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14-188 Measure A Sales Tax Revenue T.R.I.P.
CITY OF LA U R `tJ REPORT TO CITY COUNCIL TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: JASON SIMPSON DIRECTOR OF ADMINISTRATIVE SERVICES DATE: JUNE 24, 2014 SUBJECT: ADOPTION OF A RESOLUTION REGARDING CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) Recommendation: It is recommended the City Council approve and adopt: Resolution No. 2014- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE EXECUTION AND DELIVERY OF CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) PURSUANT TO A TRUST AGREEMENT, AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, CERTIFICATE PURCHASE AGREEMENT AND AN INSTALLMENT SALE AGREEMENT, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH CERTIFICATES, AUTHORIZING THE FILING OF A VALIDATION ACTION AND OTHER MATTERS RELATING THERETO AND ENTERING INTO AN AMENDED AND RESTATED JOINT EXERCISE OF POWERS AGREEMENT Background In 2008, the Riverside County Transportation Commission ( "RCTC ") approved the ability of a joint powers authority known as the California Statewide Communities Development Authority ( "CSCDA ") to offer a program to cities and counties to finance street improvement projects by a pledge of local sales tax revenues, with the CSCDA entering into Installment Sale Agreements with such cities and counties which are members of the CSCDA. The installment payments represent payments on Certificates of Participation ( "Certificates ") to be executed and delivered. Lake Elsinore CSCDA Measure A COP's 2014A June 24, 2014 Page 2 RCTC collects a 1/2 cent sales tax (Measure A) within the county to pay for regional and local transportation projects. In November 2002, Riverside County voters approved an extension of the Measure A sales tax to June 30, 2039. RCTC member agencies (i.e., Riverside County cities) are allocated a portion of annual Measure A revenues to pay for local street projects allowed under the Measure A sale tax ordinance. Measure A funds are apportioned based on proportionate shares of dwelling units, sales tax generated and other factors. Because many Riverside County cities have relied on funding street projects on a pay - as- you -go basis using Measure A funds, those cities have been forced to under -fund street construction and reconstruction resulting in a large project backlog. Discussion Last month, staff began analyzing whether the City could issue Measure A Sales Tax Revenue Certificates of Participation netting the City $5 million to $6 million to finance a significant amount for street projects throughout the City. If issued, the Certificates would be secured solely by Measure A revenues that the City receives from RCTC. The City's General Fund revenues are not pledged towards repayment of the Certificates. This significant infusion of funds would allow the City to complete several vital road projects along with implementing a street rehabilitation program that will substantially lengthen the useful life of the City's existing road improvements. Significant new projects include: • 1 -15 at Railroad Canyon southbound deceleration lane • 1 -15 /SR 74 Central Avenue interchange and ramps • Avenue 7 road and sidewalk improvements (Avenue 7 to Mill Street at the Railroad Canyon Elementary School) • Main Street interchange intersection and road improvements • Grand Avenue roadway project (in cooperation with County) • Traffic signal installations (Canyon Hills Road and Sage Lane) The proposed arterial pavement rehabilitation program and road rehabilitation projects include: • Downtown Main Street from Lakeshore Drive to 1 -15 and adjacent side streets • Railroad Canyon Road from 1 -15 to Fire Station • Mission Trail Road from Malaga Road to Railroad Canyon Reservoir • Lakeshore Drive from Railroad Canyon Reservoir to Main Street • Grand Avenue from McVicker Canyon Park Road to Lake Street • Main Street from 1 -15 to Heald Avenue • Gunnerson Street In addition to these lists, the City has the flexibility of adding other qualified projects. Lake Elsinore CSCDA Measure A COP's 2014A June 24, 2014 Page 3 The Certificates are expected to secure an "A" category underlying rating from Standard & Poor's and may potentially qualify for "AK municipal bond insurance. The Certificates will be repaid over 25 years with level annual payments. As to the City's Installment Payments for the Certificates, annual Measure A revenues as compared to Installment Payments will be structured to provide at an estimated 2 times coverage from the City's Measure A revenues. Stated differently, the City anticipates only using about 44% of its Measure A revenues ($500,000 of the approximately $1,137,000 in total revenues based on FY 2014 estimated revenues) for Certificate payments. The remaining Measure A revenue of approximately $637,000 will continue to be used for ongoing street operations and maintenance. While current market conditions have the current estimate of Certificates issued in the $5 million to $6 million range, staff is requesting authorization of Certificates not to exceed $10 million in the event that there are material further improvements in interest rates. Regardless of the ultimate size of the Certificates issued, the pledge of Measure A funds will remain limited to approximately $500,000 as noted above. If approved by City Council, the transaction must go through a legal process in which the Riverside Superior Court will issue a judgment validating the City's action. This process generally takes 90 days. The City must also become a member of the CSCDA. Assuming obtaining all of the required approvals, the Certificates would be issued in October 2014. In summary, the public benefits of the financing include: The issuance of the certificates on behalf of the City of Lake Elsinore will allow the City to make much needed improvements to their street infrastructure that may otherwise have been deferred due to lack of sufficient funds. • The program will provide the ability to catch up on backlog repairs, increase the service level of the street network, and lower future maintenance costs over the long term. • The issuance will call for Certificates of Participation under an installment sale structure. No lease of assets would be required, wherein past transactions of this nature have required a lease of city /county assets. Documents to be Approved Approval of the Resolution will authorize the City to join the CSCDA, commence the above - referenced validation action, and authorize the execution of the following financing documents: • Trust Agreement • Certificates Purchase Agreement • Installment Sales Agreement Lake Elsinore CSCDA Measure A COP's 2014A June 24, 2014 Page 4 • Preliminary Official Statement • CSCDA Amended and Restated Joint Exercise of Powers Agreement Special Counsel to the City for the Certificate program, Orrick, Herrington & Sutcliffe LLP, has reviewed the financing documents and approved them as to form. Fiscal Impact At this time, there is no fiscal impact to staff's recommendation. However, the proposed financing, once issued, should net the City proceeds of $5,000,000 to $6,000,000 which will be repaid from future Measure A revenues estimated annually at $500,000 through 2039. Prepared by: Jason Simpson Director of Administrative Services Approved by: Grant Yates City Manager Attachments: 1. Resolution No. 2014- 2. Trust Agreement 3. Certificates Purchase Agreement 4. Installment Sales Agreement 5. Preliminary Official Statement 6. CSCDA Amended and Restated Joint Exercise of Powers Agreement RESOLUTION NO. 2014 - RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING THE EXECUTION AND DELIVERY OF CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) PURSUANT TO A TRUST AGREEMENT, AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST AGREEMENT, CERTIFICATE PURCHASE AGREEMENT AND AN INSTALLMENT SALE AGREEMENT, AUTHORIZING THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE OFFERING AND SALE OF SUCH CERTIFICATES, AUTHORIZING THE FILING OF A VALIDATION ACTION AND OTHER MATTERS RELATING THERETO AND ENTERING INTO AN AMENDED AND RESTATED JOINT EXERCISE OF POWERS AGREEMENT WHEREAS, the California Statewide Communities Development Authority (the "Authority ") is empowered to assist the City of Lake Elsinore (the "City ") in financing certain public capital improvements pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act ") and pursuant to that certain Amended and Restated Joint Exercise of Powers Agreement among a number of California cities, counties and special districts, including the City of Lake Elsinore, dated June 1, 1988; WHEREAS, the City Council of the City (the "City Council ") has determined that the design, acquisition and construction of certain roadway improvements and street resurfacing, (as more fully described in the herein defined Installment Sale Agreement, the "Project ") is necessary and proper for, and for the common benefit of, the City, and under the terms of applicable law, the payment for such Project may be made in whole or in part from Measure A Receipts, as defined in the Installment Sale Agreement; WHEREAS, in order to achieve a lower net interest cost and lower costs of issuance in connection with financing the acquisition of the Project, the City has determined to participate with certain other local agencies which are also members of the Authority (collectively, the "Local Agencies ") in the California Communities Total Road Improvement Program (TRIP) (the "Program ") established by the Authority to finance street improvement projects, such as the Project; WHEREAS, pursuant to the Program, the Authority will acquire and construct the Project for, and sell the Project to, the City, pursuant to an Installment Sale Agreement by and between the City and the Authority, in the form presented to this meeting (with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Installment Sale Agreement "); WHEREAS, the City desires to authorize the execution and delivery of additional Contracts, as defined in the Installment Sale Agreement, in the future from time to time 0I1SUSA:758206738.2 City Council Resolution No. 2014 - Page 2 for the purpose of financing the design, acquisition and construction of additional roadway improvements and street resurfacing, which are necessary and proper for, and for the common benefit of, the City, the payment for which may be made in whole or in part from Measure A Receipts, as defined in the Installment Sale Agreement; WHEREAS, installment sale payments payable in connection with the installment sale agreement of each local agency participating in the Program will be combined, and Wells Fargo Bank, National Association, as trustee (the "Trustee "), pursuant to a Trust Agreement, among the Authority, the Trustee and the City (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement "), will execute and deliver California Communities Transportation Revenue (Installment Sale) Certificates of Participation, Series 2014A (or such other subseries to be designated) (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), which evidence and represent proportionate and undivided interests in such combined installment sale payments; WHEREAS, the Authority and the City may determine that securing the timely payment of the principal and interest evidenced by the Certificates by obtaining a bond insurance policy (a "Certificate Insurance Policy ") with respect thereto issued by a municipal bond insurer (a "Certificate Insurer ") could be economically advantageous to the City; WHEREAS, Stifel, Nicolaus & Company, Incorporated, or such other investment banking firm as may be selected in the sole discretion of the Authority (the "Underwriter "), has submitted to the City and the Authority a proposed form of an agreement to purchase the Certificates in the form of a Certificate Purchase Agreement (the "Certificate Purchase Agreement "); WHEREAS, a form of the Preliminary Official Statement (the "Preliminary Official Statement ") to be distributed in connection with the public offering of the Certificates has been prepared; WHEREAS, in order to participate in the Program, the Authority requires that the City enter into and execute the Amended and Restated Joint Exercise of Powers Agreement Relating to the California Statewide Communities Development Authority, dated June 1, 1988 (the "Amended Agreement "), pursuant