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HomeMy WebLinkAbout8.3 Civic Center COP Refinancing CITY OF DUBLIN . AGENDA STATEMENT CITY COUNCIL MEETING DATE: March 1, 1988 SUBJECT 1988 Civic Center Certificates of Participation Refinancing and New Money Issue EXHIBITS ATTACHED 1 ) Draft Resolution 2 ) Amended and Restated Lease Agreement 3) Trust Agreement i 4) Preliminary Official Statement 5) Purchase Agreement 6) Current Timetable of Events 7 ) Financial Schedules RECOMMENDATION 1 ) Adopt Resolution approving Amended and Restated Lease Agreement, Trust Agreement, Preliminary Official Statement and Purchase Agreement 2 ) Authorize City Manager to make any required revisions prior to closing and authorize Mayor to execute all documents at closing FINANCIAL STATEMENT: See below DESCRIPTION On September 14, 1987, the City Council approved the selection of an Underwriter and Bond Counsel for the purpose of refinancing the City' s $11, 968, 000 1985 Certificate of Participation issue, as well as issuing additional Certificates of Participation to cover the increased scope of the Civic Center project. On December 21, 1987, the City Council 'awarded the Civic Center bid Contract No. 87-9, and approved a financing plan which would provide for the use of $900, 000 in new revenues, contribute $1, 000, 000 from City Reserves and issue Certificates of Participation to finance the difference . Shown below is a Table describing the remaining project costs and funding required to cover those costs, in accordance with City Council action on December 21, 1987. TABLE I CIVIC CENTER COSTS July 1, 1987 - Project completion Construction Construction Contract $ 9, 695, 000 Construction Contingency 5% 485, 000 Subtotal $10, 180, 000 Furnishings, Equipment, Telephone 500,.000 Remaining Soft Costs 895, 000 Total Remaining Cost $11, 575, 000 TABLE II CIVIC CENTER FUNDING July 1, 1987 - Project Completion 1. 7/1/87 1985 COP Fund Balance $ 5, 600, 000 2 . Interest Income 7/1/87 to Project Completion 255, 000 3 . Income from Sale of Plans & Specifications 20, 000 4 . New Revenues 900, 000 5. Contribution from Reserves 1, 000, 000 6 . Proceeds needed from New Certificates 3, 800, 000 Total Available Funding $11, 575, 000 COPIES TO: j",ITEM NO. c•_. As indicated in Table II, Staff has calculated that the issuance of $3, 800, 000 in new Certificates of Participation is required to supplement existing funding sources for the Civic Center project. In order to refinance the 1985 Certificates of Participation and provide $3, 800, 000 in new money, the City will need to issue approximately $17,175, 000 in Certificates of Participation (see Exhibit 7a) . The legal documents provide sufficient latitude for the size of the issue to be no more than $17, 500, 000 in the event that the interest rates change. Financial Implications Refinancing of the original Certificates of Participation issue at this time is financially advantageous to the City. The current true interest rate on refinancing the 1985 COP issue is presently approximately 7. 50% compared to a 9.17% interest which the City obtained in 1985. The present value savings of refinancing the 1985 COP issue at this time is estimated at $341, 289, (see Exhibit 7d) . This savings could fluctuate up or down between now and the time the Certificates are priced. Refinancing the 1985 Certificates of Participation and increasing the size of the COP issue to generate an additional $3, 800, 000 will require an issue size of approximately $17,175, 000 as indicated above . With this size issue, the City' s average annual gross debt service on the new issue averages approximately $1, 650, 000/year (see Exhibit 7.b) , as compared to the City' s present gross average debt service of approximately $1, 246, 000/year (see Exhibit 7e) . The Net Debt Service Schedule (see Exhibit 7c ) , portrays what the City will actually have to budget each year to make the lease payments. In Fiscal Years 1988-89 and 1989-90, the City will budget approximately $414, 632. 84 and $513, 459. 34 respectively, compared to the $1, 248, 352. 50 and $1, 243, 727. 50, which the City has to budget under the 1985 issue. The amount the City will need to budget during the first two years is $1, 563, 988 less than what the City presently needs to budget under the old issue for the following reason. In 1985, the City pledged $1, 800, 000 in reserves to secure the first issue during construction of the Civic Center Facility. Under the terms of the first issue, the $1, 800, 000 would be returned to the City when construction was completed. Further, interest income generated from investing the $1, 800, 000 between 1985 and completion of the building would be returned to the General Fund. The 1988 Issue is structured so that $1, 249, 444 of the $1, 800, 000 would be placed in a Capitalized Interest Fund. This amount plus any interest generated from this fund would help pay the City' s lease payments in Fiscal Years 1988-89 and 1989-90. The difference between $1, 800, 000 and $1, 249, 444 is $550, 556, and will be retained by the City's General Fund at the time of closing of the 1988 COP Issue. From Fiscal Year 1990-91 to Fiscal Year 2008-2009, the City's net debt service will average approximately $1, 562, 000/year. In Fiscal Year 2009- 2010, the City will receive a surplus $130, 155 and not have to make the final year' s payment. This is due to the following reason. In 1985, the City also pledged $1, 300, 000 to the 1985 COP Issue for the life of the issue to secure the annual debt service in the event that the City should default on a payment. Under the terms of the original issue, interest from this reserve would be returned to the General Fund annually, and the reserve would be used to make the last debt service payment. The 1988 issue is structured such that interest from the investment of the $1, 300, 000 combined with the $1, 300, 000 will make the City' s last debt service payment. Financial Responsibility As indicated to the City Council on previous occasions, the 1988 legal documents will change the relationship of the City and Dublin Information, Inc. , through an assignment of Dublin Information, Inc. , responsibilities to the Bank of California as the new Trustee. The Bank of California will control all funds with the exception of the 1985 and 1988 construction funds, which the City will control. Conclusion It is financially advantageous for the City to refinance the 1985 COP issue and realize a present value savings of $341, 284. Further, due the low interest rates, approximately 7. 50% and the need to raise new funds for the Civic Center project, it financially prudent for the City to go to market at this time and, issue the 1988 Certificates of Participation to raise the balance of the funds. 14011-04 JHHW:CFA:dfd Peh^mr.941988 F7854 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING AMENDMENT OF LEASE AGREEMENT WITH DUBLIN INFORMATION, INC., APPROVING FORM OF TRUST AGREEMENT, APPROVING FORM OF OFFICIAL STATEMENT AND SALE OF NOT TO EXCEED $17,500,000 1988 REFUNDING CERTIFICATES OF PARTICIPATION,AND APPROVING RELATED DOCUMENTS AND OFFICIAL ACTION WHEREAS, the City of Dublin (the "City") and Dublin Information, Inc. (the "Corporation") have heretofore entered into that certain Lease Agreement Relating to Public Facilities Project No. 1 dated as of December 18, 1985, (the "Original Lease") by and between the Corporation as lessor and the City as lessee, with respect to the land. and civic center improvements described more.fully therein (the "Project"); and WHEREAS, the City has determined that it is in the economic interests of the City at this time to provide for the refinancing of the City's existing obligations under the Original Lease and to provide additional funds to the City to finance the completion of the Project, and to that end the Corporation and the City propose to enter into that certain First Amended and Restated Lease Agreement dated as of March 1, 1988, (the "Lease Agreement") by and between the Corporation as lessor and the City as lessee, amending and restating the Original Lease in full; and WHEREAS, for the purpose of obtaining the moneys required for such purposes, the Corporation proposes to assign and transfer certain of its rights under the Lease Agreement to The Bank of California, N.A. as trustee (the "Trustee") pursuant to that certain Assignment Agreement dated as of March 1, 1988, by -and between the Corporation as assignor and the Trustee as assignee; and WHEREAS, in consideration of such assignment and the execution of that certain Trust Agreement dated as of March 1, 1988, (the "Trust Agreement") by and among the Corporation, the City and the Trustee, the Trustee will execute and deliver 1988 Refunding Certificates of Participation (Civic Center Project) in the principal amount of not to exceed $17,500,000 (the "Certificates of Participation"), each evidencing an undivided fractional interest in the Lease Payments made by the City under the Lease Agreement; and WHEREAS, Rauscher Pierce Refsnes, Inc. as prospective underwriter of the Certificates of Participation (the "Underwriter"), has informed the Corporation and the City that it intends to submit an offer to purchase the Certificates of Participation, and in connection with the remarketing of the Certificates of Participation the Underwriter has caused to be prepared an Official Statement describing the Certificates of Participation; and WHEREAS, the City Council approves of said transactions as being in the public interests of the City; 1.16 -"1"' I k NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Dublin as follows: Section 1. Amendment of Lease Agreement. The City Council hereby approves the amendment of the Original Lease pursuant to the Lease Agreement in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by the City Manager. The City Council hereby authorizes and directs the Mayor to execute, and the City Clerk to attest and affix the seal of the City to, said form of the Lease Agreement for and in the name of the City. The schedule of lease payments set forth in Appendix A to the Lease Agreement shall conform to the schedule of principal and interest payments represented by the Certificates of Participation, determined pursuant to Section 3 hereof. Section 2. Trust Agreement. The City Council hereby approves the Trust Agreement in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by the City Manager. The City Council hereby authorizes and directs the Mayor to execute, and the City Clerk to attest and affix the seal of the City to, said form of the Trust Agreement for and in the name of the City. Section 3. Sale of Certificates. The City Council hereby approves the sale of the Certificates of Participation to the Underwriter pursuant to that certain Contract of Purchase among the City, the Trustee and the Underwriter, in substantially the form on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the City Manager or the Finance Director, whose execution of said agreement shall be conclusive evidence of his approval of any such changes or additions. The Certificates of Participation shall be substantially as described in the form of Official Statement on file with the City Clerk and hereinafter approved. The City Manager, or in his absence the Finance Director, is hereby authorized and directed for and in the name and on behalf of the City to execute and deliver said form of Contract of Purchase upon submission of a proposal by the Underwriter to purchase the Certificates of Participation, which proposal is acceptable to the City Manager or the Finance Director, as the case may be; provided, however, that the purchase price to be paid for the Certificates of Participation by the Underwriter shall be at least ninety-seven and one-half percent (97-1/2%) of the par value thereof, and the net interest cost represented by the Certificates of Participation shall not exceed eight percent (8%) per annum. The City Manager, or in his absence the Finance Director, is hereby delegated the authority to approve the terms of any offer by the Underwriter to purchase the Certificates of Participation, provided that such offer is in form and substance acceptable to the City Manager or the Finance Director, as the case may be, and is within the limitations set forth in this Resolution. Section 4. Official Statement. The City Council hereby approves the preliminary Official Statement describing the Certificates of Participation, in the form submitted by the Underwriter and on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the City Manager, whose execution of said agreement shall be conclusive evidence of his approval of any such changes or additions. The Underwriter is hereby authorized to distribute the Official Statement in connection with the marketing of the Certificates of Participation._ The City Manager is -2-- hereby authorized and directed to approve any changes in or additions to the final form of such Official Statement as the City Manager shall deem advisable, and to execute said final Official Statement for and in the name and on behalf of the City. Section 5. Official Actions. The Mayor, Finance Director, the City Manager, the City Clerk and all other officers of the City are each authorized and directed in the name and on behalf of the City to make any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents, including but not limited to an escrow agreement relating to the refunding of the Original Lease, which they or any of them might deem necessary or appropriate in order to consummate any of the transactions contemplated by the documents approved pursuant to this Resolution. Section 6. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. PASSED AND ADOPTED this 1st day of March, 1988, by the following vote: AYES: NOES: ABSENT: Mayor (SEAL) Attest: By: City Clerk —3— _ 14011-04 "-- JHHW:CFA:dfs 11,1988 F7671 �;/ �f MARL �D j C SHOW CHANGES -/Ij/23% AMENDED AND RESTATED LEASE AGREEMENT Dated as of "-ferry-1, 1988 by and between DUBLIN INFORMATION, INC. as lessor and the CITY OF DUBLIN, as lessee r J 7 Q F7671.TOC TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EFFECT OF THIS LEASE SECTION 1.1. Definitions 2 SECTION 1.2. Effect of this Lease Agreement 3 ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES SECTION 2.1. Covenants, Representations and Warranties of the City 5 SECTION 2.2. Covenants, Representations and Warranties of the Corporation 6 ARTICLE III DEPOSIT OF MONEYS; COMPLETION OF THE PROJECT SECTION 3.1. Deposit of Moneys 8 SECTION 3.2. Completion of the Project 8 ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS LEASE; LEASE PAYMENTS SECTION 4.1. Lease 9 SECTION 4.2. Term of Agreement 9 SECTION 4.3. Possession 9 SECTION 4.4. Lease Payments 9 SECTION 4.5. Quiet Enjoyment 11 SECTION 4.6. Title 11 SECTION 4.7. Additional Payments 12 i 1 � page ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS SECTION 5.1. Maintenance, Utilities, Taxes and Assessments 13 SECTION 5.2. Modification of Project 13 SECTION 5.3. Public Liability and Property Damage Insurance 14 SECTION 5.4. Fire and Extended Coverage Insurance 14 SECTION 5.5. Rental Interruption Insurance 15 SECTION 5.6. Title Insurance 15 SECTION 5.7. Insurance Net Proceeds; Form of Policies 15 SECTION 5.8. Advances 15 SECTION 5.9. Installation of City's Equipment 16 SECTION 5.11. Liens 16 ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1. Eminent Domain; Abatement 17 SECTION 6.2. •Application of Net Proceeds 17 SECTION 6.3. Abatement of Rental in the Event of Damage or Destruction 17 ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS SECTION 7.1. Disclaimer of Warranties 18 SECTION 7.2. Access to the Project 18 SECTION 7.3. Release and Indemnification Covenants 18 ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1. Assignment by the Corporation 19 SECTION 8.2. Assignment and Subleasing by the City 19 SECTION 8.3. Amendment of Lease Agreement 19 ii Page ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1. Events of Default Defined 20 SECTION 9.2. Remedies on Default 20 SECTION 9.3. No Remedy Exclusive 22 SECTION 9.4. Agreement to Pay Attorneys' Fees and Expenses 22 SECTION 9.5. No Additional Waiver Implied by One Waiver 22 SECTION 9.6. Application of Proceeds 22 SECTION 9.7. Trustee and Certificate Owners to Exercise Rights 22 ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1. Security Deposit 23 SECTION 10.2. Optional Prepayment 23 SECTION 10.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain 23 SECTION 10.4. Mandatory Prepayment From.Unused Project Funds 24 SECTION 10.5. Credit for Amounts on Deposit 24 ARTICLE XI MISCELLANEOUS SECTION 11.1. Notices 25 SECTION 11.2. Binding Effect 25 SECTION 11.3. Severability.. 25 SECTION 11.4. Net—net—net Lease 25 SECTION 11.5. Further Assurances and Corrective Instruments 25 SECTION 11.6. Execution in Counterparts 26 SECTION 11.7. Applicable Law 26 SECTION 11.8. Corporation and City Representatives 26 SECTION 11.9. Captions 26 iii AMENDED AND RESTATED LEASE AGREEMENT THIS AMENDED AND RESTATED 0.EASE AGREEMENT (this "Lease Agreement"), dated for convenience as of ary-1, 1988, is by and between the DUBLIN INFORMATION, INC., a nonprofit corporation duly organized and existing under the laws of the State of California (the "Corporation"), and the CITY OF DUBLIN, a municipal corporation duly organized and existing under the laws of the State of California (the "City"); WITNESSETH: WHEREAS, the Corporation has been formed for the purpose of assisting the City in financing the acquisition, construction and improvement of property which is of benefit to the City; and WHEREAS, in order to provide funds for the acquisition, construction and improvement of land and civic center improvements (the "Project"), the Corporation and the City have heretofore entered into the Lease Agreement Relating to Public Facilities Project No. 1, dated as of December 18, 1985,n(the "Original Lease") by and between the Corporation as lessor and the City as lessee of the Project; and WHEREAS, the City has determined that it is in the economic interests of the City at this time to provide for the refinancing of the City's existing obligations under the Original Lease and to provide additional funds to finance the completion of the Project, and to that end the Corporation and the City wish to enter into this Amended and Restated Lease Agreement for the purpose of amending and restating the Original Lease in full; and WHEREAS, for such purposes the Corporation proposes to assign and transfer to the Trustee certain of its rights under the Lease Agreement, and in consideration of such assignment and the execution of the Trust Agreement dated as of ri-e13%. , 1988, by and among the City, the Corporation and The Bank of California, N.A., as trustee (the "Trustee"), the Trustee has agreed to execute and deliver 1988 Refunding Certificates of Participation, each evidencing a direct, undivided fractional interest in the Lease Payments to be paid by the City under the Lease Agreement; NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows: NOW, THEREFORE, for and in consideration of the premises and the material covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as follows: ARTICLE I DEFINITIONS; EFFECT OF THIS LEASE SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Lease Agreement shall have the respective meanings specified in the Trust Agreement. In addition, the following terms heretofore defined in this Lease Agreement and the following terms defined in this Section 1.1 shall, for all purposes of this Lease Agreement, have the respective meanings herein specified. "Completion Date" means the date on which the City shall file or cause to be filed with the Corporation and the Trustee a certificate of the architect with respect thereto stating that the acquisition, construction and improvement of the Project has been completed substantially in conformity with the plans and specifications therefor. "1988 Lease Payment Date" means each January 15 and July 15 during the Term of this Lease Agreement, beginning July 15, 1988. "1988 Lease Payments" means the amounts payable by the City pursuant to Section 4.4(a)(ii) hereof, including any prepayment thereof pursuant to Article X. "Original Lease" means the Lease Agreement Relating to Public Facilities Project No. 1 dated as of December 18, 1985, by and between the Corporation as lessor and the City as lessee. "Original Lease Payments" means (a) prior to the date of recordation hereof, all of the amounts required to be paid by the City pursuant to Section 3.05 of the Original Lease as set forth in Exhibit C attached to the Original Lease; and (b) from and after the date of recordation hereof, all of the amounts required to be paid by the City from the Escrow Fund pursuant to Section 4.4(a)(i) hereof and as set forth in Exhibit C attached hereto. "Project" means the land described in Exhibit B attached hereto and by this reference incorporated herein, together with all improvements and facilities constructed and improved thereon. In the event the City elects to add any new property in substitution for former property pursuant to Section 5.10, from and after the date of such substitution such former property shall cease to constitute part of the Project and such new property shall become part of the Project. "Project Costs" means, with respect to the Project, all costs of acquisition, construction, improvement and equipping of the Project which are paid from moneys on deposit in the Project Funds, including but not limited to: (a) all costs required to be paid to any person under the terms of any agreement for or relating to the acquisition, construction, improvement or equipping of the Project; —2— (b) obligations incurred for labor and materials in connection with the acquisition, construction, improvement or equipping of the Project; (c) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect during the course of acquisition, construction, improvement or equipping of the Project; (d) all costs of engineering and architectural services, including the actual out-of-pocket costs of the Corporation or any agent of the Corporation for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as - for the - performance of all other duties required by or consequent to the proper , acquisition, construction, improvement or equipping of the Project; (e) any sums required to reimburse the Corporation or any agent of the Corporation for advances made for any of the above items or for any other costs incurred and for work done which are properly chargeable to the acquisition, construction, improvement or equipping of the Project; (f) all financing costs incurred in connection with such acquisition, construction, improvement or equipping, including but not limited to Costs of Issuance and other costs incurred in connection with the execution and delivery of the Certificates, the Trust Agreement and this Lease Agreement; and (g) the interest components of the Lease Payments coming due and • payable prior to the Completion Date. "Rental Period" means each period during the Term of this Lease Agreement commencing on and including the day immediately following an Interest Payment Date and extending to and including the next succeeding Interest Payment Date; except that the first Rental Period shall commence on. the Completion Date and extend to and including the next succeeding Interest Payment Date. "Term of this Lease Agreement" means the time during which this Lease Agreement is in effect, as provided in Section 4.3. "Trust Agreement" means the Trust Agreement, and dated as of February 1, 1988, by and among the Trustee, the Corporation and the City, together with any duly authorized and executed amendments thereto. SECTION 1.2. Effect of this Lease Agreement. The City and the Corporation hereby agree that this Lease Agreement amends and restates in full the Original Lease. The Corporation hereby agrees to cause the Trustee to deposit into the Escrow Fund an amount sufficient to provide for the payment in full of the remaining Original Lease Payments pursuant to the provisions of the remaining Original Lease and Section • 4.4(a)(i) hereof. Upon the recordation of this Lease Agreement and the deposit into the Escrow Fund as aforesaid, the Original Lease, in the form heretofore executed and -3- delivered by the City and the Corporation, shall thereupon be of no further force and effect and shall be deemed to be restated in full hereby. —4— ARTICLE H COVENANTS, REPRESENTATIONS AND WARRANTIES SECTION 2.1. Covenants, Representations and Warranties of the City. The City makes the following covenants, representations and warranties to the Corporation as of the date of the execution and delivery of this Lease Agreement: (a) Due Organization and Existence. The City is a municipal corporation duly organized and validly existing under the laws of the State of California, has full legal right, power and authority to enter into this Lease Agreement and the Trust Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the City has duly authorized the execution and delivery of this Lease Agreement and the Trust Agreement. (b) Due Execution. The representatives of the City executing this Lease Agreement and the Trust Agreement are fully authorized to execute the same. (c) Valid, Binding and Enforceable Obligations. This Lease Agreement and the Original Lease, the Agency Agreement and the Trust Agreement has been duly authorized, executed and delivered by the City and constitute the legal, valid and binding agreements of the City enforceable against the City in accordance with their respective terms. (d) No Conflicts. The execution and delivery of this Lease Agreement and the Original Lease, the Agency Agreement and the Trust Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease Agreement and the Original Lease, the Agency Agreement and the Trust Agreement or the financial condition, assets, properties or operations of the City or its properties. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization herein or therein contemplated, except as have been obtained or made and as are in full force and effect. -5- f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease Agreement or the Original Lease, the Agency Agreement or the Trust Agreement, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease Agreement or the Original Lease, the Agency Agreement or the Trust Agreement or the financial conditions, assets, properties or operations of the City or its properties. • SECTION 2.2. Covenants, Representations and Warranties of the Corporation. The Corporation makes the following covenants, representations and warranties as the basis for its undertakings herein contained: (a) Due Organization and Existence. The Corporation is a nonprofit public benefit corporation duly organized and validly existing under the laws of the State of California, has full legal right, power and authority to enter into this Lease Agreement, the Trust Agreement and the Assignment Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the Corporation has duly authorized the execution and delivery of this Lease Agreement, the Trust Agreement and the Assignment Agreement. (b) Due Execution. The representatives of the Corporation executing this Lease Agreement, the Trust Agreement and the Assignment Agreement are fully authorized to execute the same. (c) Valid. Binding and Enforceable Obligations. This Lease Agreement, the Original Lease, the Agency Agreement, the Trust Agreement and the Assignment Agreement have been duly authorized, executed and delivered by the Corporation and constitute the legal, valid and binding agreements of the Corporation . with the Corporation, enforceable against the Corporation in accordance their respective terms. (d) No Conflicts. The execution and delivery of this Lease Agreement, the Original Lease, the Agency Agreement, the Trust Agreement and the Assignment Agreement, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative -6- decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Corporation is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Corporation, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease Agreement and by the Original Lease, the Agency Agreement and the Trust Agreement, or the financial condition, assets, properties or operations of the Corporation or its properties. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Corporation, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Lease Agreement, the Original Lease, the Agency Agreement, the Trust Agreement or the Assignment Agreement, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect. (f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Corporation after reasonable • investigation, threatened against or affecting the Corporation or the assets, properties or operations of the Corporation which, if determined adversely to the Corporation or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Lease-Agreement, the Original Lease, the Agency Agreement, the Trust Agreement or the Assignment Agreement, or upon the financial condition, assets, properties or operations of the Corporation, and the Corporation is not in.default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Lease Agreement, the Original Lease, the Agency Agreement, the Trust Agreement or the Assignment Agreement or the financial conditions, assets, properties or operations of the Corporation or its properties. —7— ARTICLE III DEPOSIT OF MONEYS; COMPLETION OF THE PROJECT SECTION 3.1. Deposit of Moneys. On the Closing Date, the Corporation shall cause to be deposited with the Trustee the proceeds of sale of the Certificates. Pursuant to Section 4.01 of the Trust Agreement, the amount of $ shall be deposited in the Reserve Fund, the interest components of the Lease Payments in the amount of $ shall be deposited in the Lease Payment Fund, the amount of $ shall be transferred to the Escrow Bank for deposit in the Escrow Fund, and the remaining balance of said amount shall be deposited in the 1988 Project Fund. SECTION 3.2. Completion of the Project. The City, as agent of the Corporation under the Agency Agreement, agrees with due diligence to complete the acquisition, construction, improvement and equipping of the Project in accordance with the Agency Agreement and with plans and specifications or purchase orders or agreements approved by the City. The City shall finance direct payment, or reimbursement to itself for the payment, of the Project Costs from amounts on deposit in the Project Funds_ pursuant to Section 4.02 of the Trust Agreement. The City hereby covenants that the construction, improvement and equipping of the Project will be substantially completed, in accordance with the Agency Agreement and with plans and specifications approved by the City, on or before , 198_. Upon completion of the acquisition, construction, improvement and equipping of the Project from amounts in the Project Funds satisfactory to the Corporation, but in any event not later than thirty (30) days following such completion, the City Representative shall execute and deliver to the Corporation and the Trustee a certificate of completion stating that the acquisition, construction, improvement and equipping of the Project has been completed, identifying the date of such completion and identifying the total Project Costs of the Project. If the acquisition, construction, improvement and equipping of the Project is not completed, for any reason whatsoever, by , 198_, this Lease Agreement shall not be void or voidable; but in that event the remaining 1988 Lease Payments shall. with respect to the period between such date and the time when the City takes or is required hereunder to take possession thereof, be payable solely from the sources identified in Section 4.4(e) and the City shall not be obligated to pay the 1988 Lease Payments from any other source of funds or property of the City whatsoever. —8— ARTICLE IV AGREEMENT TO LEASE; TERMINATION OF THIS LEASE; LEASE PAYMENTS SECTION 4.1. Lease. Pursuant to the Original Lease, the Corporation presently leases the Project to the City and the City presently leases the Project from the Corporation. Throughout the Term of this Lease Agreement the Corporation shall continue to lease the Project to the City and the City shall continue to lease the Project from the Corporation, upon the terms and conditions set forth in this Lease. SECTION 4.2. Term of Agreement. The Term of this Lease Agreement has heretofore commenced pursuant to the Original Lease. The term of the Original Lease shall be deemed to be continued under and during the Term of this Lease Agreement. The Term of this Lease Agreement shall commence on the date of recordation hereof and shall end on February 1, 2010, unless such term is extended as hereinafter provided. If on February 1, 2010, the Trust Agreement shall not be discharged pursuant to Section 13.01 thereof, then the Term of this Lease Agreement shall be extended until the date of such discharge, but not beyond February 1, 2020. If prior to February 1, 2010, the Trust Agreement shall be discharged pursuant to Section 13.01 thereof, the Term of this Lease Agreement shall thereupon end. The provisions of this Section 4.2 are subject in all respects to the provisions of Section 6.1 relating to the termination of this Lease in the event of eminent domain proceedings with respect to the Project. SECTION 4.3. Possession. The Corporation hereby agrees that upon the substantial completion of the Project or any component thereof, the City will take possession of the Project or such component hereunder. SECTION 4.4. Lease Payments. (a) Obligation to Pay. • (i) Original Lease Payments. Pursuant to the Original Lease, the City has heretofore agreed to pay the Prior Lease Payments at the times and in the amounts set forth in Section 3.05 of the Original Lease and Exhibit C attached to the Original Lease. The City shall continue to pay the Original Lease Payments on the respective dates and in the respective amounts set forth in Exhibit C attached hereto and by this reference incorporated herein. Notwithstanding any provision of the Original Lease or this Lease Agreement to the contrary, from and after the Closing Date the obligation of the City to pay the Original Lease Payments shall be a special obligation of the City payable solely from the amounts on deposit with the Escrow Bank in the Escrow Fund pursuant to and in accordance with the Escrow Agreement. (ii) 1988 Lease Payments. Subject to the provisions of Section 3.2 and Articles VI and X.hereof, the City agrees to pay to the Corporation, its successors and assigns, the 1988 Lease Payments (denominated into components of principal and interest) for the Project in the respective —9— amounts specified in Exhibit A, to be due and payable on the Interest Payment Dates each of the respective 1988 Lease Payment Dates specified in Exhibit A, and to be deposited by the City with the Trustee on each of the 1988 Lease Payment Dates specified in Exhibit A. Any amount held in the Lease Payment Fund on any 1988 Lease Payment Date (other than amounts resulting from the prepayment of the 1988 Lease Payments in part but not in whole pursuant to Article X and other than amounts required for payment of past due principal or interest represented by any Certificates not presented for payment) shall be credited towards the 1988 Lease Payment then required to be paid hereunder; and no 1988 Lease Payment need be deposited with the Trustee on any 1988 Lease Payment Date if the amounts then held in the Lease Payment Fund are at least equal to the Lease Payment then required to be deposited with the Trustee. The 1988 Lease Payments payable in any Rental Period shall be for the use of the Project for such Rental Period. (b) Effect of Prepayment. In the event that the City prepays all remaining 1988 Lease Payments in full pursuant to Article X, the City's obligations under this Lease shall thereupon cease and terminate, including but not limited to the City's obligation to pay 1988 Lease Payments under this Section 4.4; subject, however, to the provisions of Section 10.1 in the case of prepayment by application of a security deposit. In the event that the City prepays the 1988 Lease Payments in part but not in whole pursuant to Sections 10.2, 10.3 or 10.4, the principal components of the remaining 1988 Lease Payments shall be reduced in inverse order of 1988 Lease Payment Date in the case of such prepayment pursuant to Section 10.2, and on a pro rata basis in the case of such prepayment pursuant to Sections 10.3 or 10.4, in integral multiples of $5000 and the interest component of each remaining 1988 Lease Payment shall be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Certificates thereby prepaid pursuant td Section 3.01 of the Trust Agreement. (c) Rate on Overdue Payments. In the event the City should fail to make any of the payments required in this Section 4.4, the payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City agrees to pay the same with interest thereon, from_ the date of default to the date of payment at the net effective rate of interest per annum then represented by the Outstanding Certificates. (d) Fair Rental Value. The 1988 Lease Payments for the Project during each Rental Period shall constitute the total rental for the Project for each Rental Period, and shall be paid by the City in each Rental Period for and in consideration of the right of the use and occupancy of, and the continued quiet use and enjoyment of the Project during each Rental Period. The parties hereto have agreed and determined that the total 1988 Lease Payments for the Project represent the fair rental value of the Project. In making such determination, consideration has been given to the estimated Project Costs of the Project, other obligations of the parties under this Lease, the uses and purposes which may be served by the Project and the benefits therefrom which will accrue to the City and the general public. -10- (e) Source of Payments; Budget and Appropriation. Prior to the date of substantial completion of the Project, the 1988 Lease Payments shall be payable solely from amounts on deposit in the Project Funds, the Reserve Fund and the Lease Payment Fund, or from any earnings on the investments of amounts held under the Trust Agreement. Following the Completion Date of the Project, the 1988 Lease Payments allocable thereto shall be payable from any source of available funds of the City, subject to the provisions of Articles VI and X. The City covenants to take such action as may be necessary to include all 1988 Lease Payments following the date of substantial-completion of the Project in each of its annual budgets during the Term of this Lease Agreement and to make the necessary annual appropriations for all such 1988 Lease Payments. During the Term of this Lease Agreement, the City will furnish to the Trustee a certificate of the City Representative stating that the 1988 Lease Payments have been included in the final budget of the City for the current Fiscal Year, such certificate to be filed within thirty (30) days after the adoption of such budget and in any event no later than September 1 in the calendar year in which the City adopts such budget. