority Legal Documents or the Purchase Contract or any other applicable agreement, or any action on the part of the Authority contemplated by any of said documents, or asserting that the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading. 7. Without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and making no representation that such Counsel has independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available in the course of the participation by Authority Counsel in the preparation of the Official Statement,nothing has come to his attention which would lead him to believe that the Official Statement as of its date or as of the date hereof (excluding therefrom information relating to DTC, the book-entry system, the -------- 2007---Series A-Bond--Insurance-Policy-and-the--lnsurer;--as-to-which-no-opinion--iss-expressed) =- - contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Very truly yours, Authority Counsel C-3 10242938.3 Nixon Peabody Draft#1 1/26/07 COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS (MEDICAL CENTER REFUNDING) 2007 SERIES B FORWARD DELIVERY BOND PURCHASE CONTRACT 2007 County of Contra Costa Public Financing Authority County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 County of Contra Costa County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 Ladies and Gentlemen: The undersigned, Citigroup Global Markets Inc., acting on behalf of itself and as representative (the "Representative") of Banc of America Securities LLC (collectively, the "Underwriters"), hereby offers to enter into this Forward Delivery Bond Purchase Contract (the "Forward Delivery Contract") with you, the County of Contra Costa Public Financing Authority (the "Issuer"), and the County of Contra Costa, California (the "County"), which, upon the Issuer's and the County's acceptance of this offer, will be binding upon the Issuer, the County, and the Underwriters. This offer is made subject to the Issuer's and the County's written - -----acceptance-hereof on-or-before 11:59-p m;-California-time, on-the-date first written-above,and; if- not fnot so accepted, will be subject to withdrawal by the Underwriters upon notice delivered to the Issuer and the County at any time prior to the acceptance hereof by the Issuer and the County. Any authority, discretion or other power conferred upon the Underwriters by this Forward Delivery Contract may be exercised by the Representative alone. Capitalized terms used in this Forward Delivery Contract and not otherwise defined herein shall have the meanings given to such terms in the Trust Agreement(defined below). Section 1. DEFINITIONS. As used in this Forward Delivery Contract, the following terms shall have the indicated meanings: 10264645.2 "Act" means the Marks-Roos Local Bond Pooling Act of 1985 contained in Chapter 5 of Division 7 of Title 1 of the California Government Code. "Bond Insurance Commitment" shall mean the "Forward Commitment To Issue a Financial Guaranty Insurance Policy" dated , 2007 issued to the Issuer by the Bond Insurer pursuant to which the Bond Insurer has agreed,upon the terms and conditions set forth in such Forward Commitment,to issue the Bond Insurance Policy on the date of the Settlement. "Bond Insurance Policy" shall mean a financial guaranty insurance policy insuring the principal of and interest on the Bonds when due, in substantially the form attached as Appendix I to the_hereinafter defined Preliminary Official Statement. . "Bond Insurer" shall mean MBIA Insurance Corporation. "Bonds" shall mean $ aggregate principal amount of the Issuer's Lease Revenue Bonds (Medical Center Refunding), 2007 Series B. "Bond Trustee" shall mean The Bank of New York Trust Company, N.A., as successor trustee under the Trust Agreement(as hereinafter defined). "Change in Law" shall mean (i) any change in or addition to applicable federal or state law, whether statutory or as interpreted by the courts, including any changes in or new rules, regulations or other pronouncements or interpretations by federal or state agencies, (ii) any legislation enacted by the Congress of the United States or introduced therein or recommended for passage by the President of the United States (if such enacted, introduced or recommended legislation has a proposed effective date which is on or before the date of the Settlement), (iii) any law, rule or regulation proposed or enacted by any governmental body, department or agency (if such proposed or enacted law, rule or regulation has a proposed effective date which is on or before the date of the Settlement) or (iv) any judgment, ruling or order issued by any court or administrative body, which in any such case, would, as to the Underwriters, prohibit (or have the retroactive effect of prohibiting, if enacted, adopted, passed or finalized) the Underwriters from purchasing the Bonds as provided herein or selling the Bonds or beneficial ownership interests therein to the public or, as to the Issuer, would make the issuance, sale or delivery of the Bonds illegal (or have the retroactive effect of making such issuance, sale or delivery illegal, if enacted, adopted, passed or finalized); provided, however, that such change in or addition to law, legislation, law, rule or regulation or judgments ruling or order shall have become effective, been enacted, introduced or recommended, been proposed or enacted or been issued, as the case may be, subsequent to the date of this Forward Delivery Contract. "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement, dated the date of the Preliminary Closing,between the County and the Bond Trustee. "County Legal Documents" means, collectively, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease, the Escrow Agreement and the Continuing Disclosure Agreement. "Depository" or "DTC" means The Depository Trust Company, New York, New York, or any successor thereto, which maintains a book-entry only system for the Bonds. 10264645.2 -2- "Escrow Agent"means The Bank of New York Trust Company,N.A., as escrow agent. "Escrow Agreement"means that certain Escrow Agreement, dated [the Settlement Date], [between/among] the County [, the Contra Costa Public Facilities Corporation] and The Bank of New York Trust Company, N.A., as escrow agent (the"Escrow Agent'). "Issuer Legal Documents" means, collectively, the Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease and the Sixth Amendment to Site Lease. "Legal Documents" means, collectively, the Trust Agreement, the Seventh Supplemental Trust Agreement, the Facility Lease, the Sixth Amendment to Facility Lease, the Site Lease, the Sixth Amendment to Site Lease and the Continuing Disclosure Agreement. "Rule 15c2-12" shall mean Rule 15c2-12 promulgated by the SEC pursuant to the 34 Act, as said rule shall from time to time be supplemented or amended. "SEC"shall mean the United States Securities and Exchange Commission. "Trust Agreement"means that certain Trust Agreement relating to the Bonds, dated as of February 1, 1999, between the Issuer and the Bond Trustee, as amended and supplemented by that certain Seventh Supplemental Trust Agreement, dated as of March 1, 2007, between the Issuer and the Bond Trustee. "34 Act" shall mean the federal Securities Exchange Act of 1934, as the same shall from time to time be supplemented or amended. Section 2. THE BONDS. The Issuer and the County adopted resolutions on , 2007 (said resolutions, as amended and supplemented prior to the date hereof, are herein called the "Issuer Resolution" and the "County Resolution,"respectively) authorizing the issuance of the Bonds. The Bonds will be issued pursuant to a Trust Agreement, dated as of February 1, 1999 (the "Master Trust Agreement"), as previously supplemented, and as further supplemented by the Seventh Supplemental Trust Agreement, dated as of March 1, 2007 (the "Seventh Supplemental Trust Agreement" and collectively with the Master Trust Agreement, the "Trust Agreement"), by and between the Issuer and the Bond Trustee, which provides the terms, provisions and details of the Bonds. i The Bonds shall be payable and subject to redemption as provided in the Trust Agreement and as set forth in the Official Statement (defined below). The Bonds are limited obligations of the Issuer payable solely from certain revenues of the Issuer, consisting primarily of Base Rental Payments to be made by the County to the Issuer pursuant to a Facility Lease (Various Capital Projects), dated as of February 1, 1999 (the "Master Facility Lease"), as previously amended, and as further amended by the Sixth Amendment to Facility Lease, dated as of March 1, 2007 (the "Sixth Amendment to Facility Lease" and collectively with the Master .Facility Lease, the "Facility Lease"), between the Issuer and the County. The Issuer and the County have entered into a Master Site Lease, dated as of February 1, 1999 (the "Master Site Lease"), as previously amended, and as further amended by the Sixth Amendment to Master Site Lease, dated as of March 1, 2007 (the "Sixth Amendment to Master Site Lease" and collectively 10264645.2 -3- with the Master Site Lease, the "Site Lease"), pursuant to which the County has leased the Facilities to the Issuer. Pursuant to the Trust Agreement, the.Issuer has assigned to the Bond Trustee certain of its interests in the Facility Lease, including the right to receive Base Rental Payments. Simultaneously with the sale of the Bonds, the Issuer will sell its Lease Revenue Bonds (Refunding and,Various Capital Projects), 2007 Series A pursuant to a separate bond purchase contract. Section 3. PURPOSE OF BONDS. The Issuer will use proceeds of the Bonds, together.with certain funds related to the 1997 Certificates, for the prepayment and defeasance of the outstanding Certificates of Participation(Merrithew Memorial Hospital Replacement Project) Refunding Series of 1997 (the "1997 Certificates") executed and delivered by the Contra Costa County Public Facilities Corporation (the "Corporation") pursuant to [that certain Trust Agreement, dated as of May 1, 1992, as supplemented and amended by] that certain First Supplemental Trust Agreement, dated as of February 1, 1997, [each] by and among the County, the Corporation and The Bank of New York Trust Company, N.A., as successor trustee (the 1997 Trust Agreement") and to pay certain costs of issuance of the Bonds. Section 4. PURCHASE AND SALE OF BONDS; UNDERWRITERS' COMPENSATION; OFFERING. (a) Upon and subject to the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriters hereby agree to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to or on behalf of the Underwriters, in the manner provided herein, an aggregate of$ principal amount of the Bonds upon the issuance thereof. The Bonds shall be dated the date of the hereinafter mentioned Settlement, and shall have the maturities and bear interest at the rates per annum and have the yields or be sold at the prices, all as set forth in Schedule I hereto. (b) The purchase price for the Bonds shall be $ (representing the principal amount of the Bonds plus/less a [net] original issue premium/discount of $ (the "Purchase Price"). (c) It shall be a condition to the Issuer's obligation to sell and deliver the Bonds to the Underwriters that the entire principal amount of the Bonds shall be purchased, accepted and paid for by the Underwriters at the Settlement. It shall be a condition to the Underwriters' obligation to purchase, to accept delivery of and to pay for the Bonds that the entire principal amount of the Bonds shall be issued, sold and delivered by the Issuer at the Settlement. (d) The Bonds will be offered and sold by the Underwriters with settlement to be made through the Depository's book-entry only system. (e) On the date of the Settlement, and as a condition to the Underwriters' obligation to purchase the Bonds at the Settlement, the Underwriters shall be paid compensation and its expenses aggregating $ (the "Underwriters' Compensation"), unless (i)the Underwriters terminate its obligation to purchase the Bonds as provided by Section 19(d) hereof, (ii) the Underwriters satisfy its obligation in the manner provided in Section 19(e) hereof, or 10264645.2 -4- (iii)the Issuer has no obligation to issue, sell and deliver the Bonds due to the application of Section I I(b)hereof. (f) The Underwriters agree to make a public offering of all of the Bonds at not in excess of the initial public offering prices or less than the yields as set forth on the inside cover page of the Official Statement (in each case, without accrued interest). If such public offering does not result in the sale of all of the Bonds, the Underwriters reserve the right to change such initial public offering prices or yields as the Underwriters deem necessary in connection with the marketing of the Bonds. Section 5. . . PRELIMINARY AND FINAL OFFICIAL STATEMENTS.; AMENDMENTS AND SUPPLEMENTS THERETO. (a) The Issuer hereby confirms that it has "deemed final' as of its date the Preliminary Official Statement dated March 1, 2007 relating to the Bonds (the "Preliminary Official Statement") for purposes of Rule 15c2-12, except for the omission of only such material as is permitted by such Rule. (b) As promptly as practicable after the execution of this Forward Delivery Contract, the Issuer shall prepare and deliver to the Representative six copies of the Official Statement of the Issuer relating to the Bonds manually executed by a duly authorized officer of the Issuer and approved by a duly authorized officer of the County, such Official Statement to be substantially in the form presented to the Board of Directors of the Issuer at the meeting at which this Forward Delivery Contract was approved, with only such changes as shall be necessary to reflect the terms of the Bonds or this Forward Delivery Contract or as otherwise approved by the Underwriters (said document, including its cover page and.Appendices, as the same shall be modified, supplemented or amended in accordance with provisions of this Section, is herein called the"Official Statement"). The Issuer shall, as soon as practicable,but not later than seven business days from the date hereof, deliver to the Representative printed, conformed copies of the Official Statement, or such greater quantity as the Underwriters shall reasonably require. (c) Notwithstanding any prior amendment or supplements to the Official Statement made pursuant to subsection(d) of this Section, the Issuer, in cooperation with the County and the Underwriters, shall prepare an updated Official Statement dated a date not more than 25 nor less than ten days prior to Settlement (both dates.inclusive) relating to the Bonds (the "Updated Official.Statement").which,.as.-of such date, will,be correct and complete,in,all,material-respects.