to which the Authority is in existence and operates; WHEREAS, there is now before the City Council a form of the Amended Agreement; and WHEREAS, this City Council, following careful review and consideration, hereby determines that it is in the public interest and for the public benefit of the City to enter into and authorize the execution of the Amended Agreement, 01- ISIJSA:758206738.2 City Council Resolution No. 2014 - Page 3 VMMMEAS, the City is a member of the Authority and the Project is to be located within the boundaries of the City; WHEREAS, the City hereby finds that the financing of such public capital improvements within the City will result in significant public benefits in the form of demonstrable savings in effective interest rates, and the more efficient delivery of City services to residential and commercial development; WHEREAS, on this date, the City held a public hearing on the financing of such public capital improvements within the City in accordance with Section 6586.5 of the Act; WHEREAS, in accordance with Section 6586.5 of the Act, notice of such hearing was published once at least five days prior to the hearing in a newspaper of general circulation in the City of Lake Elsinore; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of such financing authorized hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such financing for the purpose, in the manner and upon the terms herein provided; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, as follows: Section 1. The foregoing recitals herein contained are true and correct and the City Council so finds. Section 2. The Project is hereby approved. Any of the Authorized Officers designated in Section 9 hereof (the "Authorized Officers ") are authorized to implement the Project in accordance with the provisions of the Installment Sale Agreement and this Resolution. Section 3. The form of the Installment Sale Agreement, on file with the Clerk of the City Council, is hereby approved, and the Authorized Officers, are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Installment Sale Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the aggregate amount of the principal components of the installment sale payments shall not exceed $10,000,000, the true interest cost applicable to the interest components of the installment payments shall not exceed 5.75% and the final principal installment due on the Installment Sale Agreement shall be no later than June 1, 2039. Pursuant to the terms of the Installment Sale Agreement, the City Council further authorizes the execution and delivery of additional Contracts in the future from time to time for the purpose of financing the design, 011SUSA:758206738.2 City Council Resolution No. 2014 - Page 4 acquisition and construction of additional roadway improvements and street resurfacing, which are necessary and proper for, and for the common benefit of, the City, the payment for which may be made in whole or in part from Measure A Receipts. Section 4. The form of Trust Agreement, on file with the Clerk of the City Council, is hereby approved, and the Authorized Officers, are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Trust Agreement in substantially said form, with such changes, insertions and omissions therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. The execution and delivery of the Certificates, on the terms and conditions set forth in, and subject to the limitations specified in, the Trust Agreement and the Installment Sale Agreement, is hereby authorized and approved. The Certificates shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form and shall be as otherwise provided in the Trust Agreement, as the same shall be completed. Section 5. The form of Certificate Purchase Agreement, on file with the Clerk of the City Council, including the form of the Pricing Confirmation set forth as an exhibit thereto (the "Pricing Confirmation "), is hereby approved, and the Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Certificate Purchase Agreement in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof; provided, however, that the underwriter's discount for the sale of the Certificates shall not exceed 2.00% of the aggregate principal amount of the principal components of the installment sale payments payable under the Installment Sale Agreement. Delivery of an executed copy of the Pricing Confirmation by fax or telecopy shall be deemed effective execution and delivery for all purposes. Section 6. The form of Preliminary Official Statement, on file with the Clerk of the City Council, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Certificates is hereby authorized and approved. Any one of the Authorized Officers is hereby authorized and directed to provide the Underwriter with such information relating to the City as they shall reasonably request for inclusion in the Preliminary Official Statement and Official Statement. Upon inclusion of the information relating to the City therein, the Preliminary Official Statement is, except for certain omissions permitted by Rule 15c2 -12 of the Securities Exchange Act of 1934, as amended (the "Rule "), hereby deemed final within the meaning of the Rule; provided that no representation is made as to the information contained in the Preliminary Official Statement relating to the other Local Agencies or any Certificate Insurer or Certificate Insurance Policy. If, at any time prior to the end of the underwriting period, as defined in the Rule, any event occurs as a result of which the information contained in the Preliminary Official Statement relating to the City might include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, 01 ISUSA:758206738.2 City Council Resolution No. 2014 - Page 5 in lignt 01 0he circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter. The Authority is hereby authorized and directed, at or after the time of the sale of the Certificates, for and in the name and on behalf of the City, to execute a final Official Statement in substantially the form of the Preliminary Official Statement presented to this meeting, with such additions thereto or changes therein as the Authority may approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 7. The officers and staff of the City are hereby authorized to apply for a Certificate Insurance Policy for the Certificates and to obtain such insurance if the present value cost of such insurance is less than the present value of the estimated interest savings with respect to the Certificates. Section 8. The form of Installment Sale Agreement provides that Measure A Receipts, as defined in the Installment Sale Agreement, may be used to make 2014 Installment Sale Payments. Prior to the execution and delivery of the Installment Sale Agreement, the Authorized Officers, in consultation with the Underwriter, shall determine if significant interest rate savings could be achieved through a formal pledge of Measure A Receipts to the payment of 2014 Installment Sale Payments; and if so determined, the Installment Sale Agreement shall be amended, as necessary, to reflect such pledge, subject to any then outstanding commitment or pledge of Measure A Receipts, such amendment to be conclusively evidenced by the execution and delivery of the Installment Sale Agreement. Section 9. The appointment of Stifel, Nicolaus & Company, Incorporated as the Underwriter of the Certificates, Urban Futures Inc. as financial advisor to the City and Orrick, Herrington & Sutcliffe LLP as special counsel is hereby approved. Section 10. The Authorized Officers are, and each of them is, authorized and directed, for and in the name of the City, to instruct Orrick, Herrington & Sutcliffe LLP, as special counsel to the Program to bring a validation action under Section 860 of the California Code of Civil Procedure to determine the legality and validity of the Installment Sale Agreement, the Trust Agreement, the Certificates and the other documents and proceedings authorized pursuant to this Resolution and to execute and return the fee agreement for such services on file with the Clerk. Section 11. The Amended Agreement is hereby approved and any one of the Authorized Officers is hereby authorized and directed to execute the Amended Agreement, with such changes, insertions and omissions as may be approved by such official and the Clerk of the City is hereby authorized and directed to attest the same. Section 12. The Authorized Officer designated below and any and all other officers, agents and employees of the City are hereby authorized and directed to take any and all actions and execute and deliver any and all documents necessary or convenient to accomplish the purposes of this Resolution. 011SUSA:758206738.2 City Council Resolution No. 2014 - Page 6 Authorized Officers: TITLE (1) Natasha Johnson, Mayor (2) Grant Yates, City Manager (3) Jason Simpson, Director of Administrative Services (4) Virginia Bloom, City Clerk Section 13. All actions heretofore taken by the officers, employees and agents of the City with respect to the transactions set forth above are hereby approved, confirmed and ratified. Section 14. This Resolution shall be in full force and effect upon its adoption. PASSED, APPROVED AND ADOPTED this 24th day of June, 2014, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: Natasha Johnson, Mayor City of Lake Elsinore ATTEST: Virginia Bloom, City Clerk City of Lake Elsinore APPROVED AS TO FORM: Barbara Zeid Leibold, City Attorney City of Lake Elsinore 0HSUSA:758206738.2 City Council Resolution No. 2014 - Page 7 STATE OF CALIFORNIA COUNTY OF RIVERSIDE SS CITY OF LAKE ELSINORE 1, VIRGINIA J. BLOOM, City Clerk of the City of Lake Elsinore, California, hereby certify that Resolution No. 2014- was adopted by the City Council of the City of Lake Elsinore at a regular meeting held on the 24th day of June, 2014 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Virginia J. Bloom, CIVIC City Clerk 01 ISUSA:75820673 82 TRUST AGREEMENT among CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee and CERTAIN LOCAL AGENCIES NAMED HEREIN Dated as of 1, 2014 CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) 01 S USA:758206726.1 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; EQUAL SECURITY ............................. ............................... 3 Section1.01. Definitions .............................................................. ............................... 3 Section1.02. Equal Security ...................................................... ............................... 12 ARTICLE II EXECUTION AND DELIVERY OF CERTIFICATES ............................... 13 Section 2.01. Preparation and Purpose of Certificates ............... ............................... 13 Section 2.02. Terms of the Certificates ...................................... ............................... 13 Section 2.03. Prepayment of Certificates ................................... ............................... 15 Section 2.04. Form of Certificates .............................................. ............................... 18 Section 2.05. Execution of Certificates ...................................... ............................... 18 Section 2.06. Transfer and Payment of Certificates ................... ............................... 18 Section 2.07. Exchange of Certificates ...................................... ............................... 19 Section 2.08. Certificate Registration Books ............................. ............................... 19 Section 2.09. Mutilated, Destroyed, Stolen or Lost Certificates ............................... 19 Section 2.10. Temporary Certificates ......................................... ............................... 20 Section 2.11. Procedure for the Execution and Delivery of Certificates; Establishment of Funds and Accounts; Deposit of Proceeds .............. 20 Section 2.12. Validity of Certificates ......................................... ............................... 21 Section 2.13. Special Covenants as to Book -Entry Only System for Certificates............................................................ ............................... 21 ARTICLEIII REVENUES .................................................................... ............................... 24 Section 3.01. Pledge of Revenues; Assignment ......................... ............................... 