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City 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 City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by the City. (f) Assignment. The City understands and agrees that all 1988 Lease Payments have been assigned by the Corporation to the Trustee in trust, pursuant to the Assignment Agreement, for the benefit of the Owners of the Certificates, and the City hereby assents to such assignment. The Corporation hereby directs the City, and the City hereby agrees to pay to the Trustee at the Trust Office of the Trustee, all of the 1988 Lease Payments payable by the City pursuant to this Section 4.4 and all amounts payable by the City pursuant to Article X. SECTION 4.5. Quiet Enjoyment. During the Term of this Lease Agreement, the Corporation shall provide the City with quiet use and enjoyment of the Project, and the City shall during such Term peaceably and quietly have and hold and enjoy the Project, without suit, trouble or hindrance from the Corporation, except as expressly set forth in this Lease Agreement. The Corporation will, at the request of the City and at the City's cost, join in any legal action in which the City asserts its right to such possession and enjoyment to the extent the Corporation may lawfully do so. Notwithstanding the foregoing, the Corporation shall have the right to inspect the Project as provided in Section 7.2. SECTION 4.6. Title. During the Term of this Lease Agreement, the Corporation shall hold title to the Project and any and all additions which comprise fixtures, repairs, replacements or modifications to the Project, except for those fixtures, repairs, replacements or modifications which are added to the Project by the City at its own expense and which may be removed without damaging the Project and except for any items added to the Project by the City pursuant to Section 5.9. In the event the City exercises its right to substitute any new property for former property as provided in Section 5.10, all right, title and interest of the Corporation in and to such former property shall be transferred to and vested in the City, without the necessity of any —11— additional document of transfer; and title to such new property shall thereupon be vested in the Corporation, without the necessity of any additional document of transfer. If the City prepays the 1988 Lease Payments in full pursuant to Article X or makes the security deposit permitted by Section 10.1, or pays all 1988 Lease Payments during the Term of this Lease Agreement as the same become due and payable, all right; title and interest of the Corporation in and to the Project shall be transferred to and vested in the City. The Corporation agrees to take any and all steps and execute and record any and all documents reasonably required by the City to consummate any such transfer of title. SECTION 4.7. Additional Payments. In addition to the 1988 Lease Payments, the City shall pay when due all costs and expenses incurred by the Corporation to comply with the provisions of the Trust Agreement, including without limitation all Costs of Issuance (to the extent not paid from amounts on deposit in the Project Funds), annual compensation due to the Trustee and all of its reasonable costs payable as a result of the performance of and compliance with its duties under the Trust Agreement, and all costs and expenses of attorneys, auditors, engineers and accountants. -12- ARTICLE V MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this Lease Agreement, as part of the consideration for the rental of the Project, all improvement, repair and maintenance of the Project shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Project, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, water and all other utility services, and shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of the Project resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the 1988 Lease Payments herein provided, the Corporation agrees to provide only the Project, as hereinbefore more specifically set forth. The City waives the benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and 1942 of the California Civil Code, but such waiver shall not limit any of the rights of the City under the terms of this Lease. The City shall also pay or cause to be paid all taxes and assessments of any type or nature, if any, charged to the Corporation or the City affecting the Project or the respective interests or estates therein; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the Term of this Lease Agreement as and when the same become due. The City may, at the City's expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Corporation shall notify the City that, in the opinion of Independent Counsel, by nonpayment of any such items, the interest of the Corporation in the Project will be materially endangered or the Project or any part thereof will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes, assessments or charges or provide the Corporation with full security against any loss which may result from nonpayment, in form satisfactory to the Corporation and the Trustee. SECTION 5.2. Modification of Project. The City shall, at its own expense, have the right to remodel the Project or to make additions, modifications and improvements to the Project. All additions, modifications and improvements to the Project, but not any additional buildings or improvements shall thereafter comprise part of the Project and be subject to the provisions of this Lease Agreement. Such additions, modifications and improvements shall not in any way damage the Project or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Project, upon completion of any additions, modifications and improvements made thereto pursuant to this Section, shall be of a value which is not substantially less than the value of the Project immediately prior to the making of such additions, modifications and improvements. The City will not permit any mechanic's or other lien to be established or remain against the Project for labor or materials furnished —13— in connection with any remodeling, additions, modifications, improvements, repairs, renewals or replacements made by the City pursuant to this Section; provided that if any such lien is established and the City shall first notify or cause to be notified the Corporation of the City's intention to do so, the City may in good faith contest any lien filed or established against the Project, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom and shall provide the Corporation with full security against any loss or forfeiture which might arise from the nonpayment of any such item, in form satisfactory to the Corporation. The Corporation will cooperate fully in any such contest, upon the request and at the expense of the City. SECTION 5.3. Public Liability and Property Damage Insurance. The City shall maintain or cause to be maintained, following the Completion Date and continuing thereafter throughout the Term of this Lease Agreement, but only if and to the extent available at reasonable cost from reputable insurers, a standard comprehensive general insurance policy or policies in protection of the Corporation, City, and their respective members, officers, agents and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the operation of the Project. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in each accident or event (subject to a deductible of not to exceed $250,000), and in a minimum amount of $150,000 (subject to a deductible of not to exceed $75,000) for damage to property resulting from each accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks, subject to a deductible of not to exceed $250,000. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried by the City, and may be maintained in whole or in part in the form of self- insurance by the City, subject to the provisions of Section 5.7. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. SECTION 5.4. Fire and Extended Coverage Insurance. The City shall procure and maintain, or cause to be procured and maintained, following the Completion Date and continuing thereafter throughout the Term of this Lease Agreement, insurance against loss or damage to any structures constituting any part of the Project by fire and lightning, with extended coverage and vandalism and malicious mischief insurance, and earthquake insurance (but as to earthquake insurance, only in the event and to the extent such insurance is available at reasonable cost from reputable insurers). Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Such insurance shall be in an amount at least equal to the lesser of(a) the aggregate principal amount of the Outstanding Certificates, or (b) one hundred percent (100%) of the replacement cost of the Project. Such insurance may be subject to deductible clauses of not to exceed $100,000 for any one loss to the Project with respect to the Project and such earthquake insurance may be subject to a deductible clause of not to exceed ten percent (10%) of said replacement cost for any one loss to the Project. Such insurance may be maintained as part of or in conjunction with any other fire and extended coverage insurance carried by the City and may be maintained in whole -14- or in part in the form of self-insurance by the City, subject to the provisions of Section 5.7. The Net Proceeds of such insurance shall be applied as provided in Section 6.2. SECTION 5.5. Rental Interruption Insurance. The City shall procure, and maintain, or cause to be procured and maintained, following the Completion Date and continuing thereafter throughout the Term of this Lease Agreement, rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of any structures constituting any part of the Project as a result of any of the hazards covered in the insurance required by Section 5.4, in an amount at least equal to the maximum 1988 Lease Payments payable during any two Fiscal Years. The Net Proceeds of such insurance shall be paid to the Trustee and deposited in the Lease Payment Fund, and shall be credited towards the payment of the 1988 Lease Payments in the order in which such 1988 Lease Payments come due and payable. Such insurance may be maintained in whole or in part in the form of self-insurance by the City, subject to the provisions of Section 5.7. SECTION 5.6. Title Insurance. Prior to or concurrent with the recordation hereof, the City shall provide, at its own expense, a CLTA title insurance policy in the - amount of not less than the aggregate principal amount of the Certificates, insuring the City's leasehold estate in the Project hereunder. Such title insurance may be provided in whole or in part in the form of an endorsement to any policy previously obtained by the City with respect to any portion of the Project site, and for purposes of computing the amount of insurance maintained hereunder the amount provided in any such prior policy shall be credited thereto. All Net Proceeds received under such policy shall be deposited with the Trustee in the Lease Payment Fund and shall be credited towards the prepayment of the remaining 1988 Lease Payments pursuant to Section 10.3. SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance required by Sections 5.4, 5.5 and 5.6 shall name the Trustee as loss payee so as to provide that all proceeds thereunder shall be payable to the Trustee. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease. All such policies shall provide that the Trustee shall be given thirty (30) days' notice of each expiration, any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall not be responsible for the sufficiency of any insurance herein required and shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss. The City shall cause to be delivered to the Trustee annually, within sixty (60) days following the close of each Fiscal Year, a certificate stating that the insurancekoverage required by this Lease lain full force and effect. In the event that any insurance required pursuant to Sections 5.3 or 5.4 shall be provided in the form of self-insurance, the City shall file with the Trustee annually, within ninety (90) days following the close of each Fiscal Year, a statement of the risk manager of the City or an independent insurance advisor engaged by the City identifying the extent of such self-insurance and stating the determination that the City maintains sufficient reserves with respect thereto. In the event that any such insurance shall be provided in the form of self-insurance by the City, the City shall not be obligated to make any payment with respect to any insured event except from such reserves. -15- SECTION 5.8. Advances. If the City shall fail to perform any of its obligations under this Article, the Corporation shall take such action as may be necessary to cure such failure, including the advancement of money, and the City shall be obligated to repay all such advances as additional rental hereunder, with interest at the net effective rate per annum then represented by the Outstanding Certificates. SECTION 5.9. Installation of City's Equipment. The City may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed other items of equipment or other personal property in or upon the Project. All such items shall remain the sole property of the City, in which neither the Corporation nor the Trustee shall have any interest, and may be modified or removed by the City at any time provided that the City shall repair and restore any and all damage to the Project resulting from the installation, modification or removal of any such items. Nothing in this Lease shall prevent the City from purchasing or leasing items to be installed pursuant to this Section under a lease or conditional sale agreement, or subject to a vendor's lien or security agreement, as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Project. SECTION 5.10. Substitution of Property. The City shall have the right to substitute for any portion of the Project any property acquired other than from moneys in the Project Funds but only: (a) by providing the Corporation and the Trustee with a written certificate of the City Representative stating that (i) the market value of such property at least equals the market value of such item of the Project, and (ii) such property has useful life at least equal to the remaining useful life of such item of the Project; (b) by conveying or causing to be conveyed to the Corporation title to such property free and clear of all encumbrances and liens other than such as the City and the Authority consent to in writing;/,(c) by delivering or causing to be delivered to the Corporation a bill of sale or other instrument conveying title thereto; and (d) by causing Exhibit B hereto to be amended to reflect such substitution and causing a copy of this Lease Agreement as so amended to be recorded in the office of the Alameda County Recorder. All costs and expenses incurred in connection with substitution, including without limitation the cost of acquiring such property, shall be borne by the City. The City shall not be entitled to any abatement whatsoever of Lease Payments hereunder by reason of any such substitution. The City shall mail notice of any proposed substitution under this Section to Moody's and S&P by first class mail, postage prepaid. SECTION 5.11. Liens. The City shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Project, other than as herein contemplated. Except as expressly provided in this Article, the City shall promptly, at its own expense, take such action as may be necessary to duly discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is responsible, if the same shall arise at any time. The City shall reimburse the Corporation for any expense incurred by it in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim. —16— ARTICLE VI DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET PROCEEDS SECTION 6.1. Eminent Domain; Abatement. If all of the Project shall be taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the Term of this Lease Agreement shall cease with respect to the Project as of the day possession shall be so taken. If less than all of the Project shall be taken permanently, or if all of the Project or any part thereof shall be taken temporarily, under the power of eminent domain, (a) this Lease shall continue in full force and effect and shall not be terminated by virtue of such taking and the parties waive the benefit of any law to the contrary, and (b) there shall be a partial abatement of 1988 Lease Payments as a result of the application of the Net . Proceeds of any eminent domain award to the prepayment of the principal components of the 1988 Lease Payments hereunder, in an amount to be agreed upon by the City and the Corporation such that the resulting 1988 Lease Payments represent fair consideration for the use and occupancy of the remaining usable.portion of the Project. SECTION 6.2. Application of Net Proceeds. The Net Proceeds of any insurance award resulting from any damage to or destruction of the Project by fire or other casualty shall be paid to the Trustee, as assignee of the Corporation under the Assignment Agreement, and deposited in the Insurance and Condemnation Fund by the Trustee and 'applied as set forth in Section 6.01 of the Trust Agreement. The Net Proceeds of any eminent domain award resulting from any event described in Section 6.1 hereof shall be paid by the City to the Trustee and deposited in the Insurance and Condemnation Award Fund and applied as set forth in Section 6.02 of the Trust Agreement. SECTION 6.3. Abatement of Rental in the Event of Damage or Destruction. The amount of 1988 Lease Payments shall be abated, during any period in which by reason of damage or destruction (other than by eminent domain which is hereinbefore provided for) there is substantial interference with the use and occupancy by the City of the Project or any portion thereof. The amount of such abatement shall be agreed upon by the City and the Corporation such that the resulting 1988 Lease Payments represent fair consideration for the use and occupancy of the portions of the Project not damaged or destroyed. Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, this Lease shall continue in full force and effect and the City waives any right to terminate this Lease by virtue of any such damage and destruction. Notwithstanding the foregoing, there shall be no abatement of 1988 Lease Payments allocable to the Project under this Section 6.3 to the extent that the proceeds of rental interruption insurance or amounts in the Reserve Fund are available to pay 1988 Lease Payments which would otherwise be abated under this Section 6.3, it being hereby declared that such proceeds and amounts constitute a special fund for the payment of the 1988 Lease Payments. -17- ARTICLE VII DISCLAIMER OF WARRANTIES; ACCESS SECTION 7.1. Disclaimer of Warranties. The Corporation and the Trustee make no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City of the Project, or any other representation or warranty with respect to the Project. In no event shall the Corporation be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Lease Agreement or the Trust Agreement for the existence, furnishing, functioning or City's use of the Project. SECTION 7.2. Access to the Project. The City agrees that the Corporation and any Corporation Representative, and the Corporation's successors or assigns, shall have the right at all reasonable times to enter upon and to examine and inspect the Project. The City further agrees that the Corporation, any Corporation Representative and the Corporation's successors or assigns shall have such rights of access to the Project as may be reasonably necessary to cause the proper maintenance of the Project in the event of failure by the City to perform its obligations hereunder. SECTION 7.3. Release and Indemnification Covenants. The City shall and hereby agrees to indemnify and save the Corporation and the Trustee and their respective officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on the Project by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under this Lease, (c) any act or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect-to the Project, (d) any act or negligence of any sublessee of the City with respect to the Project, or (e) the construction of the Project or the authorization of payment of the Project Costs. No indemnification is made under this Section or elsewhere in this Lease for any negligence or intentional misconduct by the Corporation or the Trustee, or their respective officers, agents, employees, successors or assigns. • —18— ARTICLE VIII ASSIGNMENT, SUBLEASING AND AMENDMENT SECTION 8.1. Assignment by the Corporation. The Corporation's rights under this Lease, including the right to receive and enforce payment of the 1988 Lease Payments to be made by the City under this Lease have been assigned to the Trustee pursuant to the Assignment Agreement, to which assignment the City hereby consents. SECTION 8.2. Assignment and Subleasing by the City. This Lease Agreement may not be assigned by the City. The City may further sublease the Project or any portion thereof, but only with the written consent of the Corporation and subject to all of the following conditions: (a) This Lease Agreement and the obligation of the City to make 1988 Lease Payments hereunder shall remain obligations of the City. (b) The City shall, within thirty (30) days after the delivery thereof, furnish or cause to be furnished to the Corporation and the Trustee a true and complete copy of such sublease. (c) No such sublease by the City shall cause the Project to be used for a purpose other than as may be authorized under the provisions of the laws of the State. (d) The City shall furnish the Corporation and the Trustee with a written opinion of an attorney or firm of attorneys experienced in the issuance of obligations described in section 103 of the Tax Code, stating that such sublease does not cause the interest components of the 1988 Lease Payments to become subject to federal or State personal income taxes. SECTION 8.3. Amendment of Lease Agreement. Without the prior written consent of the Trustee, the City will not alter, modify or cancel, or agree or consent to alter, modify or cancel this Lease Agreement, excepting only such alteration or modification as may be permitted by Article IX of the Trust Agreement. • —19— ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION 9.1. Events of Default Defined. Any one or more of the following events shall constitute an Event of Default hereunder: (a) Failure by the City to pay any 1988 Lease Payment or other payment required to be paid hereunder at the time specified herein, and the continuation of such failure for a period of ten (10) days. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in clause (i) of this Section, for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Corporation, the Trustee, or the Owners of not less than twenty-five percent (25%) in aggregate principal amount of Certificates then Outstanding; provided, however, if the failure stated in the notice can be corrected, but not within such 30-day period, the Corporation, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the City within the applicable period and diligently pursued until corrected. (c) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachment, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted. SECTION 9.2. Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the Corporation may exercise any or all remedies available pursuant to law or granted pursuant to this Lease; provided that notwithstanding anything herein or in the Trust Agreement to the contrary, there shall be no right under any circumstances to accelerate the 1988 Lease Payments or otherwise declare any 1988 Lease Payments not then in default to be immediately due and payable. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Corporation may exercise any and all rights of entry and re-entry upon the Project, and also, at its option, with or without such entry, may terminate this Lease; provided, that no such termination shall be effected either by operation of law or acts of the parties hereto, except only in the manner herein expressly provided. Upon the occurrence of an Event of Default and notwithstanding any re-entry by the Corporation, the City shall, as herein expressly provided, continue to remain liable for the payment of the 1988 Lease Payments and/or damages for breach of this Lease and the performance of all conditions herein contained and, in any event such rent and/or -20- damages shall be payable to the Corporation at the time and in the manner as herein provided, to wit: (a) In the event the Corporation does not elect to terminate this Lease in the manner hereinafter provided for in subparagraph (b) hereof, the City agrees to and shall remain liable for the payment of all 1988 Lease Payments and the performance of all conditions herein contained and shall reimburse the Corporation for any deficiency arising out of the re—leasing of the Project, or, in the event the Corporation is unable to re—lease the Project, then for the full amount of all 1988 Lease Payments to the end of the Term of this Lease Agreement, but said 1988 Lease Payments and/or deficiency shall be payable only at the same time and in the same manner as hereinabove provided for the payment of 1988 Lease Payments hereunder, notwithstanding such entry or re—entry by the Corporation or any suit in unlawful detainer, or otherwise, brought by the Corporation for the purpose of effecting such re—entry or obtaining possession of the Project or the exercise of any other remedy by the Corporation. The City hereby irrevocably appoints the Corporation as the agent and attorney—in—fact of the City to enter upon and re—lease the Project in the event of default by the City in the performance of any covenants herein contained to be performed by the City and to remove all personal property whatsoever situated upon the Project to place such property in storage or other suitable place in the County of Alameda for the account of and at the expense of the City, and the City hereby exempts and agrees to save harmless the Corporation from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re- leasing of the Project and the removal and storage of such property by the Corporation or its duly authorized agents in accordance with the provisions herein contained. The City hereby waives any and all claims for damages caused or which may be caused by the Corporation in re—entering and taking possession of the Project as herein provided and all claims for damages that may result from the destruction of or injury to the Project and all claims for damages to or loss of any property belonging to the City that may be in or upon the Project. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Corporation to re—lease the Project in the event of such re—entry without effecting a surrender of this Lease, and further agrees that no acts of the Corporation in effecting such re—leasing shall constitute a surrender or termination of this Lease irrespective of the term for which such re—leasing is made or the terms and conditions of such re—leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Agreement shall vest in the Corporation to be effected in the sole and exclusive manner hereinafter provided for in subparagraph (b) hereof. The City further waives the right to any rental obtained by the Corporation in excess of the 1988 Lease Payments and hereby conveys and releases such excess to the Corporation as additional rental hereunder. (b) Upon the occurrence of an Event of Default, the Corporation may at its election terminate this Lease and re—lease all or any portion of the Project; provided that any such termination shall not operate to terminate the rights and remedies granted to the Corporation pursuant to this Article IX. In the event of the termination of this Lease by the Corporation and in the manner hereinafter provided on account of default by the City (and notwithstanding any re—entry upon the Project by the Corporation in any manner whatsoever or the re—leasing of the Project), the City nevertheless agrees to pay to the Corporation all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of 1988 Lease Payments. Any surplus received by the Corporation from such re—leasing —21— shall be credited towards the 1988 Lease Payments next coming due and payable. Neither notice to pay rent or to deliver up possession of the premises given pursuant to law nor any proceeding in unlawful detainer taken by the Corporation shall of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City shall be or become effective by operation of law, or otherwise, unless and until the Corporation shall have given written notice to the City of the election on the part of the Corporation to terminate this Lease. The City covenants and agrees that no surrender of the Project and/or the Site or of the remainder of the Term hereof or any termination of this Lease shall be valid in any manner or for any purpose whatsoever unless stated or accepted by the Corporation by such written notice. SECTION 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Corporation is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Corporation to exercise any remedy reserved to it in this Article it shall not be necessary to give any notice, other than such notice as may be required in this Article or by law. SECTION 9.4. Agreement to Pay Attorneys' Fees and Expenses.. In the event either party to this Lease Agreement should default under any of the provisions hereof and the nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting party the reasonable fees of such attorneys and such other expenses so incurred by the nondefaulting party. SECTION 9.5. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Lease should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. SECTION 9.6. Application of Proceeds. All net proceeds received from the re- lease of the Project under this Article IX, and all other amounts derived by the Corporation or the Trustee as a result of the occurrence of an Event of Default, shall be transferred to the Trustee promptly upon receipt thereof and shall be deposited by the Trustee in the Lease Payment Fund to be applied to the 1988 Lease,Payments in order of 1988 Lease Payment Date. SECTION 9.7. Trustee and Certificate Owners to Exercise Rights. Such rights and remedies as are given to the Corporation under this Article IX have been assigned by the Corporation to the Trustee under the Assignment Agreement, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Certificates as provided in the Trust Agreement. -22- ARTICLE X PREPAYMENT OF LEASE PAYMENTS SECTION 10.1. Security Deposit. Notwithstanding any other provision of this Lease Agreement, the City may on any date secure the payment of 1988 Lease Payments in whole or in part by depositing with the Trustee an amount of cash which, together with amounts on deposit in the Lease Payment Fund, the Insurance and Condemnation Fund and the Reserve Fund, is either (a) sufficient to pay all unpaid 1988 Lease Payments, including the principal and interest components thereof, in accordance with the 1988 Lease Payment schedule set forth in Exhibit A, or (b) invested in whole or in part in Federal Securities in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay such 1988 Lease Payments when due pursuant to Section 4.4(a) or when due on any optional prepayment date pursuant to Section 10.2, as the City shall instruct at the time of said deposit. In the event of a security deposit pursuant to this Section with respect to all unpaid Lease Payments, all obligations of the City under this Lease Agreement, and all security provided by this Lease Agreement for said obligations, shall cease and terminate, excepting only the obligation of the City to make, or cause to be made, all of 1988 Lease Payments from such security deposit, and pursuant to Section 4.6, title to the Project shall vest in the City on the date of said deposit automatically and without further action by the City or the Corporation. Said security deposit shall be deemed to be and shall constitute a special fund for the payment of 1988 Lease,Payments in accordance with the provisions of this Lease Agreement. SECTION 10.2. Optional Prepayment. The City may exercise its option to exercise its option to prepay the principal components of the 1988 Lease Payments in whole, or in part in any integral multiple of$5,000, on any Interest Payment Date on or after February 1, 199_, by paying a prepayment price equal to the aggregate principal components of the 1988 Lease Payments to be prepaid, together with the interest component of the 1988 Lease Payment required to be paid on such date and together with a prepayment penalty equal to the aggregate premium required to be paid upon the corresponding prepayment of the Certificates pursuant to Section 3.01(a) of the Trust Agreement. Such prepayment price shall be deposited by the Trustee in the Lease Payment Fund to be applied to the prepayment of Certificates pursuant to Section 3.01(a) of the Trust Agreement. The City shall give the Trustee written notice of its intention to exercise its option not less than forty—five (45) days in advance of the date of exercise. SECTION 10.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent Domain. The City shall be obligated to prepay the 1988 Lease Payments in whole on any date or in part on any Interest Payment Date, from and to the extent of any Net Proceeds of insurance award or condemnation award with respect to the Project theretofore deposited in the Lease Payment Fund for such purpose pursuant to Article VI hereof and Article VI of the Trust Agreement. The City and the Corporation hereby agree that such Net Proceeds, to the extent remaining after payment of any delinquent 1988 Lease Payments, shall be credited towards the City's obligations under this Section 10.3. —23— SECTION 10.4. Mandatory Prepayment From Unused Project Funds. The City shall be obligated to prepay the Lease Payments on the first Interest Payment Date for which notice of redemption of Certificates can be timely given following the earlier of (a). December 1, 1990, or such later date as may be permitted in the opinion of Bond Counsel, or (b) the Completion Date, from and to the extent of any amounts then remaining on deposit in the Project Funds and transferred to the Trustee for such purpose pursuant to Section 4.02 of the Trust Agreement. The City and the Corporation hereby agree that such amounts, to the extent remaining after payment of any delinquent Lease Payments, shall be credited towards the City's obligations under this Section 10.4. SECTION 10.5. Credit for Amounts on Deposit. In the event of prepayment of the principal components of the 1988 Lease Payments in full under this Article X, such that the Trust Agreement shall be discharged by its terms as a result of such prepayment, all amounts then on deposit in the Lease Payment Fund, the Project Funds or the Reserve Fund shall be credited towards the amounts then required to be so prepaid. • -24- f ARTICLE XI MISCELLANEOUS SECTION 11.1. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed to have been received 48 hours after deposit in the United States mail in registered or certified form with postage fully prepaid: If to the City: City Manager City of Dublin 6500 Dublin Boulevard Post Office Box 2340 Dublin, California 94568 If to the Corporation: Chairman Dublin Information, Inc. 6500 Dublin Boulevard Post Office Box 2340 Dublin, California. 