- and aterial.respects..and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Promptly following its preparation, the Issuer shall furnish to the Representative six copies of the Updated Official Statement manually executed by a duly authorized officer of the Issuer and approved by a duly authorized officer of the County and at least_printed, conformed copies of the Updated Official Statement, or such greater quantity as the Underwriters (as the Issuer shall be informed by the Underwriters) shall reasonably require. As used herein, the term "Official Statement" shall mean (i) at any point in time during the period from the date of the Official Statement mentioned in subsection(b) of this Section to but not including the date of delivery of the Updated Official Statement to the Representative pursuant to this subsection(c), the Official Statement mentioned in subsection(b) of this Section 10264645.2 -5- and (ii) from and after the date of such delivery of the Updated Official Statement, the Updated Official Statement. References herein as of a specific date to the Official Statement shall mean the Official Statement applicable on such date in accordance with the preceding sentence. (d) Each party hereto agrees that it will notify the other parties hereto if, within the period from the date of this Forward Delivery Contract to and including the date which is 25 days following the End of the Underwriting Period (as hereinafter defined), such party discovers any preexisting or subsequent fact or becomes aware of the occurrence of any event, in any such case which might cause the Official Statement (as the same may have been theretofore supplemented or amended) to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements_therein,.in the.light of the circumstances under which they were made, not misleading. If, in the written opinion of the Issuer or counsel to the Underwriters, the preparation and publication of a supplement or amendment to the Official Statement is, as a result of such fact or event (or any other event which becomes known to the Issuer, the County, or any Underwriter during such period), necessary so that the Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Issuer and the County will, at their expense, supplement or amend the Official Statement in such a manner so that the Official Statement, as so supplemented or amended, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,in the light of the circumstances under which they were made, not misleading, and furnish copies of such supplement or amendment to the Underwriters in such numbers as the Underwriters may reasonably request. The Issuer, the County, and the Underwriters agree that they will cooperate in the preparation of any such amendment or supplement. (e) For purposes of this Forward Delivery Contract, the "End of the Underwriting Period" shall mean the day of the Settlement, or, if the Issuer has been notified in writing by the Underwriters, on or prior to the date of the Settlement,that the"End of the Underwriting Period" within the meaning of Rule 15c2-12 will not occur on the date of the Settlement, such later date on which the"End of the Underwriting Period"within such meaning has in fact occurred. In the event that the Issuer has been given notice pursuant to the preceding sentence that the "End of the Underwriting Period" will not occur on the date of the Settlement, the Underwriters agree to notify the Issuer in writing of the date it does occur as soon as practicable following the "end of the underwriting period" for all purposes of Rule 15c2-12; provided, however, that if the - -Underwriters have-not•otherwise so-notified the Issuer of the "End of the Underwriting Period" -by the 30th day after the Settlement, then the "End of the Underwriting Period" shall be deemed to occur on such 30th day unless otherwise agreed to by the Issuer. (f) At any time prior to the End of the Underwriting Period, any Underwriter may from time to time request, and, if such request is made, the Issuer shall deliver to such Underwriter as soon as practicable thereafter, a certificate of the Issuer signed by a duly authorized officer of the Issuer in the form set forth as Exhibit D hereto, dated a date (and speaking as of such date) not earlier than the date of such request (g) At any time prior to the End of the Underwriting Period, any Underwriter may from time to time request, and, if such request is made, the County shall deliver to such 10264645.2 -6- Underwriter as soon as practicable thereafter, a certificate of the County signed by a duly authorized officer of the County in the form set forth as Exhibit H hereto, dated a date (and speaking as of such date) not earlier than the date of such request. Section 6. CERTAIN COVENANTS AND AGREEMENTS OF THE ISSUER AND THE COUNTY. (a) The Issuer and the County hereby authorize and consent to the use by the Underwriters of the Preliminary Official Statement, the Official Statement, the Updated Official Statement (including all supplements or amendments to either such Official Statement), the _ Legal Documents,_the Escrow_Agreement, and the-information therein contained, in_connection with the offering and sale of the Bonds. (b) The Issuer and the County will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate and (ii)to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Issuer and the County shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction. (c) The Issuer and the County will promptly notify the Representative as soon as either of them may become aware of any fact which, in its reasonable judgement, casts doubt on or questions the ability of the Issuer to issue, sell and deliver the Bonds as provided for by this Forward Delivery Contract. (d) Neither the Issuer nor the County shall take any action which will prevent the issuance and delivery of any of the Bonds on the date of the Settlement. Section 7. OBLIGATION OF THE ISSUER TO PROVIDE ADDITIONAL FUNDS. (a) The Trust Agreement will prohibit the issuance of the Bonds unless the proceeds of the Bonds, together with other available funds of the Issuer or the County, are sufficient to refund by prepayment on , 2007 the entire principal amount of each maturity of the 1997 Certificates to be prepaid with the proceeds of the Bonds at the prepayment price or prices thereof (plus accrued and unpaid interest thereon to such date of prepayment). The ultimate amount of such shortfall, together with all other amounts required to be available (e.g., any required deposits to the Reserve Fund under the Trust Agreement) in order to issue the Bonds under the terms of the Trust Agreement, and to pay the Issuer's costs of issuance with respect thereto, are herein referred to as the"Deficiency Amount." (b) Each of the Issuer and the County will use its best efforts to provide on the date of Settlement the Deficiency Amount so that the requirements of the Trust Agreement will be satisfied and the Bonds may be issued, authenticated, sold and delivered to the Underwriters. In providing for the Deficiency Amount, each of the Issuer and the County shall be obligated to use 10264645.2 -7- those funds available to the Issuer and the County, as applicable, which may lawfully be used for such purpose (including, without limitation, amounts in the funds and accounts held under the 1997 Trust Agreement accumulated with respect to the 1997 Certificates to be refunded with the proceeds of the Bonds and any other available funds in any other fund or account held under the 1997 Trust Agreement, or at the option of the Issuer or the County, as applicable, the proceeds of any borrowing). (c) In the event such lawfully available funds will not be sufficient to provide the full amount of the Deficiency Amount, each of the Issuer and the County shall use its best efforts to issue, sell, deliver and receive payment for, by the date of the Settlement, such amount of its bonds, notes, or-.other obligations (whether_parity.or.subordinated debt or obligations issued in. anticipation of such debt), or otherwise borrow amounts, as will provide net proceeds equal to the amount of such deficiency. Section 8. REPRESENTATIONS, WARRANTEES AND AGREEMENTS OF THE ISSUER. The Issuer hereby represents and warrants or agrees (as appropriate)as follows: (a) The Issuer has taken official action by resolution (the "Issuer Resolution") adopted by a majority of the members of the Issuer Board of Directors at a meeting duly called, noticed and conducted, at which a quorum was present and acting throughout, on , 2007, all action necessary to be taken by it for.the issuance of the Bonds, the execution and delivery of the Issuer Legal Documents to be executed by it and this Forward Delivery'Conttact and for the due performance of the Issuer Legal Documents and this Forward Delivery Contract, and to execute and deliver the Official Statement, and any and all action as may be required on the part of the Issuer to carry out, give effect to and consummate the transactions contemplated hereby and thereby has been taken, and the Issuer Resolution has not been modified or amended and is in full force and effect; (b) The Issuer is a joint exercise of powers agency duly organized and validly existing pursuant to the Constitution and laws of the State with the full power and authority to adopt the Issuer Resolution, to issue the Bonds for the purposes described in the Official Statement and to execute and deliver the Official Statement and enter into and perform its duties under the Issuer Legal Documents and this Forward Delivery Contract, and to consummate the transactions contemplated hereby and thereby; ._... (c)_.... This. Forward Delivery.Contract,the_Master..Trust_Agreement,Jhe_.Master Facility Lease and the Master Site Lease constitute, and upon their issuance and delivery, the Issuer Legal Documents to be executed by it and the Bonds will each constitute, legal, valid and binding obligations of the Issuer enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or creditors' rights generally; and the issuance of the Bonds, the execution and delivery of the Issuer Legal Documents to be executed by it and this Forward Delivery Contract, and compliance with the provisions of the Issuer Legal Documents and this Forward Delivery Contract will not conflict with or constitute a breach of or a default under any applicable law or administrative regulation .of the State or the United States, or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject, nor will any such execution, delivery or compliance result in the 10264645.2 -8- creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of,the Issuer under the terms of any such California or federal law, administrative regulation,judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the Issuer Legal Documents; (d) The Issuer is not in material breach of or in material default under any existing law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject, and no event has occurred and is _- continuing which,.with.the-passage of time.or-the--giving of notice or both,_.would constitute a material default under any such instrument; (e) At the time of the Issuer's acceptance hereof, the Official Statement did not, and as of its date the Updated Official Statement will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were or are, as the case may be, made, not misleading (excluding therefrom information relating to DTC, the book-entry system, the Bond Insurance Policy and the Bond Insurer, as to which no representation is made); and the Issuer will cooperate with the Underwriters in the preparation of any amendment or supplement to the Official Statement of the Updated Official Statement, as the case may be, in accordance with Section 5(d)hereof, so that the Official Statement, as the same may be supplemented or amended to the date of the Updated Official Statement pursuant to the provisions of this Forward Delivery Contract, and the Updated Official Statement as the same may be supplemented or amended pursuant to the provisions of this Forward Delivery Contract, will not, in either case except for brief periods between changes in any relevant circumstances and the timely amendment or supplement of the Official Statement or Updated Official Statement (as the case may be) to reflect such change, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (excluding therefrom information relating to DTC, the book-entry system, the Bond Insurance Policy and the Bond Insurer, as to which no representation is made); (f) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any California or federal court, public board or body pending or, to the best knowledge of the Issuer after due inquiry, threatened, wherein an unfavorable decision, ruling or finding would-•-(i)affect the creation, organization;existence or powers of the Issuer, or-the titles of its members or officers, (ii) enjoin or restrain the issuance, sale or delivery of the Bonds or the receipt of Base Rental Payments under the Facility Lease or challenging, directly or indirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Issuer, (iii) in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Issuer Legal Documents or this Forward Delivery Contract, (iv)in any way question or affect this Forward Delivery Contract, the Issuer Legal Documents or the transactions contemplated by this Forward Delivery Contract, the Official Statement, the documents referred to in the Official Statement, or any other agreement or instrument to which the Issuer is a party relating to the issuance of the Bonds, or(v) in any way question or affect the federal tax-exempt status of the interest on the Bonds; 10264645.2 -9- (g) Except as may be required under Blue Sky or other securities laws of any state,f there is no consent, approval, authorization or other order of, or filing or registration with, or certification by, any regulatory authority having jurisdiction over the Issuer required for the execution and delivery of this Forward Delivery Contract or the execution, delivery and sale of the Bonds or the consummation by the Issuer of the other transactions contemplated by the Official Statement, this Forward Delivery Contract, or the Issuer Legal Documents; (h) The Bonds, if and when issued, will be issued in accordance with the Trust Agreement, and the Bonds and the Trust Agreement will conform in all material respects to the descriptions thereof contained in the Official Statement under the captions "INTRODUCTION," "PLAN OF FINANCE," "THE 2007 SERIES BONDS,"'.`-SECURITY AND SOURCES-OF-PAYMENT FOR THE.- BONDS," and APPENDD{E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" to the Official Statement; this Forward Delivery Contract conforms to the description thereof contained in the Official Statement under the caption "CERTAIN FORWARD DELIVERY CONSIDERATIONS" (except for that information under the subheadings "General", "Ratings Risk", "Secondary Market Risk" and "Market Value Risk"); and the Continuing Disclosure Agreement conforms to the summary thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE" and in APPENDDx G—"PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT"to the Official Statement; (i) -The Bonds, if and when issued, authenticated and delivered-in accordance with the Trust Agreement and sold to the Underwriters as provided herein, will be validly issued and outstanding obligations of the Issuer, entitled to the benefits of the Trust Agreement; and upon such issuance, authentication and delivery the Trust Agreement will provide, for the benefit of the holders from time to time of the Bonds, a legally valid and-binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the funds and accounts pledged under the Trust Agreement, subject only to the provisions of the Trust Agreement permitting the application thereof on the terms and conditions set forth in the Trust Agreement; 0) The Issuer shall apply the proceeds of the Bonds, and earnings thereon, in accordance with the Trust Agreement and as described in the Official Statement; (k) The Issuer is not presently contemplating taking any action which, to its knowledge, would result in a material adverse change in the market price or marketability of the Bonds; (1) The Issuer is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding; (m) Any certificate signed by any official of the Issuer and delivered to the Underwriters pursuant to this Forward Delivery Contract or any document contemplated hereby shall be deemed a representation and warranty by the Issuer to the Underwriters as to the statements made therein and that such officer shall have been duly authorized to execute the same; and 10264645.2 -10- (n) At the date of the Preliminary Closing and at the Settlement Date, each of the representations and certifications of the Issuer in the Issuer Legal Documents to be executed by it and in this Forward Delivery Contract is and will be true, accurate and complete. Section 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COUNTY. The County hereby represents and warrants or agrees(as appropriate)as follows: (a) The County has taken official action by Resolution No. (the "County Resolution") adopted by a majority of the members of the County Board of Supervisors at a meeting duly called, noticed and conducted, at which a quorum was present and acting __throughout, on_ , 2007,--all action necessary to-be-taken-by it for the-execution and delivery County Legal Documents to be executed by it and this Forward Delivery Contract and for the due performance of the County Legal Documents and this Forward Delivery Contract, and to execute and deliver the Official Statement, and any and all action as may be required on the part of the County to carry out, give effect to and consummate the transactions contemplated hereby and thereby has been taken, and the County Resolution has not been modified or amended and is in full force and effect; (b) The County is a political subdivision, duly organized and existing under the laws of the Constitution and the State and has all necessary power and authority to adopt the County Resolution, to enter into and perform its duties under the County Legal Documents and this Forward Delivery Contract, and to execute and deliver the Official Statement, and to consummate the transactions contemplated hereby and thereby; (c) This Forward Delivery Contract, the Master Facility Lease and the Master Site Lease constitutes, and upon their issuance and delivery, the County Legal Documents to be executed by it will each constitute, legal, valid and binding obligations of the County enforceable . in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or creditors' rights generally; and the execution and delivery of the County Legal Documents to be executed by it and this Forward Delivery Contract, and compliance with the provisions of the County Legal Documents and this Forward Delivery Contract will not conflict with or constitute a breach of or a default under any applicable law or administrative regulation of the State or the United States, or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject, nor will any such execution, delivery or compliance..result.