24 Section 3.02. Receipt and Deposit of Revenues in the Revenue Fund ..................... 24 Section 3.03. Establishment and Maintenance of Accounts for Use of Money inthe Revenue Fund ............................................. ............................... 24 Section 3.04. Deposit and Investments of Money in Accounts and Funds ............... 27 ARTICLEIV COVENANTS ................................................................ ............................... 28 Section 4.01. Compliance with Trust Agreement ...................... ............................... 28 Section 4.02. Amendment of Agreements .................................. ............................... 28 Section 4.03. Against Encumbrances ......................................... ............................... 28 Section 4.04. Tax Covenants: Rebate Fund ............................... ............................... 28 Section 4.05. Accounting Records and Reports ......................... ............................... 29 OHSIJSA:758206726. ] j TABLE OF CONTENTS (continued) Page Section 4.06. Observance of Laws and Regulations .................. ............................... 29 Section 4.07. Further Assurances ............................................... ............................... 29 Section 4.08. Recordation and Filing ......................................... ............................... 29 Section 4.09. Acquisition of the Projects ................................... ............................... 30 ARTICLEV THE TRUSTEE .............................................................. ............................... 31 Section 5.01. The Trustee ........................................................... ............................... 31 Section 5.02. Liability of Trustee ............................................... ............................... 32 ARTICLE VI AMENDMENT OF THE TRUST AGREEMENT ........ ............................... 34 Section 6.01. Amendment of the Trust Agreement .................... ............................... 34 Section 6.02. Disqualified Certificates ....................................... ............................... 34 Section 6.03. Endorsement or Replacement of Certificates After Amendment........ 35 Section 6.04. Amendment by Mutual Consent ........................... ............................... 35 Section 6.05. Information to Rating Agency .............................. ............................... 35 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF OWNERS ........................ 36 Section 7.01. Events of Default .................................................. ............................... 36 Section 7.02. Application of Funds Upon Acceleration of Agreement ..................... 36 Section 7.03. Other Remedies of the Trustee ............................. ............................... 37 Section7.04. Non- Waiver ............................................................ .............................37 Section 7.05. Actions by Trustee as Attorney -in -Fact ............... ............................... 37 Section 7.06. Remedies Not Exclusive ...................................... ............................... 37 Section 7.07. Limitation on Owners' Right to Sue .................... ............................... 38 Section 7.08. Limited Liability of the Local Agencies .............. ............................... 38 Section 7.09. Limited Liability of the Authority ........................ ............................... 38 ARTICLEVIII DEFEASANCE ............................................................... ............................... 40 Section 8.01. Discharge of Certificates ...................................... ............................... 40 Section 8.02. Unclaimed Money ................................................ ............................... 41 ARTICLE IX PROVISIONS RELATED TO THE INSURER AND THE INSURANCEPOLICY .................................................. ............................... 42 Section 9.01. General Provisions ............................................... ............................... 42 Section 9.02. Claims Upon the Insurance Policy and Payments by and to the Insurer................................................................... ............................... 45 0I- ISUSA:758206726. ] ii TABLE OF CONTENTS (continued) Page ARTICLE X MISCELLANEOUS ....................................................... ............................... 48 Section 10.01. Liability of Authority Limited to Revenues ......... ............................... 48 Section 10.02. Benefits of the Trust Agreement Limited to Parties ............................ 48 Section 10.03. Successor Is Deemed Included In All References To Predecessor........................................................... ............................... 48 Section 10.04. Execution of Documents by Owners .................... ............................... 48 Section 10.05. Waiver of Personal Liability; No Liability of Authority Members............................................................... ............................... 49 Section 10.06. Acquisition of Certificates by Authority .............. ............................... 49 Section 10.07. Destruction of Canceled Certificates .................... ............................... 49 Section 10.08. Content of Certificates; Post - Issuance Legal Opinions ....................... 49 Section 10.09. Publication for Successive Weeks ........................ ............................... 50 Section 10.10. Accounts and Funds; Business Days .................... ............................... 50 Section 10.11. Article and Section Headings and References ..... ............................... 50 Section 10.12. Partial Invalidity ..................................................... .............................50 Section 10.13. Execution in Several Counterparts ....................... ............................... 50 Section10.14. Notices .................................................................... .............................51 EXHIBIT A FORM OF CERTIFICATE ................................ ............................... A -1 EXHIBIT B FORM REQUISITION FROM PROCEEDS SUBACCOUNT OF THE ACQUISITION FUND ....................... ............................... B -1 SCHEDULE I PARTICIPATING LOCAL AGENCY ............ ............................... S -1 -1 SCHEDULE II INITIAL DEPOSIT TO PROCEEDS SUBACCOUNT ATTRIBUTABLE TO EACH LOCALAGENCY .......................................... ............................... S -II -1 0HSUSA:758206726.1 TRUST AGREEMENT THIS TRUST AGREEMENT, made and entered into and dated as of 1, 2014 (the "Trust Agreement ") among WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Trustee "), a national banking association duly organized and existing under and by virtue of the laws of the United States of America, the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (the "Authority ") and the Local Agencies named in Schedule I hereto (the "Local Agencies "); WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title I of the Government Code of the State of California; WHEREAS, Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California authorizes and empowers the Authority to cause certificates of participation to be executed and delivered to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, each Local Agency has determined that the consummation of the transactions contemplated in its respective Agreement (as hereinafter defined) to which its is party and this Trust Agreement will result in significant public benefits, and accordingly, have determined to participate in the California Communities T.R.I.P. — Total Road Improvement Program (the "Program ") established by the Authority; WHEREAS, each Local Agency is a participant in the Program and a member of the Authority; WHEREAS, each Local Agency participating in the Program desires to have the 2014 Installment Sale Payments (as hereinafter defined) payable in connection with is respective Agreement combined with similar payments made pursuant to the Agreements executed by the other Local Agencies participating in the Program in order to achieve a lower net interest cost and lower costs of issuance associated with executing and delivering the Certificates (described herein); WHEREAS, each Local Agency has designated the Trustee to act as its trustee with respect to the funds received by the Local Agency in connection with the sale of the Certificates and with respect to the moneys paid by the Local Agency as 2014 Installment Sale Payments; WHEREAS, each Local Agency participating in the Program has executed a pricing confirmation, confirming the sale to Stifel, Nicolaus & Company, Incorporated (the "Purchaser ") of the Certificates which evidence and represent proportionate and undivided interests in the 2014 Installment Sale Payments payable in connection with its respective Agreement combined with similar payments made pursuant to the Agreements executed by the other local agencies participating in the Program and constituting part of the same series of Certificates; 0HSUSA:758206726.1 yr aas iNA�jtAO, cacti I—Mai JAgCHUY par'L1Grpatrng in Lhe Program has authorized and directed the Trustee to execute and deliver on its behalf pursuant to the terms of the Trust Agreement, the Certificates in an amount equal to the aggregate principal amount of the principal installments payable by the Local Agencies pursuant to the Agreements; WHEREAS, the Authority is empowered pursuant to the Agreements and the aforementioned Article 4 to cause the acquisition of the Projects (as hereinafter defined) and to finance the Projects through the execution and delivery of the Certificates; WHEREAS, in order to provide for the execution and delivery of the Certificates (as hereinafter defined), to establish and declare the terms and conditions upon which the Certificates are to be executed, delivered and secured and to secure the payment of the principal thereof and interest thereon, the Authority has authorized the execution and delivery of this Trust Agreement; and WHEREAS, the execution of the Agreements and the approval of the execution and delivery of this Trust Agreement and the Certificates have been in all respects duly and validly authorized by the governing board of the Local Agency pursuant to resolutions duly adopted (collectively, the "Local Agency Resolutions "); WHEREAS, the Certificates and the form of assignment to be endorsed thereon are to be substantially in the form set forth in Exhibit A, with necessary or appropriate variations, omissions and insertions, as permitted or required hereby; WHEREAS, the Trustee has accepted the trust created by this Trust Agreement and in evidence thereof has joined in the execution hereof; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of the Trust Agreement and delivery of the Certificates do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into the Trust Agreement; NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS: orisusA:758206726.1 2 ARTICLE I DEFINITIONS; EQUAL SECURITY Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any Supplemental Trust Agreement and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified: "Acquisition Fund" means the fund by that name established and maintained pursuant to Section 2.11. "Act" means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto. "Administration Fee" means, for each Local Agency, an amount equal to the sum of the Authority Fee, the Trustee Fee, the Rebate Analyst Fee and any other similar fee payable in connection with the administration of the Program, payable by each Local Agency, in accordance with such Local Agency's Agreement, on the 15th day of the month preceding each Certificate Payment Date, for the administrative costs of the Project and the Program. "Administration Fund" means the fund by that name established and maintained pursuant to Section 3.03. "Agreement" or "Agreements" means each 2014 Installment Sale Agreement, dated as of 1, 2014, between the Authority and a Local Agency as originally executed and as each may from time to time be amended or supplemented pursuant to the provisions hereof and thereof. "Authority" means the California Statewide Communities Development Authority, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California and