94568 If to the Trustee: The Bank of California, N.A. 400 California Street Sari Francisco, California 94104 Attention: SECTION 11.2. Binding Effect. This Lease shall inure to the benefit of and shall be binding upon the Corporation and the City and their respective successors and assigns. SECTION 11.3. Severability. In the event any provision of this Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 11.4. Net—net—net Lease. This Lease shall be deemed and construed to be a "net-net-net lease" and the City hereby agrees that the 1988 Lease Payments shall be an absolute net return to the Corporation, free and clear of any expenses, charges or set-offs whatsoever. SECTION 11.5. Further Assurances and Corrective Instruments. The Corporation and the City agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project hereby leased or intended so to be or for carrying out the expressed intention of this Lease. -25- SECTION 11.6. Execution in Counterparts. This Lease 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. SECTION 11.7. Applicable. Law. This Lease shall be governed by and construed in accordance with the laws of the State of California. SECTION 11.8. Corporation and City Representatives. Whenever under the provisions of this Lease the approval of the Corporation or the City is required, or the Corporation or the City is required to take some action at the request of the other, such approval or such request shall be given for the Corporation by a Corporation Representative and for the City by a City Representative, and any party hereto shall be authorized to rely upon any such approval or request. SECTION 11.9. Captions. The captions or headings in this Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Lease Agreement. -26- IN WITNESS WHEREOF, the Corporation and the City have caused this Lease Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written. CITY OF DUBLIN, as lessee By Mayor Attest: By: City Clerk DUBLIN INFORMATION, INC., as lessor By Chairman (SEAL) Attest: By: Secretary • —27— F • EXHIBIT A SCHEDULE OF 1988 LEASE PAYMENTS 1988 Lease Principal Interest 1988 Lease Payment Date Component Component Payment July 15, 1988 January 15, 1989 July 15, 1989 January 15, 1990 July 15, 1990 January 15, 1991 July 15, 1991 January 15, 1992 July 15, 1992 January 15, 1993 July 15, 1993 January 15, 1994 July 15, 1994 January 15, 1995 July 15, 1995 January 15, 1996 July 15, 1996 January 15, 1997 July 15, 1997 January 15, 1998 July 15, 1998 January 15, 1999 July 15, 1999 January 15, 2000 July 15, 2000 January 15, 2001 July 15, 2001 January 15, 2002 July 15, 2002 January 15, 2003 July 15, 2003 January 15, 2004 July 15, 2004 * A portion of the first 1988 Lease Payment in the amount of $ is.payable on the Closing Date pursuant to Section 3.1. -28- 1988 Lease Principal Interest 1988 Lease Payment Date Component Component Payment January 15, 2005 July 15, 2005 January 15, 2006 July 15, 2006 January 15, 2007 July 15, 2007 January 15, 2008 July 15, 2008 January 15, 2009 July 15, 2009 January 15, 2010 -29- EXHIBIT B DESCRIPTION OF PROJECT SITE -30- EXHIBIT C SCHEDULE OF ORIGINAL LEASE PAYMENTS Original Lease Principal Interest Original Lease Payment Date Component Component Payment August 1, 1986 February 1, 1987 August 1, 1987 February 1, 1988 August 1, 1988 February 1, 1989 August 1, 1989 February 1, 1990 • August 1, 1990 February 1, 1991 August 1, 1991 February 1, 1992 August 1, 1992 February 1, 1993 August 1, 1993 February 1, 1994 August 1, 1994 February 1, 1995 August 1, 1995 February 1, 1996 August 1, 1996 —31— 19011-09 JHHW:CFA:dfs February 11,lutes r root Piir-.1-6KED TO SHOW CHANG!_'__ RECEIVED TRUST AGREEMENT FEB 1 2 1983 art OF DUBLUt4 c rt Dated as of-February 1, 1988 by and among THE BANK OF CALIFORNIA, as trustee DUBLIN INFORMATION, INC. and the CITY OF DUBLIN Relating to 1988 Refunding Certificates of Participation (Civic Center Project) 6xn, ?, o lit 3 t E 5 F7662.TOC TABLE OF CONTENTS page • ARTICLE I DEFINITIONS Section 1.01. Definitions 2 Section 1.02. Legal Authority 9 ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.01. Authorization 10 Section 2.02. Date 10 Section 2.03. Maturity; Interest Rates 10 Section 2.04. Form of Certificates; Interest 10 Section 2.05. Form 11 Section 2.06. Execution 11 Section 2.07. Transfer and Exchange 11 Section 2.08. Certificates Mutilated,,Lost, Destroyed or Stolen 11 Section 2.09. Payment 12 Section 2.10. Execution of Documents and Proof of Ownership 12 Section 2.11. Temporary Certificates 13 Section 2.12. Registration Books 13 ARTICLE III PREPAYMENT OF CERTIFICATES Section 3.01. Prepayment 14 Section 3.02. Selection of Certificates for Prepayment 15 Section 3.03. Notice of Prepayment 15 Section 3.04. Partial Prepayment of Certificates 16 Section 3.05. Effect of Notice of Prepayment 16 Section 3.06. Purchase of Certificates 16 i _ Page s, s ARTICLE IV DISPOSITION OF PROCEEDS; PROJECT FUND AND RESERVE FUND Section 4.01. Application of Proceeds 17 Section 4.02. Project Funds 17 Section 4.03. Reserve Fund 17 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Assignment of Rights in Lease Agreement 19 Section 5.02. Establishment of Lease Payment Fund 19 Section 5.03. Deposits 19 Section 5.04. Application of Moneys 19 Section 5.05. Surplus 19 ARTICLE VI INSURANCE AND CONDEMNATION FUND Section 6.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award 20 Section 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award 20 Section 6.03. Cooperation 21 ARTICLE VII MONEYS IN FUNDS; SPECIAL ARBITRAGE COVENANTS Section 7.01. Held in Trust 22 Section 7.02. Investments Authorized 22 Section 7.03. Accounting 22 Section 7.04. Allocation of Earnings 22 Section 7.05. Valuation and Disposition of Investments 22 Section 7.06. No Arbitrage 23 Section 7.07. Rebate of Excess Investment Earnings to United States 23 ii Page • ARTICLE VIII THE TRUSTEE Section 8.01. Appointment of Trustee 25 Section 8.02. Acceptance of Trusts 25 Section 8.03. Fees, Charges and Expenses of Trustee 28 Section 8.04. Notice to Certificate Owners of Default 28 Section 8.05. Intervention by Trustee 28 Section 8.06. Removal of Trustee 28 Section 8.07. Resignation by Trustee 28 Section 8.08. Appointment of Successor Trustee 29 Section 8.09. Merger or Consolidation 29 Section 8.10. Concerning any Successor Trustee 29 Section 8.11. Appointment of Co—Trustee 29 Section 8.12. Non—Liability of Trustee 30 Section 8.13. Nature of Trust Engagement 30 ARTICLE IX MODIFICATION OR AMENDMENT OF AGREEMENTS Section 9.01. Amendments Permitted 32 Section 9.02. Procedure for Amendment with Written Consent of Certificate Owners 32 Section 9.03. Disqualified Certificates 33 Section 9.04. Effect of Supplemental Agreement • 33 Section 9.05. Endorsement or Replacement of Certificates Delivered After Amendments 34 Section 9.06. Amendatory Endorsement of Certificates 34 ARTICLE X COVENANTS; NOTICES Section 10.01. Compliance With and Enforcement of Lease Agreement 35 Section 10.02. Observance of Laws and Regulations 35 Section 10.03. Prosecution and Defense of Suits 35 Section 10.04. Recordation and Filing 35 Section 10.05. Tax Covenants 35 Section 10.06. Further Assurances 36 iii a -" Page ARTICLE XI LIMITATION OF LIABILITY Section 11.01. Limited Liability of City 37 Section 11.02. No Liability of the Corporation for Trustee Performance 37 Section 11.03. Indemnification of Trustee 37 Section 11.04. Opinion of Counsel 37 Section 11.05. Limitation of Rights to Parties and Certificate Owners 37 ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 12.01. Assignment of Rights 39 Section 12.02. Remedies 39 Section 12.03. Application of Funds 39 Section 12.04. Institution of Legal Proceedings - 40 Section 12.05. Non—waiver 40 Section 12.06. Remedies Not Exclusive 40 Section 12.07. Power of Trustee to Control Proceedings 40 Section 12.08. Limitation on Certificate Owners' Right to Sue 40 Section 12.09. Possession of Certificates by Trustee Not Required 41 ARTICLE XIII MISCELLANEOUS Section 13.01. Defeasance 42 Section 13.02. Records 42 Section 13.03. Notices 42 Section 13.04. Payment of Certificates After Discharge of Trust Agreement 43 Section 13.05. Governing Law 43 Section 13.06. Binding Effect; Successors 43 Section 13.07. Corporation and City Representatives 44 Section 13.08. Execution in Counterparts 44 Section 13.09. Delivery of Cancelled Certificates 44 Section 13.10. Headings 44 Section 13.11. Waiver of Notice 44 Section 13.12. Separability of Invalid Provisions 44 iv TRUST AGREEMENT THIS AGREEMENT, made and entered into as of ry 1, 1988, is by and among THE BANK OF CALIFORNIA, N.A., a national banking association organized and existing under the laws of the United States of America (the "Trustee"), DUBLIN INFORMATION, INC., a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "Corporation"), and the CITY OF DUBLIN, a municipal corporation duly organized and existing under the laws of the State of California (the "City"), WITNESSETH: WHEREAS, the City and the Corporation have heretofore entered into that certain Lease Agreement Relating to Public Facilities Project No. 1, dated as of December 18, 1985, by and between the Corporation as lessor and the City as lessee,hthe "Original Lease") with respect to the land and civic center improvements described more fully therein (the "Project"); and WHEREAS, the City has determined that it is in the economic interests of the City at this time to provide for the refinancing of the City's existing obligations under the Original Lease and to provide additional funds to the City to finance the completion of the Project, and to that end the Corporation and the City have entered into that certain First Amended and Restated Lease Agreement dated as of F brua 1, 1988, (the "Lease Agreement") by and between the Corporation as lessor and the City as lessee, amending and restating the Original Lease in full; and WHEREAS, for such purposes the Corporation proposes to assign and transfer to the Trustee certain of its rights under the Lease Agreement, and in consideration of such assignment and the execution of this Trust Agreement, the Trustee has agreed to execute and deliver 1988 Refunding Certificates of Participation each evidencing a direct, undivided fractional interest in the Lease Payments to be made by the City under the Lease Agreement, as so amended; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: ARTICLE I • DEFINITIONS Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Trust Agreement, have the meanings specified in this Section 1.01. In addition, all terms defined in the Lease Agreement and not otherwise defined herein_shall have the respective meanings specified in the Lease Agreement. "Agency Agreement" means the Agency Agreement Relating to Public Facilities Project No. 1, dated as of December 18, 1985, by and between the Corporation and the City, as originally executed or as thereafter amended pursuant to any duly authorized and executed amendments thereto. "Assignment Agreement" means the Assignment Agreement, dated as of February 1, 1988, by and between the Corporation as assignor and the Trustee as assignee, as ' originally executed or as thereafter amended pursuant to any duly authorized and executed amendments thereto. "Authorized Investments" means any securities in which the City may legally invest funds subject to its control. "Bond Counsel" means any attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income pursuant to Section 103 of the Tax Code. "Business Day" means a day of the week on which the Trustee is not required or authorized to remain closed and on which the New York Stock Exchange is open. "Certificate Proceeds" means the face amount of the Certificates, plus accrued interest and premium, if any, less original issue discount and less the proceeds. thereof deposited in a reserve fund. "Certificates" means the $ aggregate principal amount of 1988 Refunding Certificates of Participation.(Civic Center Project) to be executed and delivered pursuant hereto. "City" means the City of Dublin, a municipal corporation duly organized and existing under the laws of the State of California. "City Representative" means the City Manager or Treasurer of the City or any other person authorized by resolution of the City Council of the City to act on behalf of the City under or with respect to this Agreement. "Closing Date" means February _, 1988, being the day when the Certificates of Participation, duly executed by the Trustee, are delivered to the Original Purchaser. —2— . "Corporation" means the Dublin Information, Inc., a nonprofit public benefit corporation duly organized and existing under the laws of the State of California. "Corporation Representative" means theA President, Chief Financial Officer or Secretary of the Corporation, or any other person authorized by resolution of the Corporation to act on behalf of the Corporation under or with respect to this Agreement. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the City or the Corporation relating to the execution and delivery of the Lease Agreement,n the execution, sale and delivery of the Certificates or the administration of the Escrow Agreement, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee and the Escrow Bank (which shall include legal fees and the first annual administration fee of the Trustee and the Escrow Bank), financing discounts, legal fees and charges, insurance fees and charges, financial and other professional consultant fees, costs of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Escrow Agreement" means the Escrow Deposit and Trust Agreement dated the Closing Date, by and between the City and the Escrow Bank. "Escrow Bank" means The Bank of California. N.A., or any successor thereto acting as escrow bank pursuant to the Escrow Agreement. "Escrow Fund" means the fund by that name established and held by the Escrow Bank pursuant to the Escrow Deposit and Trust Agreement. "Event of Default" means an event of default under the Lease Agreement, as defined in Section 9.1 thereof. "Excess Investment Earnings" means an amount equal to the sum of: (a) the excess of (i) the aggregate amount earned from and after the Closing Date on all Nonpurpose Obligations in which Gross Proceeds are invested (other than amounts attributable to an excess described in this paragraph (a)), over (ii) the amount that would have been earned if the Yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this paragraph (a)) had been equal to the Yield on the Lease Payments, plus (b) any income attributable to the excess described in paragraph (a). "Federal Securities" means any of the following which are noncallable and which at the time of investment are legal investments under the laws of the State of California for trust funds held by the Trustee: -3- l . (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books ofthe Department of the Treasury of the United States of America); and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America. "Fiscal Year" means the twelve-month period beginning on July 1 of any year and ending on,June 30 of the next succeeding year, or any other twelve-month period selected by the City as its fiscal year. "Gross Proceeds" means and includes all of the following amounts: (a) the proceeds remaining from the sale of the Certificates following payment of all costs of issuance relating thereto, including accrued interest but excluding underwriter's discount, original issue discount (if any) and excluding any such.proceeds which become transferred proceeds (determined in .accordance with applicable Tax Regulations) of obligations issued to refund the Lease Payments in whole or in part; (b) amounts received at any time from the investment of any proceeds described in the preceding clause (a) or from the investment in Nonpurpose Obligations, plus any profits and less any losses on such investments, excluding such amounts which become transferred proceeds (determined in accordance with applicable Tax Regulations) of obligations issued to refund the Lease Payments in whole or in part; (c) amounts, other than amounts described in the preceding clauses (a) and (b), which are held in the Lease Payment Fund and any other fund or account which is reasonably expected to be used to pay principal or interest represented by the Certificates; (d) amounts in the Reserve Fund or any other fund established as a reasonably required reserve or replacement fund; (e) Investment Property pledged as security for payment of principal or interest represented by the Certificates by an ultimate obligor, a related person or the City; (f) any amounts, other than amounts described in the preceding clauses (a) through (e), used to pay principal or interest represented by the Certificates; and (g) amounts received as a result of the investment of any amounts described in this definition. "Independent Counsel" means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Corporation, the Trustee or the City. -4- • "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds as the City may designate in a written request delivered to the Trustee. "Insurance and Condemnation Fund" means the fund by that name to be established and held by the Trustee pursuant to Section 6.01. "Interest Payment Date" means August 1, 1988, and the first day of each August and February thereafter so long as any Certificates are Outstanding. "Investment Property" means any security (as said term is defined in Section 165(g)(2)(A) or (B) of the Tax Code), obligation, annuity contract or investment—type property, excluding obligations the interest on which is excluded from gross income under Section 103 of the Tax Code, for federal income tax purposes. "Lease Agreement" means the Amended and Restated Lease Agreement dated as of February 1, 1988, by and between the Corporation as lessor and the City as lessee, as originally executed or as thereafter amended pursuant to any duly authorized and executed amendments thereto. "Lease Payment Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.02. "Lease Payments" means all payments required to be paid by the City pursuant to Section 4.4(a)(ii) of the Lease Agreement, including any prepayment thereof pursuant to Article X of the Lease Agreement. "Minimum Rating" means: (a) with respect to any Permitted Investment acquired as an investment of amounts on .eposit in the Reserve Fund, a rating of A or better by Moody's and a rating of A or better by S&P; and (b) with respect to any Permitted Investment acquired as any investment of amounts on deposit in any other fund or account held by the Trustee hereunder, a rating of A or better by Moody's or a rating of A or better by S&P. In the event the rating system of Moody's or S&P with respect to any particular Permitted Investment does not including a rating category of A, the term "A or better" as used in the preceding sentence shall mean one of the two highest general rating categories applicable to such Permitted Investment (determined without regard to any refinement or gradation of such rating category by a numerical modifier, a plus or a minus sign, or otherwise). "Moody's" means Moody's Investors Service and its successors. "Net Proceeds" means any insurance proceeds or eminent domain award (including any proceeds of sale to a governmental entity under threat of the exercise of 5 t�1 1 Eminent domain powers), paid with respect to the Project, to the extent remaining after payment therefrom of all expenses incurred in the collection thereof. "1985 Project Fund" means the fund by that name established and held by the City pursuant to Section 4.02. "1988 Project Fund" means the fund by that name established and held by the City pursuant to Section 4.02. "Nonpurpose Obligation" means any Investment Property which is acquired with the proceeds of the Certificates and is not acquired in order to carry out the governmental purpose of the Certificates. Original Purchaser" means Rauscher Pierce Refsnes, Inc. as original purchaser of the Certificates. "Outstanding", when used as of any particular time with respect to Certificates, means all Certificates theretofore executed and delivered by the Trustee under this Agreement except — (a) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Certificates for the payment or prepayment of which funds or Federal Securities in the necessary amount shall have theretofore been deposited with the Trustee pursuant to Section 13.01; and (c) Certificates in lieu of or in exchange for which other Certificates shall have been executed and delivered by the Trustee pursuant to Section 2.08. "Owner", when used with respect to a Certificate means the person in whose name the ownership of such Certificate shall be registered on the Registration Books. "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: _ (a) Federal Securities; (b) any of the following obligations or indebtedness issued or guaranteed by any of the following federal agencies and entities: (i) senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates of the Federal Home Loan Mortgage Corporation; (iii) mortgage—backed securities or senior debt obligations of the Federal National Mortgage Association; or (iv) senior debt obligations of the Student Loan Marketing Association. (c) interest—bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in —6— • federal or state banks (including the Trustee), provided that: (i) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Savings and Loan Insurance Corporation, or the unsecured obligations of such savings and loan association shalllhave a Minimum Rating; and (ii) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall,have a Minimum Rating; (d) commercial paper having a Minimum Rating or backed by a letter of credit or line of credit which has a Minimum Rating; (e) obligations issued by any corporation organized and operating within the United States of America having assets in excess of $500,000,000 which obligations„have a Minimum Rating; (f) money market funds the policy of which is to invest solely in Federal Securities or in obligations which are fully collateralized by Federal Securities, orb hich have a Minimum Rating; (g) any investment agreement, guarantee or other investment vehicle or security, in form and substance satisfactory to the Trustee, issued by, secured by or otherwise representing the general obligations of a financial institution whose long—term unsecured general obligations have a Minimum Rating; (h) obligations the interest on which is exempt from federal income taxation under Section 103 of the Tax Code, and which have a Minimum Rating; and (i) banker's acceptances of commercial banks (which banks must be rated for unsecured debt at the time of investment and reinvestment in one of the two highest classifications established by S&P and Moody's) maturing not more than 360 days after the date of purchase. "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a governmental unit and use as a member of the general public. "Project Funds"A means, collectively, the 1985 Project Fund and the 1988 Project Fund. "Purchase Price", for the purpose of computation of the Yield on the Lease Payments, has the same meaning as the term "issue price" in Sections 1273(b) and 1274 of the Tax Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Certificates are sold or, if the Certificates are privately placed, the price paid by the —7— .. .Original Purchaser or the acquisition cost of the Original Purchaser. The term "Purchase Price," for the purpose of computation of the Yield of Nonpurpose Obligations, means the fair market value of the Nonpurpose Obligations on the date of use of Gross Proceeds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation. "Rebate Calculation Period" means the twelve month period from and including the Closing Date or any anniversary of the Closing Date and extending to but not including the next succeeding anniversary of the Closing Date, or any other period prescribed in the Tax Regulations as a period during which Excess Investment Earnings must be calculated. "Rebate Fund" means the fund by that name established and held by the Trustee pursuant to Section 7.07(c). "Record Date" means the close of business on the fifteenth (15th) day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day. "Registration Books" means the records maintained by the Trustee pursuant to Section 2.12 for registration of the ownership and transfer of ownership of the Certificates. "Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Section 4.03. "Reserve Requirement" means an amount equal to [insert amount equal to 10% of „Certificate proceeds, maximum annual debt service or 125% of average annual debt service, whichever is less]. "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax—(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures—Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax—(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex—(215) 496-5058; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in a written request of the City delivered to the Trustee. "S&P" means Standard & Poor's Corporation and its successors. "Tax Code" means the Internal Revenue Code of 1986. Any reference herein to a provision of the Tax Code shall include all applicable Tax Regulations promulgated with respect to such provision. "Tax Regulations" means temporary and permanent regulations promulgated under the Tax Code. "Term Certificates" means the Certificates maturing on February 1, 20_. —8— "Trust Agreement" or "Agreement" means this Trust Agreement, as originally executed or as thereafter amended pursuant to any amendments hereto permitted to be made hereunder. "Trust Office" means the corporate trust office of the Trustee at 400 California Street, San Francisco, California 94104, or at such other address or addresses designated by the Trustee in written notice filed with the City, the Corporation and the Owners. "Trustee" means The Bank of California, N.A., or any successor thereto acting as Trustee pursuant to this Trust Agreement. "Yield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Obligations which require payments in a form not characterized as principal and interest) on a Nonpurpose Obligation or on the Lease Payments, produces an amount equal to the Purchase Price of such Nonpurpose Obligation or the Lease Payments, all computed as prescribed in the applicable Tax Regulations. • Section 1.02. Legal Authority. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Agreement, and has taken all actions necessary to authorize the execution of this Agreement by the officers and persons signing it. -9- - ARTICLE II THE CERTIFICATES OF PARTICIPATION Section 2.01. Authorization. The Trustee is hereby authorized and directed upon written request from the Corporation to prepare, execute and deliver, to the Original Purchaser, Certificates in an aggregate principal amount of Dollars ($ ) evidencing direct, undivided fractional ownership interests of the Owners thereof in the Lease Payments. Section 2.02. Date. Each Certificate shall be dated as of the date of its execution and interest represented thereby shall be payable from the Interest Payment Date next preceding the date of execution thereof, unless: (a) it is executed after a Record Date and on or before the following Interest Payment Date, in which event interest represented thereby shall be payable from such Interest Payment Date; or (b) it is executed on or before July 15, 1988, in which event interest represented thereby shall be payable from the Closing Date; provided, however, that if as of the date of any Certificate, interest represented by any Certificate is in default, interest represented by such Certificate shall be payable from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to such Certificate. Section 2.03. Maturity; Interest Rates. Principal represented by the Certificates shall be payable on February 1 in each of the respective years and in the respective amounts, and interest represented thereby shall be computed at the respective rates, as follows: Maturity Date Principal Interest Maturity Date Principal Interest (February 1) Amount Rate (February 1) Amount Rate (TO COME) Section 2.04. Form of Certificates; Interest. The Certificates shall be delivered in the form of fully registered Certificates without coupons in the denomination of$5,000 or any integral multiple thereof, except that no Certificate shall represent principal payable in more than one year. The Certificates shall be assigned such alphabetical and numerical designation as shall be deemed appropriate by the Trustee. Interest represented by the Certificates shall be payable on each Interest Payment Date to and including the date of maturity or prepayment, whichever is earlier, as provided in Section 2.09. Said interest shall represent the portion of Lease Payments designated as interest and coming due on each of the respective Interest Payment Dates. The share of the portion of Lease Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Lease Payments designated as —10—_ _ principal represented by such Certificate by the rate of interest represented by such Certificate (on the basis of a 360—day year of twelve 30—day months). Section 2.05. Form. The Certificates shall be substantially in the form set forth in Exhibit A attached hereto and by this reference incorporated herein. Section 2.06. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized signatory of the Trustee. If any • person whose signature appears on any Certificate ceases to be an authorized signatory before the date of delivery of said Certificate, such signature shall nevertheless be as effective as if such person had remained an authorized signatory until such date. Section 2.07. Transfer and Exchange. (a) Transfer of Certificates. The registration of any Certificate may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation at the Trust Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Certificate or Certificates of the same maturity, interest rate and aggregate principal amount, in any authorized denominations. (b) Exchange of Certificates. Certificates may be exchanged at the Trust Office of the Trustee, for a like aggregate principal amount of Certificates of other authorized denominations of the same interest rate and maturity. The Trustee may require the payment by the Certificate Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. (c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange either (i) any Certificate during the fifteen—day period prior to the date established by the Trustee for the selection of Certificates for redemption or (ii) the portion of any Certificate selected by the Trustee for redemption as to which notice of redemption has been mailed pursuant to the provisions of Section 3.02. Section 2.08. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of such Certificate, shall execute and deliver a new Certificate of like principal amount, interest rate and maturity in replacement for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the Trustee shall be cancelled by it and redelivered by the Trustee to the City. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft must be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, ifAthe City and the Trustee are indemnified in form satisfactory to the Trustee shall be given, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new Certificate of like principal amount, interest rate and maturity and numbered as the Trustee shall determine in lieu of and in replacement for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each replacement Certificate delivered under this Section 2.08 and of the expenses which may be incurred by the Trustee in carrying out the duties under this —11— .. - 'Section 2.08. Any Certificate issued under the provisions of this Section 2.08 in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally entitled to the benefits of this Agreement with all other Certificates secured by this Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and. delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section 2.08, in lieu of delivering a replacement for a Certificate which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Certificate upon receipt of indemnity satisfactory to the Trustee. Section 2.09. Payment. Payment of interest represented by any Certificate on any Interest Payment Date shall be made to the person appearing on the Registration Books as the Owner thereof as of the close of business on the Record Date immediately preceding such Interest Payment Date, such interest to be paid by check or draft mailed to such Owner on such Interest Payment Date, by first class mail, postage prepaid. The principal and prepayment price represented by the Certificates at maturity or upon prior prepayment shall be payable in lawful money of the United States of America upon surrender of the Certificates at the Trust Office of the Trustee. Section 2.10. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Agreement to be signed or executed by Certificate Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgements of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of Certificates by any person and the amount, the maturity and the numbers of such Certificates and the date of his holding the same shall be proved by the Registration Books. -12- - • Nothing contained in this Section 2.10 shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem sufficient. Any request or consent of the Owner of any Certificate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee in pursuant of such request or consent. Section 2.11. Temporary Certificates. The Certificates may be issued in temporary form exchangeable for definitive Certificates when ready for delivery. Any temporary Certificates may be printed, lithographed or typewritten, shall be of Authorized Denominations, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Certificate shall be executed by the Trustee upon the same conditions and in substantially the same manner as the definitive Certificates. If the Trustee delivers temporary Certificates it will execute and deliver definitive Certificates as promptly thereafter as practicable, and thereupon the temporary Certificates may be surrendered, for cancellation, in exchange therefor at the Trust Office of the Trustee who shall execute and deliver in exchange for such temporary Certificates an equal aggregate principal amount of definitive Certificates of authorized denominations. Until so exchanged, the temporary Certificates shall be entitled to the same benefits under this Trust Agreement as definitive Certificates executed and delivered hereunder. Section 2.12. Registration Books. The Trustee shall keep or cause to be kept sufficient records for the registration and registration of transfer of the Certificates, which shall at all reasonable times be open to inspection by the City and the Corporation during regular business hours; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, Certificates as hereinbefore provided. —13— _ • • • ARTICLE III PREPAYMENT OF CERTIFICATES Section 3.01. Prepayment. (a) Optional Prepayment. The Certificates maturing on or before February 1, 199_, are not subject to optional prepayment prior to the respective stated maturities. The Certificates maturing on or after February 1, 199_, are subject to optional prepayment in whole, or in part in inverse order of maturity and by lot within a maturity, on any Interest Payment Date, from prepayments of the Lease Payments made at the option of the City pursuant to Section 10.2 of the Lease Agreement, beginning on February 1, 199_, at a prepayment price (expressed as a percentage of the principal amount to be prepaid), together with accrued interest represented thereby to the date fixed for prepayment, as follows: Prepayment Prepayment Dates Price (TO COME) (b) Prepayment From Net Proceeds of Insurance or Condemnation. The Certificates are subject to mandatory prepayment on any date, in whole,Nor in part on anyymaturities on a pro rata basis and by lot within a maturity, from the Net Proceeds of insurance or eminent domain proceedings credited towards the prepayment of the Lease Payments by the City pursuant to Section 10.3 of the Lease Agreement, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the date fixed for prepayment. (c) Prepayment From Unexpended Project Funds. The Certificates are also subject to mandatory prepayment in whole, or in part among maturities on a pro rata basis and by lot within a maturity, from the amounts (if any) transferred to the Trustee by the City from the Project Funds and deposited by the Trustee in the Lease Payment Fund for such purpose pursuant to the last paragraph of Section 4.02, on the first Interest Payment Date following such transfer for which notice of prepayment can be timely given, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the date fixed for prepayment, without premium. (d) Sinking Fund Prepayment. The Term Certificates are also subject to mandatory sinking fund prepayment by lot on February 1 in each year beginning February 1,. , from the principal components of the Lease Payments required to be paid with respect to each of such dates, at a prepayment price equal to 100% of the principal amount to be prepaid, together with accrued interest represented thereby to the prepayment date, as follows: -14- - • Sinking Fund Prepayment Date Principal Amount (February 1) To Be Prepaid (TO COME) Section 3.02. Selection of Certificates for Prepayment. Whenever provision is made in this Agreement for the prepayment of.Certificates and less than all Outstanding Certificates of any maturity are called for prepayment, the Trustee shall select Certificates of such maturity for prepayment by lot. For the purposes of such selection, Certificates shall be deemed to be composed of $5,000 portions, and any such portion may be separately prepaid. The Trustee shall promptly notify the City and the Corporation in writing of the Certificates or portions thereof so selected for prepayment. Section 3.03. Notice of Prepayment. When prepayment is authorized or required pursuant to Section 3.01 hereof, the Trustee shall give notice of the prepayment of the Certificates on behalf and at the expense of the City. Such notice shall state the prepayment date and prepayment price and, if less than all of the then Outstanding Certificates are to be called for prepayment, shall designate the CUSIP numbers of the Certificates to be prepaid and the numbers of the Certificates to be prepaid (by giving the individual number of each Certificate or by stating that all. Certificates between two stated numbers, both inclusive, have been called for prepayment or by stating that all of the Certificates of one or more maturities have been called for prepayment), and shall require that such Certificates be then surrendered, at the option of the respective Owners thereof, at.the Trust Office of the Trustee for prepayment at said prepayment price, giving notice also that further interest represented by the Certificates will not accrue after the prepayment date. Such notice shall further state that on the specified date there shall become due and payable, the principal and premium, if any, represented by each Certificate together with accrued interest represented thereby to said date, and that from and after such date interest represented thereby shall cease to accrue and be payable. Notice of such prepayment shall be mailed by first class mail with postage prepaid, to the Information Services and to the Securities Depositories, and to the Owners of Certificates designated for prepayment at their respective addresses appearing on the Registration Books, at least thirty (30) days but not more than sixty (60) days prior to the prepayment date, which notice shall, in addition to setting forth the above information, set forth, in the case of each Certificate called only in part, the portion of the principal represented thereby which is to be prepaid; provided that neither failure to receive such notice so mailed nor any defect in any notice so mailed shall affect the —15— - •�J f 'sufficiency of the proceedings for the prepayment of such Certificates or the cessation of accrual of interest represented thereby from and after the prepayment date. Section 3.04. Partial Prepayment of Certificates. Upon surrender of any Certificate prepaid in part only, the Trustee shall execute, authenticate and deliver to the Owner thereof, at the expense of the City, a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to the unprepaid portion -of the Certificate surrendered and of the same interest rate and the same maturity. Section 3.05. Effect of Notice of Prepayment. Moneys for the prepayment (including the interest to the applicable date of prepayment), of Certificates having been set aside in the Lease Payment Fund, the Certificates shall become due and payable on the date of such prepayment, and, upon presentation and surrender thereof at the Trust Office of the Trustee, said Certificates shall be paid at the unpaid principal amount (or applicable portion thereof) represented thereby plus interest accrued and unpaid to said date of prepayment. If, on said date of prepayment, moneys for the prepayment of all the Certificates to be prepaid, together with interest to said date of prepayment, shall be held by the Trustee so as to be available therefor on such date of prepayment, then, from and after said date of prepayment, interest represented by the Certificates shall cease to accrue and become payable. All moneys held by the Trustee for the prepayment of Certificates shall be held in trust for the account of the Owners of the Certificates so to be prepaid. Section 3.06. Purchase of Certificates. In lieu of prepayment of Certificates as provided in this Article III, amounts held by the Trustee for such prepayment shall, at the written request of the City Representative, be applied by the Trustee to the purchase of Certificates at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) as the City may in its discretion direct, but not to exceed the prepayment price which would be payable if such Certificates were prepaid. The aggregate principal amount of Certificates of the same maturity purchased in lieu of prepayment pursuant to this Section 3.06 shall not exceed the aggregate principal amount of Certificates of such maturity which would otherwise be subject to such prepayment. —16— ARTICLE IV DISPOSITION OF PROCEEDS; • PROJECT FUND AND RESERVE FUND Section 4.01. Application of Proceeds. The proceeds received by the Trustee from the sale of the Certificates shall forthwith be set aside by the Trustee in the following respective funds and in the following order of priority: (a) The Trustee shall deposit in the Lease Payment Fund an amount equal to $ (b) The Trustee shall deposit in the Reserve Fund the amount of $ whichnequals the Reserve Requirement. (c) The Trustee shall transfer to the Escrow Bank the amount of $ for deposit in the Escrow Fund. (d) The Trustee shall deposit the remainder of such proceeds in the 1988 Project Fund. Section 4.02. Project Funds. TheCiity_shall establish a special fund designated as the p985 Pro'ect Fund" and a se•arate fund designated as the "1988 Project Fund", which shall be held and administered solely for the purposes set forth herein: On .e Closing Date, the City shall: (a) deposit in the 1985 Project Fund all amounts then on deposit in the construction account established pursuant to Section 4.02 of the Trust Agreement Relating to'Public Facilities Project No. 1, dated as of December 18, 1985, by and between the Corporation and the City, and (b) deposit in the 1988 Project Fund a portion of the proceeds of the Certificates transferred to the City by the Trustee pursuant to Section 4.01(d). The City shall disburse moneys in the Project Funds from time to time to finance direct payment of the Project Costs and the Costs of Issuance, or to reimburse itself for Project Costs or Costs of Issuance advanced from any other source of funds of the City. In making any payment of Project Costs and Costs of Issuance, the City shall have the sole discretion to make such payment from the 1985 Project Fund or the 1988 Project Fund, or both. On the earlier of(a) the date on which the City files with the Trustee a certificate stating that the Project has been completed, or (b) December 1, 1990, or such later date as may be permitted in the opinion of Bond Counsel, the„City shall withdraw all moneys in the Project Funds and transfer such moneys to the Trustee for deposittin the Lease Payment Fund. Such moneys shall be applied by the Trustee to prepay the Lease Payments pursuant to Section 10.4 of the Lease Agreement and thereby prepay the Certificates pursuant to Section 3.01(c). Section 4.03. Reserve Fund. The Trustee shall establish a special fund designated as the "Reserve Fund" to be held by the Trustee in trust for the benefit of the City and the Owners of the Certificates, and applied solely as provided herein. Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when due of the Lease Payments on behalf of the City. Except in the event and to the extent the City —17— • directs the Trustee to deposit earnings on the investment of amounts in the Reserve Fund into the Rebate Fund pursuant to Section 7.07(c), the Trustee shall deposit in the Lease Payment Fund, to be credited towards payment of the Lease Payments, any earnings on the investment of moneys in the Reserve Fund.n If on any Interest Payment Date the moneys available in the Lease Payment Fund do not equal the amount of the Lease Payment then coming due and payable, the Trustee shall apply the moneys available in the Reserve Fund to make such payments on behalf of the City by transferring the amount necessary for this purpose to the Lease Payment Fund. Upon receipt of any delinquent Lease Payment with respect to which moneys have been advanced from the Reserve Fund, such Lease Payment shall be deposited in the Reserve Fund to the extent of such advance. If on any Interest Payment Date the moneys on deposit in the Reserve Fund and the Lease Payment Fund (excluding amounts required for payment of principal, interest and redemption premium, if any, represented by any Certificates theretofore having come due but not presented for payment) are sufficient to pay all Outstanding Certificates, including all principal, interest and redemption premiums (if any) represented thereby, the Trustee shall, upon the written request of the City, transfer all amounts then on deposit in the Reserve Fund to the Lease Payment Fund to be applied for such purpose to the payment of the Lease Payments on behalf of the City. Any amounts remaining in the Reserve Fund on the date of payment in full, or provision for such payment as provided in Section 13.01, of all obligations represented by the Outstanding Certificates, but only following the deposit into the Rebate Fund of an amount sufficient or estimated to be sufficient to satisfy all obligations of the City under Section 7.07(c) resulting from such payment or provision for payment, shall be withdrawn by the Trustee and at the written request of the City applied towards such payment or paid to the City. • -18- --.- 1 ARTICLE V LEASE PAYMENTS; LEASE PAYMENT FUND Section 5.01. Assignment of Rights in Lease Agreement. The Corporation has in the Assignment Agreement transferred, assigned and set over to the Trustee certain of its rights under the Lease Agreement, including but not limited to all of the Corporation's rights to receive and collect all of the Lease Payments and all other amounts required to be deposited in the Lease Payment Fund. All Lease Payments and such other amounts to which the Corporation may at any time be entitled shall be paid directly to the Trustee, and all of the Lease Payments collected or received by the Corporation shall be deemed to be held and to have been collected or received by the Corporation as the agent of the Trustee, and if received by the Corporation at any time shall be deposited by the Corporation with the Trustee within one Business Day after the receipt thereof, and all such Lease Payments and such other amounts shall be forthwith deposited by the Trustee upon the receipt thereof in the Lease Payment Fund, except as provided in Section 4.03. Section 5.02. Establishment of Lease Payment Fund. The Trustee shall establish a special fund designated as the "Lease Payment Fund". All moneys at any time deposited by the Trustee in the Lease Payment Fund shall be held by the Trustee in trust for the benefit of the City and the Owners of the Certificates. So long as any Certificates are Outstanding, neither the City nor the Corporation shall have any beneficial right or interest in the Lease Payment Fund or the moneys deposited therein, except only as provided in this Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.03. Deposits. There shall be deposited in the Lease Payment Fund all Lease Payments received by the Trustee, including any moneys received by the Trustee for deposit therein pursuant to Sections 4.01(a), 4.02, 5.01 or Article VI, or Section 10.1 of the Lease Agreement, and any other moneys required to be deposited therein pursuant to the Lease Agreement or pursuant to this Agreement. Section 5.04. Application of Moneys. All amounts in the Lease Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal, interest and prepayment premiums (if any) represented by the Certificates as the same shall become due and payable, in accordance with the provisions of Article II and Article M. Section 5.05. Surplus. Any surplus remaining in the Lease Payment Fund, after prepayment and payment of all Certificates, including premiums and accrued interest (if any) and payment of any applicable fees and expenses to the Trustee, or provision for such prepayment or payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the City. -19- • ARTICLE VI INSURANCE AND CONDEMNATION FUND Section 6.01. Establishment of Insurance and Condemnation Fund; Application of Net Proceeds of Insurance Award. Any Net Proceeds of insurance against accident to or destruction of any structure constituting any part of the Project collected by the City in the event of any such accident or destruction shall be paid to the Trustee pursuant to Section 6.2 of the Lease Agreement and deposited by the Trustee promptly upon receipt thereof in a special fund designated as the "Insurance and Condemnation Fund". If the City determines and notifies the Trustee in writing of its determination, within ninety (90) days following the date of such deposit, that the replacement, repair, restoration, modification or improvement of the Project is not economically feasible or in the best interests of the City, then such Net Proceeds shall be promptly transferred by the Trustee to the Lease Payment Fund and applied to the prepayment of Lease Payments pursuant to Section 10.3 of the.Lease Agreement and the corresponding prepayment of Certificates pursuant to Section 3.01(b). All Net Proceeds deposited in the Insurance and Condemnation Fund and not so transferred to the Lease Payment Fund shall be applied to the prompt replacement, repair, restoration, modification or improvement of the damaged or destroyed portions of the Project by the City, upon receipt of written requisitions of the City Representative stating with respect to each payment to be made (a) the name and address of the person, firm or corporation to whom payment is due, (b) the amount to be paid and (c) that each obligation mentioned therein has been properly incurred, is a proper charge against the Insurance and Condemnation Fund, has not been the basis of any previous withdrawal, and specifying in reasonable detail the nature of the obligation, accompanied by a bill or a statement of account for such obligation. In the event of damage or destruction of the Project in full, such Net Proceeds may be transferred to the Lease Payment Fund to be used to redeem Outstanding Certificates only if such Net Proceeds, together with other available moneys, are sufficient to cause the redemption of all Outstanding Certificates. Any balance of the Net Proceeds remaining after the City shall file a written certificate with the Trustee stating that such work has been completed shall be paid to the City. Section 6.02. Deposit and Application of Net Proceeds of Eminent Domain Award. If all or any part of the Project shall be taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain) the Net Proceeds therefrom shall be deposited with the Trustee in the Insurance and Condemnation Fund, pursuant to Section 6.2 of the Lease Agreement, and shall be applied and disbursed by the Trustee as follows: (a) If the City has given written notice to the Trustee of its determination that (i) such eminent domain proceedings have not materially affected the interest of the City in the Project or the ability of the City to meet any of its obligations under the Lease Agreement, and (ii) that such proceeds are not needed for the replacement of the Project, and the City has given written notice to the Trustee of such determination, the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited towards the payment of the Lease Payments as the same become due and payable. -20- - (b) If the City has given written notice to the Trustee of its determination ` that (i) such eminent domain proceedings have not materially affected the interest of the City in the Project or the ability of the City to meet any of its obligations under the Lease Agreement, and (ii) such proceeds are needed for the replacement of the Project, the Trustee shall pay to the City, or to its order, from said proceeds such amounts as the City may expend for such replacement, upon the filing of requisitions of the City Representative meeting the requirements of Section 6.01. (c) If (i) less than all of the Project shall have been taken in such eminent domain proceedings or sold to a government threatening the use of eminent domain powers, and if the City has given written notice to the Trustee of its determination that such eminent domain proceedings have materially affected the interest of the City in the Project or the ability of the City to meet any of its obligations under the Lease Agreement or (ii.) all of the Project shall have been taken in such eminent domain proceedings, then the Trustee shall transfer such proceeds to the Lease Payment Fund to be credited toward the prepayment of the Lease Payments pursuant to Section 10.3 of the Lease Agreement and applied to the prepayment of Certificates in the manner provided in Section 3.01(b). In making any such determination under this Section 6.02, the City may obtain, but shall not be required to obtain, at its expense, the report of an independent engineer or other independent professional consultant, a copy of which shall be filed with the Trustee. Any such determination by the City shall be final. Section 6.03. Cooperation. The Corporation and the Trustee (in its capacity as loss payee under any policy of insurance) shall cooperate fully with the City at the expense of the City in the prosecution or defense of any prospective or pending condemnation proceeding with respect to the Project or any portion thereof. —21— __ ARTICLE VII MONEYS IN FUNDS; SPECIAL ARBITRAGE COVENANTS Section 7.01. Held in Trust. The moneys and investments held by the Trustee under this Agreement are irrevocably held in trust for the benefit of the City and the Owners of the Certificates solely for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Corporation, the Trustee, the City or the Owner of any Certificates. Section 7.02. Investments Authorized. Amounts held in the Project Funds shall be invested by the City in any Authorized Investments. Upon the written request of the City filed with the Trustee from time to time, moneys held by the Trustee in any fund. or account hereunder shall be invested and reinvested by the Trustee in Permitted Investments selected by the City and specified in such written request of the City, which mature not later than the date such moneys are required or estimated by the City to be required to be expended hereunder. In the absence of any written request of the City directing the investment of uninvested moneys held by the Trustee hereunder, the Trustee shall invest such moneys in Federal Securities or in Permitted Investments described in clause,fl of the definition thereof, which mature not later than the date such moneys are required or estimated by the Trustee to be required to be expended - hereunder. Such investments, if registrable, shall be registered in the name of the Trustee, as trustee or in the name of its nominee, and shall be held by the Trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 7.02. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee may act as purchaser or agent in the making or disposing of any investment. Section 7.03. Accounting. The Trustee shall furnish to the City, not less than monthly, an accounting of all investments made by the Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 7.02. Section 7.04. Allocation of Earnings. Subject to the provisions of Sections 4.03 and 7.07, any income, profit or loss on such investments shall be deposited in or charged to the respective funds from which such investments were made. Section 7.05. Valuation and Disposition of Investments. For the purpose of determining the amount in any fund, the value of Permitted Investments credited to such fund shall be calculated at the cost thereof, excluding.accrued interest and brokerage commissions, if any. The Trustee may sell at the best price obtainable, or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any such Permitted Investment. -22- • Section 7.06. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the Gross Proceeds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the obligations. represented by the Certificates to be "arbitrage bonds" within the meaning of Section 148(a) of the Tax Code. Section 7.07. Rebate of Excess Investment Earnings to United States. (a) Duties of City in General. The City shall calculate, or caused to be calculated, Excess Investment Earnings in accordance with subsection (b) and shall assure payment of an amount equal to Excess Investment Earnings to the United States in accordance with subsections (c) and (d). (b) Calculation of Excess Investment Earnings. Prior to the last day of the first Rebate Calculation Period, the City shall calculate, and shall provide written notice to the Trustee of, the Excess Investment Earnings described in paragraph (a) of the definition of Excess Investment Earnings. Prior to the last.day of each succeeding Rebate Calculation Period and on the date of the payment of the Lease Payments in full, the City shall calculate, or caused to be calculated, and shall provide written notice to the Trustee of, the amount of Excess Investment Earnings. Said calculations shall be made or caused to be made by the City in accordance with the Tax Regulations. (c) Rebate Fund and Deposits Therein; Payment to the United States. Upon the calculation by the City of the amount of Excess Investment Earnings with respect to any Rebate Calculation Period pursuant to the preceding subsection (b), the City shall file with the Trustee a written request of the City directing the Trustee to deposit into the Rebate Fund (which the Trustee hereby agrees to establish and hold in trust hereunder) a like amount of interest, profits and other income next to be received from the investment of moneys in any funds and accounts established hereunder (which funds and accounts shall be designated in such written request of the City). The City hereby covenants to direct the Trustee to deposit into the Rebate Fund, from the interest, profits and other income derived from the investment of moneys in any funds and accounts established hereunder, the amount of all Excess Investment Earnings which are required to be deposited in the Rebate Fund hereunder. The City further covenants to direct the Trustee to pay from the Rebate Fund the amount of all Excess Investment Earnings required to be rebated to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Rebate Calculation Period and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The City shall assure that each such installment is in an amount equal to at least ninety percent (90%) of the amount of Excess Investment Earnings with respect to the Gross Proceeds as of the close of the computation period. Not later than sixty (60) days after the payment of the Lease Payments in full, the City shall direct the Trustee to pay, and for such purpose shall provide amounts to the Trustee from any legally available source of funds, to the United States of America all remaining unpaid Excess Investment Earnings. The City shall remit payments to the United States of America at the address prescribed by the applicable Tax Regulations as the same may from time to time be in effect with such reports and statements as may be prescribed by such Tax Regulations. —23— -- • (d) Further Obligation of City. The City shall assure that Excess Investment Earnings are not paid or disbursed except as required in this Section. To that end the City shall assure that investment transactions are on an arm's length basis and that Nonpurpose Obligations are acquired at their fair market value. In the event that Nonpurpose Obligations consist of certificates of deposit or investment contracts, investment in such Nonpurpose Obligations shall be made in accordance with the procedures described in applicable Tax Regulations as from time to time in effect. (e) Maintenance of Records. The City shall keep, and retain for a period of six (6) years following the payment of the Lease Payments in full, records of the determinations made pursuant to this Section 7.07 in accordance with the Tax Regulations. (f) Independent Consultants. In order to provide for the administration of this Section 7.07, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate. • (g) Trustee Compliance. The Trustee shall conclusively be deemed to have complied with the provisions of.this section if it follows the directions of the City, and shall not be required to take any actions hereunder in the absence of directions from the City. • —24— , ARTICLE VIII THE TRUSTEE Section 8.01. Appointment of Trustee. The Bank of California, N.A. is hereby appointed Trustee by the Corporation and the City for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Agreement. The Corporation and the City agree that they will maintain a Trustee having a corporate trust office in California, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by Federal or state authority, so long as any Certificates are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section 8.01 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee is hereby authorized to pay or prepay the Certificates when duly presented for payment at maturity, or on prepayment, or on purchase by the Trustee as directed by the City prior to maturity in accordance with Section 3.06, and to cancel all Certificates upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. The Trustee shall be compensated for its services rendered pursuant to the provisions of this Agreement. Section 8.02. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Trust Agreement, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee, prior to the occurrence of an Event of Default and after curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Trust Agreement. In case an Event of Default has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Trust Agreement, and shall use the same degree of care and skill in their exercise, as is consistent with the fiduciary responsibilities of a trustee. (b) No provision in this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents,or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Trustee shall not be answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care and without negligence or intentional misconduct. The Trustee shall not be answerable for the exercise of any discretion or power under this Trust Agreement or for anything whatever -25- in connection with the funds and accounts established hereunder, except only for its own negligence or intentional misconduct. (d) The Trustee shall not be responsible for any recital, statement or representation of the City or the Corporation herein or in the Lease Agreement or the Certificate's, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Certificates, and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Corporation or the City under the Lease Agreement. (e) The Trustee shall not be accountable for the use of any Certificates delivered hereunder. The Trustee may become the Owner of Certificates secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Certificates, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Certificates then Outstanding. (f) In the absence of negligence or intentional misconduct on its part, the Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee without negligence or intentional misconduct pursuant to this Trust Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Certificate, shall be conclusive and binding upon all future Owners of the same Certificate and upon Certificates issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Certificate or to take any action at his request unless such Certificate shall be deposited with the Trustee or satisfactory evidence of the ownership of such Certificate shall be furnished to the Trustee. (g) As to the existence or non—existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by a Corporation Representative or a. City Representative as sufficient evidence of the facts therein contained. Prior to the occurrence of an Event of Default of which the Trustee has been given notice or is deemed to have notice, as provided in Section 8.02(i) hereof, the Trustee shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a certificate of a Corporation Representative or a City Representative to the effect that an authorization in the form therein set forth has been adopted by the Corporation or the City, as the case may be, as conclusive evidence that such authorization has been duly adopted, and is in full force and effect. (h) The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and it shall not be answerable for -26— other than its negligence or intentional misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (i) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the City to make any of the Lease Payments to the Trustee required to be made by the City pursuant to the Lease Agreement or failure by the Corporation or the City to file with the Trustee any document required by this Trust Agreement or the Lease Agreement to be so filed subsequent to the delivery of the Certificates, unless the Trustee shall be specifically notified in writing of such default by the Corporation, the City or by the Owners of at least twenty—five percent (25%) in aggregate principal amount of Certificates then Outstanding and all notices or other instruments required by this Trust Agreement to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default except as aforesaid. (j) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect the Project, including all books, papers and records of the Corporation or the City pertaining to the Project and the Certificates, and to take such memoranda from and with regard thereto as may be desired. (k) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (1) Notwithstanding anything elsewhere in this Trust Agreement with respect to the execution of any Certificates, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Trust Agreement, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition so that by the terms hereof required as a condition of such action, by the Trustee deemed desirable for the purpose of establishing the right of the Corporation to the execution of any Certificates, the withdrawal of any cash, or the taking of any other action by the Trustee. (m) Before taking the action referred to in Section 12.02 hereof the Trustee may require that a satisfactory indemnity bond be furnished by the Owners of the Outstanding Certificates, or any of them, for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its gross negligence or wilful default in connection with any such action. (n) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were • received but need not be segregated from other funds except to the extent required by law. (o) The Trustee shall not be responsible for the validity or invalidity of the. Lease Agreement, the legal authority of the City to pay moneys pursuant to the Lease • Agreement, or the value of or title to the premises upon which the Project is located. —27— -- • (p) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it, without negligence or intentional misconduct, in accordance with the direction of the Owners of a majority in aggregate principal amount of the Outstanding Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement. Section 8.03. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon an Event of Default, but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of, premium, if any, and interest on any Certificate upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it respectively. Section 8.04. Notice to Certificate Owners of Default. If an Event of Default occurs of which the Trustee has been given or is deemed to have notice, as provided in Section 8.02(i), then the Trustee shall promptly give written notice thereof by first class mail, postage prepaid, to the Owner of each Certificate at the addresses set forth in the Registration Books, unless such Event of Default shall have been cured before the giving of such notice;provided, however that unless such Event of Default consists of the failure by the City to make any Lease Payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Certificate Owners not to give such notice. Section 8.05. Intervention by Trustee. In any judicial proceeding to which the Corporation or the City is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of the Certificates, the Trustee may intervene on behalf of the Certificate Owners, and subject to Section 8.02(1), shall do so if requested in writing by the Owners of at least twenty—five percent (25%) in aggregate principal amount of Certificates then Outstanding. The rights and obligations of the Trustee under this Section 8.05 are subject to the approval of a court of competent jurisdiction. Section 8.06. Removal of Trustee. The City may, upon at least thirty (30) days' prior written notice and with the consent of the Corporation, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent instruments in writing delivered to the Trustee and the Corporation, and may appoint a successor or successors thereto; provided that any such successor shall be a bank or trust company meeting the requirements set forth in Section 8.01. Section 8.07. Resignation by Trustee. The Trustee and any successor Trustee may at any time resign by giving thirty (30) days' written notice by registered or certified mail to the City and the Corporation. Upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the City shall give notice thereof, by first class mail postage prepaid, to the Certificate Owners at their respective addresses set forth on the Registration Books. —28— Section 8.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 8.06 or 8.07, respectively, the City shall promptly appoint a successor Trustee. In the event the City shall for any reason whatsoever fail to appoint a successor Trustee within thirty (30) days following the delivery to the Trustee of the instrument described in Section 8.06 or within thirty (30) days following the receipt of notice by the City pursuant to Section 8.07, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 8.01. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such ninety— day period. Section 8.09. Merger or Consolidation. Any company or association into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company or association shall be eligible under Section 8.01; shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 8.10. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and also the Corporation and the City an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the written request of the Corporation, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Corporation be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Corporation. The resignation of any Trustee and the instrument or instruments removing any Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article VIII, shall be filed or recorded by the successor Trustee in each recording office where the Assignment Agreement shall have been filed or recorded. Section 8.11. Appointment of Co—Trustee. It is the purpose of this Trust Agreement that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee.in such jurisdiction. It is recognized that in case of litigation under this Trust Agreement or the Lease Agreement, and in particular in case of the enforcement of either on default, or in case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable —29— -- l` r or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate or co—trustee. The following provisions of this Section 8.11 are adapted to these ends. In the event that the Trustee appoints an additional individual or institution as a separate or co—trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Trust Agreement to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co—trustee but only to the extent necessary to enable such separate or co—trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co—trustee shall run to and be enforceable by either of them. Should any instrument in writing from the Corporation be required by the separate trustee or co—trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Corporation. In case any separate trustee or co— trustee, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co—trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co—trustee. Section 8.12. Non—Liability of Trustee. No provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing repayment of such funds or adequate indemnity is not reasonably assured to it. The Trustee makes no representation or warranty, express or implied as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City or Corporation of the Project. In no event shall the Trustee be liable for special or consequential damages in connection with or arising from the Lease Agreement for the existence, furnishing or use of the Project. The Trustee shall not be: (a) responsible for the sufficiency or enforceability of the Lease Agreement or the assignment under the Assignment Agreement of its rights to receive Lease Payments; (b) deemed to have knowledge of any Event of Default unless and until it shall have actual knowledge thereof; and (c) accountable for the use or application by the City or Corporation of any funds which the Trustee has released under this Trust Agreement. Section 8.13. Nature of Trust Engagement. The Trustee undertakes to perform such duties and only such duties as are specifically set forth in the Trust Agreement and no implied covenants or obligations shall be read into the Trust Agreement against the Trustee. In accepting the trusts hereby created, the Trustee acts solely as Trustee and not in its individual capacity and all persons, including without limitation the Owners, the City and the Corporation, having any claim against the —30— Trustee arising from the Trust Agreement shall look only to the funds and accounts hereunder for payment except as otherwise provided herein; provided, however, that nothing in this sentence is intended or shall be construed to apply to, or limit the source of, claims against the Trustee arising from the negligence or intentional misconduct of the Trustee. Under no circumstances shall the Trustee be liable in its individual capacity for the payment of the obligations represented by the Certificates. • —31— -- ARTICLE IX MODIFICATION OR AMENDMENT OF AGREEMENTS Section 9.01. Amendments Permitted. This Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and . obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 9.03, shall have been filed with the Trustee. No such modification or amendment shall (a) extend or have the effect of extending the fixed maturity of any Certificate or reducing the interest rate represented thereby or extending the time of payment of interest, or reducing the amount of principal represented thereby or reducing any premium payable upon the prepayment thereof, without the express consent of the Owner of such Certificate, or (b) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Lease Agreement, or (c) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 9.02. This Agreement and the rights and obligations of the Owners of the Certificates and the Lease Agreement and the rights and obligations of the respective parties thereto, may be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only to the extent permitted by law and only (a) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein or therein reserved to the Corporation or the City, (b) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, (c) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not, in the opinion of Bond Counsel, materially adversely affect the interests of the Owners of the Certificates, (d) to modify the legal description of the Project site to conform to the requirements of title insurance or otherwise to add or delete property descriptions to reflect accurately the description of the parcels intended to be included therein or to effectuate the substitution of property pursuant to Section 5.10 of the Lease Agreement, or (e) if and to the extent permitted in the opinion of Bond Counsel filed with the Trustee, the City and the • Corporation, to delete or modify any of the provisions hereof or thereof relating to the exemption from federal income taxation of interest represented by the Certificates. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. Section 9.02. Procedure for Amendment with Written Consent of Certificate Owners. This Agreement and the Lease Agreement may be amended by supplemental agreement as provided in this Section 9.02 in the event the consent of the Owners of the Certificates is required pursuant to Section 9.01. A copy of such supplemental agreement, together with a request to the Certificate Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth on the Registration Books, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as in this Section provided. —32— Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 9.03) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.10. Any such consent shall be binding upon the Owner of the Certificate giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore provided in this Section for the mailing of such supplemental agreement of the notice of adoption thereof, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of Certificates and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mail of such last—mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Certificates at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60) day period. Section 9.03. Disqualified Certificates. Certificates owned or held by or for the account of the City or by any person directly or indirectly controlled or controlled by, or under direct or indirect common control with the City (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Agreement. Section 9.04. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article IX, this Agreement or the Lease Agreement, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Certificates Outstanding, as the case may. be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Agreement or the Lease Agreement, as the case may be, for any and all purposes. Each Certificate Owner shall certify to the Trustee whether the Certificates as to which such consent is given are disqualified as provided in Section 9.03. —33— __ Section 9.05. Endorsement or Replacement of Certificates Delivered After Amendments. The Trustee may determine that Certificates delivered after the effective date of any action taken as provided in this Article IX shall bear a notation, by endorsement or otherwise, in form approved by the Trustee, as to such action. In that case, upon demand on the Owner of any Certificate Outstanding at such effective date and presentation of his Certificate for the purpose at the Trust Office of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may determine that the delivery of substitute Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Certificate Owners' action, which substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand on the Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the Trust Office of the Trustee, without cost to such Owner, for a Certificate of the same character then Outstanding, upon surrender of such Outstanding Certificate. Section 9.06. Amendatory Endorsement of Certificates. The provisions of this Article IX shall not prevent any Certificate Owner from accepting any amendment as to the particular Certificates held by him, provided that proper notation thereof is made on such Certificates. . -34- ARTICLE X COVENANTS; NOTICES Section 10.01. Compliance With and Enforcement of Lease Agreement. The City covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The Corporation covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Lease Agreement. The City will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be a ground for cancellation or termination of the Lease Agreement by the Corporation thereunder. The Corporation and the City, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting their respective estates, or either of them, in the Project, which may or can in any manner affect such estate of the City, will deliver the same, or a copy thereof, to the Trustee. • Section 10.02. Observance of Laws and Regulations. The City will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the City, including its right to exist and carry on business as a municipal corporation, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 10.03. Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee or any Certificate Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Project, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Certificate Owner harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud, suit, action or proceeding. Section 10.04. Recordation and Filing. The City shall record and file the Lease Agreement or a memorandum thereof, the Assignment Agreement and all such documents as may be required by law (and shall take all further actions which may be necessary or be reasonably required by the Trustee), all in such manner, at such times and in such places as may be required by law in order fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners. Section 10.05. Tax Covenants. (a) Private Business Use Limitation. The City shall assure that (i) not in excess of ten percent (10%) of the Certificate Proceeds is used for Private Business Use if, in addition, the payment of more than ten percent (10%) of the principal or ten percent (10%) of the interest due with respect to the Certificates is, —35— • U tinder the terms of the Certificates or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Business Use or in payments in respect of property used or to be used for a Private Business Use or is to be derived from payments, whether or not to the City, in respect of property or borrowed money used or to be used for a Private Business Use. In the event that both (A) in excess of five percent (5%) of the Certificate Proceeds are used for a Private Business Use, and (B) an amount in excess of five percent (5%) of the principal components or five percent (5%) of the interest components of the Certificates is, under the terms of this Agreement or any underlying arrangement, directly or indirectly secured by any interest in property used or to be used for said Private Business Use or in payments in respect of property used or to be used for a Private Business Use or is to be derived from payments, whether or not to the City, in respect of property or borrowed money used or to be used for a Private Business Use; and (ii) and that, in the event that both (A) in excess of five percent (5%) of the Certificate Proceeds are used for a Private Business Use, and (B) an amount in excess of five percent (5%) of the principal components or five percent (5%) of the interest components of the Certificates is, under the terms of this Agreement or any underlying arrangement, directly or indirectly secured by any interest in property used or to be used for said Private Business Use or in payments in respect of property used or to be used for said Private Business Use or is to be derived from payments, whether or not to the City, in respect of property or borrowed money used or to be used for said Private Business Use, then said excess over said five percent (5%) amount used for a Private Business Use shall be used for a Private Business Use related to the governmental purposes of the Certificates. (b) Private Loan Limitation. The City shall assure that no more than five percent (5%) of the Certificate Proceeds are used, directly or indirectly, to make or finance a loan (other than loans constituting Nonpurpose Obligations or assessments) to persons other than state or local government units. (c) 'Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Certificates to be "federally guaranteed" within the meaning of Section 149(b) of the Tax Code. Section 10.06. Further Assurances. The Corporation and the City will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and the Lease Agreement, and for the better assuring and confirming unto the_Owners of the Certificates the rights and benefits provided herein. —36— -- ARTICLE XI LIMITATION OF LIABILITY Section 11.01. Limited Liability of City. Except for the payment of Lease Payments when due in accordance with the Lease Agreement and the performance of the other covenants and agreements of the City contained in said Agreement and this Trust Agreement, the City shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with respect to this Agreement or the terms, execution, delivery or transfer of the Certificates, or the distribution of Lease Payments to the Owners by the Trustee, except as expressly set forth herein. Section 11.02. No Liability of the Corporation for Trustee_Performance. Neither the City nor the Corporation shall have any obligation or liability to any of the other parties or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Agreement. Section 11.03. Indemnification of Trustee. The Corporation and the City shall indemnify and save the Trustee, its directors, officers, agents and employees harmless from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or from any work or thing done on, the Project by the Corporation or the City, (b) any breach or default on the part of the Corporation or the City in the performance of any of their respective obligations under this Trust Agreement and any other agreement made and entered into for purposes of the Project, (c) any act of negligence of the Corporation or the City or of any of their respective agents, contractors, servants, employees, licensees with respect to the Project, (d) any act of negligence of any assignee of, or purchaser from the Corporation or the City or of any of its or their respective agents, contractors, servants, employees or licensees with respect to the Project, (e) the authorization of payments from the Project Funds, (0 the actions of any other party, including but not limited to the ownership, operation or use of the Project by the Corporation or the City, or (g) the Trustee's exercise and performance of its powers and duties hereunder. No indemnification will be made under this Section 11.03 or elsewhere in this Trust Agreement for the negligence or intentional misconduct by the Trustee, its officers, agents, employees, successors or assigns. The Corporation's and the City's obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Certificates. Section 11.04. Opinion of Counsel. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, or an opinion of Bond Counsel acceptable to the Trustee with respect to any federal tax matters, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, Trustee shall be absolutely protected in relying on any such opinion or certificate obtained by the Trustee. Section 11.05. Limitation of Rights to Parties and Certificate Owners. Nothing in this Agreement or in the Certificates expressed or implied is intended or shall be construed to give any person other than the City, the Corporation, the Trustee and the Owners of the Certificates, any legal or equitable right, remedy or claim under or in —37— ' respect of this Agreement or any covenant, condition or provision hereof; and all such covenants, conditions and provisions are and shall be for the sole and exclusive benefit of the City, the Corporation, the Trustee and said Owners. -38- _ ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 12.01. Assignment of Rights. Pursuant to the Assignment Agreement the Corporation has transferred, assigned and set over to the Trustee all of the Corporation's rights and duties in and to the Lease Agreement (excepting only the Corporation's rights under Sections 4.7, 7.3 and 9.4 thereof), including without limitation all of the Corporation's rights to exercise such rights and remedies conferred on the Corporation pursuant to the Lease Agreement as may be necessary or convenient (a) to enforce payment of the Lease Payments and any other amounts required to be deposited in the Lease Payment Fund or the Insurance and Condemnation Fund, and (b) otherwise to exercise the Corporation's rights and take any action to protect the interests of the Trustee or the Certificate Owners in an Event of Default. Section 12.02. Remedies. If an Event of Default shall happen, then and in each and every such case during the continuance of such Event of Default, the Trustee may, and upon request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding shall, exercise any and all remedies available pursuant to law or granted pursuant to the Lease Agreement; provided, however, that notwithstanding anything herein or in the Lease Agreement to the contrary, there shall be no right under any circumstances to accelerate the maturities of the Certificates or otherwise to declare any Lease Payment not then in default to be immediately due and payable. Section 12.03. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XII or Article IX of the Lease Agreement shall be applied by the Trustee in the order following upon presentation of the several Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid - First, to the payment of the costs and expenses of the Trustee and of the Certificate Owners in declaring such Event of Default and in taking any remedial action with respect thereto, including reasonable compensation to its or their agents, attorneys and counsel; Second, to the payment of the whole amount then owing and unpaid with respect to the Certificates for principal and interest, with interest on the overdue principal and installments of interest at the net effective rate of interest per annum then represented by the Outstanding Certificates (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Certificates, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over -39- any other installment of interest, ratably to the aggregate of such principal and interest. Section 12.04. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in principal amount of the Certificates then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of Certificates by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights or duties hereunder. Section 12.05. Non—waiver. Nothing in this Article XII or in any other provision of,this Agreement or in the Certificates, shall affect or impair the obligation of the City, which is absolute and unconditional, to pay or prepay the Lease Payments as provided in the Lease Agreement. No delay or omission of the Trustee or of any Owner of any of the Certificates to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XII to the Trustee or to the Owners of Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate Owners. Section 12.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Certificate Owners is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. Section 12.07. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Certificates Outstanding. Section 12.08. Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b) the Owners of at least twenty-five percent (25%) in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to -40- institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. Section 12.09. Possession of Certificates by Trustee Not Required. All rights and remedies granted to or exercisable by the Trustee hereunder or under the Lease Agreement may be exercised by the Trustee without possession of any of the Certificates or the production thereof at the trial or other proceeding relative thereto, and any suit, action or proceeding instituted by the Trustee hereunder or under the Lease Agreement shall be brought in its name for the benefit of all of the Owners of such Certificates, subject to the provisions of this Trust Agreement. • -41- • ARTICLE XIII MISCELLANEOUS Section 13.01. Defeasance. If and when the obligations represented by any Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and redemption premiums (if any) represented by such Certificates Outstanding, as and when the same become due and payable; or (b) by depositing with the Trustee or any other fiduciary, under an escrow deposit and trust agreement, security for the payment of Lease Payments relating to such Certificates as more particularly described in Section 10.1 of the Lease Agreement, said security to be held by the Trustee as agent for the City to be applied by the Trustee to pay or prepay such Lease Payments as the same become due, pursuant to Section 10.1 of the Lease Agreement — notwithstanding that such Certificates shall not have been surrendered for payment, all rights hereunder of the Owners of such Certificates and all obligations of the Corporation, the Trustee and the City with respect to such Certificates shall cease and terminate, except only the obligations of the Trustee under Sections 2.07 and 2.08, and the obligation of the Trustee or such other fiduciary to pay or cause to be paid, from Lease Payments paid by or on behalf of the City from funds deposited pursuant to paragraph (b) of this Section, to the Owners of such Certificates not so surrendered and paid all sums represented thereby when due and in the event of deposits pursuant to paragraph (b), such Certificates shall continue to represent undivided fractional interests of the Owners thereof in Lease Payments under the Lease Agreement. Any funds held by the Trustee, at the time of discharge of the obligations represented by all Outstanding Certificates as a result of one of the events described in paragraphs (a) or (b) of this Section, which are not required for the payment to be made to Owners, shall, upon payment in full of all fees and expenses of the Trustee (including attorneys' fees) then due, be paid over to the City. Section 13.02. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed under this Agreement, which shall be available for inspection by the City, the Corporation, and any Owner, or the agent of any of them, at any reasonable time during regular business hours. Section 13.03. Notices. All written notices to be given under this Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective upon deposit in the United States mail, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: -42- If to the City: City Manager City of Dublin 6500 Dublin Boulevard Post Office Box 2340 Dublin, California 94568 If to the Corporation: Chief Financial Officer Dublin Information, Inc. 6500 Dublin Boulevard Post Office Box 2340 Dublin, California 94568 If to the Trustee: The Bank of California, N.A. 400 California Street San Francisco, California 94104 Attention: Section 13.04. Payment of Certificates After Discharge of Trust Agreement. Notwithstanding any provisions of this Trust Agreement, but subject to any applicable laws of the State of California relating to the escheat of funds or property, any moneys held by the Trustee in trust for the payment of the principal or interest represented by any Certificates and remaining unclaimed for six (6) years after the principal represented by all of the Certificates has become due and payable (whether at maturity or upon call for redemption or by acceleration as provided in this Trust Agreement), if such moneys were so held at such date, or six (6) years after the date of deposit of such moneys if deposited after said date when all of the Certificates became due and payable, shall be - repaid to the City free from the trusts created by this Trust Agreement upon receipt of an indemnification agreement acceptable to the City and the Trustee indemnifying the Trustee with respect to claims of Owners of Certificates which have not yet been paid, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the City as aforesaid, the Trustee may (at the cost of the City) first mail, by first class mail postage prepaid, to the Owners of Certificates which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Certificates so payable and not presented and with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof. Section 13.05. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of California, without giving effect to ■ principles of conflicts of law of the State of California. Section 13.06. Binding Effect; Successors. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Agreement either the Corporation, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the Corporation, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. -43- 4 • • Section 13.07. Corporation and City Representatives. Whenever under the provisions of this Agreement the Corporation or the City is required or permitted to take some action, including but not limited to the giving of any approval or the execution of some request, direction or other instrument, such action shall be made on behalf of the Corporation by an Corporation Representative and on behalf of the City by a City Representative, and any party hereto shall be fully authorized to rely upon any such action by an Corporation Representative or a City Representative. Section 13.08. Execution in Counterparts. This 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 agreement. Section 13.09. Delivery of Cancelled Certificates. Whenever in this Agreement provision is made for the surrender to or cancellation by the Trustee of any Certificates, the Trustee shall cancel and, if so directed in writing by the City Representative, destroy such Certificates and shall deliver a certificate of destruction with respect thereto to the City. Section 13.10. Headings. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Agreement. All references herein to "Articles", "Sections", and other subdivision's are to the corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein", "hereof', "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 13.11. Waiver of Notice. Whenever in this Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance - upon such waiver. Section 13.12. Separability of Invalid Provisions. In case any one or more of the provisions contained in this Agreement or in the Certificates shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable. -44- - IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. THE BANK OF CALIFORNIA, N.A., as, Trustee By Vice President By Assistant Vice President DUBLIN INFORMATION, INC. By Chairman (SEAL) Attest: By: Secretary CITY OF DUBLIN By Mayor (SEAL) Attest: By: City Clerk —45— - • . L EXHIBIT A (FORM OF CERTIFICATE OF PARTICIPATION) (TO COME) -46-- - • Brown & Wood Draft of 2/17/88 ti PRELIMINARY OFFICIAL STATEMENT DATED February 29, 1988 NEW ISSUE In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Special Counsel, subject, however to certain qualifications described herein, under existing law, the portion of lease payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes, although it is included in adjusted net book income and current earnings in computing the alternative minimum tax imposed on certain corporations . In the further opinion of Special Counsel, such interest is exempt from California personal income taxes . See "TAX EXEMPTION" herein. 1988 REFUNDING CERTIFICATES OF PARTICIPATION (Civic Center Project) Evidencing and Representing a Fractional Undivided Interest of the Owners Thereof in Lease Payments to Be Made by the CITY OF DUBLIN Dated: YrQary 1 , 1988 Due: February 1, as shown below The Certificates are being sold to provide (i) funds to refund outstanding City of Dublin 1985 Certificates of Participation originally sold to finance the Civic Center complex and (ii) additional moneys to complete the Civic Center . Interest represented by the Certificates is payable semiannually on February 1 and August 1 of each year, commencing August 1 , 1988, by check mailed to the registered owner thereof . Principal due with respect to the Certificates is payable at the principal corporate trust office of Bank of California, N.A. , the Trustee, in San Francisco, California. The Certificates are deliverable as fully registered Certificates in denominations of $5, 000 or any integral multiple thereof (not exceeding the principal amount maturing in any one year) . t5 2-1 The Certificates are subject to optional and mandatory prepayment, as described herein, prior to their stated maturities . The City has covenanted in the Lease to make all Lease Payments provided for therein to Dublin Information, Inc . , the Lessor, subject to complete or partial abatement of such Lease Payments resulting from failure to complete construction in a timely manner or from substantial interference with use and possession by the City of the Project caused by material damage or destruction of the Project or condemnation thereof . The City has also covenanted in the Lease to take such action as may be necessary to include such Lease Payments in its annual budgets and to make the necessary annual appropriations therefor . THE OBLIGATION OF THE CITY TO PAY LEASE PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION NOR DOES IT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. ASERIAL CERTIFICATES* Maturity "'Maturity Date Interest Price or Date Interest Price or (February 1) Amount Rate Yield (February 1) Amount Rate Yield • $ $ $ $ $ % TernytCertificates Due February 1, -- Price Y (Plus Accrued Interest from-F= y-1, 1988) The Certificates are offered when, as and if sold and received by the Underwriter, subject to approval as to their legality by Special Counsel, Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California. Certain legal matters will be passed upon for the Underwriter by Brown & Wood, San Francisco, California, and for the City by the City Attorney. It is anticipated that the Certificates in definitive form will be available for delivery in New York, New York, on or about March , 1988 . Rauscher Pierce Refsnes, Inc . Dated: March , 1988 *Subject to change. • w, This Preliminary Official Statement and the Information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. • • No dealer, broker , salesperson or other person has been authorized by the City, the Lessor or the Underwriter to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations 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 an offer to buy, nor shall there be any sale of the Certificates by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Certificates . 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 a representation of fact . 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 a representation of facts . The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall , under any circumstances, create any implication that there has been no change in the affairs of the Lessor or the City since the date hereof . This Official Statement and its distribution have been duly authorized and approved by the Board of Directors of the Lessor and the City Council of the City. This Official Statement is submitted in connection with the sale of the Certificates referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. IN CONNECTION WITH THIS •OFFERING, THE UNDERWRITER MAY OVER—ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT _ A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. CITY OF DUBLIN, CALIFORNIA City Council Linda J. Jeffery Mayor ^Georgean V,Enheeder Paul C. Moffatt Peter J. Hegarty Peter W. Snyder City Staff Richard C. Ambrose City Manager Paul Rankin Assistant to the City Manager Phillip Molina Administrative Services/Finance Director Special Counsel Jones Hall Hill & White A Professional Law Corporation San Francisco, California. Trustee Bank of California, N.A. San Francisco, California • TABLE OF CONTENTS Page INTRODUCTION THE REFUNDING PLAN THE CERTIFICATES General Provisions Transfer and Exchange Prepayments Manner of Selection of Certificates for Prepayment Notice of Prepayment Partial Prepayment of Certificates Trustee Security for the Certificates Lease Payment Schedule ESTIMATED SOURCES AND USES OF FUNDS. THE PROJECT RISK FACTORS Lease Not a General Obligation City' s Lease Payments No Liability by the Lessor to the Owners Limited Recourse on Default Abatement No Acceleration Upon Default Insolvency or Bankruptcy of the Lessor CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Recent Initiative Statute Affecting Local Taxes CITY OF DUBLIN FINANCIAL INFORMATION City Budget General Fund Financial Summary CITY OF DUBLIN General Population • Labor Relations Property Taxation CITY OF DUBLIN DIRECT AND OVERLAPPING BONDED DEBT STATEMENT THE CITY' S ECONOMY Economic Structure Employment Building and Construction Community Facilities Education Transportation Utilities Parks and Recreation • TABLE OF CONTENTS (continued) Page LESSOR UNDERWRITING RATING TAX EXEMPTION VERIFICATION OF MATHEMATICAL ACCURACY LITIGATION APPROVAL OF LEGALITY OTHER MATTERS APPENDIX A - Audited General Purpose Financial Statements, as of June 30 , 1987 APPENDIX B - Summary of Principal Legal Documents APPENDIX C - Form of Opinion of Special Counsel • II $ * 1988 REFUNDING CERTIFICATES OF PARTICIPATION (Civic Center Project) Evidencing and Representing Fractional Undivided Interests of the Owners Thereof in Lease Payments to be Made by the CITY OF DUBLIN, CALIFORNIA INTRODUCTION This Official Statement, including the cover page and the appendices, sets forth certain information in connection with the offering of the 1988 Refunding Certificates of Participation (Civic Center Project) (the "Certificates" ) in the aggregate principal amount of $ * to refund the 1985 City of Dublin Certificates of Participation (the "1985 Certificates" ) and to provide additional funds for the Project as described below. See "THE PROJECT. " The Certificates evidence and represent fractional undiv,ided interests of the registered owners thereof (the "Owners" ) in lease payments (the "Lease Payments" ) to be made by the City of Dublin (the "City" ) to Dublin Information, Inc. (the "Lessor") as rental for certain facilities (as described herein) to be used by the City pursuant to an Amended and Restated Lease Agreement, dated as of February 1, 1988 (the "Amended Lease" ) , between the City and the Lessor . The rights of the Lessor to receive payments under the Amended Lease will be assigned to Bank of California, N.A. , as Trustee (the "Trustee" ) under an Assignment Agreement, dated as of February 1 , 1988 (the "Assignment Agreement" ) , whereby the Lessor shall assign to the Trustee for the benefit of the Owners its rights (i) to Lease Payments payable by the City under the Amended Lease and ( ii) to enforce amounts payable upon default. In addition, under the Trust Agreement, dated as of February 1, 1988, among the City, the Trustee and the Lessor (the "Trust Agreement") , the Lease Payments are irrevocably pledged to the payment of the principal and interest represented by the Certificates . The Certificates are being executed and delivered pursuant to the Trust Agreement . In general, the City is required to pay to the Trustee all of the Lease Payments required under the Amended Lease, subject *Subject to change. 1 1739031/2 to completion of construction of the Project and subject to complete or partial abatement of such Lease Payments resulting from substantial interference with the use and possession by the City of the Project caused by material damage, destruction or condemnation thereof . See "RISK FACTORS" and "APPENDIX B — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS . " Under the Amended Lease, the City is also required to pay any taxes, assessments, insurance premiums or maintenance and repair costs in connection with the Project. The City has also covenanted in the Amended Lease to take such action as may be necessary to include the Lease Payments in its annual budgets and to make the necessary annual appropriations therefor . For certain financial information with respect to the City, see "CITY OF DUBLIN FINANCIAL INFORMATION" and "APPENDIX A. " THE REFUNDING PLAN A portion of the proceeds of the Certificates, together with a portion of the monies deposited in funds and accounts established with respect to the 1985 Certificates will be deposited in an escrow fund (the "Escrow Fund" ) established by Bank of California, N.A. , as escrow bank (the "Escrow Bank" ) pursuant to an Escrow Deposit and Trust Agreement, dated as of February 1, 1988 (the "Escrow Agreement" ) , by and among the City, the Lessor and the Escrow Bank. The Escrow Fund will be invested in, bills , certificates of indebtedness . notes . bonds or similar securities which are direct obligations of . or the, principal and interest of which securities are guaranteed by the United States; the interest and principal payments from which will secure, and are calculated to provide sufficient funds to pay principal with respect to the 1985 Certificates on their respective payment or prepayment dates and interest which will become due with respect to the 1985 Certificates on such payment or prepayment dates . The Escrow Bank is irrevocably committed to pay the principal and interest with respect to the 1985 Certificates required, but only from monies available in the Escrow Fund. THE CERTIFICATES . General Provisions The Certificates will be executed and delivered in the aggregate principal amount of $ * . The Certificates are deliverable in fully registered form in denominations of $5,000 or any integral multiples thereof (not exceeding the * Subject to change. 