-in-the--creation.or. imposition of any.lien;-charge or.-other security.interest.or... encumbrance of any nature whatsoever upon any of the properties or assets of the County under the terms of any such California or federal law, administrative regulation,judgment or decree or any lease,.loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided in the County Legal Documents; (d) The County is not in material breach of or in material default under any existing law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or,is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute a material default under any such instrument; 10264645.2 -1 1- (e) At the time of the Issuer's acceptance hereof, the Official Statement did not, and as of its date the Updated Official Statement will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were or are, as the case may be, made, not misleading (excluding therefrom information relating to DTC, the book-entry system, the Bond Insurance Policy and the Bond Insurer, as to which no representation is made); and the Issuer will cooperate with the Underwriters in the preparation of any amendment or supplement to the Official Statement or the Updated Official Statement, as the case may be, in accordance with Section 5(d)hereof, so that the Official Statement, as the same may be supplemented or amended to the date of the Updated Official Statement pursuant to the provisions of this Forward Delivery - - Contract,-and the Updated Official-Statement-as-the same may be supplemented or amended — -- - pursuant to the provisions of this Forward Delivery Contract, will not, in either case except for brief periods between changes in any relevant circumstances and the timely amendment or supplement of the Official Statement or Updated Official Statement (as the case may be) to reflect such change, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (excluding therefrom information relating to DTC, the book-entry system,the Bond Insurance Policy and the Bond Insurer, as to which no representation is made); (f) . There is no action, suit, proceeding or investigation before or by any court,public board or body pending or, to the best knowledge of the County after due inquiry, threatened, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the County, or the titles of its members or officers, (ii) enjoin or restrain the issuance, sale and delivery of the Bonds or the payment of Base Rental Payments under the Facility Lease or challenging, directly or indirectly, the location of the Facilities, or the proceedings to lease the Facilities from the Issuer, (iii)in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Bonds, the County Legal Documents or this Forward Delivery Contract, (iv)in any way question or affect this Forward Delivery Contract, the County Legal Documents or the transactions contemplated by this Forward Delivery Contract, the Official Statement, the documents referred to in the Official Statement, or any other agreement or instrument to which the County is a party relating to the issuance of the Bonds or (v) in any way question or affect the federal tax-exempt status of the interest on the Bonds; (g) Except as may be required under Blue Sky or other securities laws of any state, -- - there is--no--consent, approval; authorization--or-other-order-of;-or-filing-or-registration--with,-or - p certification by, any regulatory authority having jurisdiction over the County required for the execution and delivery of this Forward Delivery Contract or the execution, delivery and sale of the Bonds or the consummation by the County of the other transactions contemplated by the Official Statement, this Forward Delivery Contract, or the County Legal Documents; (h) The Bonds, if and when issued, will be issued in accordance with the Trust Agreement, and the Bonds and the Trust Agreement will conform in all material respects to the descriptions thereof contained in the Official Statement under the captions "INTRODUCTION," "PLAN OF FINANCE," "THE 2007 SERIES BONDS,""SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," and APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" to the Official Statement; this Forward Delivery Contract conforms to the 10264645.2 -12- description thereof contained in the Official Statement under the caption "CERTAIN FORWARD DELIVERY CONSIDERATIONS" (except for that information under the subheadings "General", "Ratings Risk", "Secondary Market Risk" and "Market Value Risk'); and the Continuing Disclosure Agreement conforms to the summary thereof contained in the Official Statement under the caption "CONTINUING DISCLOSURE" and in APPENDDx G—"PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT"to the Official Statement; (i) The Bonds, if and when issued, authenticated and delivered in accordance with the Trust Agreement and sold to the Underwriters as provided herein, will be validly issued and outstanding obligations of the Issuer, entitled to the benefits of the Trust Agreement; and upon such_issuance,_authentication and delivery the Trust Agreement will_provide,._for..the benefit of the holders from time to time of the Bonds, a legally valid and binding pledge of and lien on the Revenues (as defined in the Trust Agreement) and the funds and accounts pledged under the Trust Agreement, subject only to the provisions of the Trust Agreement permitting the application thereof on the terms and conditions set forth in the Trust Agreement; (j) Except as disclosed in the Official Statement, there has not been any materially adverse change in the financial condition of the County since June 30, 2006 and there has been no occurrence, circumstance or combination thereof which is reasonably expected to result in any such materially adverse change. The financial statements of, and other financial information .regarding the County in the Official Statement fairly present the financial position and results of the operations of the County as of the dates and for the periods therein set forth (i)the audited financial statements have been prepared in accordance with the generally accepted accounting principles consistently applied, and (ii) the other financial information in the Official Statement has been determined on a basis substantially consistent with that of the County's audited financial statements included in the Official Statement; (k) The County is not presently contemplating taking any action which, to its knowledge, would result in a material adverse change in the market price or marketability of the Bonds; (1) The County is not in default, and at no time has defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding; _.._._.___ _....__...,.._. (m)...._Any _-signed__by_any official-_.of.,the...County__and._delyered_.to. the.. Underwriters pursuant to this Forward Delivery Contract or any document contemplated hereby shall be deemed a representation and warranty by the County to the Underwriters as to the statements made therein and that such officer shall have been duly authorized to execute the same; (n) At the date of the Preliminary Closing and the Settlement, each of the representations and certifications of the County in the County Legal Documents to be executed by it and in this Forward Delivery Contract is and will be true, accurate and complete; and (o) At or prior to the Preliminary Closing, the County shall have duly authorized, executed and delivered the Continuing Disclosure Agreement substantially in the form attached 10264645.2 -13- to the Official Statement as Appendix G, to provide certain annual financial information and to provide notices upon the occurrence of certain events, if material. The County has never failed to comply with any prior continuing disclosure undertakings under Rule 15c2-12. Section 10. PRELIMINARY CLOSING. At 8:00 a.m., California time, on , 2007 (the "Closing Date"), or such other date and time as shall have been mutually agreed upon by the Issuer, the County, and the Underwriters, the certificates, opinions and other documents required by Section 13 below shall be executed and delivered (all of the foregoing actions are herein referred to collectively as the "Preliminary Closing"). The Preliminary Closing shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, San Francisco, California ("Bond Counsel"), or at such other location.as shall..be_mutually agreed upon_by.the Issuer, the County,__. and the Underwriters. Assuming the Preliminary Closing is completed in accordance with the provisions of this Forward Delivery Contract then, subject to the provisions of this Forward Delivery Contract, the Underwriters shall be obligated to purchase the Bonds and pay the Purchase Price therefor (and the Issuer shall be obligated to issue and deliver such Bonds) at the Settlement. Section 11. SETTLEMENT. (a) At 8:00 a.m., California time, on , 2007 (the "Settlement Date"), or at such later date, but not later than - - 2007,.as may.be mutually agreed upon by the Issuer, the County, and the Underwriters, (i)the Issuer will, subject to the terms and conditions hereof, deliver the Bonds to DTC on behalf of the Underwriters in the form of one or more bonds for each maturity of the Bonds registered in the name of Cede & Co., duly executed and authenticated, and deliver or cause to be delivered to the Representative the other documents required by Section 15 hereof, (ii)the Underwriters will, subject to the terms and conditions hereof, accept such delivery and pay or cause to be paid the Purchase Price of the Bonds as set forth in Section 4 hereof by wire transfer in immediately available funds to the Bond Trustee; and (iii)the Issuer will pay to the Underwriters the Underwriters' Compensation as set forth in Section 4(e) hereof by wire transfer in immediately available funds to such account as shall be designated by the Underwriters (all of the foregoing described transactions are herein called the "Settlement"). Delivery and payment as aforesaid shall be made at the offices of Bond Counsel, or such other place as shall have been mutually agreed upon by the Issuer and the Underwriters. (b) The Issuer will have no obligation to issue, sell and deliver the Bonds if, because of_a_Change in-Law,.such_issuance, sale-and.delivery would.be-illegal.-as to-the Issuer.__.In.such......_.._.. event, the County shall pay to the Underwriters the amount of$ , and neither the Issuer nor the County will.have any further liability whatsoever for the failure to issue, sell and deliver the Bonds. Section 12. CERTAIN CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The Underwriters have entered into this Forward Delivery Contract in reliance upon the representations and warranties of the Issuer and the County contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Preliminary Closing and the Settlement, and upon the performance by the Issuer of its respective obligations hereunder, both as of the date hereof and as of the dates of the Preliminary Closing and the Settlement. Accordingly, the Underwriters' 102646452 -14- obligations under this Forward Delivery Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Issuer of its obligations to be performed hereunder and the delivery of the documents and instruments required to be delivered hereby at or prior to the Preliminary Closing and the Settlement, and shall also be subject to the following additional conditions: (a) The representations and warranties of the Issuer and the County contained herein shall be true, complete and correct on the date hereof, at the date of the Preliminary Closing and at the date of the Settlement; at the time.---of the Preliminary Closing..and__the__Solement, this Forward. ._,.._,, Delivery Contract and the Legal Documents and, at the time of the Settlement only, the Escrow Agreement, shall be in full force and effect in accordance with their respective terms and shall not have been amended, modified or supplemented in any manner which will adversely affect (i) the ability of the Issuer to issue the Bonds or perform its obligations thereunder or under this Forward Delivery Contract or (ii) the security for the Bonds; and both at the time of the Preliminary Closing and the Settlement, the Official Statement and the Updated Official Statement shall not have been supplemented or amended except pursuant to the provisions of this Forward Delivery Contract; (c) Both at the time.of the Preliminary Closing and the.Settlement, all official action of the Issuer, the County and of the other parties thereto relating to this Forward Delivery Contract, the Bonds, the Escrow Agreement and the Legal Documents shall have been taken and shall be in full force and effect in accordance with their respective terms and shall not have been amended,modified or supplemented in any material adverse respect; and Section 13. PRELIMINARY CLOSING CONDITIONS. (a) The Underwriters' obligations under this Forward Delivery Contract shall be conditioned upon the performance by the Issuer and the County of their obligations to be performed hereunder, and the applicable conditions of Section 12 hereof having been satisfied, and the tender by the Issuer and the County of their performance at the Preliminary Closing as described in Section 10 hereof, which Preliminary Closing shall not be completed unless the Underwriters shall receive at the time of the Preliminary Closing the following: (1) The Official Statement and each supplement or amendment, if any, thereto, executed on behalf of the Issuer by its Executive Director and approved on behalf of the County by its Director of Finance; (2) Two transcripts of all proceedings relating to the authorization and issuance of the Bonds through the date of the Preliminary Closing, certified by a duly authorized officer of the Issuer; (3) The Issuer Resolution, certified by the Secretary of the Issuer as having been duly adopted by the Issuer and as being in effect, with such supplements or amendments as may have been agreed to by the Underwriters, together with a certificate from the Secretary of the Issuer stating that the Issuer Resolution is in effect in the form 10264645.2 -15- existing on the date hereof and has not been amended except as shall have been agreed to by the Underwriters; (4) The County Resolution, certified by the Clerk-Recorder of the County Board of Supervisors as having been duly adopted by the County and as being in effect, with such supplements or amendments as may have been agreed to by the Underwriters, together with a certificate from the Clerk-Recorder of the County Board of Supervisors stating that the County Resolution is in effect in the form existing on the date hereof and has not been amended except as shall have been agreed to by the Underwriters; (5) A letter,.dated the date of Preliminary Closing and addressed to the Issuer and the County, of Bond Counsel, in substantially the form attached hereto as Exhibit C, together with a letter of such counsel, dated the date of the Preliminary Closing and addressed to the Underwriters, to the effect that the foregoing letter addressed to the Issuer and the County may be relied upon by the Underwriters to the same extent as if such letter were addressed to them; (6) An opinion, dated the date of the Preliminary Closing and addressed to the Underwriters, of Bond Counsel to the effect that (i)this Forward Delivery Contract has been duly executed and delivered by the Issuer and (assuming due authorization, execution and delivery by, and-validity with respect to,the Underwriters and the County) constitutes a valid and binding agreement of the Issuer subject to (A)bankruptcy or other laws affecting creditors' rights and (B) the application of equitable principles, (ii) assuming no change in applicable law from the law in effect on the date of such opinion, the Bonds, if and when issued, will not be subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended (no opinion need be expressed with respect to the Bond Insurance Policy); and (iii)the statements contained in the Official Statement under the captions"INTRODUCTION,""PLAN OF FINANCE," "THE 2007 SERIES BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,""CERTAIN FoRwARD DELIVERY CONSIDERATIONS" (except for that information under the subheadings "General," "Ratings Risk," "Secondary Market Risk" and "Market Value Risk") and "TAX MATTERS" and contained in APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" insofar as such statements summarize certain provisions of the Trust Agreement, the Facility Lease, the Site Lease, the Bonds, Bond Counsel'-s-opinion concerning-certain federal-ta -matters-relating to the.