an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988, among a number of California cities, counties and special districts, including the Local Agency, as amended. "Authority Fee" means, for each Local Agency, the annual administration fee of the Authority payable by each Local Agency in accordance with such Local Agency's Agreement. "Authorized Authority Representative" means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. "Authorized Local Agency Representative" means the person or persons designated in Section 8.12 of each Agreement or any other person at the time designated to act on behalf of such respective Local Agency by written certificate furnished to the Trustee, containing the specimen signature of such person and signed on behalf of such Local Agency by an Authorized Local Agency Representative. oHSUSA:758206726.1 3 Uuslaess Day" ,neans any day on which the trustee is open for business at its corporate trust office in Los Angeles, California. "Cash Flow Report" means a report prepared by the Cash Flow Consultant identifying Certificates to be prepaid as a result of any prepayment pursuant to Section 2.03 hereof. In the case of any optional prepayment pursuant to section 2.03(a) hereof, such report shall demonstrate that Revenues expected to be received following such prepayment shall be sufficient to pay the regularly scheduled principal and interest represented by the Certificates as such amounts become due and payable. In the case of a mandatory prepayment pursuant to section 2.03(b) hereof, such report shall identify maturities of principal evidenced by the Certificates to be prepaid in a manner consistent with Section 7.02 hereof and Section 6.02 of the related Local Agency Agreement relating to the application of Revenues upon Acceleration. "Cash Flow Consultant" means Stifel, Nicolaus & Company, Incorporated or any successor thereto appointed by the Authority. "Certificates" means the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program). The term "Serial Certificates" means Certificates for which no sinking fund payments are provided. The term "Term Certificates" means Certificates which are payable on or before their specified payment dates from sinking fund payments established for that purpose and calculated to prepay such Certificates on or before their specified payment dates. "Certificate Payment Date" means a date on which principal evidenced and represented by the Certificates is due and payable, being June 1 of each year commencing June 1, 20_. "Code" means the Internal Revenue Code of 1986, as amended and the regulations issued thereunder. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to a Local Agency, or the Local Agencies, as applicable, or the Authority and related to the authorization, execution and delivery of the Certificates, including, but not limited to costs of preparation and reproduction and delivery of documents, filing and recording fees, fees and charges of the Trustee and its counsel, legal fees and charges, fees and disbursements of consultants and professionals, fees of rating agencies, fees and charges for preparation, execution and safekeeping of the Certificates and any other costs, charges or fees in connection with the original execution, delivery, marketing and sale of the Certificates. "Cost of Issuance Fund" means the fund by that name established and maintained pursuant to Section 2.11. "Defeasanee Obligations" means the following: (1) cash, (2) non callable direct obligations of the United States of America ( "Treasuries "), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the OI- ISU SA: 758206726.1 4 custodian may be obligated, (4) subject to the prior written consent of the Insurer, pre refunded municipal obligations rated "AAA" and "Aaa" by S &P and Moody's, respectively, or (5) subject to the prior written consent of the Insurer, securities eligible for "AAA" defeasance under then existing criteria of S &P or any combination thereof, shall be used to effect defeasance of the Certificates. "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State or a comparable successor, appointed and paid by the Authority, and who, or each of whom - (1) is in fact independent according to the Statement of Auditing Standards No. 1 and not under the domination of the Authority; (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority; and (3) is not connected with the Authority as a member, officer or employee of the Authority, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority. "2014 Installment Sale Payments" means the periodic payments scheduled to be paid by each Local Agency under and pursuant to its respective Agreement. "Insurance Agreement" means the insurance agreement, dated , 2014, by and between the Local Agency and the Insurer. "Insurance Policy" means the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal and interest evidenced and represented by the Certificates when due. "Insurer" means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. "Interest Fund" means the fund by that name established pursuant to Section 3.03. "Interest Payment Account" means the account within the Interest Fund by that name established for each Local Agency pursuant to Section 3.03. "Interest Payment Date" means a date on which interest evidenced and represented by the Certificates is due and payable, being Tune I and December 1 of each year, commencing [December 1, 2014]. "Local Agency" or "Local Agencies" means, as applicable, the respective local agency or local agencies listed in Schedule I hereto, each a duly organized and existing political subdivision of the State of California. OHSUSA:758206726.1 5 "Offirn of tho Trivefoo" moans 1110 rnrn rate trust ofrice of�the Trustee ; , 1 n.�....1.... vv, Nva uav 1t uJ1 v1.a1V,s vl tll,✓ 11lIJ tl+V 111 LIJJ All�,.'V1lJ, California. "Opinion of Counsel" means a written opinion of counsel of recognized national standing in the field of law relating to municipal obligations, appointed and paid by the Authority and satisfactory to and approved by the Trustee (who shall be under no liability by reason of such approval). "Outstanding," when used as of any particular time with reference to Certificates, means (subject to the provisions of Section 6.02) all Certificates except (1) Certificates theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Certificates paid or deemed to have been paid within the meaning of Section 8.01; and (3) Certificates in lieu of or in substitution for which other Certificates shall have been executed and delivered by the Trustee pursuant hereto. "Owner" means any person who shall be the registered owner of any Outstanding Certificate. "Permitted Investments" means any of the following to the extent permitted by the laws of the State and the applicable Local Agency's Investment Policy: A. Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export - Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates OHSUSA:758206726.1 6 6. Government National Mortgage Association (GNMA or "Ginnie Mae ") GNMA - guaranteed mortgage - backed bonds GNMA - guaranteed pass - through obligations (not acceptable for certain cash -flow sensitive issues.) 7. U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac ") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae ") Mortgage- backed securities and senior debt obligations 4. Resolution Funding Corp. (REFCORP) obligations 5. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S &P of AAAm -G; AAA -m; or AA -m and if rated by Moody's rated Aaa, Aal or Aa2 including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services. E. Certificates of deposit secured at all times by collateral described in (A) and /or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks which may include the Trustee and its affiliates. The collateral must be held by a third party and the Owners must have a perfected first security interest in the collateral. 0I- ISUSA:758206726. ] 7 r. �ci litca es of deposit, savings accounts, ueposn accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF which may include the Trustee and its affiliates. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put Agreements (Investment Agreement criteria is available upon request). H. Commercial paper rated, at the time of purchase, "Prime - I" by Moody's and "A- 1" or better by S &P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S &P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A -1" or "A" or better by S &P which may include the Trustee and its affiliates. K. The Local Agency Investment Fund (LAIF) administered by the State of California. L. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase agreements provide for the transfer of securities from a dealer batik or securities firm (seller /borrower) to a municipal entity (buyer /lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. 1. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's Corporation and Moody's Investor Services, or b. Banks rated "A" or above by Standard & Poor's Corporation and Moody's Investor Services. 2. The written repo contract must include the following: a. Securities which are acceptable for transfer are: (1) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) OfISUSA:758206726.1 8 b. The term of the repo may be up to 30 days C. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before /simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral (1) The securities must be valued weekly, (narked -to- market at current market price plus accrued interest. (2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and /or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105 %. 3. Legal minion which must be delivered to the municipal entity: a. Repo meets guidelines under state law for legal investment of public funds. "Prepayment Price" means, with respect to any Certificate (or portion thereof) the principal amount with respect to such Certificate (or portion), plus the applicable premium, if any, payable upon prepayment thereof pursuant to the provisions of such Certificate and the Trust Agreement. "Pricing Confirmation Supplement" means that certain Pricing Confirmation Supplement attached to each Purchase Agreement as agreed and accepted by each of the respective Local Agencies. "Principal Fund" means the account by that name established and maintained pursuant to Section 3.03. "Principal Payment Account" means the account within the Principal Fund by that name established for each Local Agency pursuant to Section 3.03. "Project(s)" has the meaning ascribed to such term in each Agreement. "Project Costs" means all costs of payment of, or reimbursement for, the engineering, design, acquisition, installation, provision and financing of the Projects, including but not limited to, engineering and installation management costs, administrative costs and capital expenditures OHSU SA: 75 &206726.1 9 1'�,�,L,ng w unailililg 111 avnu), COSiS U1 aGCOu11t111g, 1CaS1D111Ly, envlronnlental and other reports, interest during the period -of acquisition and installation of the Projects, insurance costs, inspection costs, permit fees, filing and recording costs, printing costs, reproduction and binding costs, initial fees and charges of the Authority and the Trustee, escrow fees, financing discounts, legal fees and charges, financial and other professional consultant fees and charges in connection with the foregoing. "Program" means the California Communities T.R.I.P. — Total Road Improvement Program pursuant to which the Certificates are executed and delivered to assist local agencies in financing Projects. "Purchase Agreement" means that certain Purchase Agreement by and between each of the respective Local Agencies and the Purchaser relating to the Agreements and the Certificates. "Purchaser" means Stifel, Nicolaus & Company, Incorporated as Purchaser of the Certificates. "Purchase Price" means with respect to any Certificate (or portion thereof) the principal amount with respect to such Certificate (or portion), plus the applicable premium, if any, payable upon purchase thereof pursuant to the provisions of such Certificate and the Trust Agreement. "Qualified Reserve Instrument" means an insurance policy meeting the requirements of Section 3.03(3). "Rating Agency" means Standard & Poor's Corporation or, in the event that Standard & Poor's Corporation no longer maintains a rating on the Certificates, any other nationally recognized