2 1739031/2 principal amount maturing in any one year) . Certificates will be dated as of the date of their execution and interest represented thereby will be payable from the February 1 or August 1 (each an "Interest Payment Date" ) next preceding the date of execution thereof , unless : (a) it is executed after the close of business on the fifteenth day of the month immediately preceding an Interest Payment Date and, in which event interest represented thereby shall be payable from such Interest Payment Date; or (b) it is executed on or before July 15, 1988, in which event interest represented thereby shall be payable from February 1 , 1988 . The interest represented by the Certificates will be calculated from February 1, 1988 , at the rates per annum set forth on the cover page hereof, payable semiannually on February 1 and August 1 of each year commencing August 1, 1988, and will represent the sum of the portions of the Lease Payments designated as interest components coming due on the Interest Payment Dates in each year . The principal represented by the Certificates will be payable, subject to prior prepayment, on February 1 in each of the designated years (each .a "Certificate Payment Date") and in the principal amounts set forth on the cover page hereof . Certificates with a Certificate Payment Date of February 1, 20 represent, in the aggregate, the principal components of the Lease Payments due on February 1, 20_ through February 1, 20 , and a portion of such Certificates_.. are subject to mandatory prepayment on such dates . Certificates with Certificate Payment Dates other than February 1, 20_ evidence and represent the principal component of the Lease Payments coming due on their respective Certificate Payment Dates . Interest with respect to the Certificates is payable by check or draft mailed to the Owners of the respective Certificates by first class mail, postage prepaid at the addresses appearing on the Certificate registration books of the Trustee as of the close of business on the 15th day of the month immediately preceding the Interest Payment Date. Principal due with respect to the Certificates is- payable upon z surrender at the principal corporate trust office of Bank of California, in San Francisco, California. Transfer and Exchange Any Certificate may, in accordance with its terms, be transferred by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation at the principal corporate office of the .Trustee in San Francisco, California, accompanied 3 1739031/2 by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Certificates may be exchanged at the principal corporate office of the Trustee in San Francisco, California, for a like aggregate principal amount of Certificates of other authorized denominations of the same maturity and interest rate. The Trustee may require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee will not be required to transfer or exchange either ( i) any Certificate during the. fifteen days prior to the date established by the Trustee for the selection of Certificates for prepayment or (ii) the portion of any Certificate as to which notice of prepayment has been mailed by the Trustee. Prepayments The Certificates are subject to mandatory prepayment in whole on any date or in part on anyiate among maturities on a pro rata basis and by lot within a maturity, from the proceeds of insurance or eminent domain proceedings credited towards the prepayment of the Lease Payments by the City pursuant to the Amended Lease, at a prepayment price equal to 100% of the principal amount to be prepaid plus accrued interest represented thereby to the date fixed for prepayment. The Certificates payable on February 1, 20 are subject to mandatory prepayment prior to their stated Certificate Payment Date in part on February 1 of each year on and after February 1, 20 , by lot, from and in the amount of the . principal components of the Lease Payments due and payable on such dates, at a prepayment price equal to 100% of the principal amount to be prepaid plus accrued interest represented thereby to the date of prepayment, without premium. The amounts of mandatory' prepayments are set forth in the following table: • 4 . 1739031/2 MANDATORY PREPAYMENT SCHEDULE Certificate Certificate Payment Payment Date Amount Date Amount February 1, $ February 1, $ February 1, February I, February 1, February 1, February 1, February 1, - February 1, *Final maturity. The Certificates are also subject to mandatory prepayment in whole, or in part among maturities on a pro rata basis and by lot within a maturity, from the amounts (if any) of unused Certificate proceedsA on an Interest Payment Date on or after February 1, 20_ for which notice of prepayment can be timely given, at a prepayment price equal to 100% of the principal amount to be prepaid, plus accrued interest represented thereby to the date fixed for prepayment, without premium. The Certificates payable on or before February 1, 199 shall not otherwise be subject to prepayment before their respective stated Certificate Payment Dates . The Certificates payable on or after February 1, 199_ will also be subject to prepayment prior to their respective stated Certificate Payment Dates, at the option of the City, as a whole, or in part in inverse order of such Payment Dates and by lot within any such Payment Date if less than all of the Certificates of such Payment Date are to be prepaid from prepayments of the Lease Payments made at the option of the City pursuant to the Amended Lease, beginning February 1, 199 at a prepayment price (expressed as a percentage of the principal amount to be prepaid) , together with accrued interest represented thereby to the date fixed for prepayment as follows : Prepayment Date Prepayment Price 5 1739031/2 Manner of Selection of Certificates for Prepayment Whenever less than all of the outstanding Certificates payable on any Certificate Payment Date are called for prepayment, the Trustee will select Certificates for prepayment by lot. The Trustee will promptly notify the City and the Lessor in writing of the Certificates selected. for prepayment . Notice of Prepayment Notice of prepayment will be mailed by first class mail, postage prepaid, to, among others, the Owners of Certificates designated for prepayment at their addresses appearing on the Certificate registration books, at least 30 days but not more than 60 days prior to the prepayment date. Partial Prepayment of Certificates Upon surrender by the Owner of a Certificate for partial prepayment, the Trustee will execute and deliver to the Owner of such surrendered Certificate, a new Certificate or Certificates which shall be of authorized denominations equal in aggregate principal amount to the unprepaid portion of the Certificate surrendered and of the same interest rate and the same Certificate Payment Date. Trustee Bank of California, N.A. San Francisco, California, has been appointed as Trustee. The Trustee will receive all of the proceeds of the Certificates and will disburse such proceeds in conformity with the Trust Agreement. In addition to holding and administering various funds of the City, the Trustee will invest the funds held in trust and will be the recipient of the Lease Payments payable by the City for the Project. The Trustee will also act as paying agent for the purpose of disbursing payments of interest and principal with respect to the Certificates . The Trustee will act as certificate registrar and will execute all Certificates . Security for the Certificates General . Each Certificate represents a fractional undivided interest in Lease Payments to be made by the City to the Lessor under the Amended Lease. The Lessor, pursuant to the Assignment Agreement and the Trust Agreement, has assigned all its rights to receive Lease Payments under the Amended Lease to the Trustee for the benefit of the Owners of the Certificates . Additionally, under the Trust Agreement, the Lease Payments are irrevocably pledged to the payment of the 6 1739031/2 4 principal and interest represented by the Certificates . Lease Payments are subject to complete or partial abatement, however, in the event of loss or substantial interference in the use and possession of all or any portion of the Project by the City caused by damage, destruction or condemnation of the Project. In the case of damage or destruction, the amount of abatement will be agreed upon by the City and the Lessor such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Project not damaged or destroyed. Such abatement shall continue for the period commencing with the date of such damage or destruction and ending with the substantial completion of the work of repair or reconstruction of the Project . If the entire Project or so much thereof as to render the remainder unusable for the purposes for which it was used by the City is taken under the power of eminent domain or sold to a governmental entity threatening to exercise the power of eminent domain, the proceeds therefrom will be used to •prepay the Certificates . If less than the entire Project is taken under the power of eminent domain and the remainder is usable for the purposes for which it was used by the City at the time of such taking, then Lease Payments will be subject to a. partial abatement in an amount to be agreed upon by the City and the Lessor such that the resulting Lease Payments represent fair consideration for the use and occupancy of the portions of the Project not damaged or destroyed. Additional lease payments due from the City to the Trustee include amounts sufficient to pay certain taxes and assessments charged with respect to the Project and administrative costs of the Lessor . The City is also responsible for repair and maintenance of the Project during the term of the Amended Lease. THE CITY HAS COVENANTED IN THE AMENDED LEASE TO TAKE SUCH ACTION AS MAY BE NECESSARY TO INCLUDE ALL SUCH LEASE PAYMENTS IN ITS ANNUAL BUDGETS AND TO MAKE THE NECESSARY ANNUAL APPROPRIATIONS THEREFOR. SUCH OBLIGATION AND THE OBLIGATION TO MAKE LEASE PAYMENTS DO NOT CONSTITUTE DEBTS OF THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION NOR OBLIGATIONS OF THE CITY FOR WHICH THE CITY IS OBLIGATED OR PERMITTED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. Should the City default in its payment obligation under the Amended Lease, the Trustee, as assignee of the Lessor, may retain the Amended Lease and hold the City liable for all Lease Payments on an annual basis and have the right to re-enter and re-let the Project . Such re-entry and re-letting will not effect a surrender of the Amended Lease. Alternatively, the 7 1739031/2 Trustee may terminate the Amended Lease and proceed against the City to recover damages pursuant to the Amended Lease. Due to the specialized nature of the Project, no assurance can be given that the Trustee will be able to re-let the Project so as to provide rental income sufficient to make principal and interest payments with respect to the Certificates in a timely manner, and the Trustee is not empowered to sell the Project for the benefit of the Owners of the Certificates . Reserve Fund. A Reserve Fund (the "Reserve Fund" )will be established with the Trustee pursuant to the Trust Agreement and will be funded from proceeds of the Certificates in an amount equal to $ and thereafter maintained in an amount equal to the lesser of 10% of the principal amount of the Certificates, 125% of average annual Lease Payments or the maximum amount of Lease Payments remaining to be paid by the City during any twelve-month period. Amounts in the Reserve Fund are to be used for the payment. of- Lease Payments when such Lease Payments have been abated in whole or in part or when other monies of the City are not otherwise available to make such Lease Payments . Lease Interruption Insurance. Under the terms of the Amended Lease, the City is required to obtain rental interruption or use and occupancy insurance on the Project to cover a partial or total loss of the use of the structures constituting the Project in an amount at least equal to the maximum Lease Payments payable during any two_ fi.scal years . Lease Payment Schedule Lease Payments are required to be paid by the City under the Amended Lease on each January 15 and July 15, commencing July 15, 1988 . Pursuant to the Trust Agreement, the Lease Payments will be deposited in the Lease - Payment Fund and applied to pay the principal and interest represented by the Certificates in accordance with the following schedule: • 8 - 1739031/2 - - Certificate Principal Interest Total Payment Dates Component Component Payment • • $ $ $ Total $ $ $ * To be funded partially by proceeds of the Certificates. ** Represents mandatory prepayments. *** Final Certificate Payment Date. 9 1739031/2 • \ 1 ESTIMATED SOURCES AND USES OF FUNDS* The proceeds to be received from the sale of the Certificates (including accrued interest as described below) and certain monies relating to the 1985 Certificates are anticipated to be applied as follows : Sources of Funds Principal amount of Certificates $ 1985 Funds [to be described] Total Sources $ Uses of Funds Deposit to the Escrow Fund $ Deposit to Project Fund Deposit to Lease Payment Fund Deposit to Reserve Fund Total Uses $ * Subject to change. (1) The above—described deposit plus $ of accrued interest from February 1, 1988 to February , 1988 equals Capitalized Interest for the period February '1-,r988 to (2) Estimated reinvestment rate of % on Lease Payment Fund, Reserve Fund, and Project Fund. THE PROJECT Since its incorporation in 1982, the City has occupied leased space in a commercial office complex. In 1984, a subcommittee of the City Council undertook a review of potential sites for construction of a Civic Center to provide adequate space for City needs as well as for Dublin Police Services, a contract service of the Alameda County Sheriff ' s Department. In 1986, the City purchased a 10 acre site adjacent to a 23 acre sports park currently under the jurisdiction of a special district . The City anticipates obtaining title to the park property on July 1 , 1988 as part of an agreement with the Dublin San Ramon Services District and the City of San Ramon. See "CITY OF DUBLIN - Assumption of Fire and Park Services from Dublin San Ramon Services District. " The City Council approved the final schematic design on January 28, 1987. The design consists of two-semicircular 10 - 1739031/2 wings with a central courtyard. One wing contains a City Council chamber, administrative offices, and a regional meeting room. The second wing is designed as a police facility. This building contains a dispatch area, administrative offices, evidence room, training area, emergency operations center and other support facilities . The construction contract was awarded to Dickman-Nourse, Inc . ( "Dickman-Nourse" ) by the City Council on December 21, 1987 . The Contractor completed bonding and insurance requirements and was given a notice to proceed on January 25, 1988 . The City Council conducted a formal groundbreaking on Saturday, January 30, 1988 . The contract calls for substantial completion by April 2, 1989 . Dickman-Nourse Inc . , Mountain View, California, was formed in July 1985 through the merger of Dickman Builders, Inc . and Engstrum and Nourse. The firm reports that they do approximately $24 million of business each year focusing on 6 to 7 projects at a time which range in value between $2 million and $12 million. The two firms which have emerged as Dickman-Nourse have a long history of constructing projects in the Bay Area. Dickman Construction Inc . was established in 1953 and changed its name to Dickman Builders Inc . in 1966 . Engstrum & Nourse was formed in 1955 . Dickman-Nourse focuses on public or quasi-public construction projects . The following outline identifies some of the projects that Dickman-Nourse has completed: Project Owner Cost (in millions) Engstrum & Nourse Primate Discovery Center San Francisco Zoo $5 .3 Braun Music Center Stanford University - 8 & Campbell Recital Hall Dickman Builders Inc Collider Experiment Hall Stanford University 8 . 5 Center Core Hospital Veterans Administration 16 . 4 Menlo Park Building 66-Laboratory University of California 8 . 0 at Berkeley Foster City Elementary San Mateo School District 2 . 9 11 1739031/2 Dickman-Nourse, Inc . Ginzton Laboratory Stanford University 1 . 2 Environ Safety Facility Stanford University 3 . 196 Life Science Bldg. University of California at Berkeley 6 . 753 Bulk Mail Center-Richmond United States Post Office 3 .2 RISK FACTORS The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating purchase of the Certificates . Lease Not a General Obligation The obligation of the City to make Lease Payments does not constitute an obligation of the City for which the City must levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation, nor does it constitute a debt or indebtedness of the City, the State of California or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation or restriction. City' s Lease Payments The City' s Lease Payments and other payments due under the Amended Lease (including payment of costs of improvements, repair and maintenance of the Project, taxes and other governmental charges and assessments levied against the Projects) are not secured by any pledge of taxes or other revenues of the City, but are payable from any funds lawfully available to the City. In the event the City' s revenue sources are less than its total obligations, the City could choose to fund other municipal services before making Lease Payments . The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues . For a discussion of the City' s- current appropriation limits, see "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS. " No Liability by the Lessor to the Owners Except as expressly provided in the Trust Agreement, the Lessor shall not have any obligation or liability to the Owners of the Certificates with respect to the payment when due of the Lease Payments by the City, or with respect to the observance or performance by the City of other agreements, conditions, 12 1739031/2 covenants and terms required to be observed or performed' by it contained in the Amended Lease or the Trust Agreement, or with respect to the performance by the Trustee of any obligation required to be performed by it contained in the Trust Agreement. Limited Recourse on Default If the City defaults on its obligations to make Lease Payments with respect to the Project, the Trustee, as assignee of the Lessor,. may retain the Amended Lease and hold the City liable for all Lease Payments on an annual basis and will have the right to re-enter and re-let the Project. Such re-entry and re-letting shall not effect a surrender of the Amended Lease.. Alternatively, the Trustee may terminate the Amended Lease and proceed against the City to recover damages pursuant to the Amended Lease. Due to the specialized nature of the Project, no assurance can be given that the Trustee will be able to re-let the Projects so as to provide rental income sufficient to make principal and interest payments with respect to the Certificates in a timely manner, and the Trustee is not empowered to sell the Project for the benefit of the Owners of the Certificates . Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See "APPENDIX B - SUMMARIES OF PRINCIPAL LEGAL DOCUMENTS -- The Amended Lease -- Default by City. " Abatement In the event the construction of the -Project is not completed or in the event of loss or substantial interference in the use and possession of all or any portion of the Project by the City caused by material damage or destruction to or condemnation of the Project, Lease Payments will be subject to abatement. In the event the Project could not be replaced during the period of time that proceeds of the City' s rental interruption insurance will be available in lieu of Lease • Payments plus the period for which funds are available from the Reserve Fund, or in the event that casualty insurance proceeds - or condemnation proceeds are insufficient to provide for complete repair or replacement of the Project or prepayment of the Certificates, there could be insufficient funds to cover payments to Owners in full . No Acceleration Upon Default . If the City defaults on its obligations to make Lease' Payments, the Trustee may have limited ability to re-let the Project so as to preserve the tax exempt nature of the interest 13 1739031/2 • d component of the Lease Payments and the Certificates . In the event of a default, there is no available remedy of acceleration of the total Lease Payments due over the term of the Amended Lease. The City will only be liable for Lease . Payments on an annual basis, and the Trustee would be required to seek a separate judgment each. year for that year ' s Lease Payments . Insolvency or Bankruptcy of the Lessor Title to the Project will be held by the Lessor throughout the term of the Amended Lease. Therefore, the title to the Project may be considered property of the estate of the Lessor which may be disposed of by a bankruptcy court in the event of a bankruptcy, insolvency or similar proceeding by or against the Lessor . • CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS Article XIIIA of the California Constitution limits the taxing powers of California public agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot exceed one percent of the "full cash value" of the property, and effectively prohibits the levying of any other ad valorem property tax except as discussed below. "Full cash value" is defined as the County Assessor ' s valuation of real property as shown on the 1975-76 tax bill under "full cash value" or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. The full cash value is subject to annual adjustment to reflect inflation at a rate not to exceed two percent or a reduction in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors . The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on any indebtedness approved by the voters before July 1, 1978 or any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the votes cast by the voters voting on the proposition. Article XIIIB of the California Constitution limits the amount of appropriations of the state and of local governments for "proceeds of taxes" to the amount of appropriations of the entity for the prior year, adjusted for changes in the cost of living, population and services provided. The City had appropriation limits of $9 , 670 , 616 for 1987-88 and $7, 672, 746 14 1739031/2 for 1986-87. compared to actual appropriations subject to such limits of $7,806,431 and $6,782,995, respectively. Recent Initiative Statute Affecting Local Taxes On November 4, 1986, California voters approved an initiative statute known as Proposition 62. This statute (i) requires that any tax for general governmental purposes imposed by local governments be approved by resolution or ordinance adopted by a two-thirds vote of the governmental entity' s legislative body . and by a majority vote of the electorate of the governmental entity; (ii) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within that jurisdiction; ( iii) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax was imposed; (iv) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA of the California Constitution; (v) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governments; (vi) requires that any tax imposed by a local government on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988; (vii) requires that, in the event a local government fails to comply with the provisions of this measure, a reduction in the amount of property tax revenue allocated to such local government occur in an amount equal to the revenues received by such entity attributable to the tax levied in violation of the initiative; and (viii) permits these provisions to be amended . exclusively by the voters of the State of California. CITY OF DUBLIN FINANCIAL INFORMATION City Budget The City adopts a final budget annually by June 30 for the following fiscal year . The City Manager prepares a proposed budget which is presented to the Council . The proposed budget may be modified by the City Council of the City (the "Council" ) during the budget hearing process . After the hearings, a final . budget is adopted. The 1987-88 proposed budget was presented to the Council on June 16, 1987 . Budget hearings commenced on June 23, 1987 and were completed on June 23 , 1987 . The Council adopted a budget on June 23 , 1987 . 15 1739031/2 • Throughout the fiscal year, all revenues and appropriations are subject to review and since the budget must remain in balance, any overall reduction in revenues would require a reduction in appropriations . 16 1739031/2 • • CITY OF DUBLIN GENERAL FUND4BUDGETS FISCAL YEARS 1985-86 THROUGH FISCAL YEAR 1987-88 Actual Ac tuaal Approved 1985-86 1986-87 1987-88 General Government City Council $ 50,420.00 $ 62,075.00 $ 88,880.00 City Manager 193,230.00 222,953.00 255,438.00 Legal Services 76,167.00 80,510.00 76,400.00 Finance 50,946.00 117,855.00 138,970.00 Building Management 106,570.00 1,499,101.00 1,398,490.00 Insurance 104,500.00 103,878.00 136,600.00 Elections -- 4,300.00 5,000.00 Non-Departmental -- 200,000.00 341,402.00 Public Safety Police Services 1,214,110.00 1,584,915.00 1,849,634.00 Crossing Guards 16,600.00 13,800.00 22,200.00 Animal Control 48,800.00 45,548.00 42,000.00 Traffic Signals & Safety 59,600.00 42,200.00 9,500.00 Disaster Preparedness 26,700.00 23,600.00 20,250.00 Transportation Street Maintenance 134,786.00 188,410.00 104,400.00 Public Works Administration 73,740.00 122,002.00 159,318.00 Street Sweeping 52,500.00 Street Tree Maintenance 53,400.00 74,400.00 67,500.00 Street Landscape Maintenance 112,030.00 132,450.00 224,050.00 Paratransit Services 13,061.00 15,694.00 14,586.00 Health & Welfare Services Vector Control Services 8,925.00 6,000.00 15,500.00 Culture & Leisure Services Library Services 69,741.00 91,984.00 103,500.00 Recreation 264,430.00 358,977.00 409,000.00 Park Maintenance 27,500.00 26,300.00 66,900.00 Senior Citizen Activities 40,000.00 -- -- Community Cable TV -- -- 20,000.00 17 1739031/2 Community Development Planning 281,990.00 409,780.00 521,530.00 Building Safety 262,450.00 287,700.00 329,892.00 Engineering 515,127.00 489,589.00 453,650.00 SUBTOTAL GENERAL FUND $3,804,823.00 $6,204,021.00 $6,927,090.00 Contingency .00 .00 .00 TOTAL GENERAL FUND $3,804,823.00 $6,204,021.00 $6,927,090.00 REVENUES OF THE GENERAL FUND $7,771,367.00 $8,450,679.00 $8,984,760.00 TOTAL G/F BUDGETED EXPENDITURES (3,804,823.00) (6,204,021.00) (6,927,090.00) Transfer to other funds (4,238,056.00) (5,095,151.00) (893,714.00) Transfer from other funds 22,876.00 832,500.00 415,660.00 Excess Resources <Deficiency> ($248,636.00) ($2,015,993.00) $1,579,616.00 ,yam \ 1. The amounts of the Transfers to Other Funds shown on the General Fund ,- 1 Approved Budgets statement were prepared during the budget process. 2( j Figures showing the actual amounts transferred are presented on the Statement of Revenues, Expenditures and Changes in Fund Balance General Fund. 2. The Civic Center project is accounted for in the Dublin Information Inc. Enterprise Funds (DII). The members of the Board of Directors of DII are the City Council members plus the City Manager. c ' (`3. The Fund Balance Transfers on the Statement of Revenues, Expenditures and Changes in Fund Balances General Fund, represent the dedication of l a portion of the General Fund, Fund Balance for the Civic Center project and the delineation of the reserves from the General Fund to the Enterprise Fund of the Civic Center Project. Below is a detail analysis of each transfer. These amounts are taken directly from the audited financial statements which are a part of this Official Statement: 1. Fund Balance Transfer Out in the General Fund for 6/30/87 equal $500,000. This is the transfer of General Fund cash to the Civic Center Project and was shown as Fund Balance Transfers In within the Civic Center Project. 2. The Operating Transfers Out in the General Fund for 6/30/87 equal $886,347.00 and represent advances to various Capital Improvement projects. This amount is reflected in the audit on page #4. 18 1739031/2 3. Fund Balance Transfer Out for 6/30/86 equals $3,125,115, and are shown as Fund Balance Transfers In as detailed below: 1. Reserves Transferred to DII $3,100,000.00 2. Cash to establish the Internal Service Fund 25,115.00 $3,125,115.00 4. The Operating Transfers Out in the General Fund for 6/30/86 equal $3,594,211 and represent advances to various Capital Improvement projects. This amount is shown in the Audit for the Year Ended June 30, 1986 page #4. 5. Changes in the Fund Balance from one year to the next are detailed in the audit for each respective year and reproduced below: GENERAL FUND Fund Balance 6/30/85 $8,317,722.00 Trust Fund Refundable deposit 17,399.00 Due to other funds (47,320.00) Prepaid expenses (7,139.00) Reserve accrual leave 24,700.00 Shannon Center Lease 2,000.00 ADJUSTED FUND BALANCE 6/30/85 $8,307,362.00 Fund Balance 6/30/86 $6,123,739.00 Reserve accrual leave 11,504.00 Other 11.00 ADJUSTED FUND BALANCE 6/30/87 $6,135,254.00 19 1739031/2 General Fund Financial Summary The information contained in the following table is . summarized from audited financial statements for fiscal years 1984-85 through 1986-87 . 20 1739031/2 • CITY OF DUBLIN STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEARS ENDED JUNE 3.0 , 1985, 1986 AND 1987 REVENUES 6/30/85 6/30/86 6/30/87 Taxes $4,738,818.00 $5,062,103.00 $5,837,811.00 Licenses and permits 333,982.00 410,243.00 586,320.00 Intergovernmental 785,881.00 1,057,247.00 795,353.00 Charges for Services 260,217.00 682,324.00 593,407.00 Use of Money and Property 909,651.00 956,215.00 773,939.00 Fines and Forfeitures 15,162.00 13,524.00 15,690.00 Other Revenues 149,099.00 24,147.00 37,890.00 $7,192,810.00 $8,205,803.00 $8,640,410.00 EXPENDITURES General Government $361,392.00 $542,616.00 $2,208,131.00 Public Safety 1,317,734.00 1,522,434.00 1,611,762.00 Highways and Streets 65,571.00 335,819.00 429,287.00 Health and Welfare .00 2,461.00 2,985.00 Community Development 602,567.00 961,541.00 1,062,858.00 Culture and Leisure 215,696.00 295,191.00 349,863.00 Capital Outlay 30,308.00 32,824.00 36,734.00 $2,593,268.00 $3,692,886.00 $5,701,620.00 Revenue in Excess or <less> than Expenditures 4,599,542.00 4,512,917.00 2,938,790.00 Other Financing Sources (uses) Operating transfers in 26,978.00 22,786.00 .00 Operating transfers out (1,099,806.00) (3,594,211.00) (886,347.00) ($1,072,828.00) ($3,571,425.00) ($886,347.00) REVENUES AND OTHER FINANCING SOURCES IN EXCESS OR (LESS) THAN EXPENDITURES AND OTHER USES 3,526,714.00 941,492.00 2,052,443.00 FUND BALANCE TRANSFER .00 (3,125,115.00) (500,000.00) FUND BALANCE BEGINNING 4,791,008.00 8,307,362.00 6,135,254.00 FUND BALANCE END OF YEAR $8,317,722.00 $6,123,739.00 $7,687,697.00 Source: Compiled from the City's financial statements for the individual years. 21 1739031/2 • A copy of the City' s Audited General Purpose Financial Statements for the fiscal year ended June 30, 1987 is attached as Appendix A to this Official Statement. Audited financial statements for prior years are available upon request from the Finance Department of the City. CITY OF DUBLIN General The City of Dublin is located in the Tri-Valley in Alameda County. The City is bordered to the south by the City of Pleasanton and to the north by the City of San Ramon. The City is 395 miles north of Los Angeles and 35 miles southeast of San Francisco, and is only a twenty-five minute drive from San Jose and Oakland. The City was incorporated on February 1, 1982 . The City Council has five members all elected at large. Interstate Freeways 580 and 680 intersect in Dublin and allow easy access to the stable economy of the East Bay. Residential areas are located 125 to 360 feet above sea level with average temperatures of 80° in the summer and 60° in the winter. City Growth At the time of its incorporation in 1982, the City covered 4 . 1 square miles . Since that time, the City has annexed 78 . 74 acres of land to the west which is primarily residential in nature and 2,713 . 47 acres of primarily governmentally-owned land to the east and now covers 8 . 5 square miles . Population The following table presents population data for the City, Alameda County and the State of California since 1983 . CITY, COUNTY AND STATE POPULATION DATA City of Alameda State of Year Dublin County California 1983 15, 103 1, 155,500 24 ,944 ,700 1984 15, 557 1, 172,300 25,415,300 1985 15, 608 1, 187, 000 25,857,464 1986 17, 793 1,208,200 26, 636 ,961 1987 21 ,477 1,214, 100 27,292, 70.0 Source: California Department of Finance Annual Reports . 22 1739031/2 1 Labor Relations The City currently contracts with public and private entities to provide many of its services . The City of Dublin has 22 regular positions . The City' s Recreation Department uses temporary part-time employees . Its staffing level varies between 10 - 15 employees . Additionally, the City has 43 persons providing services pursuant to four contracts . The City does not have any labor organizations which represent City employees . Property Taxation City property taxes are assessed and collected by Alameda County (the "County" ) at the same time and on the same rolls as the County, all special district and school district taxes are collected. Assessed valuations are based upon 100% of market value. For assessment and collection purposes, property is classified either as "secured" or "unsecured" , and is listed, accordingly, on separate parts of the assessment roll . The "secured roll" is that part of the assessment roll containing State assessed property, and property the taxes on which are a lien on real property, sufficient, in the opinion of the County Assessor, to secure payment of the taxes . All other property is assessed on the "unsecured roll . " The following table presents a summary of ,assessed valuations in the City for fiscal years 1982-83 through 1987-88 . ASSESSED VALUE Fiscal Year SECURED • UNSECURED EXEMPT 1982-83 $452,445,772 - $52, 149,934 $20,395,200 1983-84 508,609 ,723 62,296,499 21, 061,600 1984-85 549 ,919 ,514 64,760,035 21, 077, 000 1985-86 635,026, 686 74, 740,855 21,938, 000 1986-87 760 ,496, 777 82,214, 150 22,332,800 1987-88 A845 ,253 ,961 A85,253 ,484 A23 , 660, 000 , Source: Auditor-Controller of Alameda County. 23 1739031/2 • Assumption of Fire And Park Services From Dublin San Ramon Services District Prior to incorporation, the Dublin area received some services from the Dublin San Ramon Services District ( "DSRSD" ) . This special community services district was organized to provide park, fire, water and sewer services to the City of Dublin and a portion of the City of San Ramon. The two cities have negotiated with representatives of the special district to allow the respective cities to assume responsibility for the provision of general fund municipal services . On July 1, 1988, DSRSD will transfer title and responsibility for the parks and aquatics facilities it owns within the City of Dublin, to the City, including approximately 37 acres of improved parkland, a community center and a community swim center . DSRSD will also transfer responsibility for the provision of fire suppression and prevention services to the newly formed Dougherty Regional Fire Authority (the "Authority" ) . The Authority is a joint powers authority formed by the Cities of Dublin and San Ramon and will be governed by city council members from each city. The Authority' s sole source of income will be derived from the two cities. In order to support these additional_ obligations, t he Cities of Dublin and San Ramon will receive all the applicable revenues and reserves from DSRSD. City staff have reviewed the financial projections with the DSRSD Finance Director and the Alameda County Auditor. The City estimates that it will incur $2, 085, 000 in additional expenses as a result of the transfer of service responsibility. The current estimates project that the City will receive $2,155,000 in annual revenues and a one-time transfer of $2,650 , 000 in reserves from DSRSD. DSRSD has further agreed to transfer its appropriations limitation to the Cities of Dublin and San Ramon on a proportionate basis . The appropriations limit transfer to the City of Dublin will be $1,992,548 . Those appropriations funded by proceeds of taxes and subject to the limitations are estimated at $2,032,000, or approximately $39 ,452 more than the appropriations limit transferred by DSRSD to the City. This transaction will consolidate the provision of municipal services to area residents . DSRSD will continue to provide water and sewer services . The majority of the revenues being transferred are in the form of an increased share of property tax revenue. 24 1739031/2 • CITY OF DUBLIN DIRECT AND OVERLAPPING BONDED DEBT STATEMENT 1987-88 Assessed Valuation: $930,507,445 DIRECT AND OVERLAPPING BONDED DEBT: % Applicable Debt 2/1/88 Alameda County General Fund Obligations 1.993% $ 3,278,783 Alameda County Superintendent of Schools 1.993 186,943 Oakland-Alameda County Coliseum Authority 0.997 168,259 Bay Area Rapid Transit District 0.758 3,516,741 Alameda County Flood Control District, Zone #7 12.572 176,636 South County Joint Community College District 4.772 57,502 Amador Valley Joint Union High School District and Certificates of Participation • 21.213-21.838 1,004,810 Livermore Valley Joint Unified School District and Certificates of Participation 0.003 283 Murray School District and Certificates of Participation 40.501-41.526 564,600 Pleasanton Joint School District and Certificates of Participation 0.090-0.097 646 Dublin-San Ramon Community Services District, I.D. #1 57.417 180,863 Bay Area Pollution Control Authority 0.354 2,188 City of Dublin Certificates of Participation 100. 11,615,000(1) TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT $20,753,254 Less: Oakland-Alameda County Coliseum Authority (100% self-supporting) 168,259 TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT $20,584,995 (1) Excludes refunding certificates of participation to be sold. Ratios to Assessed Valuation: Direct Debt 1.25% Total Gross Debt 2.23% Total Net Debt 2.21% SHARE OF AUTHORIZED AND UNSOLD BONDS: Amador Valley Joint Union High School District $ 74,882 Murray School District $289,556 Pleasanton Joint School District $ 778 STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/87: $4,082,008 Source: California Municipal Statistics, Inc. 25 1739031/2 THE CITY'S ECONOMY Economic Structure / The City of Dublin has approximately 7/70, retail outlets serving the Tri-Valley area ranging from large department stores and discount stores to small individualized service stores . The Stoneridge Shopping Center is located across I-580 approximately one mile from the City of Dublin. Employment The following table shows the major employers in the City. MAJOR EMPLOYERS Employer Employees Mervyn' s/Department Store 200 Lucky Stores Inc ./ Headquarters for Retail Grocery Co . 