-Bonds,. - - are accurate in all material respects; (7) The opinion of Lofton & Jennings, San Francisco, California ("Disclosure Counsel"), dated the Preliminary Closing Date and addressed to the Issuer, the County and the Underwriters, to the effect that, based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to their attention which would cause them to believe that the Official Statement, as of its date or as of the date of their opinion (except for any financial or statistical data or 10264645.2 -16- forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry or The Depository Trust Company, the Bond Insurer or the Bond Insurance Policy, included .therein, or Appendices C, D, E, F, H and I attached thereto, as to which no opinion or view need be expressed), contained or contains any untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (8) An opinion, dated the date of the Preliminary Closing and addressed to the ._..__._......____._._Underwriters, of the County Counsel as general counsel lo.the_Issuer,.in substantially the ...._ form attached hereto as Exhibit A-1; (9) The opinion of the County Counsel, dated the Preliminary Closing Date and addressed to the Underwriters, in substantially the form attached hereto as Exhibit A- 2, (10) Certificates, dated the date of the Preliminary Closing, signed by duly authorized officers of the Issuer and the County in substantially the form attached hereto as Exhibits B and G (but in lieu of or in conjunction with such certificates the Underwriters may, in its sole discretion, accept certificates or opinions of Bond Counsel,. or of other counsel acceptable to the Underwriters, that, in the opinion of such counsel, the issues raised in any pending or threatened litigation referred to in such certificate are without substance or that the contentions of all plaintiffs therein are without merit); (11) ' An opinion of Nixon Peabody LLP, San Francisco, California ("Underwriters' Counsel"), dated the date of the Preliminary Closing and.addressed to the Underwriters, to the effect that, (i)based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to the attention of the attorneys rendering legal services in connection with such representation which cause them to believe that the Official Statement, as of its date or as of the date of the Preliminary Closing (except for any financial or statistical data or ....forecasts,.- numbers,_ charts, -.tables, graphs,.-.estimates,__projections,_:_.assumptions...or- expressions rexpressions of opinion, or any information about book-entry or The Depository Trust Company, the Bond Insurer or the Bond Insurance Policy, included therein, or any of the appendices attached thereto,as to which no opinion or view need be expressed) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (ii) assuming no change in applicable law from the law in effect on the date of such opinion, the Bonds, if and when issued, will be exempt from registration under the Securities Act of 1933, as amended, (iii)the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended and (iv) assuming the due authorization, execution, and delivery of the Continuing Disclosure Agreement by the County and the 10264645.2 -17- enforceability thereof, the Continuing Disclosure Agreement satisfies Section (b)(5)(i) of Rule 15c2-12, which requires an undertaking for the benefit of the holders, including beneficial owners, of the Bonds, to provide certain annual financial information and event notices to various information repositories at the time and in the manner required by the Rule 15c2-12; (12) A certificate, dated the date of the Preliminary Closing, signed by a duly authorized official of the Bond Trustee, satisfactory in form and substance to the Underwriters, to the effect that: (A)the Bond Trustee is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being..qualified._to_.enter into the Seventh.Supplemental Trust Agreement.._.__..___.____.... and the Continuing Disclosure Agreement and to perform its duties under the Trust Agreement and the Continuing Disclosure Agreement and to authenticate and deliver the Bonds to the Underwriters pursuant to the Trust Agreement; (B)the Bond Trustee is duly authorized to enter into the Seventh Supplemental Trust Agreement and the Continuing Disclosure Agreement and to authenticate and deliver the Bonds to the Underwriters pursuant to the Trust Agreement; (C) on the Settlement Date, the Bonds will have been duly authenticated and delivered by the Bond Trustee; (D)the execution and delivery of the Seventh Supplemental Trust Agreement and the Continuing Disclosure Agreement and compliance with the provisions on the part of the Bond Trustee contained in the Trust Agreement and the Continuing Disclosure Agreement, does not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, note, resolution, agreement or other instrument to which the Bond Trustee is a party or is otherwise subject (except that no representation or warranty is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption .or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Bond Trustee pursuant to the Trust Agreement under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Trust Agreement; and (E)to the best knowledge of the Bond Trustee after reasonable investigation, it has not been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any such action or other proceeding threatened against the Bond Trustee, affecting the existence of the Bond Trustee, or the titles of its officers-to their'respective offices-or-seeking to"-prohibit; restrain,or enjointhe......_...-,-_'____-_._. execution and delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of the Trust Agreement or the Continuing Disclosure Agreement, or contesting the powers of the Bond Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or the Trust Agreement or the Continuing Disclosure Agreement or the power and authority of the Bond Trustee to enter into and perform its respective duties under such agreements and to authenticate and deliver the Bonds to the Underwriters; (13) The opinion of Counsel to the Bond Trustee, dated the Preliminary Closing Date, addressed to the Issuer, the County and the Underwriters, to the effect that: 10264645.2 -18- (A)the Bond Trustee has been duly incorporated as a national banking association under the laws of the United States and is in good standing under the laws of the United States, duly qualified to do business and to exercise trust powers therein, having full power and authority to enter into the Seventh Supplemental Trust Agreement and the Continuing Disclosure Agreement and to perform its duties as Trustee under the Trust Agreement and as dissemination agent under the Continuing Disclosure Agreement; (B) on the Settlement Date, the Bonds will have been validly authenticated, registered and delivered by the Bond Trustee; (C) no authorization, approval, consent or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Bond Trustee, or, to such counsel's knowledge after reasonable investigation, any other required for-the valid authorization, execution--and-delivery of the Seventh--- Supplemental Trust Agreement or the Continuing Disclosure Agreement or the performance by the Bond Trustee of the Trust Agreement or the Continuing Disclosure Agreement; (D)the execution and delivery of the Seventh Supplemental Trust Agreement and the Continuing Disclosure Agreement, and compliance by the Bond Trustee with the provisions of the Trust Agreement and the Continuing Disclosure Agreement under the circumstances contemplated thereby, does not in any material respect conflict with or constitute on the part of the Bond Trustee a breach or default under any agreements or other instrument to which the Bond Trustee is a parry (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law,- regulation, court order or consent decree to which the Bond Trustee is subject; and (E) the Trust Agreement and the Continuing Disclosure Agreement each constitute legal, valid and binding obligations of the Bond Trustee enforceable against the Bond Trustee in accordance with their respective terms; (14) A certificate of the Escrow Agent, dated the Preliminary Closing Date, signed by a duly authorized official, satisfactory in form and substance to the Underwriters, to the effect that: (A)the Escrow Agent is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being qualified to enter into and perform its duties under the Escrow Agreement; (B)the Escrow Agent is duly authorized to enter into the Escrow Agreement; (C)the execution and delivery of the Escrow Agreement and compliance with the provisions on the part of the Escrow Agent contained therein, w not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, - - deeree;-loan-agreement;-'"indenture, note, resolution;-agreement or otlier instrument to - which the Escrow Agent is a party or is otherwise subject (except that.no representation or warranty is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Escrow Agent pursuant to the Escrow Agreement under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Escrow Agreement; and (D) to the best knowledge of the Escrow Agent after reasonable investigation, it has not been served with any action, suit, proceeding, inquiry or investigation in law or in equity, before or by any court, governmental agency, public board or body, nor is any such 10264645.2 -19- action or other proceeding threatened against the Escrow Agent, affecting the existence of the Escrow Agent, or the titles of its officers to their respective offices or seeking to prohibit, restrain, or enjoin or in any way contesting or affecting the validity or enforceability of the Escrow Agreement, or contesting the powers of the Escrow Agent or its authority to enter into, adopt or perform its obligations under the foregoing to which it is a party, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Escrow Agreement or the power and authority of the Escrow Agent to enter into and perform its duties under the Escrow Agreement; (15) The opinion of Counsel to the Escrow Agent, dated the Preliminary _ Closing Date, addressed_to_.the--County and the Underwriters, to the effect that: ._(A)_the...-_...... - Escrow Agent has been duly incorporated as a national banking association under the laws of the United States and is in good standing under the laws of the United States, duly qualified to do business and to exercise trust powers therein, having full power and authority to enter into and to perform its duties as Escrow Agent under the Escrow Agreement, and has full power and authority to execute and deliver the Escrow Agreement, and to perform its respective obligations thereunder; (B) no authorization, approval, consent or other order of the State or any other governmental authority or agency within the State having jurisdiction over the Escrow Agent, or, to such counsel's knowledge after reasonable investigation, any other entity, is required for the valid authorization, execution, delivery and performance by the Escrow Agent of the Escrow Agreement; and (C) the execution and delivery of the Escrow Agreement, and compliance by the Escrow Agent with the provisions of the foregoing under the circumstances contemplated thereby, will not in any material respect conflict with or constitute on the part of the Escrow Agent a breach or default under any agreements or other instrument to which the Escrow Agent is a party (and of which such counsel is aware after reasonable investigation) or by which it is bound (and of which such counsel is aware after reasonable investigation) or any existing law, regulation, court order or consent decree to which the Escrow Agent is subject; (16) Evidence satisfactory to the Underwriters that the claims paying ability of the Bond Insurer is rated, at the time of the Preliminary Closing, "AAA" by S&P and "Aaa"by Moody's; (17) A tax certificate by the County and/or the Issuer in form and substance acceptable to-Bond-Counsel and-the Underwriters; (18) A certificate, dated as of the date of the Preliminary Closing, of an accountant.or a firm of accountants acceptable to the Underwriters and Bond Counsel (the "Verification Agent") to the effect that it has verified the accuracy of the mathematical computations of the adequacy of the maturing principal amounts of the Investment Securities (as defined in the Escrow Agreement) to be held by the Escrow Agent together with the interest earned and to be earned thereon to make full and timely payment of all principal and interest due with respect to all of the 1997 Certificates to be refunded from the proceeds of the Bonds and to prepay all such 1997 Certificates as are then outstanding on the dates specified in the Escrow Agreement at the then applicable 10264645.2 -20- prepayment prices; such mathematical computations to be based upon information provided to the Verification Agent by the Underwriters, the Issuer and the County; (19) Evidence satisfactory to the Underwriters as to the County's legal title or the Issuer's leasehold interest to the Facilities; (20) A copy of the Bond Insurance Commitment executed by the Issuer and the Bond Insurer in the form previously approved by the Underwriters; (21) A favorable opinion of counsel to the Bond Insurer, satisfactory in form and scope to the Underwriters, dated the date of the Preliminary Closing and addressed to the Underwriters, as to the power and authority of the Bond Insurer to issue the Bond insurance Commitment and to deliver the Bond Insurance Policy pursuant thereto, and as to the validity and enforceability of the Bond Insurance Commitment and, when issued and paid for, the Bond Insurance Policy, and as to such other matters as the Underwriters may reasonably request; and (22) Such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Preliminary Closing, of the Issuer's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Issuer on or prior to the date of the Preliminary Closing of all the agreements then to be performed and conditions then to be satisfied by it. (b) The Issuer's obligations under this Forward Delivery Contract shall be conditioned upon the performance by the Underwriters of their obligations to be performed hereunder, including furnishing to the Issuer at the Preliminary Closing the following: (1) An opinion of counsel to the Underwriters in the form attached as Exhibit E hereto; and (2) A certificate of the Underwriters as to the issue price for the Bonds in the form attached hereto as Exhibit F. (c) All the opinions, letters, certificates, instruments and other documents mentioned " above"shall-be"deemed to be"iri compliance-with the pfovi§ions"hereof if;but only if;they are in form and substance satisfactory to (i) the Underwriters in the case of subsection(a) of this Section and (ii) the Issuer and Bond Counsel in the case of subsection(b) of this Section. The opinions and certificates referred to in clauses (8, (9) and (10) of subsection(a) of this Section, and the opinion and certificate referred to in subsection(b) of this Section, shall be deemed satisfactory provided they are substantially in the forms attached as exhibits to this Forward Delivery Contract. (d) The parties hereto agree that any opinion to be delivered pursuant to this Forward Delivery Contract may be modified to comply with the requirements of Internal Revenue Service Circular 230 (31 C.F.R. Part 10), and any such modification shall be subject to Section 16(e) hereof. 