bond rating agency then maintaining a rating on the Certificates, but, in each instance, only so long as Standard & Poor's Corporation, or other nationally recognized rating agency then maintains a rating on the Certificates. "Rebate Amount" means, for any given period, the amount determined by the Rebate Analyst as required to be rebated or paid as a yield reduction payment to the United States of America with respect to the Certificates. "Rebate Analyst" means BLX Group. "Rebate Analyst's Fee" means, for each Local Agency, the fee payable to the Rebate Analyst, payable by each Local Agency in accordance with such Local Agency's Agreement. "Rebate Fund" means the fund by that name established and maintained pursuant to Section 4.04. "Record Date" means the 15th day of the month next preceding each Interest Payment Date, whether or not such day is a business day. "Request" or "Certificate" with respect to a Local Agency means an instrument in writing signed on behalf of such Local Agency by an Authorized Local Agency Representative, and with respect to the Authority means an instrument in writing signed on behalf of the Ol ISUSA:758206726.1 10 Authority by an Authorized Authority Representative or other person at the time designated to act on behalf of the Authority by written certificate furnished to the Trustee. "Reserve Fund" means the fund by that name established and maintained pursuant to Section 3.03. "Reserve Fund Requirement" means, as of any date of calculation, separately with respect to each Agreement, an amount equal to the least of (i) 10% of the initial stated principal amount (within the meaning of Section 148 of the Code) of the 2014 Installment Sale Payments under the Agreement; (ii) 125% of the average annual 2014 Installment Sale Payments under the Agreement; or (iii) the Maximum Annual Debt Service, as defined in each Agreement. "Reserve Policy" means the debt service reserve fund insurance policy issued by the Insurer and credited to the Local Agency's Reserve Subaccount. The Reserve Policy is a Qualified Reserve Instrument. "Reserve Subaccount" means the Subaccount within the Reserve Fund by that name established for each Local Agency pursuant to Section 3.03. "Revenues" means all 2014 Installment Sale Payments and other payments paid by the Local Agencies and received by the Authority pursuant to the Agreements and all interest or other income from any investment of any money in any fund or account (other than the Rebate Fund) pursuant to Section 3.04. "Revenue Fund" means the fund by that name established and maintained pursuant to Section 3.02. "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax -(516) 227 -4039 or 4190; or such other addresses and /or such other securities depositories as the Authority may designate to the Trustee in writing. "State" means the State of California. "Supplemental Trust Agreement" means any trust agreement then in full force and effect which has been duly executed and delivered by the Authority and the Trustee amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Trust Agreement is specifically authorized hereunder. "Surplus Account" means the account by that name established and maintained pursuant to Section 3.03. "Tax Certificate" means each Tax Certificate dated the date of initial delivery of the Certificates and executed and delivered by the Authority and each Local Agency. "Trust Agreement" means this Trust Agreement, dated as of 1, 2014, among the Authority, the Trustee and the Local Agencies, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to the provisions hereof. OHSUSA:758206726.1 I I "Trustee" mnonc I'Vells Rn R. ,lL Tl..I:. nail A , „i.: t _ _ ... ... . u.�� rr � to , c�i'gv ,�uiin, i va61wla1 r1J5vCiuLion, or any sUCCGSSO1 IIICI'CL0 appointed pursuant to this Trust Agreement. "Trustee's Fee" means, for each Local Agency, the annual administration fee of the Trustee, in the amount of $2,000.00 payable in advance on 2014 and thereafter on June 1, commencing June 1, 2015. Section 1.02. Equal Security. In consideration of the acceptance of the Certificates by the Owners, the Trust Agreement shall be deemed to be and shall constitute a contract among the Trustee, the Local Agencies, and the Owners to secure the full and final payment of the interest and principal evidenced and represented by the Certificates, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Trustee shall be for the equal and proportionate benefit, protection and security of all Owners without distinction, preference or priority as to benefit, protection or security of any Certificates over any other Certificates by reason of the number or date thereof or the time of execution or delivery thereof or otherwise for any cause whatsoever, except as expressly provided herein or therein. 01-]susA:758206726.1 12 ARTICLE II EXECUTION AND DELIVERY OF CERTIFICATES Section 2.01. Preparation and Purpose of Certificates. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Certificates and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the execution and delivery of the Certificates do exist, have happened and have been performed in due time, form and manner as required by law, and that the Authority is now duly authorized, pursuant to each and every requirement of the Act, to cause the Certificates to be executed and delivered in the form and manner provided herein for the purpose of providing funds to pay for and construct the Projects, and that the Certificates shall be entitled to the benefit, protection and security of the provisions hereof. The Trustee is hereby authorized and directed to prepare the Certificates in the initial aggregate principal amount of dollars ($ ), evidencing and representing the aggregate principal components of the 2014 Installment Sale Payments and each evidencing and representing a proportionate, undivided interest in the 2014 Installment Sale Payments. The Local Agencies hereby authorize the Authority to execute on their behalf, a letter of representations to be delivered to DTC in connection with the delivery of the Certificates (the "Representation Letter "). Each Local Agency participating in the Program is the Local Agency required to make the 2014 Installment Sale Payments with respect to its Agreement which, when combined with the 2014 Installment Sale Payments to be made with respect to the Agreements of other Local Agencies participating in the Program and the same series, shall be evidenced by the Certificates which evidence and represent a proportionate and undivided interest in the 2014 Installment Sale Payments of each Local Agency, such that each Local Agency participating in the Program is severally, and not jointly, liable on each such Certificates in the proportion that the principal component of such Local Agency's Installment Sale Payments bears to the total aggregate principal component of the Installment Sale Payments to be made by all Local Agencies participating in the Program and the same series. Each Local Agency participating in the Program has, pursuant to its Local Agency Resolution, authorized and directed the Trustee on behalf of that Local Agency to prepare and execute the Certificates and to deliver the Certificates to the Purchaser upon payment of the purchase price thereof, pursuant to the terms of the Trust Agreement. Section 2.02. Terms of the Certificates. The Certificates shall be designated "California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.LP. — Total Road Improvement Program)." This designation is an intended revision of the nomenclature for the Certificates originally included in the materials filed in connection with the proceedings for validation of the Certificates in the interest of clarity in marketing the Certificates. The Certificates shall be dated as of , 2014, shall be executed and delivered only in fully registered form in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Certificates payable at any one time), and shall be payable on the Certificate Payment Dates and in the principal amounts and evidence and represent interest at the rates (based on a 360 -day year comprised of 12 30 -day months) as set forth in the following schedule: 01 Isusn:758206726.1 13 �oi uii�aw 1 ayii2eiu ri incipai Date (June 1) Amount Interest Rate The principal evidenced and represented by the Certificates shall be payable in lawful money of the United States of America by check upon presentation thereof at maturity or on prepayment prior to maturity at the Office of the Trustee. The Certificates shall evidence and represent interest at the rates set forth above, payable on Interest Payment Date. The Certificates shall evidence and represent interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they shall evidence and represent interest from such date, or unless such date of registration is prior to the first Interest Payment Date, in which event they shall evidence and represent interest from , 2014; provided, however, that if at the time of registration of any Certificate interest is then in default on the Outstanding Certificates, such Certificate shall evidence and represent interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Certificates. Payment of interest evidenced and represented by the Certificates due on or before the maturity or prior prepayment thereof shall be made to the person whose naive appears in the Certificates registration records maintained by the Trustee pursuant to Section 2.08 as the registered owner thereof as of the close of business on the Record Date preceding each Interest Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on such Interest Payment Date (or the next Business Day if such Interest Payment Date is not a Business Day) to such registered owner at the address as it appears in such books or at such other address as may have been filed with the Trustee for that purpose. Payment of the principal evidenced and represented by the Certificates shall be made by check upon the surrender thereof at maturity or on prepayment prior to maturity at the Office of the Trustee. The Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer and the Trustee shall comply with such request for all Interest Payment Dates following the fifteenth (I 5th) day after receipt of such request until such request is rescinded. 01- 1SUSA:758206726.1 14 Section 2.03. Prepayment of Certificates. (a) Optional Prepayment. The Certificates maturing on or after June 1, 20 , shall be subject to optional prepayment prior to maturity, at the option of the Authority upon direction of the Local Agency, on or after June 1, 20_ in whole or in part (by lot within any maturity), on any date, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. The Local Agency shall provide notice to the Authority and the Trustee at least forty -five (45) days prior to the prepayment date (or such lesser period of time acceptable to the Trustee in its sole discretion) specifying the principal amount evidenced by and maturities of the 2014 Installment Sale Payments to be prepaid. (b) Mandatory Prepayment. The Certificates shall be subject to mandatory prepayment prior to maturity, in whole or in part (by lot among Certificates with the same maturity in any manner which the Trustee in its sole discretion shall deers appropriate), on any date, from amounts received upon the acceleration of 2014 Installment Sale Payments upon the occurrence of an event of default under any Agreement, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. (c) Mandatory Sinking Fund Prepayment. The Certificates maturing on June 1, 20, are subject to mandatory prepayment on June 1 of each year commencing June 1, 20, in part, from mandatory sinking fund payments, on each June 1 specified below, at a prepayment price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor shall be as follows: Mandatory Prepayment Principal Date (June 1) Arnount The amount of each such prepayment shall be reduced in the event and to the extent that 2014 Installment Sale Payments payable on the corresponding 2014 Installment Sale Payment Date are optionally prepaid pursuant to the any Agreement or Agreements and applied to the prepayment of Certificates maturing on June 1, 20 . In such event, the Local Agencies shall provide the Trustee with a revised sinking fund prepayment schedule. The Certificates maturing on June 1, 20_, are subject to mandatory prepayment on June 1 of each year commencing June 1, 20_, in part, from mandatory sinking fund payments, on each June 1 specified below, at a prepayment price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor shall be as follows: 014SUSA:758206726.1 15 1�Aan lat�,•v T�,�.