200 Hexcel Corporation/Mfg. 180 Structural Honeycomb Resins, - Adhesives, & Glass Fabrics International Clinical Laboratories, Inc ./ 180 Medical Laboratory Toys R Us/Retail Toy Store 126 Automation Electronics Corp./ 100+ Manufacturer ' s of Telephone Mgt . Systems & Call Sequences Tri-Valley Herald/Daily Newspaper 100 Unisource/Wholesale Paper Products 100 Distribution Target Stores/Retail Department Store 100 Micro Porcelain Dental Laboratory, Inc ./ 90 Dental Laboratory Source : City of Dublin: 26 1739031/2 The following table shows employment figures for Alameda Cou my for the years 1981 through 1986 . ALAMEDA COUNTY EMPLOYMENT Annual Averages (in thousands) 1981 1982 1983 19841 1985 1986 Civilian Labor Force 579.6 604.0 603.6 608.3 611.8 638.0 Employment 540.2 547.5 551.9 566.8 571.4 599.3 Unemployment 39.4 56.4 51.7 41.4 40.4 38.7 Unemployment Rate 6.8% 9.3% 8.6% 6.8% 6.6% 6.1% 1 1984 figures based on monthly averages through September 1984. Not adjusted for seasonal changes. Source: California Employment Development Department. CITY OF DUBLIN TAXABLE TRANSACTIONS (in thousands of dollars) 1983 1984 1985 1986 Apparel Stores $ 7,925.00 $ 8,703.00 $ 9,570.00 $11,681.00 General Merchandise Stores 40,469.00 39,703.00 39,534.00 39,746.00 Drug Stores 6,402.00 6,414.00 7,042.00 Food Stores 18,049.00 26,052.00 32,796.00 32,780.00 Eating and Drinking Places 20,741.00 23,480.00 25,170.00 24,356.00 Home Furnish and Appliances 10,083.00 19,869.00 22,150.00 23,439.00 Building Material and Farm Implements 16,880.00 20,870.00 25,098.00 27,705.00 Auto Dealers and Auto Supplies 69,774.00 76,998.00 93,116.00 128,390.00 Service Stations 21,101.00 21,224.00 21,869.00 15,088.00 Other Retail Stores 31,825.00 31,472.00 40,471.00 38,409.00 Retail Stores Totals 236,847.00 274,773.00 316,188.00 348,636.00 All Other Outlets 47,836.00 51,931.00 50,213.00 59,131.00 Total All Outlets $284,683.00 $326,704.00 $366,401.00 $407,767.00 Source: California State Board of Equalization. 27 1739031/2 Building and Construction The following table ' shows the value of building permits issued in the City between 1983 and 1987 . CITY OF DUBLIN BUILDING PERMIT VALUATION (in thousands of dollars) 1983* 1984 1985 1986 1987 Residential New single-dwelling $ 0 $ 2,216 $21,954 $43,931 $28,482 New multi dwelling 0 21,018 1,325 1,560 32,974 Additions, alterations 218 1,415 761 1,016 1,442 Total Residential 218 24,649 24,040 46,508 62,898 Non-Residential New commercial 0 2,870 2,443 2,857 4,309 New industrial 783 0 9,307 1,290 350 Other 63 844 571 911 782 Additions, alterations 1,353 3,132 4,978 4,922 11,509 Total Non-residential 2,199 6,846 17,299 9,980 16,950 TOTAL VALUATION $2,417 $31,495 $41,339 $56,488 791848 Number of new dwelling unit Single dwelling 0 20 203 388 251 Multi-dwelling 0 625 40 26 756 Total Units 0 645 243 414 1007 Source: Security Pacific National Bank, "California Construction Trends" and City of Dublin Building Division. * First full year of operation of City. - Community Facilities The Dublin Library is one of the 12 branches of the Alameda County Library System. The Library is a well-used resource in the community and, as a result of City funding and support, the facility is open seven days a week. The entire system provides access to approximately 800 , 000 volumes . 28 1739031/2 The City also operates Shannon Community Center . This facility provides space to accommodate various community meetings, instructional classes, and recreational activities as well as staff - offices . The facility is also rented to area residents for social functions, such as wedding receptions and public dances . Shannon Center is one of several recreation sites which will be transferred to the City on July 1, 1988 . See "CITY OF DUBLIN - Assumption of Fire And Park Services From Dublin San Ramon Services District. " In early 1988 the City of Dublin proceeded with the alteration and renovation of a former school facility. Once completed this building will house senior citizens ' programs . The location is a former school multi-purpose room which contains kitchen facilities and will be structured as a senior citizen drop-in program. In addition to the public facilities located in Dublin, several privately owned businesses provide recreational opportunities for area residents . Due to the city' s location, it has become a central point for the location of various entertainment-related businesses . This includes an ice skating rink, a bowling alley, and two large movie theater complexes containing a total. of 12 screens . Hospitals The City of Dublin does not have a hospital within City limits; however, nearby hospitals such as Eden Hospital located in Castro Valley, Valley Memorial Hospital located in Livermore and Kaiser Permanente Hospital located in Walnut Creek are among those serving the City of Dublin. Churches Valley Christian Center • Family Bible Church Parkway Baptist Church • St. Raymond' s Catholic Church Eagles Nest Christian Fellowship of No. California California Community Church Church of Jesus Christ of Latter-Day Saints Lutheran Church of the Resurrection - ALC St . Phillip Lutheran Church John Knox Presbyterian Church 29 . 1739031/2 fl � 1 ` Financial Institutions. Community First National Bank Hibernia Bank Sanwa Bank of California Tri-Valley. National Bank Wells Fargo Bank Homestead Savings Great Western Bank Bank of America Education A new unified school district has been created as a result of an election conducted in November of 1987 . The new district will provide kindergarten through 12th grade education within the City. Its boundaries are contiguous with those of the City. The new district will formally assume responsibilities beginning July 1, 1988 . The new district will operate Dublin High School, Wells Intermediate School, and Fredericksen, Nielsen, and Murray Elementary Schools . These schools will serve students from kindergarten through 12th grade. There are also two private schools located within the City. Valley Christian Center operates the Valley Christian School, a kindergarten through 8th grade program, located at a former public school site. The Valley Christian Center also operates a high school located on Christian Center property in the western foothills . St. Raymond' s Catholic Church has recently implemented a school which operates a kindergarten through 5th grade program. St . Raymond' s has plans to increase its curriculum through the 8th grade in the upcoming years . [Information to come on colleges/universities . ] Transportation The City of Dublin is located - at the intersection of Interstate 580 and Interstate 680 . These interstates serve as major transportation corridors to and from the City. CalTrans has begun planning for the widening of Interstate 680 which runs North/South through the local valley. Oakland International Airport is an approximately 20 minute drive. BART has approved the extension of a line from Hayward to the City of Dublin. Current projections are that the service could be in place by as early as 1995 . The new Dublin station will be located approximately one mile west of the Project . BART currently provides express bus service from the City . to its Hayward station. 30 1739031/2 Local bus service is provided by the Livermore Amador Valley Transit Authority (LAVTA) . This is a joint powers authority with representatives from the cities of Dublin, Livermore and Pleasanton and from Alameda County. The City also participates in a joint powers authority which provides Para—Transit Services to its elderly and handicapped residents . The City Council undertook a comprehensive review of all major arterials after incorporation. The purpose of the review was to identify ultimate roadway configurations under projected development scenarios . The review has provided the basis for several capital improvement projects . The 1986-91 Capital Improvement Program identifies nearly $12 . 5 million of street improvement projects, with approximately $5 . 6 million of projects anticipated to be complete by the end of the 1987-88 fiscal year . Utilities Gas & Electricity —Pacific Gas and Electric Telephone — Pacific Bell Cable Television - Viacom Cablevision Garbage Service — Dublin—Livermore Disposal, which is a division of Oakland Scavenger Company ( "OSC") . OSC is currently owned by Waste Management Inc.,. which provides collection services and operation of the sanitary landfill . , The landfill is not located in the City of Dublin. Water and Sewer — These services are provided by DSRSD. Parks and Recreation The City's Recreation Department is responsible for • providing recreation programs for the residents of the City. Programs are offered on a quarterly basis and are publicized through the "Schedule . of Recreation Classes and Programs" mailed to residents four times a year . 31 1739031/2 • The Department currently offers programs in the following areas : Preschool Classes (2-5 years) Leisure Enrichment Classes (All ages) Afterschool Playground Program (1-6 grades) Summer Playground Program (6-12 years) Summer Youth Employment Program (13-21 years) Special Events Volleyball Leagues (Adult) Teen Programs (trips & dances) Additionally, the Department is in the process of developing aquatic and senior citizen programs . There are currently 69 acres of developed parkland within the City of Dublin, as follows: Dublin Sports Grounds Mape Park Shannon Park & Community Center Stagecoach Park Valley Community Swim Center In addition, there are three new neighborhood parks under construction: Kolb - 5 acres, Dolan - 5 acres, and Alamo Creek - 8 acres . AA 100-acre site has also been designated for a future park. Within the next four years it is anticipated that there will be 187 acres of developed parkland within the City. LESSOR [TO COME] 32 1739031/2 r ' UNDERWRITING The Certificates will be purchased by Rauscher Pierce Refsnes, Inc . , San Francisco, California (the "Underwriter" ) . The Underwriter has agreed to purchase the Certificates at a price equal to $ , plus accrued interest. The initial public offering prices set forth on the cover page may be changed by the Underwriter . The Underwriter may offer and sell the Certificates to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof . The Contract of Purchase between the City and the Underwriter provides that the Underwriter will purchase all of the Certificates if any are purchased. RATING Moody' s Investors Service ("Moody' s") has given the Certificates a rating of Any desired explanation of the significance of such rating should be obtained from the rating agency furnishing the same. The City furnished to such rating agency certain information and materials with respect to the Certificates and the City. Generally, rating agencies base their ratings on the information and materials so furnished to them and on investigations, studies and assumptions by the rating agencies . There is no assurance that such rating will be retained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. Any such change in or withdrawal of such rating could have an adverse effect on the market price of the Certificates . TAX EXEMPTION In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, subject, however, to the qualifications set forth below, under existing law, the portion of the Lease Payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes) , such interest is taken into account in determining adjusted net book income. (adjusted current earnings for taxable years beginning after December 31 , 1989) . 33 1739031/2 The opinions set forth in the preceding sentences are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 (the "Code" ). that must be satisfied subsequent to the delivery of the Lease Agreement in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes . The City has covenanted to comply with each such requirement . Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of delivery of the Lease Agreement . Special Counsel expresses no opinion regarding other federal tax consequences arising with respect . to the Lease Agreement and the Certificates. Prospective purchasers of the Certificates should be aware that (i) with respect to insurance companies subject to the tax imposed by section 831 of the Code, for taxable years beginning after December 31, 1986, section • 832(b) (5) (B) (i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest payable with respect to the Certificates, (ii) for taxable years beginning after December 31, 1986 and before January 1, 1992, interest payable with respect to the Certificates earned by some corporations could be subject to the environmental tax imposed by section 59A of the Code, (iii) for taxable years beginning after December 31, 1986, interest payable with respect to the Certificates earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including interest payable with respect to the Certificates, may be subject to federal income taxation under section 1375 of the Code for subchapter S corporations that have subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such subchapter S corporation is passive investment income and (v) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest payable with respect to the Certificates . In the further opinion of Special Counsel, such interest is exempt from California personal income taxes. VERIFICATION OF MATHEMATICAL ACCURACY , independent certified public accountants, upon delivery- of the Certificates, will deliver a report on the mathematical accuracy of certain computations contained in the schedules provided to them, which are based on assumptions and 34 1739031/2 information provided by the Underwriter on behalf of the City, relating to the sufficiency of the principal of and interest on the securities on deposit in the Escrow Fund to pay, when due, principal of and interest on the 1985 Certificates . The report of will include the statement that the scope of their engagement is limited to reviewing the mathematical accuracy of the computations contained in the schedules provided to them, and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report . LITIGATION Upon the delivery of the Certificates, the City will provide its certificate that there is no litigation of any nature now pending against the City or, to the knowledge of its officers, threatened, seeking to restrain or enjoin the execution or delivery of the Amended Lease or Trust Agreement or the issuance or sale of the Certificates or in any way contesting the validity of the Amended Lease, Trust Agreement, or the Certificates .or any proceedings of the City taken with - respect to such execution, delivery or sale, or the application of any monies or security provided for the payment of the Lease Payments or the use of the Certificate proceeds . There are several lawsuits and claims pending against the City. The aggregate amount of uninsured liabilities of the City which may. result from such suits and claims, as determined by City Attorney, will not, in the opinion of the City Attorney, materially affect the City' s finances or impair its ability to pay the Lease Payments . APPROVAL OF LEGALITY At the time of the delivery of the Certificates, Jones Hall Hill & White, ' San Francisco, California, Special Counsel, will deliver its opinion, substantially in the form attached hereto as Appendix C. Certain legal matters will be passed upon for the Underwriter by Brown & Wood, San Francisco, California, and for the City by the City Attorney. OTHER MATTERS This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or 35 - 1739031/2 • any of the Owners of Certificates . Any statement made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as an opinion and not as representations of fact. The information and expressions of opinion 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 affairs in the City since the date hereof . All references to the Trust Agreement, the Site Lease, the Amended Lease and the Assignment Agreement are brief outlines of certain provisions thereof . Such outlines do not purport to be complete and reference is made to such documents for a. full and complete statement of such provisions . The execution and delivery of this Official Statement have been duly authorized by the City. CITY OF DUBLIN By 36 1739031/2 APPENDIX A June 30, 1987 Audited Financial Statements A-1 1739031/2 , , , APPENDIX B [To come from Special Counsel. ] B-1 1739031/2 �r F- w y APPENDIX C [To come from Special Counsel . ] C-1 1739031/2 • Brown & Wood Draft of 2-22-88 1988 REFUNDING CERTIFICATES OF PARTICIPATION (Civic Center Project) Evidencing and Representing the Fractional Undivided Interests of the Owners thereof in Lease Payments to be made by the CITY OF DUBLIN CONTRACT OF PURCHASE March , 1988 City of Dublin 650.0 Dublin Boulevard Dublin, California 94568 Ladies and Gentlemen: Rauscher Pierce Refsnes , Inc. , as underwriter (the "Underwriter" ) , does hereby offer to enter into this Contract of Purchase with you, the City of Dublin, . a municipal corporation organized under the laws of the State of California (the "City" ) under a Lease (as hereinafter defined) with the City, for the purchase by the Underwriter- and the execution and delivery to be caused by the City, Dublin Information, Inc. (the "Lessor" ) and The Bank of California, N.A. , as trustee (the "Trustee") , of the 1988 Refunding Certificates of Participation (Civic Center Project) , specified below. This offer is made subject to acceptance by the City prior to 11 : 59 P.M. , San Francisco time, on the date hereof, and, upon such acceptance, this Contract of Purchase shall be in full force and effect in accordance with its terms and shall be binding upon the City and the Underwriter . All terms not defined herein shall have the meanings set forth in the Official Statement hereinafter mentioned. 1 . Upon the terms and conditions and upon the basis of the representations herein set forth the Underwriter hereby agrees to purchase and the City agrees to cause the Trustee to deliver to the Underwriter all (but not less than all) of the 1 i q. • $ • aggregate principal amount of the 1988 Refunding Certificates of Participation (Civic Center Project) (the "Certificates" ) to be. dated February 1, 1988 and having maturities and representing interest at the rates set forth in the Official Statement, at an aggregate purchase price of $ , plus interest accrued thereon to the date of Closing as defined in Section 4 hereof . Each Certificate shall evidence an undivided interest of the owner thereof in lease payments (the "Lease Payments" ) to be paid by the City as the rental price for a civic center complex (the "Project" ) , pursuant to and as more particularly described in the Amended . . and Restated Lease Agreement ° (the "Lease") , dated as of February 1, 1988, between the City, as lessee, and the Lessor . [The real property to be leased by the City in connection with the acquisition of the Project is more fully described in the Site Lease (the "Site Lease" ) , dated as of February 1, 1988, between the Lessor and the City. ] The Lessor ' s right to receive the Lease Payments and to exercise remedies upon default have been assigned to the Trustee for the benefit of the Owners pursuant to the Assignment Agreement (the "Assignment Agreement" ) , dated as of February 1, 1988, between the Lessor and the Trustee. [Pursuant to the Agency Agreement (the "Agency Agreement" ) , dated as of February 1 , 1988, between the Lessor and the Lessee, the Lessor irrevocably appoints the Lessee as its agent in connection with the construction of the Project. ] The Certificates shall be as described in, and shall be secured under and pursuant to the Trust Agreement (the "Trust Agreement" ) , dated as of February 1, 1988, by and _ among the City, the Lessor and the Trustee substantially in the form previously submitted to the Underwriter with only such changes therein as shall be mutually agreed upon by the Lessor, the City and the Underwriter . The Certificates shall represent the proportionate interests of the Owners, as defined in the Trust Agreement, in the Lease Payments which the City has covenanted under the Lease to make, and in moneys held under` the Trust Agreement including moneys held in the Reserve Fund thereunder. 2 . The City shall deliver or cause to be delivered to the Underwriter promptly after your acceptance hereof, two copies of the Official . Statement, dated the date hereof relating to the Certificates approved for distribution by a resolution of the City (the Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference and the Preliminary Official Statement, dated as of March , 1988, are hereinafter referred collectively to as the "Official Statement, " except that if the Official Statement has been amended between the date thereof and the date of Closing referred to in Section 4 hereof, the term "Official 2 • Statement" shall refer to the Official Statement as so amended) . The Underwriter agrees that it will not confirm the sale of any Certificates unless the ..confirmation of sale is accompanied or preceded by the delivery of a copy of the Official Statement . 3 . The City represents, warrants and covenants to the Underwriter that: (a) The City is and will be at the date of Closing a municipal corporation duly organized and operating pursuant to and under the laws of the State of California and has all necessary power and authority to enter into and perform its duties under [the Site Lease, ] the Lease, [the Agency Agreement, ] the Trust Agreement, the Escrow Deposit and Trust Agreement, dated as of February 1, 1988, by and between the City, the Lessor and The Bank of California, N.A. , as Escrow Bank (the "Escrow Agreement" ) and this Contract of Purchase (collectively, the "Legal Documents" ) and, when executed and delivered by the respective parties thereto, the Legal Documents will constitute legal, valid and . binding obligations of the City enforceable in accordance with their respective terms . (b) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly approved the distribution of the • Preliminary Official Statement and the distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the Legal Documents and the , consummation by it of all other transactions contemplated by the Official. Statement and this Contract of Purchase. . (c) The execution and delivery of the Legal Documents and the approval and execution of the Official Statement and compliance with the provisions on the City' s part contained herein and therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which . the City is a party or is otherwise subject, 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 of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or 3 . • other instrument, except as provided by the Legal Document . and the Assignment Agreement . (d) Both at the date hereof and at the date of Closing, the statements and information contained in the Official Statement relating to the City, its functions, duties and, responsibilities are and will be true, correct and complete in all material respects and the Official Statement ( including any financial and ' statistical data - contained therein) does not and will not omit any statement or information which is necessary to make such statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect . . (e) 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 with, or certification by, any regulatory authority having. jurisdiction over the City required for the execution, delivery and sale of the Certificates or the consummation by the City of the other transactions contemplated by the Official Statement and this Contract of Purchase. . (f) The City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City 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 default or an event of default under any such instrument . (g) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against the City affecting the existence of the City or the titles of its officers to their respective - offices or seeking to prohibit, restrain or enjoin the execution or delivery of the Certificates or the City' s covenant to make Lease Payments or in any way contesting or affecting the validity or enforceability of the Certificates or the Legal Documents or contesting the powers of the City or its authority to enter into, adopt or . perform its obligations under any of the foregoing, including, but not limited to, the consummation of the transactions relating to the Project as described in the Official Statement, or contesting in any way the completeness or accuracy of the Preliminary Official 4 Statement or the Official Statement, or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Certificates or the Legal Documents, or in which a final adverse decision could materially or adversely affect the operations of the City. (h) The City will furnish such information, execute - such instruments and take such other action in cooperation - with the Underwriter as the Underwriter may reasonably request in order (1) to qualify the Certificates 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 Underwriter may designate and (2) to determine the eligibility of the Certificates for . investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualification in effect so long as required for distribution of the Certificates . (i) If between the date of this Contract of Purchase and the date of the Closing an event occurs, of which the City has knowledge, which might or would cause the - information relating to the City, its functions, duties and responsibilities 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 to make the information therein, in the light of the circumstances under which it was presented, not misleading, the City will notify the Underwriter, and if in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in •a manner approved by the Underwriter, provided all expenses thereby incurred will be paid for by the City. (j ) If the information relating to the City, its functions, duties and responsibilities contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date of the Closing, the portions of the Official Statement so supplemented or amended ( including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a 5 material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading. (k) The City will take no action and will cause no action to be taken that would- cause the interest with_ respect to the Certificates to be subject to federal income taxation. (1) The City has not been, . is ' not presently and as a result of the sale and delivery of the Certificates will not be in violation of any debt limitation, appropriation limitation or any other provision of the California Constitution. (m) Between the date hereof and the Closing, without the prior written consent of the Underwriter, the City will not have issued any bonds, notes or other obligations for borrowed money on behalf of the City except for such borrowings as may be described in or contemplated of the Official Statement. (n) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer whose no—arbitrage certificates may not be relied upon. (o) Any certificate signed by any officer of the City and delivered to the Underwriter shall be deemed a representation and warranty of the City to the Underwriter as to the statements made therein but not of the person signing such certificate. 4 . At 8 : 00 a.m. , San Francisco time, on March , ' 1988, or at such other time, or on such earlier or later date as the Trustee, the City, the Lessor and the Underwriter mutually agree upon (the "Closing" ) , the Trustee will deliver or cause to be delivered to the Underwriter at the offices of Jones, Hall, Hill & White, A Professional Law Corporation ( "Special Counsel" ) , San Francisco, California or such other place as the Trustee, the City, the Lessor and the Underwriter mutually agree upon, the Certificates in definitive form (all of the Certificates to be printed in fully registered form) , duly executed and authenticated, together with the other documents hereinafter mentioned. CUSIP identification numbers shall be printed on the Certificates, but the , failure to print such number on any Certificate or any error with respect thereto shall not constitute cause for a failure or refusal by the Underwriter to accept delivery of, or pay for, the Certificates in accordance with the terms of this Contract of Purchase. All 6 expenses in relation to the printing of CUSIP numbers on said Certificates and the CUSIP Service Bureau charge for the assignment of said numbers shall be paid for by the City from Certificate proceeds . The Underwriter will accept delivery of the Certificates and pay the purchase price thereof by certified or official bank check or checks payable in immediately available funds to the order of the Trustee in an amount equal to the purchase price. The Certificates will be made available for checking and packaging not later than 12 : 00 noon two business days prior to the Closing. In the event that temporary Certificates are delivered, the Trustee and the Lessor will deliver definitive Certificates to the Underwriter as soon after the Closing as is reasonably possible but in no event later than 15 days thereafter. The temporary Certificates will be made available for checking and packaging not later than 12 : 00 noon two business days, prior to the Closing. 5 . The Underwriter has entered into this Contract of Purchase in• reliance upon the representations and. warranties of . the City contained herein. The Underwriter ' s obligations under this Contract of Purchase are and shall be subject to the following further conditions : - (a) at the time of Closing, the Assignment Agreement and the Legal Documents all as described in the Official Statement, shall be in full force and effect as valid and binding agreements between or among the various parties thereto and the Legal Documents, the Assignment 'Agreement and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and there shall be in full force and effect such resolutions as, in the opinion of Special Counsel, shall be necessary in connection with the transactions contemplated hereby; (b) at or prior to the Closing, the Underwriter shall receive the following documents, in each case satisfactory in form and substance to the Underwriter: (1) the unqualified approving opinion of Special Counsel, dated the date of Closing, as to the validity and tax—exempt status of the Certificates; (2) a supplementary opinion of Special Counsel in form and substance satisfactory to the Underwriter, dated the date of Closing and addressed to the City and the Underwriter, to the effect that : ( i) the description of the Certificates and security for the Certificates and statements in 7 the Official Statement under the captions "INTRODUCTION, " "THE REFUNDING PLAN, " "THE CERTIF- ICATES, " "CONSTITUTIONAL AND STATUTORY LIMITA- TIONS ON TAXES AND "APPROPRIATIONS, "TAX EXEMPTION, " and "APPENDIX B - SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" insofar as such statements purport to summarize certain provisions of the Trust Agreement, [the Site Lease, ] the Lease, [the Agency Agreement, ] the Assignment Agreement, the Escrow Agreement, California law or federal law and Special Counsel ' s opinion with respect to validity and tax-exemption, are correct and complete to the best of such counsel' s knowledge and belief; and . (ii) assuming due authorization, execution and delivery by the .Trustee of the documents to which it is a party or which the Trustee has . acknowledged, the Legal Documents and the Assignment Agreement have been duly authorized, executed and delivered by the respective parties thereto and constitute legal, valid and binding agreements of the - parties thereto and are enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors ' rights and by the application of equitable principles if equitable remedies are sought; (iii) the Certificates are exempt from registration pursuant to the Securities Act of 1933 , as amended, and the Trust Agreement is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939 , as amended; and (iv) although they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that they have independently verified the accuracy, completeness or fairness of any such statements, during the course of preparation of the Official Statement, they met in conferences with representatives of the City, the Trustee, their respective counsels, the Underwriter, and others, during which conferences the contents of the Official Statement and related matters were discussed and 8 that based on their participation in the above-mentioned conferences, and in reliance thereon and on the certificates, opinions and other documents herein mentioned, they advise that no information came to their attention which caused them to believe that the Official Statement as of the date hereof and as of the Closing (except for any financial or statistical data or forecasts included therein, as to which they express no opinion or view) contained any untrue statement of a material fact or omitted 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. (3) an opinion of the counsel to the City, dated the date of Closing and addressed to the City and the Underwriter, in form and substance satisfactory to the Underwriter, to the effect that: ( i) the City is a municipal corporation duly organized and validly existing under the laws of the State of California; (ii) the Official Statement has been duly approved by the City and the descriptions therein • as to the City and the City' s obligations under the Trust Agreement, the Lease, [the Site Lease], the Escrow Agreement and [the Agency Agreement] are correct and do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the information in the light of the circumstances under which they were presented, not misleading; (iii) the resolution of the City approving and authorizing the execution and delivery of the Legal Documents and approving the Official Statement was duly adopted at a meeting of the governing body of the City 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; (iv) there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best of such counsel 's knowledge, threatened 9 against or affecting the City, which would adversely impact the City' s ability to complete the transactions described in and contemplated by the Official Statement, to restrain or enjoin the collection of Lease Payments under the Lease, or in any way contesting or affecting the validity of the Certificates or the Legal Documents or the transactions described in and contemplated hereby and by the Official Statement wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability of the Certificates or the Legal Documents or in which a final adverse decision could materially adversely affect the operations of the City; (v) the execution and delivery of the Legal Documents and the • approval of the Official Statement and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby, do not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject; (vi) . the Legal Documents have been duly authorized, executed and delivered by the City, and, assuming - due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors ' rights and by the application of equitable principles if equitable remedies are sought; and (vii) no authorization, approval , consent, or other order of any court or governmental body is required for the valid authorization, execution and delivery of the Legal Documents and the approval of the Official Statement or the consummation by the City of the transactions contemplated herein and in the Official Statement, except such as have been obtained and . except such as may be required under state securities or blue sky laws in connection with 10 the purchase and distribution of the Certificates by the Underwriter; (4) the favorable opinion of the counsel to the Lessor, dated the date of Closing, and addressed to the City and the Underwriter, in form and substance satisfactory to the Underwriter to the effect: (i) the Lessor is a nonprofit public benefit corporation duly organized, validly existing and in good standing under the laws of the State of California; (ii) the Lessor has full legal power and adequate corporate authority to enter into the Legal Documents and the Assignment Agreement and the full legal power and authority to own its properties and to carry on its business; (iii) the Legal Documents and the Assignment Agreement have been validly authorized, executed and delivered by the Lessor and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the Lessor, enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors ' rights and by the application of equitable principles if equitable remedies are sought; (iv). no consent, approval, authorization or order of any court, regulatory authority or governmental body is required for the valid authorization, execution and delivery of the Legal Documents or the Assignment Agreement or the consummation by the Lessor of the transactions -contemplated herein and in the Official Statement except such as have been obtained and except such as may be required under the state securities or blue sky laws in connection with the purchase and distribution of the Certificates by the Underwriter; (v) the Official Statement has been duly , approved by the Lessor and the descriptions therein as to the Lessor and the Lessor ' s obligations under the Trust Agreement, the Assignment Agreement, the Lease, the Site Lease 11 . and the Agency Agreement are correct and do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the information therein, in the light of the circumstances under which they were presented, not misleading; (vi) there