10264645.2 -21- Section 14. RIGHTS OF TERMINATION PRIOR TO PRELIMINARY CLOSING. The Representative, on behalf of the Underwriters, may terminate this Forward Delivery Contract, without liability therefor, by notification to the Issuer if at any time on or after the acceptance by the Issuer of this Forward Delivery Contract and on or prior to the Preliminary Closing: (1) legislation (including any amendments thereto), resolution, rule or regulation (including any amendments thereto) shall be introduced in, considered by or be enacted by any governmental body, department or political subdivision of the State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the opinion of the Representative would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; (2)there shall have occurred-any-outbreak or escalation of-hostilities, declaration by the-United-- States United-States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery of the Bonds as contemplated by the Official Statement (exclusive of any amendment or supplement thereto); (3)the declaration of a banking moratorium by federal, New York or California authorities, or trading in the Issuer's outstanding securities shall have been suspended by the Securities and Exchange Commission or the New York Stock Exchange or the NASDAQ National Market or trading in securities generally on the New York Stock Exchange or the NASDAQ National Market shall have been suspended or limited or minimum prices shall have been established on either of the New York Stock Exchange -or the NASDAQ National Market; (4) the imposition by the New York Stock Exchange or 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 Underwriters which, in the opinion of the Representative would make it impracticable or inadvisable to, proceed with the offer, sale or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; (5) legislation enacted (or resolution passed) by or introduced or pending legislation amended in the Congress or recommended for passage by the President of the United States, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed) issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that securities of the general character of the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt -from qualification under the Trust In enture Act of 1939, as amended, or t11at the execution, offering or sale of obligations of the general character of the Bonds, including any or all underlying arrangements, as contemplated hereby or by the Official Statement, otherwise is or would be in violation of the federal securities laws as amended and then in effect; (6) (i) legislation (including any amendment thereto) shall have been introduced in or adopted by either House of the Congress of the United States or recommended to the Congress or otherwise endorsed for passage by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or legislation is proposed for consideration by either such committee by any member thereof or presented as an option for consideration by either 10264645.2 -22- such committee by the staff of such committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or a bill to amend the Internal Revenue Code shall be filed in either house, or (ii) a decision shall have been rendered by any federal or state court, or(iii) an order, filing, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or any other agency of the United States, or (iv) a release or official statement shall have been issued by the President of the United States or by the Treasury Department of the United States or by the Internal Revenue Service, the effect of which, in any such case described in clause (i), (ii), (iii), or(iv), would be to impose, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds or upon income of the general character to - --- --- be received by the-Issuer,-other than as imposed on-the-Bonds and income therefrom under the - federal tax laws in effect on the date hereof, in such a manner as in the judgment of the Representative would make it impracticable or inadvisable to proceed'with the offer, sale or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; (7) action is taken by or on behalf of the State or the California Franchise Tax Board, with the purpose or effect, directly or indirectly, of imposing California personal income taxation upon such interest as would be received by the Owners of the Bonds; (8)the withdrawal or downgrading or any notice of an intended or potential downgrading of any rating of the obligations of the Issuer (including the rating to be issued with respect to the Bonds) by a "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act of 1933- as amended which, in the opinion of the Representative,would make it impracticable or inadvisable to proceed with the offer, sale or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; (9) any event occurring, or information becoming known which, in the judgment of the Representative, 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 therein, in the light of the circumstances under which they were made, not misleading; (10) any change or development involving a prospective change in the condition of the County, financial or otherwise, or in the operations of the County from those set forth in the Official Statement that makes the Bonds, in the judgment of the Representative, impracticable or inadvisable to offer, sell or deliver the Bonds on the terms and in the manner contemplated by the Official Statement; (11) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred; or (12)the purchase of and payment for the Bonds by the Underwriters, or the resale of the Bonds by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission. Section 15. SETTLEMENT CONDITIONS. (a) The Underwriters' obligations under this Forward Delivery Contract to purchase, to accept delivery of and to pay for the Bonds at the Settlement shall be conditioned upon the performance by the Issuer and the County of their obligations to be performed hereunder, including, without limitation, the Preliminary Closing having been completed, and the Issuer and the County having tendered performance of their obligations under Sections 11 and 12 hereof with respect to the Settlement, which Settlement shall not be completed unless the Underwriters shall receive at the time of the Settlement the following: 10264645.2 -23- (1) At least two copies of the Updated Official Statement and each supplement or amendment thereto, manually executed on behalf of the Issuer by its Executive Director and approved on behalf of the County by its Director of Finance, and such number of conformed copies as the Underwriters shall reasonably require; (2) The Escrow Agreement, as executed by the parties thereto; (3) Certificates, dated the date of the Settlement, of duly authorized officers of the Issuer and the County to the effect that the Issuer Resolution and the County Resolution are in full force and effect in the form existing as of the date of this Forward Delivery_.Contract and have not been subsequently amended, modified_.or supplemented, or if the same have been so amended, modified or supplemented, with certified copies of all such amendments,modifications and supplements and a certification that none of such amendments, modifications or supplements has a material adverse effect on the security for or source of payment of the Bonds or on the transactions contemplated by this Forward Delivery Contract; (4) An opinion, dated the date of Settlement and addressed to the Issuer and the County, of Bond Counsel in substantially the form included in the Official Statement as Appendix F, together with a letter of such counsel, dated the date of the Settlement and addressed to the Underwriters,to the effect that the.foregoing opinion addressed to the Issuer and the County may be relied upon by the Underwriters to the same extent as if such opinion were addressed to them; (5) An opinion, dated the date of the Settlement and addressed to the Underwriters of Bond Counsel, to the effect that (i)this Forward Delivery Contract has been duly authorized, executed and delivered by, and constitutes a legal, valid and binding agreement of, the Issuer in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to creditors' rights generally; (ii)the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (iii)the statements contained in the Official Statement under the captions "INTRODUCTION," "PLAN OF FINANCE," "THE 2007 SERIES BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," "CERTAIN FORWARD DELIVERY CONSIDERATIONS"....-.(except for that . information under the_ subheadings "General," . "Ratings Risk," ".Secondary Market Risk" and "Market Value Risk") and "TAX MATTERS" and contained in APPENDIX E—"SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS" to the Updated Official Statement, insofar as such statements summarize certain provisions of the Trust Agreement, the Facility Lease, the Site Lease, the Bonds, and Bond Counsel's opinion concerning certain federal tax matters relating to the Bonds, are accurate in all material respects; (6) The opinion of Disclosure Counsel, dated the date of the Settlement and addressed to the Issuer, the County and the Underwriters, to the effect that, based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without assuming any 10264645.2 -24- responsibility for the accuracy, completeness. or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to their attention which would cause them to believe that the Official Statement, as of its date contained, or that the Official Statement as the same may have been amended or supplemented to the date of the Settlement (except for any financial or statistical data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry or The Depository Trust Company, the Bond Insurer or the Bond Insurance Policy, included therein, or Appendices C, D, E, F, H and I attached thereto, as to which no opinion or view need be expressed) as of the date of the Settlement contains any untrue --------- --- - statement-of a material fact or omitted.-or-omits-to state a material fact-required to be ---- stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,not misleading; (7) An opinion, dated the date of the Settlement and addressed to the Underwriters, of County Counsel, as general counsel to the Issuer, in substantially the form attached hereto as Exhibit A-1; (8) The opinion of the County Counsel, dated the Date of the Settlement and addressed to the Underwriters, in substantially the form attached hereto as Exhibit A-2; (9) The opinion of Counsel to the Escrow Agent, dated the Preliminary Closing Date, addressed to the County and the Underwriters, to the effect that the Escrow Agreement has been duly authorized, executed and delivered by the Escrow Agent and constitutes the legal, valid and binding obligation of the Escrow Agent enforceable against the Escrow Agent in accordance with its terms; (10) A certificate, dated the date of the Settlement, signed by a duly authorized officer of the Issuer in substantially the form attached hereto as Exhibit B (but in lieu of or in conjunction with such certificate the Underwriters may, in its sole discretion, accept certificates or opinions of Bond Counsel, or of other counsel acceptable to the Underwriters, that, in the opinion of such counsel, the issues raised in any pending or threatened litigation referred to in such certificate are without substance or that the contentions of all plaintiffs therein are without merit); certificate,.dated the date of_the.Settlement,_signed by._a._duly.authorized officer of the County in substantially the form attached hereto as Exhibit G(but in lieu of or in conjunction with such certificate the Underwriters may, in its sole discretion, accept certificates or opinions of Bond Counsel, or of other counsel acceptable to the Underwriters, that, in the opinion of such counsel, the issues raised in any pending or threatened litigation referred to in such certificate are without substance or that the contentions of all plaintiffs therein are without merit); (12) An opinion of Underwriters' Counsel, dated the date of the Settlement and addressed to the Underwriters, to the effect that, (i) based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without assuming any responsibility for the 10264645.2 -25- accuracy, completeness or fairness of the statements contained in the Official Statement, and having made no independent investigation or verification thereof, no information has come to the attention of the attorneys rendering legal services in connection with such representation which cause them to believe that the Official Statement, as of its date or as of the date of such letter(except for any financial or statistical data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information about book-entry or The Depository Trust Company, the Bond Insurer or the Bond Insurance Policy, included therein, or any of the appendices attached thereto, as to which no opinion or view need be expressed) contained or contains any untrue statement of a material fact or omitted or omitsto state any material fact required to be - stated- -therein--or---necessary to make the---statements therein, in--the -light -of the circumstances under which they were made, not misleading, (ii) the Bonds are exempt from registration under the Securities Act of 1933, as amended, (iii)the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended and (iv) assuming the due authorization, execution and delivery of the Continuing Disclosure Agreement by the County and the enforceability thereof, the Continuing Disclosure Agreement satisfies Section (b)(5)(i) of Rule 15c2-12, which requires an undertaking for the benefit of the holders, including beneficial owners, of the Bonds, to provide certain annual financial information and event notices to various information repositories at the time and in the manner required by the Rule 15c2-12; (13) The Letter of Representations or evidence of other appropriate arrangements with DTC; (14) Letters from each of Moody's and S&P confirming their then current ratings on the Bonds, based upon the existence of the Bond Insurance Policy and the then current ratings of the Bond Insurer; (15) Evidence satisfactory to the Underwriters that the Bond Insurance Policy for the Bonds has been issued in substantially the form set forth. as Appendix I to the Preliminary Official Statement; (16) A favorable opinion of counsel to the Bond Insurer, satisfactory in form and scope to the Underwriters, dated the. date of the Settlement, and addressed to the Underwriters, as to the power and authority of the Bond Insurer