�. ,� �, 1- n., ,.1 Lau.,,uuwi y i i vNu.y uiwu I i li2Cipai Date (,Tune 1) Amount The amount of each such prepayment shall be reduced in the event and to the extent that 2014 Installment Sale Payments payable on the corresponding 2014 Installment Sale Payment Date are optionally prepaid pursuant to any Agreement or Agreements and applied to the prepayment of Certificates maturing on June 1, 20 . In such event, the Local Agencies shall provide the Trustee with a revised sinking fund prepayment schedule. (d) Selection of Certificates. Whenever provision is made in this Trust Agreement for the prepayment or purchase of less than all of the Certificates or any given portion thereof, the Trustee shall, subject to the following sentence, select the Certificates to be prepaid or purchased, from all Certificates subject to prepayment or purchase or such given portion thereof equal to a multiple of $5,000 or any integral multiple thereof not previously called for prepayment or purchase. Upon notice of any prepayment pursuant to Section 2.03(a) hereof or receipt of moneys resulting in a prepayment pursuant to Section 2.03(b) hereof, the Trustee shall request the Cash Flow Consultant to prepare a Cash Flow Report identifying the principal amount and maturities of the Certificates to be prepaid. The Trustee shall promptly notify the Authority in writing of any prepayment or purchase of Certificates and of the Certificates or portions thereof so selected for prepayment or purchase. (e) Purchase in Lieu of Prepayment. In lieu of prepayment of any Certificates, amounts on deposit in the Revenue Fund or in any sinking account therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Authority, for the purchase of such Certificates at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the Authority may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date. The principal amount of any Certificates so purchased by the Trustee in any twelve -month period ending 60 days prior to any Certificate Payment Date in any year shall be credited towards and shall reduce the principal amount of such Term Certificates required to be Prepaid on such Certificate Payment Date in such year. (f) Notice or Prepayment or Purchase. Notice of prepayment or purchase shall be mailed by first -class mail by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the prepayment or purchase date, to (i) the respective Owners of any Certificates designated for prepayment or purchase at their addresses appearing on the registration books of the Trustee, and (ii) if the Certificates are no longer held by the Depository, to the Securities Depositories and the Municipal Securities Rulemalcing Board through its Electronic Municipal Marketplace Access (EMMA) System. Notice of prepayment shall be given by telecopy, certified, registered, or overnight mail to the 011susA:758206726.1 16 Securities Depositories and the Municipal Securities Rulernaking Board through its Electronic Municipal Marketplace Access (EMMA) System. Each notice of prepayment or purchase shall state the date of such notice, the date of initial execution and delivery of the Certificates, the prepayment or purchase date, the Prepayment Price or Purchase Price, the place or places of prepayment or purchase (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the Certificates of each Certificate Payment Date or Dates, and, if less than all of the Certificates of any such Certificate Payment Date, the distinctive certificate numbers of the Certificates with such Certificate Payment Date, to be prepaid or purchased and, in the case of Certificates to be prepaid or purchased in part only, the respective portions of the principal amount thereof to be prepaid or purchased. Each such notice shall also state that on said date there will become due and payable on each of said Certificates the Prepayment Price or Purchase Price represented thereby or of said specified portion of the principal amount thereof in the case of a Certificate to be prepaid or purchased in part only, together with interest accrued with respect thereto to the prepayment or purchase date, and that from and after such prepayment or purchase date, interest thereon shall cease to accrue, and shall require that such Certificates be then surrendered at the address or addresses of the Trustee specified in the prepayment or purchase notice. If any of the Certificates are prepaid pursuant to an advance refunding, notice of such advance refunding and prepayment shall be given in the same manner as above provided, and also within the same time period with respect to the actual prepayment date. Notice of prepayment or purchase of Certificates shall be given by the Trustee, at the expense of the Authority. Conditional notice of prepayment may be given at the direction of the Authority and shall be given if funds sufficient to prepay the Certificates are not then on deposit with the Trustee. If at the time of mailing of notice, funds are not then on deposit with the Trustee, such notice shall state that it is conditional upon the deposit of the funds not later than the opening of business on the date of prepayment of the Certificates, and such notice shall be of no effect unless such moneys are so deposited. Failure by the Trustee to give notice pursuant to this Section 2.03 to the Municipal Securities Rulemalcing Board through its Electronic Municipal Marketplace Access (EMMA) System or Securities Depositories shall not affect the sufficiency of the proceedings for prepayment or purchase. Failure by the Trustee to mail notice of prepayment or purchase pursuant to this Section 2.03 to any one or more of the respective Owners of any Certificates designated for prepayment or purchase shall not affect the sufficiency of the proceedings for prepayment with respect to the Owner or Owners to whom such notice was mailed. (g) Partial Prepayment of Purchase of Certificates. Upon surrender of any Certificate to be prepaid or purchased in part only, the Trustee shall execute and deliver to the registered owner thereof, at the expense of the Authority, a new Certificate or Certificates of authorized denominations, and having the same Certificate Payment Date, 011sUSA:758206726.1 17 p'irinclpai C111JUU1IL w Otte unpfepa.id or urpurchased portion of the Certificate surrendered. (h) Effect of Prepayment. Notice of prepayment having been duly given as aforesaid, and moneys for payment of the Prepayment Price of, together with interest accrued to the prepayment date with respect to, the Certificates (or portions thereof) so called for prepayment being held by the Trustee, on the prepayment date designated in such notice, the Certificates (or portions thereof) so called for prepayment shall become due and payable at the Prepayment Price specified in such notice and interest accrued with respect thereto to the prepayment date, interest with respect to the Certificates so called for prepayment shall cease to accrue, said Certificates (or portions thereof) shall cease to be entitled to any benefit or security under this Trust Agreement, and the Owners of said Certificates shall have no rights in respect thereof except to receive payment of said Prepayment Price and accrued interest. All Certificates prepaid pursuant to the provisions of this Section shall be cancelled upon surrender thereof by the Trustee. All Certificates purchased pursuant to the provisions of this Section shall be registered in the name of the Authority and delivered to, or as directed in writing by, the Authority. Section 2.04. Form of Certificates. The Certificates and the registration endorsement and assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto attached and by this reference herein incorporated (provided that on the face of each Certificates, at the place where the portion of the form set forth below appears on the reverse side of such Certificate, there shall be inserted the following sentence: REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTII ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE). Section 2.05. Execution of Certificates. The Certificates shall be executed by the Trustee by the manual signature of an authorized signatory of the Trustee. Only those Certificates executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such execution by the Trustee shall be conclusive evidence that the Certificates so executed and registered have been duly authorized, executed and delivered hereunder and are entitled to the benefit, protection and security hereof. Section 2.06. Transfer and Payment of Certificates. Any Certificates may, in accordance with its terms, be transferred in the records maintained pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificates for cancellation accompanied by delivery of a duly executed written instrument of transfer° in a form approved by the Trustee. Whenever any Certificates shall be surrendered for transfer, the Trustee shall execute and deliver to the transferee a new Certificate or Certificates of the same series and maturity for a like aggregate principal amount. The Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer as a condition precedent to the exercise of such privilege. 01 is USA:758206726. 1 18 The Authority and the Trustee may deer and treat the registered owner of any Certificates as the absolute owner of such Certificates for the purpose of receiving payment thereof and for all other purposes, whether such Certificates shall be overdue or not, and neither the Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest and principal and prepayment premium, if any, evidenced and represented by such Certificates shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on such Certificates to the extent of the sum or sums so paid. The Trustee shall not be required to execute, register the transfer of or exchange any Certificates during the fifteen (15) days preceding each Interest Payment Date or the date of selection by the Trustee of Certificates for prepayment, or to register the transfer of or exchange any Certificates which have been selected for prepayment in whole or in part. Section 2.07. Exchange of Certificates. Certificates may be exchanged at the office of the Trustee for a like aggregate principal amount of Certificates of the same series and payment date of other authorized denominations. The Trustee shall 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 as a condition precedent to the exercise of such privilege. Section 2.08. Certificate Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Certificates which shall at all times be open to inspection by the Local Agencies or any Owner on reasonable notice during regular business hours on any Business Day, and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Certificates in such books as hereinabove provided. Section 2.09. Mutilated, Destroyed, Stolen or Lost Certificates. If any Certificate shall become mutilated the Trustee at the expense of the Owner shall thereupon execute and deliver, a new Certificate of like tenor and number in exchange and substitution 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 canceled. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and the Authority and indemnity satisfactory to the Trustee and the Authority shall be given, the Trustee, at the expense of the Owner, shall thereupon execute and deliver, a new Certificate of like tenor and number in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of a reasonable sum for each new Certificate executed and delivered under this Section 2.09 and of the expenses which may be incurred by the Authority and the Trustee in the premises. Any Certificate executed and delivered under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other Certificates of the same series secured by this Trust Agreement. Neither the Authority nor the Trustee shall be required to treat both the original Certificate and any duplicate Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may 011SUSA:758206726.1 19 ho ovorntotl and 1PlivnrP l 1 PYP1T YPi' for th 07 .J + . +, ..0 ti.. w.. ..,...,..0 ..