are no, to the knowledge of such counsel, legal or governmental proceedings pending or threatened against the Lessor which are required to be disclosed in the Official Statement; and (vii) the execution and delivery of the Legal Documents and Assignment Agreement by the Lessor and performance by the Lessor of its obligations thereunder will not conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which the Lessor is a party or constitute a default thereunder; (5) the opinion of counsel to the Trustee, dated the date of Closing and addressed to the City, the Lessor and the Underwriter, to the effect that: (i) the Trustee is a national banking association with trust powers, duly organized and validly existing under the laws of the United States, having the legal authority to exercise trust powers in the State of California, and has full power, authority and legal right to execute and deliver the Trust Agreement and the Assignment Agreement and to comply with the terms thereof and perform its obligations thereunder; ( ii) the Trust Agreement and the Assignment Agreement have each been duly authorized, executed and delivered by the Trustee and assuming due authorization, execution and delivery by the other parties thereto are the valid, legal and binding agreements of the Trustee, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors ' rights and by the application of equitable principles if equitable remedies are sought; and 12 (iii) no consent; approval, authorization or other action by any governmental or regulatory . authority having jurisdiction over the Trustee that has not been obtained is required for the execution and delivery by the Trustee of the Trust Agreement and the Assignment Agreement; and (iv) to the best of such counsel ' s knowledge there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body, pending or, to the best of such counsel ' s knowledge, threatened against or affecting the Trustee, , which would adversely impact the Trustee' s ability to complete the transactions described in and contemplated by the Official Statement, or in any way contesting or affecting the validity of the Certificates or the Legal Documents or the transactions described in and contemplated hereby and by the Official Statement wherein an unfavorable decision, ruling or finding would adversely affect the validity and enforceability of the Certificates or the Legal Documents; - (6) a certificate, dated the date of Closing, signed by a duly authorized official of the City satisfactory in form and substance to the Underwriter to the effect that there is no litigation or proceeding pending or, to the best of his or her knowledge, threatened against the City (a) to restrain or enjoin the delivery of any of the Certificates or the collection of Lease Payments, (b) in any way contesting the validity of the Certificates or the Legal Documents or the authority of the City to enter into the Legal Documents, (c) in any way contesting the powers of the City in connection with any action contemplated by this Contract of Purchase, or (d) in which a final adverse decision could materially adversely affect the operations of the City or its ability to perform its obligations under the foregoing agreements; (7) a certificate, dated the date of Closing, signed by a duly authorized official of the Lessor satisfactory in form and substance to the Underwriter to the effect that to the best of his or her knowledge no litigation or proceeding is pending or threatened against the Lessor (a) to restrain or enjoin the delivery of any of the Certificates or the collection of Lease Payments (b) in any way contesting the 13 • validity of the Certificates, the Legal Documents or the Assignment Agreement, or the authority of the Lessor to enter into the Legal Documents or the Assignment Agreement, or (c) in any way contesting the powers of the Lessor in connection with any action contemplated by the foregoing agreements; (8) a certificate, dated the date of Closing, signed by a duly authorized official of the Trustee satisfactory in form and substance to the Underwriter to the effect that (a) there is no action, suit, proceeding, inquiry or investigation (an "action" ) at law or in equity, before or by any court or governmental agency, public board or body pending or threatened seeking to prohibit, restrain or enjoin the execution of the Certificates or the collection of Lease Payments intended to pay the principal of and interest on the Certificates, or pledge thereof, or in any way contesting or affecting the validity or enforceability of the Certificates, the Trust Agreement or the Assignment Agreement, and there is no action pending or threatened against the Trustee affecting the existence of the Trustee, or contesting the powers of the Trustee or its authority to enter into or perform its obligations under any of the foregoing agreements, wherein an unfavorable decision, ruling or finding would adversely affect the validity of the Certificates, the Trust Agreement or the Assignment Agreement; and (b) the execution and delivery by the Trustee of the Trust Agreement and the Assignment Agreement and compliance with the terms thereof will not conflict with, or result in a violation or breach of, or constitute a default under , any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Trustee 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 both having jurisdiction over the Trustee or any of its activities or properties; (9) two executed or certified copies of each of the Legal Documents and the Assignment Agreement; (10) two copies of the Official Statement, executed on behalf of the City; (11) two certified copies of the general resolution of the Trustee authorizing the execution and delivery of Certificates, the Trust Agreement, the 14 acceptance of the Assignment Agreement and this Contract of Purchase; (12) copies of resolutions adopted by the City and certified by an authorized official of the City authorizing the execution and delivery of this Contract of Purchase, the Lease, the Agency Agreement, the Trust Agreement, the Site Lease and the approval of the Official Statement; (13) a certificate of an authorized officer of the City, dated the date of Closing, confirming as of such date the representations and warranties of the City contained in this Contract of Purchase; (14) copies of resolutions adopted by the Lessor and certified by the Secretary or Assistant Secretary of the Lessor, authorizing the execution and delivery of the Lease, the Trust Agreement, ' [the Agency Agreement, the Site Lease] and the Assignment Agreement; (15) an opinion -of Special Counsel regarding the - effective defeasance of the City of Dublin - 1985 Certificates of Participation; (16) arbitrage certifications by- the City in form and substance acceptable to Special Counsel and the Underwriter; and (17) an opinion of counsel to the Underwriter to the effect that: (i) the Certificates are exempt from registration pursuant to the Securities Act of 1933 , as amended, the Agreement exempt from qualification and pursuant Trust to the Trustis Indenture Act of 1939 , as amended; and (ii) although they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that they have independently verified the accuracy, completeness or fairness of any such statements, during the course of preparation of the Official Statement, they met in conferences with representatives of the City, the Trustee, their respective counsels, Special Counsel, the Underwriter, . and others, 15 l � during which conferences the contents of the Official Statement and related matters were discussed and that based on their participation in the above—mentioned conferences, and in reliance thereon and on the certificates, opinions and other documents herein mentioned, they advise that no information came to their attention which caused them to believe that the Official Statement as of the date hereof and as of the Closing (except for any financial or statistical data or forecasts included therein or appendices thereto, as to which they express no opinion or view) contained any untrue statement of a material fact or omitted 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; and (18) such additional legal opinions, certificates, proceedings, instruments or other documents as Special Counsel may reasonably request to evidence compliance by the Trustee with legal - requirements, the truth and accuracy, as of the time of Closing, of the representations contained herein and in the Official Statement and the due performance. or satisfaction by the Trustee, the Lessor and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. (c) All matters relating to this Contract of Purchase, the Certificates and the sale thereof, the Trust Agreement, the Lease, the Site Lease, the Assignment Agreement, the Agency Agreement and the consummation of the transactions contemplated by this Contract of Purchase shall have been approved by the Underwriter, which approval shall not be unreasonably withheld. If the conditions to the Underwriter ' s obligations contained in this Contract of Purchase are not satisfied or if the Underwriter ' s obligations shall be terminated for any reason permitted by this Contract of Purchase, this Contract of Purchase shall terminate and neither the Underwriter nor the City shall have any further obligation hereunder . In the event that the Underwriter fails (other than for a reason permitted by this Contract of Purchase) to accept and pay for the Certificates at the Closing, the amount of one percent of the principal amount of the Certificates shall be full liquidated . damages for such failure and for any and all defaults hereunder 16 on the part of the Underwriter, and the acceptance of such amount shall constitute a full release and discharge of all claims and rights of the City against the Underwriter . 7 . The Underwriter shall have the right to cancel its obligations to purchase the Certificates if, between the date hereof and the Closing regardless of whether any of the following statements of fact were in existence or known of on the date of this Contract of Purchase: • (a) the marketability of the Certificates or the market price thereof , in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State of California, or the recommendation to. Congress , or endorsement for passage (by press release, other form of notice or otherwise) of legislation 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 the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for the staff of either such Committee, or by the staff of the Joint Committee on taxation of the . Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any • decision of any federal or state court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or state authority affecting the federal or state tax status of .the City, or the .interest on bonds or notes (including the Certificates) ; (b) there shall exist any event which in the reasonable opinion of the Underwriter either (i) makes untrue or incorrect in any material respect any statement or information contained in the Official Statement or (ii) is not reflected in the Official Statement but should be reflected therein to make the statements and information contained therein not misleading in any material respect; (c) there shall have occurred any new outbreak of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on 17 the financial markets of the United States being such as would make it impracticable, in the reasonable opinion of the Underwriter, for the Underwriter to sell the Certificates; (d) there shall be in force a general suspension of trading on the New York Stock Exchange or other national securities exchange, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or such other exchange, whether by virtue of a determination by that Exchange or such other exchange or by orders of the Securities and Exchange Commission or any other governmental authority; (e) a general banking moratorium shall have been declared by either federal, California or New York authorities having jurisdiction and be in force; (f) there shall be established any new restrictions on transactions in securities materially , affecting the free market for securities (including the imposition of any limitations on interest rates) or the extension of credit by, or the charge to the net capital requirements of, underwriters established by the New York Stock Exchange, the Securities and Exchange Commission, any other federal or state agency or the Congress of the United States, or by Executive Order; (g) an adverse event occurs in the affairs of the Trustee, the Lessor or the City which, in the opinion of the Underwriter, requires or has required a supplement or amendment to the Official Statement; • (h) the rating of the Certificates shall have been downgraded or withdrawn by a national rating service, which, in the opinion of the Underwriter, materially adversely affects the market price of the Certificates.; or (i) the Comptroller of the Currency renders an opinion or issues a regulation which has the effect of prohibiting the Underwriter from underwriting the. Certificates . . 7 . The City' s obligations hereunder shall be subject to the following conditions : (a) the performance by the Lessor of its obligations, to be performed hereunder at or prior to the Closing; 18 (b) at or before the Closing, the City shall have received duly executed copies of the letters, documents and certificates referred to in . sections 5(b) (7) , 5(b) (8) , 5(b) (9) , 5(b) (11) , 5(b) (14) , and 5(b) (15) , and the opinions referred to in sections 5(b) (1) , 5(b) (2) , 5(b) (4) and 5(b) (5) . 8 . After the Closing (a) the City will not adopt any amendment of or supplement to the Official Statement to which the Underwriter shall object in writing and (b) if any event relating to or affecting the Trustee, the Lessor or the City . shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to an initial purchaser of the Certificates, the Trustee, the Lessor and the City will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement ( in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the Certificates, not misleading. For the purposes of this section the Trustee, the Lessor and the City will each furnish such information with respect to itself as the Underwriter may from time to time request . 9 . Whether or not the transactions contemplated by this Contract of Purchase are consummated, the Underwriter shall be under no obligation to pay, and the City shall pay from the proceeds of the Certificates or otherwise, all expenses and costs of the City and the Corporation incident to the performance of their obligations in connection with the authorization, execution, delivery and the Certificates to the Underwriter, including, without limitation, fees and disbursements of Special Counsel and other professional advisors employed by the City or the Corporation; costs of preparation, printing, signing, transportation, delivery and safekeeping of the Certificates; the interest cost to the Underwriter to provide immediately available funds to the City; credit rating(s) ; preparation by an outside vendor of a City debt statement; word processing by the Underwriter or otherwise; printing and distribution of the 'preliminary and final Official Statements; Trustee and paying agency fees and charges; printing, reproducing and binding documents; computer calculations and verifications thereof; travel by City or • 19 Corporation officials; Closing costs; fees and expenses of filing with state securities or blue sky commissions, including fees of counsel; costs of preparation and reproduction of the Contract of . Purchase. The Underwriter shall pay its out-of-pocket expenses, except as noted above. . - 10 . The City shall indemnify and hold harmless the Underwriter and employees and each person who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended (such Act being herein called the "Act" and any such person being herein sometimes . called an "Indemnified Party" ) , against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject under any statute or at law or in equity or otherwise, and shall reimburse any such Indemnified Party for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) an allegation or determination that the Certificates should have been registered under the Act or the Trust Agreement should have been qualified under the Trust Indenture Act of 1939, as amended, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Official Statement ( including the Appendices thereto) , or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading; provided, however, that the City shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement of a material fact contained in that particular part of the Official Statement, or any amendment thereof or supplement thereto, under the caption "Underwriting" (in the case of the Underwriter) , or the omission or alleged omission to state under such caption a material fact necessary to make the respective statements therein not misleading. This indemnity agreement shall not be construed as a limitation on any other liability which the City may otherwise have to any Indemnified Party. • An Indemnified Party shall, promptly after the receipt of notice of • the commencement of any action against such Indemnified Party in respect of which indemnification may be sought against the City, notify the City in writing of the commencement thereof , but the omission to notify the City of any such action shall not relieve the City from any liability which it may have to such Indemnified Party otherwise than 20 under the indemnity agreement contained herein. In case any such action shall be brought against an Indemnified Party and such Indemnified Party shall notify the City of the commencement thereof, the City may, or if so requested by such Indemnified Party shall, participate therein or assume the defense thereof, with counsel satisfactory to such Indemnified Party, and after notice from the City to such Indemnified Party of an election so to assume the defense thereof, the City will not be liable to such Indemnified Party under this paragraph for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other . than reasonable costs of investigation. If the City shall not have employed counsel to have charge of the defense of any such action or if an Indemnified Party shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the City (in which case the City .shall not have the right to direct the defense of such action on behalf of such Indemnified Party) , such Indemnified Party shall have the right to retain legal counsel of its own choosing and legal and other expenses incurred by such Indemnified Party shall be borne by the City. The City shall not be liable for any settlement of any such action effected without its consent by any Indemnified Party, but if settled with the -consent of the City or if there be a final judgment or award for the plaintiff in any such action against the City or any Indemnified Party, with or without the. consent of the City, the City agrees to indemnify and hold harmless such Indemnified Party for the amount of any such settlement, final judgment or award. In order to provide for just and equitable contribution in circumstances in which indemnification hereunder is for any reason held to be unavailable from the City, the City and the Underwriter shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, to which the City and -the Underwriter may be subject) in such proportion so that the Underwriter is responsible for that portion represented by the percentage that the underwriting discount set forth in the Official Statement bears to the public offering price appearing thereon and the City is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph, each person, if any, who controls the Underwriter within the meaning of the Act shall have the same rights to contribution as the 21 Underwriter . Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph, notify such party or parties from whom contribution may be sought, but the omission to so notify such party from whom contribution may be sought shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have hereunder or otherwise than under this paragraph. No party shall be liable for contribution with respect to any action or claim settled without its consent. 11 . Any notice or other communication to be given to the Underwriter under this Contract of . Purchase may be given by delivering the same in writing to Rauscher Pierce Refsnes, Inc . , One California Street, Suite 2630 , San Francisco, California 94111, Attention: Grant M. Hamill . All notices or communications hereunder by any party shall be given and served upon each other party. Any notice or communication to be given the City under this Contract of Purchase may be given by delivering the same to the City of Dublin, 6500 Dublin Boulevard, Dublin, California 94568, Attention: Richard C. - Ambrose. The approval of the Underwriter when required hereunder or the determination of satisfaction as to any document referred to herein shall be in writing signed by the Underwriter and delivered to you. - 12 . This Contract of Purchase is made solely for the benefit of the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof . All representations, warranties and agreements of the City in this Contract of Purchase shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of and payment for the Certificates . 13 . This Contract - of Purchase may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument . 22 - This Contract of Purchase shall be governed by the laws of the State of California. RAUSCHER PIERCE REFSNES, INC. By Title Accepted: CITY OF DUBLIN By Title 23 • 4 J ACKNOWLEDGEMENT OF THE BANK OF CALIFORNIA, N.A. The undersigned hereby acknowledges receipt of an executed copy of the Contract of Purchase, dated March , 1988 and agrees that, upon the execution and delivery of the Trust Agreement and its acceptance of the appointment as Trustee thereunder, it shall execute and deliver the Certificates in accordance with the terms of such Contract of Purchase to the extent such terms are consistent with the terms of the Trust Agreement . THE BANK OF CALIFORNIA, N.A. By Title 24 ,. -- APPENDIX (a) The Lessor is a non-profit public benefit corporation duly organized, validly existing and in good standing under the laws of the State of California and has all necessary power and authority to enter into and perform its duties under the Legal Documents and the Assignment Agreement and, when executed and delivered by the respective parties thereto, the Legal Documents and the Assignment Agreement will constitute legal, valid and binding obligations of the Lessor in accordance with their respective terms . (b) By official action of the Lessor, the Lessor has duly approved the distribution. of the Preliminary Official Statement relating to the Certificates, and the distribution of the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Lessor of the obligations on its part contained in the Legal Documents and the Assignment Agreement and the consummation by it of all other - transactions contemplated by the Official Statement and this Contract of Purchase. (c) The execution and delivery of the Legal Documents, the Assignment Agreement and the approval and execution of the Official Statement and compliance with the provisions on the Lessor ' s part contained herein and therein, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement • or other instrument to which the Lessor is a party or is otherwise subject, 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 of the Lessor 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 Legal Documents and the Assignment Agreement . (d) The statements and information contained in the Official Statement relating to the Lessor, its functions, duties and responsibilities are and will be true, correct and complete in all material respects and the Official Statement does not and will not omit any statement or 1 information which is necessary to make such statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect . . (e) 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 with, or certification by, any regulatory authority having jurisdiction over the Lessor required for the execution, delivery and sale of the Certificates or the consummation by the Lessor of the other transactions contemplated' by the Official Statement and this Contract of Purchase. (f) The Lessor is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Lessor 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 default or an event of default under any such instrument . (g) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending or threatened against the Lessor affecting the existence of the Lessor or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the execution or delivery of the Certificates, or in any way contesting or affecting the validity or enforceability of the Assignment Agreement, the Certificates or the Legal Documents, or contesting the powers of the Lessor or its authority to enter into, adopt or perform its obligations under any of the foregoing,. including, but not limited to, the consummation of the transactions relating to the financing of the Project as described in the Official Statement, or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or any amendment or supplement thereto, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Certificates or the Legal Documents and the Assignment Agreement. (h) The Lessor covenants that it will not take any action which would cause interest with respect to the Certificates to be subject to federal income taxation. - 2 (i) Any certificate signed by any officer of the Lessor and delivered to the Underwriter shall be deemed a representation and warranty of the Lessor to the Underwriter as to the statements made therein but not of the person signing such certificate . 3 RAUSCHER PIERCE REFSNES,INC. CITY OF DUBLIN 1988 REFUNDING CERTIFICATES OF PARTICIPATION CIVIC CENTER PROJECT Current Timetable of Events March 1,1988 -- FEBRUARY MARCH , r / w f f z ! o f w 1 1 2 3 4 5 6 1 2 3 4 5 7 6 6 10 11 12 13 6 7 6 9 10 It 12 14 15 16 17 15 19 20 13 14 16 16 11 16 14 21 22 23 24 25 26 27 20 21 22 23 24 25 26 26 24 27213930 31 • Date Event Responsible Partv(s) Feb.26. Receive Ratings RPR March 1 Council approves basic legal documents, City P.O.S.and form of Purchase Contract March 2 Mail P.Q.S.and initiate marketing RPR March 7-8 • Price Certificates RPR • Subscribe to State&Local Government RPR/City Series Bonds for Escrow March 9 Presentation of Purchase Contract RPR i • March 10-25 Preparation and review of closing documents All Parties March 28 Pre-Closing(2:00 p.m.at JHH&W) All Parties March 29 Closing(8:00 a.m.at JHH&W) All Parties - a-6 7_, t y1y, 7 • '3 One California Street,Suite 2630 • San Francisco,California 94111 • (415)989-2300 Item 8.3 Exhibit No. 6 Missing Current Timetable of Events CITY OF DUBLIN REFUNDING & NEW MONEY ISSUE Estimated Sources and Uses of Funds SOURCES: Bond Proceeds $17,175,000 Investment Earnings(1) 135,723 Series 1985 Reserve Fund 1,300,000 Series 1985 Debt Service Account Contribution 1,249,444 Accrued Interest 98,231 Total: $19,958,398 USES: Cost of Escrow $12,727,708 New Money Proceeds 3,800,000 Capitalized Interest(2) 1,249,444 Reserve Fund(3) 1,691,534 Underwriter's Discount(4) 257,625 Costs of Issuance 133,856 Accrued Interest 98,231 $19,958,398 • (1) Interest earnings on New Money Proceeds & Capitalized Interest. (2) 21 Months of capitalized interest on New Money portion & $5.50 million outstanding from 1985 issue. (3) Maximum Annual Debt Service. (4) 1.5% of Bond Proceeds. .AA- 7 CU. CITY,,OF DUBLIN 19E8 NEW MONEY + REFUNDING CERTIFICATES OF PARTICIPATION GROSS DEBT SERVICE SCHEDULE Delivery Date 03/29/88 Date Principal Coupon Interest Total Annual 08/01/88 526,238.02 526,238.02 02/01/89 631,485.63 631,485.63 1,157,723.65 08/01/89 631,485.63 631,485.63 02/01/90 631,485.63 631,485.63 1,262,971.25 08/01/90 631,485.63 631,485.63 02/01/91 425,000.00 5.750 631,485.63 1,056,485.63 1,687,971.25 08/01/91 619,266.88 619,266.88 02/01/92 450,000.00 6.000 619,266.88 1,069,266.88 1,688,533.75 08/01/92 605,766.88 605,766.88 02/01/93 480,000.00 6.250 605,766.88 1,085,766.88 1,691,533.75 08/01/93 590,766.88 590,766.88 02/01/94 510,000.00 6.500 590,766.88 1,100,766.88 1,691,533.75 08/01/94 574,191.88 574,191.88 02/01/95 540,000.00 6.700 574,191.88 1,114,191.88 1,688,383.75 08/01/95 556,101.88 556,101.88 02/01/96 575,000.00 6.800 556,101.88 1,131,101.88 1,687,203.75 08/01/96 536,551.88 536,551.88 02/01/97 615,000.00 6.900 536,551.88 1,151,551.88 1,688,103.75 08/01/97 515,334.38 515,334.38 02/01/98 660,000.00 7.000 515,334.38 1,175,334.38 1,690,668.75 08/01/98 492,234.38 492,234.38 02/01/99 705,000.00 7.100 492,234.38 1,197,234.38 1,689,468.75 08/01/99 467,206.88 467,206.88 02/01/00 755,000.00 7.200 467,206.88 1,222,206.88 1,689,413.75 08/01/00 440,026.88 440,026.88 02/01/01 810,000.00 7.300 440,026.88 1,250,026.88 1,690,053.75 08/01/01 410,461.88 410,461.88 02/01/02 870,000.00 7.400 410,461.88 1,280,461.88 1,690,923.75 08/01/02 378,271.88 378,271.88 02/01/03 930,000.00 7.500 378,271.88 1,308,271.88 1,686,543.75 08/01/03 343,396.88 343,396.88 02/01/04 1,000,000.00 7.600 343,396.88 1,343,396.88 1,686,793.75 08/01/04 305,396.88 305,396.88 02/01/05 1,080,000.00 7.650 305,396.88 1,385,396.88 1,690,793.75 08/01/05 264,086.88 264,086.88 02/01/06 1,160,000.00 7.700 264,086.88 1,424,086.88 1,688,173.75 08/01/06 219,426.88 219,426.88 02/01/07 1,250,000.00 7.750 219,426.88 1,469,426.88 1,688,853.75 08/01/07 170,989.38 170,989.38 02/01/08 1,345,000.00 7.800 170,989.38 1,515,989.38 1,686,978.75 08/01/08 118,534.38 118,534.38 02/01/09 1,450,000.00 7.850 118,534.38 1,568,534.38 1,687,068.75 08/01/09 61,621.88 61,621.88 02/01/10 1,565,000.00 7.875 61,621.88 1,626,621.88 1,688,243.75 Totals: 17,175,000.00 19,022,937.40 36,197,937.40 36,197,937.40 Less Accrued From 03/01/88: 98,231.10 98,231.10 Net Cost: 18,924,706.30 36,099,706.30 Values From Dated Date: ' Average Interest Rate 7.55286832 7 . Band Years 251,863.750 Average Life 14.66456 Values From Delivery Date: Bond Proceeds: 17,175,000.00 True Interest Rate 7.49684136 Day Basis is 30/360 (Municipal Bond) CITY OF DUBLIN REFUNDING AND NEW MONEY CERTIFICATES OF PARTICIPATION CIVIC CENTER COMPLEX CASH FLOW ANALYSIS TO SHOW NET DEBT SERVICE Delivery Date 03/29/88 GROSS DEBT LESS: LESS: NET DEBT SERVICE CAPITALIZED RESERVE SERVICE INTEREST EARNINGS 07.50% Date (1) 02/01/89 1,157,723.65 626,797.86 116,292.95 414,632.84 _ 02/01/90 1,262,971.25 622,646.88 126,865.03 513,459.34 02/01/91 1,687,971.25 126,865.03 1,561,106.22 02/01/92 1,688,533.75 126,865.03 1,561,668.72 02/01/93 1,691,533.75 126,865.03 1,564,668.72 02/01/94 1,691,533.75 126,865.03 1,564,668.72 02/01/95 1,688,383.75 126,865.03 . 1,561,518.72 02/01/96 1,687,203.75 126,865.03 1,560,338.72 02/01/97 1,688,103.75 126,865.03 1,561,238.72 02/01/98 1,690,668.75 126,865.03 1,563,803.72 02/01/99 1,689,468.75 126,865.03 1,562,603.72 02/01/00 1,689,413.75 126,865.03 1,562,548.72 02/01/01 1,690,053.75 126,865.03 1,563,188.72 02/01/02 1,690,923.75 126,865.03 1,564,058.72 02/01/03 1,686,543.75 126,865.03 1,559,678.72 02/01/04 1,686,793.75 126,865.03 1,559,928.72 02/01/05 1,690,793.75 126,865.03 1,563,928.72 02/01/06 1,688,173.75 126,865.03 1,561,308.72 02/01/07 1,688,853.75 126,865.03 1,561,988.72 02/01/08 1,686,978.75 126,865.03 1,560,113.72 02/01/09 1,687,068.75 126,865.03 1,560,203.72- 02/01/10 1,688,243.75 1,818,398.78 -130,155.03 Totals : 36,197,937.40 1,249,444.74 4,471,992.33 30,476,500.33 1 22 MONTHS OF CAPITALIZED INTEREST ON NEW MONEY & $5.50 MILLION OUTSTANDING FROM 1985 ISSUE • ' 7e) . CITY OF DUBLIN REFUNDING ONLY PORTION OF 1988 ISSUE VS 1985 ISSUE DEMONSTRATION OF DEBT SERVICE SAVINGS ESTIMATED SOURCES & USES SOURCES: Bond Proceeds $13,070,000 Series 1985 Reserve Fund 1,300,000 Total: $14,370,000 USES: Cost of Escrow $12,771,200 1988 Reserve Fund (1) 1,300,000 Underwriter's Discount(1.5%) 196,050 Costs of Issuance / Rounding 102,750 Total: $14,370,000 Future Value Savings: $320,188.80 Present Value Savings: $341,289.00 (see following savings schedule) (1) Assured to be equal to the 1985 Reserve Fund CITY OF DUBLIN, CALIFORNIA REFONDING PORTION OF 1988 ISSUE VS 1985 ISSUE COMPARISON OF GROSS DEBT SERVICE -SAVINGS SCHEDULE TIC 1985 BONDS = 9.167% - TIC 1988 BONDS = 7.50% (ESTIMATED) PRESENT VALUE SAVINGS (UNDER "CHANGE" COLUMN) = $341,289 (EST a 7.486%) Delivery Date 03/29/88 Date Principal Coupon Interest Annual Refunded Change 08/01/88 323,208.08 02/01/89 100,000.00 5.250 476,864.38 900,072.45 1,248,352.50 -348,280.05 08/01/89 474,239.38 02/01/90 295,000.00 5.500 474,239.38 1,243,478.75 1,243,727.50 -248.75 08/01/90 466,126.88 02/01/91 315,000.00 5.750 466,126.88 1,247,253.75 1,247,840.00 -586.25 08/01/91 457,070.63 02/01/92 330,000.00 6.000 457,070.63 1,244,141.25 1,244,840.00 -698.75 08/01/92 447,170.63 02/01/93 350,000.00 6.250 447,170.63 1,244,341.25 1,245,160.00 -818.75 08/01/93 436,233.13 02/01/94 370,000.00 6.500 436,233.13 1,242,466.25 1,243,320.00 -853.75 08/01/94 424,208.13 02/01/95 395,000.00 6.700 424,208.13 1,243,416.25 1,244,240.00 -823.75 08/01/95 410,975.63 02/01/96 425,000.00 6.800 410,975.63 1,246,951.25 1,247,400.00 -448.75 08/01/96 396,525.63 02/01/97 455,000.00 6.900 396,525.63 1,248,051.25 1,247,250.00 801.25 08/01/97 380,828.13 02/01/98 485,000.00 7.000 380,828.13 1,246,656.25 1,244,400.00 2,256.25 08/01/98 363,853.13 02/01/99 520,000.00 7.100 363,853.13 1,247,706.25 1,243,850.00 3,856.25 08/01/99 345,393.13 02/01/00 555,000.00 7.200 345,393.13 1,245,786.25 1,245,150.00 636.25 08/01/00 325,413.13 02/01/01 600,000.00 7.300 325,413.13 1,250,826.25 1,246,675.00 4,151.25 08/01/01 303,513.13 02/01/02 640,000.00 7.400 303,513.13 1,247,026.25 1,244,037.50 2,988.75 08/01/02 279,833.13 02/01/03 690,000.00 7.500 279,833.13 1,249,666.25 1,247,237.50 2,428.75 08/01/03 253,958.13 02/01/04 740,000.00 7.600 253,958.13 1,247,916.25 1,245,350.00 2,566.25 08/01/04 225,838.13 02/01/05 800,000.00 7.650 225,838.13 1,251,676.25 1,248,375.00 3,301.25 08/01/05 195,238.13 02/01/06 855,000.00 7.700 195,238.13 1,245,476.25 1,245,387.50 88.75 08/01/06 162,320.63 02/01/07 925,000.00 7.750 162,320.63 1,249,641.25 1,246,387.50 3,253.75 08/01/07 126,476.88 - 02/01/08 995,000.00 7.800 126,476.88 1,247,953.75 . 1,245,450.00 2,503.75 08/01/08 87,671.88 02/01/09 1,075,000.00 7.850 87,671.88 1,250,343.75 1,247,112.50 3,231.25 08/01/09 45,478.13 02/01/10 1,155.000.00 7.875 45,478.13 1,245,956.25 1,245,450.00 506.25 Totals: 13,070,000.00 14,016,803.70 27,086,803.70 27,406,992.50 -320,188.80 Less Accrued From 03/29/88: .00 .00 Net Cost: 14,016,803.70 27,086,803.70 Values From Dated Date: Average Interest Rate 7.54771322 Bond Years 185,709.27778 Average Life 14.20882 Values From Delivery Date: Bond Proceeds: 13,070,000.00 True Interest Rate 7.48863929 Day Basis is 30/360 (Municipal Bond) CITY OF DUBLIN, CALIFORNIA 1985 CERTIFICATES OF PARTICIPATION CURRENT GROSS DEBT SERVICE Delivery Date 03/29/88 Date Principal Coupon Interest Total Annual 08/01/88 526,676.25 526,676.25 02/01/89 .195,000.00 7.500 526,676.25 721,676.25 1,248,352.50 08/01/89 519,363.75 519,363.75 02/01/90 205,000.00 7.750 519,363.75 724,363.75 1,243,727.50 08/01/90 511,420.00 511,420.00 02/01/91 225,000.00 8.000 511,420.00 736,420.00 1,247,840.00 08/01/91 502,420.00 502,420.00 02/01/92 240,000.00 8.200 502,420.00 742,420.00 1,244,840.00 08/01/92 492,580.00 492,580.00 02/01/93 260,000.00 8.400 492,580.00 752,580.00 1,245,160.00 08/01/93 481,660.00 481,660.00 02/01/94 280,000.00 8.600 481,660.00 761,660.00 1,243,320.00 08/01/94 469,620.00 469,620.00 02/01/95 305,000.00 8.800 469,620.00 774,620.00 1,244,240.00 08/01/95 456,200.00 456,200.00 02/01/96 335,000.00 9.000 456,200.00 791,200.00 1,247,400.00 08/01/96 441,125.00 441,125.00 02/01/97 365,000.00 9.000 441,125.00 806,125.00 1,247,250.00 08/01/97 424,700.00 424,700.00 02/01/98 395,000.00 9.000 424,700.00 819,700.00 1,244,400.00 08/01/98 406,925.00 406,925.00 02/01/99 430,000.00 9.000 406,925.00 836,925.00 1,243,850.00 08/01/99 387,575.00 387,575.00 02/01/00 470,000.00 9.250 387,575.00 857,575.00 1,245,150.00 08/01/00 365,837.50 365,837.50 02/01/01 515,000.00 9.250 365,837.50 880,837.50 1,246,675.00 08/01/01 342,018.75 342,018.75 02/01/02 560,000.00 9.250 342,018.75 902,018.75 1,244,037.50 08/01/02 316,118.75 316,118.75 02/01/03 615,000.00 9.250 316,118.75 931,118.75 1,247,237.50 08/01/03 287,675.00 287,675.00 02/01/04 670,000.00 9.250 287,675.00 957,675.00 1,245,350.00 08/01/04 256,687.50 256,687.50 02/01/05 735,000.00 9.250 256,687.50 991,687.50 1,248,375.00 08/01/05 222,693.75 222,693.75 02/01/06 800,000.00 9.250 222,693.75 1,022,693.75 1,245,387.50 08/01/06 185,693.75 185,693.75 02/01/07 875,000.00 9.250 185,693.75 1,060,693.75 1,246,387.50 08/01/07 145,225.00 145,225.00 02/01/08 955,000.00 9.250 145,225.00 1,100,225.00 1,245,450.00 08/01/08 101,056.25 101,056.25 02/01/09 1,045,000.00 9.250 101,056.25 1,146,056.25 1,247,112.50 08/01/09 52,725.00 52,725.00 02/01/10 1.140,000.00 9.250 52,725.00 1,192,725.00 1,245,450.00 Totals: 11,615,000.00 15,791,992.50 27,406,992.50 27,406,992.50 Less Accrued From 02/01/88: 169,706.79 169,706.79 Net Cost: 15,622,285.71 27,237,285.71 Values From Dated Date: Average Interest Rate 9.19395249 �� , Bond Years 171,765.000 Average Life 14.78820 Values From Delivery Date: Bond Proceeds: 11,615,000.00 True Interest Rate 9.16685091 Day Basis is 30/360 (Municipal Bond)