to deliver the Bond Insurance.Policy, and_as..to.the validity.and_enforceability of the.Bond Insurance Policy,_-.._... and as to such other matters as the Underwriters may reasonably request; (17) Two transcripts of all proceedings relating to the authorization and issuance of the Bonds certified by the duly authorized officers of the Issuer and the County, and (18) Such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Settlement, of the Issuer's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Issuer 10264645.2 =26- on or prior to the date of the Settlement of all the agreements then to be performed and conditions then to be satisfied by it.. (b) The opinion of Bond Counsel which is referred to in clause(4) of subsection(a) of this Section shall be deemed satisfactory provided it is substantially in the form included in the Official Statement as Appendix F, and the opinions and certificates referred to in clauses (7), (8), (10), and (11) of such subsection shall be deemed satisfactory provided they are substantially in the forms attached as exhibits to this Forward Delivery Contract. Section 16. RIGHTS OF TERMINATION AFTER PRELIMINARY CLOSING, BUT __... _._.,.._.,____. .._. ON OR PRIOR TO SETTLEMENT. The Underwriters may terminate this Forward Delivery _ Contract without liability therefor by notification to the Issuer and the County if at any time on or after Preliminary Closing and on or prior to Settlement: (a) legislation shall be enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either House of Congress by any committee of such House, or passed by either House of Congress, or a decision shall have been rendered by a court of the United States or the United States Tax Court, or a ruling shall have been made or a regulation shall have been proposed or made by the Treasury Department of the United States or the Internal Revenue Service, with respect to the federal taxation of interest received on obligations of the general character of the Bonds, which, in the opinion of Bond Counsel has, or will have, the effect of making such interest subject to inclusion in gross income for purposes of federal income taxation, except to the extent such interest shall be includable in gross income on the date hereof; or (b) as a result of any legislation, regulation, ruling, order, release, court decision or judgment or action by the U.S. Department of the Treasury, the Internal Revenue Service, or any agency of the State either enacted, issued, effective, adopted or proposed, or for any other reason Bond Counsel cannot issue an opinion substantially in the form and to the effect set forth in Appendix F to the Official Statement or to the effect that (1)the interest on the Bonds is (x)not includable in the gross income of the holders thereof for federal income tax purposes by virtue of Section 103 of the Internal Revenue Code of 1986, as amended (the"Code") (or the comparable provisions of any successor federal income tax laws) and (y)not subject to personal income taxes imposed by the State, or (2) to the extent such opinion cannot be rendered under clause(1) above, and notwithstanding a change in law from that existing on the date of closing which __.._. -.affects-the.treatment, for.tax purposes,..at-.settlement_..the_.interest-on-the_Bonds_is not subject to (x) any currently imposed federal income tax and (y)personal income taxes imposed by the State; or (c) legislation shall have been enacted, or actively considered for enactment with an effective date prior to Settlement, or a decision by a court of the United Staies shall have been rendered,the effect of which is that(i)the Bonds or the Trust Agreement, as the case may be, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect or (ii) the offering or sale of the Bonds would be in violation of the Securities Exchange Act of 1934, as amended and as then in effect; 10264645.2 -27- (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering, or sale of the Bonds as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the federal securities.laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; (e) an official published ruling, regulation, guidance, release or official announcement, or temporary or proposed regulation, is made or is proposed by the Treasury Department-of_the__United..States or the Internal Revenue Service after..the.__date.hereof.with respect to the provisions of Internal Revenue Service Circular 230 (31 C.F.R. Part 10) (collectively, a"Ruling"); and: (1) any counsel delivering an opinion hereunder determines that compliance with such Ruling would require a modification to the form of opinion approved hereunder, including the form of Bond Counsel opinion attached to the Official Statement (without any amendments or supplements made subsequent to the date hereof); or (2) a determination is made by Bond Counsel that one or more "significant Federal tax issues" contained in a "separately provided written advice prepared by Bond Counsel pursuant to and as a result of the application of the Ruling as then in effect or as then proposed should be discussed in an amendment or supplement to the Official Statement, or any subsequent disclosure document; and such modification to the form of opinion or discussion of"significant Federal tax issues" as set forth in (i) or (ii) above would, in the judgment of the Representative: (A) adversely affect the market for the Bonds, the market value of the Bonds or the ability of the Underwriters to enforce contracts for the sale of the Bonds; or (B) limit the ability of the Underwriters to market the Bonds to certain classes of investors; (f) an event of default has occurred and is continuing, technical or otherwise, under any of the Legal Documents or the 1997 Trust Agreement; or (g) the Bond Insurer notifies the Issuer that the Bond Insurer is canceling its Bond Insurance Commitment to issue the Bond Insurance Policy. Section 17. EXPENSES. (a) The Underwriters shall be under no obligation to pay, and the Issuer shall pay, any expenses incident to the performance of the Issuer's obligations hereunder including, but not limited to: (i)the cost of preparation, printing and delivery.of the Escrow Agreement and the Legal Documents; (ii)the costs of preparation, printing and delivery of the Preliminary Official Statement and of preparation, printing and delivery of the Official Statement and the Updated Official Statement and any supplements and amendments to either of such Official Statements; (iii)the cost of preparation and printing of the Bonds; (iv)the fees and disbursements of Bond Counsel and County Counsel as counsel to the Issuer; (v)the fees and disbursements of any other engineers, accountants, and other experts, consultants or advisers retained by the Issuer; (vi)the 10264645.2 -28- fees, if any, for bond ratings; (vii)the fees and disbursements of the Verification Agent in connection with the certificate to be delivered pursuant to this Forward Delivery Contract; (viii)the fees and disbursements of and any other independent auditor of the Issuer; and (ix) the expenses (included in the expense component of the spread) incurred on behalf of the Issuer's and the County's employees which are incidental to implementing this Forward Delivery Contract, including, but not limited to, meals, transportation, lodging, and entertainment of such employees; (b) The Underwriters shall pay, only: (i)the cost of the printing of the Forward Delivery Contract and the Blue Sky Survey; (ii) all advertising expenses and Blue Sky filing fees . in.connection._with the public offering of.the_Bonds; (iii)-the fees and disbursements of Nixon Peabody LLP, as counsel to the Underwriters; and (iv) all other expenses incurred by the Underwriters in connection with the public offering of the Bonds, including the fees and disbursements of any other counsel retained by them. (c) Notwithstanding the foregoing, if the Underwriters or the Issuer or the County shall.bring an action to enforce any part of this Forward Delivery Contract against the other, the unsuccessful party in such action shall owe to the successful party in such action, in addition to all other amounts or obligations which shall be held to be due and owing, the successful party's reasonable attorney's fees and costs, and other fees, costs and expenses, incurred in connection with such action. _. Section 18. NOTICES. Any notice or other communication to be given to the Issuer or the County under this Forward Delivery Contract may be given by delivering the same in writing to the Issuer's and the County's address set forth above; and any notice or other communication to be given to the Underwriters under this Forward Delivery Contract may be given by delivering the same in writing to Citigroup Global Markets Inc., One Sansome Street, 28th Floor, San Francisco, California 94104, Attention: Michael T. Gomez, Director; or, in each. case, to such different address for a party as such party shall have notified the other party as aforesaid. In addition to any other copies which may be delivered to the Underwriters pursuant to this Forward Delivery Contract, five copies of the Updated Official Statement prepared pursuant to Section 5(c) hereof and five;copies of any amendment or supplement to the Official Statement prepared pursuant to Section 5(d) hereof shall be provided by the Issuer to the Underwriters at [390 Greenwich Street, 2nd Floor, New York, NY 10013, Attention: Section 19. TERMINATION AND ITS EFFECT. (a) In the event the Issuer or the County is unable, after using their best efforts, to satisfy the conditions herein to the completion of the Preliminary Closing (unless waived by the Underwriters) by the time such completion is required or if the Underwriters shall terminate this Forward Delivery Contract prior to the completion of the Preliminary Closing in accordance with Section 14 hereof, then this Forward Delivery Contract shall terminate, and neither the Issuer, the County nor the Underwriters shall have any further obligation or liability to, or any rights against, the others. 10264645.2 -29- (b) If the Preliminary Closing shall have occurred, in the event the Issuer or the County is unable, after using their best efforts, to satisfy the conditions herein to the completion of the Settlement (unless waived by the Underwriters) by the time such completion is required, or is otherwise unable, after using its best efforts, to satisfy the conditions to the obligation of the Underwriters to purchase, accept delivery of and pay for the Bonds as set forth in this Forward Delivery Contract (unless waived by the Underwriters) by the time such completion is required, then this Forward Delivery Contract shall terminate, and neither the Issuer nor the Underwriters shall have any further obligation or liability to, or any rights against, the other except as otherwise provided in this Forward Delivery Contract. _ _In_the_event-the Underwriters do-not purchase,_accept deliver ._of..and_pay-for the _.._. Bonds as provided herein for a reason permitted hereunder (other than as set forth in Sections 19(e) or (f)hereunder), then this Forward Delivery Contract shall terminate, and neither the Underwriters nor the Issuer shall have any further obligation or liability to, or rights against, the other except as otherwise provided in this Forward Delivery Contract. (d) In the event the Underwriters terminate this Forward Delivery Contract as permitted in Section 14 or Section 16 hereof, then this Forward Delivery Contract shall terminate, and neither the Underwriters nor the Issuer shall have any further obligation or liability to, or rights against, the other. (e) If the Underwriters fail (other than for a reason permitted hereunder) to accept and pay for the Bonds at Settlement as provided herein, the Underwriters shall payto the Issuer as full liquidated damages and not as a penalty, an amount equal to $ (the "Liquidated Damages") and payment of the Liquidated Damages by the Underwriters to the Issuer shall constitute a full release and discharge of all claims and damages for such failure and for any and all such defaults hereunder on the part of the Underwriters. The Issuer and the Underwriters mutually acknowledge and confirm that it would be extremely difficult, if not impossible, to determine the exact amount of damages that would be suffered by the Issuer as a result of a failure of the Underwriters (other than for a reason permitted hereunder) to accept and pay for the Bonds at Settlement as provided herein and that the liquidated damages provided herein are a responsible good faith estimate of the actual damages that would be suffered and are not a penalty. Nothing in this paragraph is intended to limit the right or ability of the Underwriters to collect contributions from any other Underwriters equal to its pro rata proportionate share of the amounts paid hereunder. (f) The Underwriters may satisfy their obligations under this Agreement by payment to the Issuer on the Settlement of an amount equal to $ (g) In the event that the Underwriters satisfy all of its obligations under the Forward Delivery Contract by making a payment to the Issuer as provided in Section 19(f) hereof, neither the Underwriters, the Issuer nor the County shall have any further obligation or liability to, or any rights against, the other, except as provided in this Forward Delivery Contract. (h) Notwithstanding the foregoing, the provisions of Sections 17 and 19 hereof shall survive any termination of this Forward Delivery Contract. 10264645.2 -30- Section 20. PARTIES IN INTEREST; SURVIVABILITY OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. This Forward Delivery Contract is made solely for the benefit of the Issuer, the County and the Underwriters and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Issuer's and the County's representations, warranties and agreements contained in this Forward Delivery Contract shall remain operative and in full force and effect, regardless of. (i) any investigations made by or on behalf of the Underwriters; (ii) delivery of and payment for the Bonds pursuant to this Forward Delivery Contract; and (iii) any termination of this Forward Delivery Contract. Section 21. EFFECTIVENESS. This Forward Delivery Contract shall become effective upon-the execution of the acceptance-hereof_by the duly authorized officers of the Issuer and the County and shall be valid and enforceable at the time of such acceptance. Section 22. GOVERNING LAW. This Forward Delivery Contract will be governed by and construed in accordance with the laws of the State of California without reference to choice of law doctrine, except that the capacity, power or authority of the Issuer to enter into this Agreement and any issue relating to the interpretation of the Trust Agreement or to the payment of any of the Issuer's obligations under this Forward Delivery Contract or the issuance of the Bonds shall be governed by and construed in accordance with the laws of the State of California. Section 23. HEADINGS. The.headings of the Sections of this Forward Delivery Contract are inserted for convenience only and shall not be deemed to be a part hereof. 10264645.2 -31- Very truly yours, CITIGROUP GLOBAL MARKETS INC. BANC OF AMERICA SECURITIES LLC By: CITIGROUP GLOBAL MARKETS INC., as Representative By: Director COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY By: Authorized Officer COUNTY OF CONTRA COSTA By: Authorized Officer -32- 10264645.2 SCHEDULEI 2007 SERIES B MATURITIES,AMOUNTS, RATES,YIELDS AND PRICES Maturity Principal Interest Price or June 1 Amount Rate Yield Schedule I 10264645.2 Exhibit A-1 Legend: Text in [ ]s to be included only in opinion delivered at Preliminary Closing. Text in<>s to be included only in opinion delivered at Settlement. [LETTERHEAD OF ISSUER COUNSEL] (Description of Opinion of County Counsel, as counsel to the Issuer) (Introductory Language, Assumptions, Qualifications and Limitations to Come] 1. The Issuer is a joint exercise of powers agency duly organized and validly existing pursuant to the Constitution and laws of the State of California with the full power and authority to adopt the Issuer Resolution, and the Issuer has duly and validly adopted the Issuer Resolution approving the execution and delivery of the Seventh Supplemental Trust Agreement, the Sixth Amendment to Facility Lease, the Sixth Amendment to Site Lease and the Continuing Disclosure Agreement (collectively, the "2007 Issuer Legal Documents"), the Bonds and the Official Statement at a meeting of the Board of Directors of the Issuer 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 throughout and the Issuer Resolution has not been modified or amended and is in full force and effect. 