�.. ,.u�. or A., blle purpose �, u,,L.,r;;zining any percer�� age U, Certificates Outstanding hereunder, but both the original and duplicate Certificate shall be treated as one and the same. Section 2.10. Temporary Certificates. The Certificates executed and delivered under this Trust Agreement may be initially executed and delivered in temporary form exchangeable for definitive Certificates when ready for delivery. The temporary Certificates may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Trustee, shall be in fully registered form and may contain such reference to any of the provisions of this Trust Agreement as may be appropriate. Every temporary Certificate shall be executed and delivered by the Trustee upon the same conditions and terms and in substantially the same manner as definitive Certificates. If the Trustee executes and delivers temporary Certificates it will execute and furnish definitive Certificates without delay and thereupon the temporary Certificates may be surrendered, for cancellation, in exchange therefor at the Office of the Trustee, and the Trustee shall 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 delivered hereunder. Section 2.11. Procedure for the Execution and Delivery of Certificates; Establishment of Funds and Accounts; Deposit of Proceeds. At any time after the sale of the Certificates, the Trustee shall execute the Certificates for delivery hereunder, and thereupon the Certificates shall be delivered by the Trustee to the purchaser thereof upon the Request of the Authority and upon receipt of payment therefor from the purchaser thereof. Upon receipt of payment for the Certificates from the purchaser thereof, the Trustee shall set aside and deposit the proceeds received from such sale in the following respective accounts or funds or with the following respective persons, in the following order of priority: (a) The Trustee shall credit the Reserve Policy to the Reserve Subaccount for each Local Agency within the Reserve Fund within the Revenue Fund established pursuant to Section 3.03 hereof The initial maximum amount available under the Reserve Policy is equal to the Reserve Fund Requirement for each Local Agency. (b) The "Cost of Issuance Fund" is hereby established as a separate trust fund with the Trustee. The Trustee shall deposit a sum equal to the amount set forth in such Request of the Authority in the Cost of Issuance Fund. The moneys in the Cost of Issuance Fund shall be disbursed, upon the Request of the Authority, to pay Costs of Issuance. Upon the payment in full of the Costs of Issuance or the making of adequate provision for the payment thereof, evidenced by a Certificate of the Authority to the Trustee, any balance remaining in such Fund shall be transferred to the Proceeds Subaccounts of the Acquisition Fund in proportion to the amounts initially deposited in the Costs of Issuance Fund attributable to each Local Agency, and pending such transfer and application, the moneys in such Fund may be invested as permitted by Section 3.04 hereof; provided, however, that investment income resulting from any such investment shall be retained in the Cost of Issuance Fund. Any residual earnings received after the transfer referenced above will, as and when convenient, be transferred to the Proceeds 01-1SUSA:758206726. 1 20 Subaccounts of the Acquisition Fund in proportion to the amounts initially deposited in the Costs of Issuance Fund attributable to each Local Agency. (c) There shall be further created a special trust fund to be held by the Trustee called the "Acquisition Fund." Within the Acquisition Fund the Trustee shall create Proceeds Subaccounts (the "Proceeds Subaccounts ") to account separately for funds in the Acquisition Fund attributable to each Local Agency. The Trustee shall deposit a sum equal to the amount set forth in such Request of the Authority in the Acquisition Fund, and such moneys shall be credited to each of the Local Agencies in the amounts set forth in Schedule II, which is attached hereto and made a part hereof. Moneys in the Proceeds Subaccounts shall be disbursed to each Local Agency in the amounts set forth in Schedule II relating to such Local Agency pursuant to a Requisition in the form attached hereto as Exhibit B. Such Requisition shall be in the form of a sequentially numbered requisition and shall set forth the name and address of the person or persons to whom said amounts are to be disbursed and state the amounts to be disbursed are for Project Costs properly chargeable to the Proceeds Subaccount and have not been the subject of any previous requisition. Upon delivery to the Trustee of a Request of a Local Agency, any Certificate proceeds remaining in such Local Agency's Proceeds Subaccount upon completion of its Project (which completion shall be evidenced by such Request of the Local Agency) shall be applied by the Trustee to offset scheduled 2014 Installment Sale Payments required to be paid by the Local Agency under its Agreement or in such other manner as may be directed in such Request of the Local Agency. Upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Acquisition Fund shall not be disbursed, but shall instead be applied to the payment of the scheduled principal and interest represented by the Certificates as such amounts become due and payable or the prepayment price of the Certificates. Section 2.12. Validity of Certificates. The validity of the Certificates shall not be dependent on or affected in any way by the proceedings taken by the Authority or the Trustee for the financing of the Projects or by any contracts made by the Authority or its agents in connection therewith, and shall not be dependent upon the completion of any of the Projects or upon the performance by any person, firm or corporation of his or its obligation with respect thereto. The recital contained in the Certificates that the same are executed and delivered pursuant hereto shall be conclusive evidence of their validity and of the regularity of their execution and delivery, and all Certificates shall be incontestable from and after their execution and delivery. The Certificates shall be deemed to be executed and delivered, within the meaning hereof, whenever the definitive Certificates (or any temporary Certificates exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received. Section 2.13. Special Covenants as to Book -Entry Only System for Certificates. (a) Except as otherwise provided in subsections (b) and (c) of this Section 2.13, all of the Certificates initially executed and delivered shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "), or such other nominee as DTC shall request pursuant to the Representation Letter. Payment of the interest evidenced and represented by any Certificate registered in the name of Cede & Co. shall be made OHSUSA:758206726.1 21 nip �nnl, 1111- -oaf D., „4 TN-f- r.... ..L /' - ... 17 ,.i. .u— -AL11wOL LL�''1nel1L "aLC 1W 3UU11 �,cr'L11WULCs to L11C aCCOLmI, In the manner and at tale address indicated in or pursuant to the Representation Letter. (b) The Certificates initially shall be executed and delivered in the form of a single fully registered certificate for each stated payment date of such Certificates, representing the aggregate principal amount evidenced and represented by the Certificates payable on such payment date. Upon initial execution and delivery, the ownership of all such Certificates shall be registered in the registration records maintained by the Trustee pursuant to Section 2.08 hereof in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter. The Trustee, the Local Agencies, the Authority and any paying agent may treat DTC (or its nominee) as the sole and exclusive owner of the Certificates registered in its name or the name of its nominee for the purposes of payment of the principal or prepayment price and interest evidenced and represented by such Certificates, selecting the Certificates or portions thereof to be prepaid, giving any notice permitted or required to be given to Owners hereunder, registering the transfer of Certificates, obtaining any consent or other action to be taken by Owners of the Certificates and for all other- purposes whatsoever; and neither the Trustee or the Authority or any paying agent shall be affected by any notice to the contrary. Neither the Trustee, the Local Agencies nor the Authority or any paying agent shall have any responsibility or obligation to any Participant (which shall mean, for purposes of this Section 2.13, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the Certificates under or through DTC or any Participant, or any other person which is not shown on the registration records as being a Owner, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the principal, prepayment price or interest evidenced and represented by the Certificates, (iii) any notice which is permitted or required to be given to Owners of Certificates hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial prepayment of the Certificates, or (v) any consent given or other action taken by DTC as Owner of Certificates. The Trustee shall pay all principal, premium, if any, and interest evidenced and represented by the Certificates only at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the obligations with respect to the principal, premium, if any, and interest evidenced and represented by the Certificates to the extent of the sum or sums so paid. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of its then existing nominee, the Certificates will be transferable to such new nominee in accordance with subsection (f) of this Section 2.13. (c) In the event that the Authority determines that it is in the best interests of the Local Agencies or the beneficial owners of the Certificates that they be able to obtain certificates, the Trustee shall, upon the written instruction of the Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of such certificates. In such event, the Certificates will be transferable in accordance with subsection (f) of this Section 2.13. DTC may determine to discontinue providing its services with respect to the Certificates at any time by giving written notice of such discontinuance to the Authority, the Local Agencies and the Trustee and discharging its responsibilities with respect thereto under applicable law. In such event, the Certificates will be transferable in accordance with subsection 011SUSA:758206726.1 22 (f) of this Section 2.13. Whenever DTC requests the Authority, the Local Agencies and the Trustee to do so, the Trustee, the Local Agencies and the Authority will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of all certificates evidencing the Certificates then Outstanding. In such event, the Certificates will be transferable to such securities depository in accordance with subsection (f) of this Section 2.13, and thereafter, all references in this Trust Agreement to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate. (d) Notwithstanding any other provision of this Trust Agreement to the contrary, so long as all Certificates Outstanding are registered in the name of any nominee of DTC, all payments with respect to the principal, premium, if any, and interest evidenced and represented by such Certificate and all notices with respect to each such Certificate shall be made and given, respectively, to DTC as provided in the Representation Letter. (e) The Trustee is hereby authorized and requested to execute and deliver the Representation Letter and, in connection with any successor nominee for DTC or any successor depository, enter into comparable arrangements, and shall have the same rights and immunities with respect to its actions thereunder as it has with respect to its actions under this Trust Agreement. (f) In the event that any transfer or exchange of Certificates is authorized under subsection (b) or (c) of this Section 2.13, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered Owner thereof of the Certificates to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.06 and 2.07 hereof. In the event Certificates are delivered to Owners other than Cede & Co., its successor as nominee for DTC as Owner of all the Certificates, another securities depository as Owner of all the Certificates, or the nominee of such successor securities depository, the provisions of Sections 2.06 and 2.07 hereof shall also apply to, among other things, the registration, exchange and transfer of the Certificates and the method of payment of principal, premium, if any, and interest evidenced and represented by the Certificates. 