2. The Issuer has the full legal right, power and authority to sell {and deliver}.the Bonds, and to execute and deliver the 2007 Issuer Legal Documents and to perform its obligations and duties under the Trust Agreement, the Facility Lease, the Site Lease and the Continuing Disclosure Agreement (collectively, the "Issuer Legal Documents") and the Forward Delivery Contract and the transactions contemplated by the Official Statement, and the Issuer has , complied with the provisions of applicable law in all matters relating to the transactions contemplated by the Bonds, each of the Issuer Legal Documents, the Forward Delivery Contract and the Official Statement. 3. Each of{the Bonds,} the Issuer Legal Documents, the Forward Delivery Contract and the Official Statement has been duly authorized, executed and delivered by the Issuer, is in -full force and effect-and;-assuming due authorization, execution and delivery by the other parties thereto of the Issuer Legal Documents and the Forward Delivery Contract, each constitutes a legal, valid and binding agreement of the Issuer enforceable against the Issuer in accordance with its respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and -to the application of equitable principles if equitable remedies are sought. 4. Except as may be described in the [Official Statement] {Updated Official Statement}, no approval, consent or authorization of any governmental or public agency, authority or person is required for the adoption of the Issuer Resolution, the issuance of the Bonds or the execution and delivery by the Issuer of the 2007 Issuer Legal Documents, the Forward Delivery Contract or the Official Statement or the performance by the Issuer of its A-1 10264645.2 obligations under the Issuer Legal Documents, the Forward Delivery Contract or the Official Statement which has not been obtained (provided that no opinion is expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution of the Bonds by the Underwriters). 5. The issuance on the Settlement Date of the Bonds, the execution and delivery of the 2007 Issuer Legal Documents, the Forward Delivery Contract and the Official Statement by the Issuer, the adoption of the Issuer Resolution, and compliance with the provisions of the Bonds, the Issuer Legal Documents, the Forward Delivery Contract, the Official Statement and the performance by the Issuer of its obligations thereunder will not conflict with or constitute a breach of, or default under,_any.instrument relating to the organization, existence or operation the Issuer, or any commitment, agreement or other instrument to which the Issuer is, or will on or after the [date of Closing] {Settlement Date} be, a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance,judgment, order or decree to which the Issuer (or any of its officers in their respective capacities as such) is subject or any provision of the laws of the State of California relating to the Issuer and its affairs. 6. There is no action, suit, proceeding, inquiry or investigation at law or in equity, or before any court,public board or body pending or, to the best of my knowledge after due inquiry, threatened in any way affecting the existence of the Issuer or the titles of its officers to their respective offices, in any way contesting or affecting the validity of the Issuer Legal Documents or the Forward Delivery Contract, the issuance, sale or delivery of the Bonds or any of the transactions contemplated by the Official Statement, or the validity of the proceedings taken by the Issuer in connection with the authorization, issuance and sale of the Bonds or the execution or delivery of the Issuer Legal Documents, the Forward Delivery Contract or the Official Statement, wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated thereby, or which, in any way, would adversely affect the validity or enforceability of the Issuer Resolution, the Issuer Legal Documents or the Forward Delivery Contract, or in any material respect affect the ability of the Issuer to perform its obligations under the Issuer Legal Documents or the Forward Delivery Contract or any other applicable agreement, or any action on the part of the Issuer contemplated by any of said documents, or asserting that the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. - - - T Without--passing--upon---or- -assuming any---responsibility for the -accuracy; -- completeness or fairness of the statements contained in the Official Statement and making no representation that such Counsel has independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available in the course of the participation by Issuer Counsel in the preparation of the Official Statement, nothing has come to his attention which would lead him to believe that the Official Statement as of its date or as of the date hereof (excluding therefrom information relating to DTC, the book-entry system, the Bond Insurance Policy and the Bond Insurer, as to which no opinion is expressed) contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. A-1-2 10264645.2 Very truly yours, Issuer Counsel A-1-3 10264645.2 Exhibit A-2 Legend: Text in [ ]s to be included only in opinion delivered at Closing. Text in {}s to be included only in opinion delivered at Settlement. [LETTERHEAD OF COUNTY COUNSEL] (Description of Opinion of County Counsel, as counsel to the County) [Introductory Language, Assumptions, Qualifications and Limitations to Come] 1. The County is a political subdivision, organized, operating and existing under the Constitution and laws of the State of California, with the full power and authority to adopt the County Resolution, and the County has duly and validly adopted the County Resolution approving the execution and delivery of the Sixth Amendment to Facility Lease, the Sixth Amendment to Site Lease and the Continuing Disclosure Agreement (collectively, the "2007 County Legal Documents") and the Escrow Agreement at a meeting of the Board of Supervisors 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 throughout and the County Resolution has not been modified or amended and is in full force and effect. 2. The County has the full legal right,power and authority to execute and deliver the 2007 County Legal Documents and the Escrow Agreement and to perform its obligations and duties under the Facility Lease, the Site Lease and the Continuing Disclosure Agreement (collectively, the "County Legal Documents"), the Escrow Agreement and the Forward Delivery Contract and the transactions contemplated by the Official Statement, and the County has complied with the provisions of applicable law in all matters relating to the transactions contemplated by each of the County Legal Documents, the Escrow Agreement, the Forward Delivery Contract and the Official Statement. 3. Each of {the Escrow.Agreement,} the County Legal Documents and the Forward Delivery Contract has been duly authorized, and executed and delivered by the County, is in full force and effect and, assuming due authorization, execution and delivery by the other parties thereto of {the Escrow Agreement,} the County Legal Documents and the Forward Delivery Contract, each constitutes a legal, valid and binding agreement of the County enforceable against the County in accordance with its respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and to the application of equitable principles if equitable remedies are sought. 4. Except as may be described in the [Official Statement] {Updated Official Statement}, no approval, consent or authorization of any governmental or public agency, authority or person is required for the adoption of the County Resolution or the execution and delivery by the County of the 2007 County Legal Documents, the Escrow Agreement or the Forward Delivery Contract or the performance by the County of its obligations under the County Legal Documents, the Escrow Agreement or the Forward Delivery Contract which has not been obtained(provided that no opinion is expressed as to any action required under state securities or blue sky laws in connection with the purchase or distribution of the Bonds by the Underwriters). A-2-1 10264645.2 4 5. The {issuance of the Bonds, the) execution and delivery of the 2007 County Legal Documents, the Escrow Agreement and the Forward Delivery Contract by the County, the adoption of the County Resolution, and compliance with the provisions of the County Legal Documents, the Forward Delivery Contract, the Escrow Agreement and the County Resolution and the performance by the County of its obligations thereunder will not conflict with or constitute a breach of, or default under, any instrument relating to the organization, existence or operation of the County, or any commitment, agreement or other instrument to which the County is, or will on or after the [date of Closing] {Settlement Date) be, a party or by which it or its property is bound or affected, or any ruling, regulation, ordinance,judgment, order or decree to which the County (or any of its officers in their respective capacities as such) is subject or any - provision of the laws of the State of California relating to-the County and its affairs. 6. There is no action, suit,proceeding, inquiry or investigation at law or in;equity, or before any court,public board or body pending or, to the best of my knowledge after due inquiry, threatened in any way affecting the existence of the County'or the titles of its officers to their respective offices, in any way contesting or affecting the validity of the County Legal Documents or the Forward Delivery Contract, the issuance, sale or delivery of the Bonds or any of the transactions contemplated by the Official Statement, or the validity of the proceedings taken by the County in connection with the authorization, issuance and sale of the Bonds or the execution or delivery of the County Legal Documents, the Escrow Agreement or the Forward Delivery Contract, wherein any unfavorable decision, ruling or finding would adversely affect the transactions contemplated thereby, or which, in any way, would adversely affect the validity or enforceability of the County Resolution, the Bonds, the County Legal Documents, the Escrow Agreement or the Forward Delivery Contract, or in any material respect affect the ability of the County to perform its obligations under the County Legal Documents, the Escrow Agreement or the Forward Delivery Contract or any other applicable agreement, or any action on the part of the County contemplated by any of said documents, or asserting that the Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 7. Without passing upon or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement and making no representation that such Counsel has independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available in the course of the --- - participation by County Counsel in the preparation-of the-Official-Statement, nothing-has-come to his attention which would lead him to believe that the Official Statement as of its date or as of the date hereof (excluding therefrom information relating to DTC, the book-entry system, the Bond Insurance Policy and the Bond Insurer, as to which no opinion is expressed) contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. A-2-2 10264645.2 Very truly yours, County Counsel A-2-3 10264645.2 Exhibit B COUNTY OF CONTRA COSTA PUBLIC FINANCING AUTHORITY CERTIFICATE The undersigned, [TITLE OF AUTHORIZED OFFICER] of the County of Contra Costa Public Financing Authority(the"Issuer"),hereby certify that: - 1. The representations and warranties of the Issuer contained in Forward Delivery Bond Purchase Contract (this "Forward Delivery Contract"), dated , 2007, by and among the Issuer, the County and the Underwriters, are true and correct on and as of the date of Closing [Settlement] as if made on the date of Closing[Settlement]; 2. The information contained in the [Updated] Official Statement (including any financial and statistical data contained therein) is true and correct in all material respects and the information in the [Updated] Official Statement (including any financial and statistical data contained therein) does not omit any statement or information which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading; 3. The Issuer has duly authorized by the Issuer Resolution, the execution and delivery of the Issuer Legal Documents to be executed by it and the taking of any and all such action as may be required on the part of the Issuer to carry out, give effect to and consummate the transactions contemplated thereby, and the Issuer Resolution was adopted at a meeting duly noticed and at which a quorum was present, and the Issuer Resolution has not been modified or amended and is in full force and effect; 4. No consent, approval, authorization or other action by any 'governmental or regulatory authority having jurisdiction over the Issuer that has not been obtained is or will be required for the issuance and delivery of the Bonds or the consummation by the Issuer of the other transactions contemplated by the Issuer Legal Documents and the [Updated] Official Statement, except as such may be required for the state securities or blue sky laws; -- -- --- -5: The--execution and delivery by the- Issuer of the-Issuer-Legal-Documents to be - executed by it and compliance with the terms thereof, will not conflict with, or result in a violation or breach of, or constitute a default under, any lease, indenture, bond, note, resolution or any other agreement or instrument to which the Issuer is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Issuer or any of its activities or properties; 6. The Issuer is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject which breach or default would materially adversely 'affect the ability of the Issuer to perform its obligations under the Issuer Legal B-1 10264645.2 Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and 7. [Except as disclosed in the [Updated] Official Statement,] there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or, to the best knowledge of the Issuer after due inquiry, threatened, affecting the existence of the Issuer or seeking to prohibit, restrain or enjoin the issuance and delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of this Forward Delivery Contract or the Issuer Legal Documents or contesting the powers of the Issuer to enter into, -adopt or perform its obligation under any of the foregoing, -- wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated hereby and by the [Updated] Official Statement, or which, in any way, would materially adversely affect the validity of the Bonds, the Issuer Legal Documents, or any agreement or instrument to which the Issuer is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby and by the [Updated] Official Statement or the exemption from taxationas set forth herein; 8. This certificate is being delivered in satisfaction of the conditions of Sections 12(a)(10) and 15(a)(10) of the Forward Delivery Contract. All capitalized terms employed herein which are not otherwise defined shall have the same meanings as in the Forward Delivery Contract. Title: County of Contra Costa Public Financing Authority [Preliminary Closing Date] [Settlement Date] B-2 10264645.2 Exhibit C [Letterhead of Bond Counsel] County of Contra Costa Public Financing Authority County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 County of Contra Costa County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 [Preliminary Closing Date] Ladies and Gentlemen: Attached as Appendix F to the hereinafter mentioned Official Statement of County of Contra Costa Public Financing Authority (the "Issuer") is our proposed form of legal opinion regarding, among other things, the authorization, issuance, validity and enforceability of the County of Contra Costa Public Financing Authority's Lease Revenue Bonds (Medical Center Refunding), (the "Bonds"), the exclusion of interest on the Bonds from gross income for federal income tax purposes, subject to the conditions and qualifications stated therein, and the exemption of such interest from State of California personal income taxes. Assuming satisfaction by the Issuer and the Underwriters (as defined in the Forward Delivery Contract hereinafter referred to) of their respective obligations to be satisfied in the Forward Delivery Bond Purchase Contract dated , 2007 between the Issuer and the Underwriters (the "Forward Delivery Contract"), and the issuance of the Bonds,on or after , 2007, and no change in any applicable law, regulations or rulings, or in interpretations thereof, or in any other facts or circumstances (tax or otherwise) which, in our view, affect or are material to our opinion (including, without limitation, the existence of any litigation), we will be able to issue our opinion on the date of the Settlement (as defined in the Forward Delivery Contract) in substantially the form attached as Appendix F to the Official Statement of the Issuer dated 2007 relating to the Bonds. Very truly yours, C-1 10264645.2 Exhibit D CERTIFICATE 1, the [TITLE OF AUTHORIZED OFFICER] of the County of Contra Costa Public Financing Authority (the "Issuer"), hereby certify that the Official Statement of the Issuer dated [ , 2007] [ , 2007] relating to its Lease Revenue Bonds (Medical Center Refunding), 2007 Series B, as the same may have been amended or supplemented to the date hereof, does not contain an untrue statement of a material fact or omit to state a fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. I have made such inquiries as were necessary for me to render this certificate. Dated: Name: Title: D-1 10264645.2 Exhibit E 12007 County of Contra Costa Public Financing Authority County Administrator's Office 651 Pine Street, I Oth Floor Martinez, California 94553 County of Contra Costa County Administrator's Office 651 Pine Street, 10th Floor Martinez, California 94553 Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding) 2007 Series B Ladies and Gentlemen: We have acted as counsel to Citigroup Global Markets Inc. (the "Underwriters") in connection with the agreement by the Underwriters to purchase $ Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the "Bonds") from County of Contra Costa Public Financing Authority (the "Issuer'). The Underwriters have agreed to purchase the Bonds under a Forward Delivery Bond Purchase Contract dated , 2007 among the Underwriters, the Issuer and the County(the"Forward Delivery Contract"). We have reviewed the Forward Delivery Contract. In addition, we have examined such records, documents, and certificates as we have deemed necessary or appropriate for the purpose of rendering the opinions set forth herein. We have assumed the genuineness of all signatures and the authenticity of all items submitted to us as originals and the conformity with the originals of all items submitted to us as copies._ In making our examination of the Forward Delivery Contract; we-have assumed that the Issuer and the County have the power to enter into and perform their obligations under the Forward Delivery Contract; have duly authorized, executed and delivered the Forward Delivery Contract; and that the Forward Delivery Contract constitutes the legal, valid and binding obligation of the Issuer and the County. Based on the foregoing and subject to the qualifications and exclusions set forth below, we are of the opinion that the Forward Delivery Contract constitutes the legal, valid and binding obligation of the Underwriters, enforceable against it in accordance with its terms. Our opinion that any document is legal, valid and binding on a party and enforceable against such party in accordance with its terms is qualified as to: E-1 10264645.2 (a) limitations imposed by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, transfer, moratorium, or other laws relating to or affecting the enforcement of creditors' rights generally; (b) applicable laws limiting certain remedial provisions of agreements which, in our opinion, will not materially interfere with the practical realization of the material benefits intended to be provided by any such agreement; and (c) general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. We are not opining on law other than the law of the State of New York and the federal law of the United States of America. This opinion letter is solely for the benefit of the party to whom it is addressed and may not be relied upon, used, circulated, quoted or referred to, nor copies hereof delivered to, any other person without our prior written approval. This letter may not be relied upon by any other person or for any other purpose whatsoever. Very truly yours, E-2 10264645.2 Exhibit F Initial Issue Price Certificate [TO COME] F-1 10264645.2 Exhibit,G COUNTY OF CONTRA COSTA, CALIFORNIA CERTIFICATE The undersigned, [TITLE OF AUTHORIZED OFFICER] of the County of Contra Costa(the"County"),hereby certify that: 1. The representations and warranties of the County contained in the Forward Delivery Bond Purchase Contract (this "Forward Delivery Contract"), dated , 2007, by and among the County of Contra Costa Public Financing Authority, the County and the Underwriters, are true and correct on and as of the date of Closing [Settlement] as if made on the date of Closing [Settlement]; 2. The information contained in the [Updated] Official Statement (including any -financial and statistical data contained therein) is true and correct in all material respects and the information in the [Updated] Official Statement (including any financial and statistical data contained therein) does not omit any statement or information which is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading; 3. The County has duly authorized by the County Resolution, the execution and delivery of the County Legal Documents to be executed by it and the taking of any and all such action as may be required on the part of the County to carry out, give effect to and consummate the transactions contemplated thereby, and the County Resolution was adopted at a meeting duly noticed and at which a quorum was present, and the County Resolution has not been modified or amended and is in full force and effect; 4. No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the County that has not been obtained is or will be required for the issuance and delivery of the Bonds or the consummation by the County of the other transactions contemplated by the County Legal Documents and the [Updated] Official Statement, except as such may be required for the state securities or blue sky laws; 5. The execution and delivery by the County of the County Legal Documents to be executed by it and compliance with the terms thereof, will not conflict with, or result in a violation or breach of, or constitute a default under, any lease, indenture, bond, note, resolution or any other agreement or instrument to which the County is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the County or any of its activities or properties; 6. The County is not in breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any lease, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the County is a party or is otherwise subject which breach or default would materially G-1 10264645.2 adversely affect the ability of the County to perform its obligations under the County Legal Documents, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a default or an event of default under any such instrument; and 7. [Except as disclosed in the [Updated] Official Statement,] there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending or, to the best knowledge of the County after due inquiry, threatened, affecting the existence of the County or seeking to prohibit, restrain or enjoin the issuance and delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, this Forward Delivery Contract or the County Legal Documents or contesting the powers of the County to enter into, adopt or perform its obligation under any of the foregoing, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated hereby and by the [Updated] Official Statement, or which, in any way, would materially adversely affect the validity of the Bonds, the County Legal Documents, or any agreement or instrument to which the County is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby and by the [Updated] Official Statement or the exemption from taxation as set forth herein; 8. This certificate is being delivered in satisfaction of the conditions of Sections 12(a)(10) and 15(a)(11) of the Forward Delivery Contract. All capitalized terms employed herein which are not otherwise defined shall have the same meanings as in the Forward Delivery Contract. Title: County of Contra Costa [Preliminary Closing Date] [Settlement Date] G-2 10264645.2 Exhibit H CERTIFICATE I, the [TITLE OF AUTHORIZED OFFICER] of the County of Contra Costa, California (the "County"), hereby certify that the Official Statement of the County of Contra Costa Public Financing Authority dated [ 2007] [ 2007] relating to. its Lease Revenue Bonds (Medical Center Refunding), 2007 Series B, as the same may have been amended or supplemented to the date hereof, does not contain an untrue statement of a material fact or omit to state a fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading(excluding information on DTC, the book-entry system, the Bond Insurer or Bond Insurance and under the section entitled "Underwriting"). I have made such inquiries as were necessary for me to render this certificate. Dated: COUNTY OF CONTRA COSTA, CALIFORNIA Name: Title: H-1 10264645.2 Exhibit I FORM OF DELAYED DELIVERY CONTRACT 2007 Citigroup Global Markets Inc. Re: County of Contra Costa Public Financing Authority Lease Revenue Bonds (Medical Center Refunding), 2007 Series B (the"Bonds"). Ladies and Gentlemen: The undersigned (the "Purchaser") hereby agrees to purchase from Citigroup Global Markets Inc. ("Citigroup"), when, as, and if issued and delivered to Citigroup by the County of Contra Costa Public Financing Authority (the "Authority") and Citigroup agrees to sell to the Purchaser Par Amount Maturity Date Interest Rate CUSIP Number Yield in aggregate principal amount of the above-referenced Bonds offered by the Authority under the Preliminary Official Statement dated 2007 and the Official Statement dated 2007 (the "Official Statement"), receipt and review of copies of which (including without limitation the sections entitled "Certain Forward Delivery Considerations" and "Tax Matters [— Bond Counsel Opinion and Circular 230 Considerations]" therein) is hereby acknowledged, at a purchase price (plus accrued interest, if any, from the date of initial delivery of the Bonds), at the interest rates, principal amounts, and maturity dates shown above, and on the further terms and conditions set forth in this Delayed Delivery Contract. The Purchaser hereby purchases and agrees to accept delivery of such Bonds from Citigroup on , 2007 (the"Settlement Date"). Payment for the Bonds which the Purchaser has agreed to purchase on the Settlement Date shall be made to Citigroup or its order on the Settlement Date upon delivery to the 10264645.2 I-I Purchaser of the Bonds then to be purchased by the Purchaser through the book-entry system of The Depository Trust Company. Upon issuance by the Authority of the Bonds and purchase thereof by Goldman Sachs, the obligation of the Purchaser.to take delivery hereunder shall be unconditional except in the event that between the date of this Delayed Delivery Contract and the Settlement Date, (a) as a result of any legislation, regulation, ruling, order, release, court decision or judgment or action by the U.S. Department of Treasury, the Internal Revenue Service, or the Securities and Exchange Commission, either issued, effective, adopted, or proposed, (i)Bond Counsel cannot issue an opinion substantially in the form and to the effect set forth in Appendix F to the Official - Statement or to the effect that (1)the interest on the Bonds is (x)not includable in the-gross income of the holders thereof for federal income tax purposes by virtue of Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") (or the comparable provisions of any successor federal income tax laws) and (y)not subject to personal income taxes imposed by the State, or (2)to the extent such opinion cannot be rendered under clause(1) above, and notwithstanding a change in law from that existing on the date of closing which affects the treatment, for tax purposes, at settlement the interest on the Bonds is not subject to (x) any currently imposed federal income tax and (y)personal income taxes imposed by the State, or (ii)the offering or sale of the Bonds would be in violation of any provision of the Securities Act of 1933, as amended (the "1933 Act"), the Securities and Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended, or the offering or sale of the Bonds would be subject to registration under the 1933 Act or similar federal law; (b)if for any other reason, Bond Counsel is not.able to render its opinion substantially in the form attached as Appendix F to the Office Statement; (c)the occurrence of an event of default, technical or otherwise, under the Trust Agreement, the Master Facility Lease or the Master Site Lease; (d) the Bond Insurer fails to issue the Bond Insurance Policy on the Settlement Date; or(e)the Bonds are not rated by both Moody's Investors Service and Standard&Poor's Ratings Service on the Settlement Date. The Purchaser represents and warrants that, as of the date of this Delayed Delivery Contract, the Purchaser is not prohibited from purchasing the Bonds hereby agreed to be purchased by it under the laws of the jurisdiction to which the Purchaser is subject. This Delayed Delivery Contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party without the written consent of the other. The Purchaser acknowledges that Citigroup is entering into an agreement with the Authority to purchase the Bonds in reliance in part on the performance by the Purchaser of its obligations hereunder. The Purchaser agrees that it will at all times satisfy the minimum initial and maintenance margin requirements of Regulation T of the Board of Governors of the Federal Reserve System, Rule 431 of the New York Governors of the Federal Reserve System, Rule 431 of the New York Stock Exchange, Inc., and any other margin regulations applicable to Citigroup. 10264645.2 1-2 This Delayed Delivery Contract may be executed by either of the parties hereto in any number of counterparts, each of which shall be deemed to be an original; but all such counterparts shall together constitute one and the same instrument. It is understood that the acceptance by Citigroup of any Delayed Delivery Contract (including this one) is in Citigroup' sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this Delayed Delivery Contract is acceptable to Citigroup, it is requested that Citigroup sign the form of acceptance below and mail or deliver one of the .counterparts hereof to the Purchaser at its address set forth below. This will become a binding contract between Citigroup and the Purchaser when such counterpart is so mailed or-delivered by Citigroup. This Delayed Delivery Contract does not constitute a customer confirmation pursuant to Rule G-15 of the Municipal Securities Rulemaking Board. The Authority shall be deemed a third party beneficiary of this Delayed Delivery Contract. This Delayed Delivery Contract shall be construed and administered under the laws of the State of New York. Purchaser Address Telephone By: Name: Title: Accepted: CITIGROUP GLOBAL MARKETS INC. Name: Title: 10264645.2 I-3