0xsusA:758206726. 1 23 Al\ T Tilr. -LL all REVENUES Section 3.01. Pledge of Revenues; Assignment. All Revenues and any other amounts (including proceeds of the sale of the Certificates) held by the Trustee in any fund or account established hereunder (other than amounts on deposit in the Acquisition Fund created pursuant to Section 2.11 and the Rebate Fund created pursuant to Section 4.04) are hereby irrevocably pledged to the payment of the principal, interest and premium, if any, evidenced and represented by the Certificates as provided herein, and the Revenues shall not be used for any other purpose while any of the Certificates remain Outstanding; provided, however, that out of the Revenues and other moneys there may be applied such sums for such purposes as are permitted hereunder. This pledge shall constitute a first pledge of and charge and lien upon the Revenues and all other moneys on deposit in the funds and accounts established hereunder (other than amounts on deposit in the Acquisition Fund created pursuant to Section 2.11 and the Rebate Fund created pursuant to Section 4.04) for the payment of the interest and principal evidenced and represented by the Certificates in accordance with the terms hereof and thereof. The Authority hereby assigns to the Trustee all of the Authority's rights and remedies under the Agreements, including, but not limited to, the Authority's security interest in and lien upon the Revenues. Section 3.02. Receipt and Deposit of Revenues in the Revenue Fund. In order to carry out and effectuate the pledge, charge and lien contained herein, the Authority agrees and covenants that all Revenues when and as received shall be received by the Authority in trust hereunder for the benefit of the Owners and shall be deposited when and as received by the Authority in the Revenue Fund which fund is hereby created and which fund the Authority hereby agrees and covenants to maintain with the Trustee so long as any Certificates shall be Outstanding under the Trust Agreement. All Revenues shall be accounted for separately for each Local Agency and held in trust in the Revenue Fund. All Revenues, whether received by the Authority in trust or deposited with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely for the purposes and uses hereinafter in this Article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the Authority, and the Authority shall have no beneficial right or interest in any of the Revenues except only as herein provided. Section 3.03. Establishment and Maintenance of Accounts for Use of Money in the Revenue Fund. Subject to Section 4.04, all money in the Revenue Fund shall be set aside by the Trustee in the following respective special funds and accounts within the Revenue Fund in the following order of priority: (1) Interest Fund, and within the Interest Fund, an Interest Payment Account for each Local Agency; (2) Principal Fund, and within the Principal Fund, a Principal Payment Account for each Local Agency; OHSUSA:758206726.1 24 (3) Reserve Fund, and within the Reserve Fund, a Reserve Subaccount for each Local Agency; (4) Administration Fund, and within the Administration Fund, an Administration Subaccount for each Local Agency; and (5) Surplus Account. All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section. Notwithstanding the foregoing, the Trustee need not create separate accounts within the Interest Fund, the Principal Fund, the Reserve Fund and the Administration Fund, but shall keep sufficient records to account separately for the deposits attributable to each Local Agency. (1) Interest Fund. On or before the Business Day immediately preceding each Interest Payment Date, the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency Interest Payment Account that amount of money which is equal to the amount of interest becoming due and payable with respect to such Local Agency's Agreement on the next succeeding Interest Payment Date. No such deposit need be made if the amount contained in a Local Agency Interest Payment Account is at least equal to the aggregate amount of interest becoming due and payable in connection with such Local Agency's Agreement on such Interest Payment Date. All money in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest evidenced and represented by the Certificates as it shall become due and payable (including accrued interest evidenced and represented by any Certificates purchased or prepaid prior to the paynnent dates thereof). (2) Principal Fund. On or before the Business Day immediately preceding each Certificate Payment Date the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency Principal Payment Account an amount of money equal to the amount of principal becoming due and payable with respect to such Local Agency's Agreement on the next succeeding Certificate Payment Date. No such deposit need be made if the amount contained in a Local Agency Principal Payment Account is at least equal to the aggregate amount of principal becoming due and payable in connection with such Local Agency's Agreement on such Certificate Payment Date. All money in the Principal Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal evidenced and represented by the Certificates as it shall become due and payable, whether on their respective Certificate Payment Dates or prepayment, except that any money in any sinking fund account shall be used and withdrawn by the Trustee only to purchase or to prepay or to pay Term Certificates for which such sinking fund account was created. (3) Reserve Fund. The Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency's Reserve Subaccount that amount of money (or other authorized deposit of security) which shall be required to maintain the Reserve Subaccount in the full amount of the Reserve Fund Requirement. No deposit need be made in any Reserve Subaccount so long as there shall be on deposit therein a sun equal to the related Local Agency Reserve Fund Requirement. All money in each Reserve Subaccount oxsusA:758206726.1 25 �Mctuuing all amounts which may be Obtained TrOm any insurance policy on deposit in the Reserve SubacCOUnt) shall be used and withdrawn by the Trustee solely for the purpose of replenishing the related Local Agency Interest Payment Account or the related Local Agency Principal Payment Account, in that order, in the event of any deficiency at any time in either of such Accounts, but solely for the purpose of paying the interest, principal or prepayment premiums, if any, payable in connection with the related Local Agency Agreement, except that any cash amounts in the Reserve Subaccounts in excess of the amount required to be on deposit therein shall be withdrawn from the Reserve Subaccounts on each Interest Payment Date and deposited in the related Local Agency Interest Payment Account. In lieu of malting a Local Agency Reserve Fund Requirement deposit or in replacement of moneys then on deposit in any Reserve Subaccount (which shall be transferred by the Trustee to the Local Agency upon delivery of an insurance policy satisfying the requirements stated below), a Local Agency may also deliver to the Trustee an insurance policy (a "Qualified Reserve Instrument ") securing an amount, together with moneys or Permitted Investments on deposit in the Reserve Subaccount, no less than the Local Agency Reserve Fund Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing tine timely payment of the principal and interest components of the related Local Agency Agreement and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies) are rated in the two highest rating categories (without respect to any modifier) of the Rating Agency. Notwithstanding anything to the contrary set forth in the Trust Agreement, amounts on deposit in the Reserve Fund shall be applied solely to the payment of debt service due on the Certificates. If and to the extent that a Local Agency's Reserve Subaccount has been funded with a combination of cash (or Permitted Investments) and a Qualified Reserve Instrument, then all such cash (or Permitted Investments) shall be completely used before any demand is made on such Qualified Reserve Instrument, and replenishment of the Qualified Reserve Instrument shall be made prior to any replenishment of any cash (or Permitted Investments). If a Local Agency's Reserve Subaccount is funded, in whole or in part, with more than one Qualified Reserve Instrument, then any draws made against such Qualified Reserve Instrument shall be made pro - rata. The Reserve Policy has been credited to the Local Agency's Reserve Subaccount, and the Trustee shall make claims under the Reserve Policy in accordance with the terms of the Reserve Policy and the Insurance Agreement. The Reserve Policy is a Qualified Reserve Instrument. (4) Administration Fund. On or before the Business Day immediately preceding each Certificate Payment Date, the Trustee shall set aside from amounts deposited by each Local Agency in the Revenue Fund and deposit in each Local Agency's Administration Subaccount an amount equal to such Local Agency's Administration Fee. All money in each Administration Subaccount shall be used and withdrawn by the Trustee solely for the purpose of paying the fees of the Authority, the Trustee and the Rebate Analyst, payable with respect to the related Local Agency Agreement, except that any cash amounts in the Administration Subaccounts in excess of the amount required to be on deposit therein shall be withdrawn from the Administration Subaccounts on each Interest Payment Date and deposited in the related Local Agency Interest Payment Account. 011 susA:758206726.1 26 (5) Surplus Account. On the Business Day immediately following each Interest Payment Date the Trustee shall deposit in the Surplus Account all money remaining in the Revenue Fund after the deposits required by Section 4.04 and by paragraphs (1), (2), (3) and (4) of this section have been made. On June 30 of each year, beginning on June 30, 2014, the Trustee shall disburse the money in the Surplus Account to each Local Agency to the extent each such Local Agency's deposit of moneys, together with investment earnings thereon, if any, exceeded the deposits required by paragraphs (1), (2), (3) and (4) of this section. Section 3.04. Deposit and Investments of Money in Accounts and Funds. Subject to Section 4.04, all money held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested and reinvested in Permitted Investments at the Request of the Local Agency received not less than two (2) Business Days prior to the date of making such investment. The Trustee shall notify the Local Agency no less than two (2) Business Days prior to the date moneys held hereunder will be available for investment, requesting that the Local Agency deliver to the Trustee a Request of the Local Agency specifying the Permitted Investments to be acquired by the Trustee with such moneys. All money held in the Reserve Fund shall be invested and reinvested in Permitted Investments with a term to maturity not exceeding five years or on the final maturity date of the Certificates, whichever date is earlier; provided, however, that if an obligation may be prepaid at par on the business day prior to each Interest Payment Date during which such obligation is outstanding, such obligation may have any maturity. All such Permitted Investments shall be valued by the Trustee not less frequently than semi- annually on each Interest Payment Date at the lower of the cost or market value thereof. Subject to Section 4.04, all interest or profits received prior to the completion of each Project (as certified in writing by the related Local Agency representative) on any money so invested shall be deposited in the related Proceeds Subaccount of the Acquisition Fund, and all interest or profits received subsequent thereto on any money so invested shall be deposited in the related Local Agency Interest Payment Account. The Trustee may act as a principal or agent in making or disposing of any investment. Notwithstanding the foregoing, in the event there is only one participating Local Agency identified in Schedule I, notifications from the Trustee of the availability of funds for investment shall be provided to the Local Agency and instructions for the investment of funds will be at the Request of the Local Agency. OHSOSA:758206726.1 27 A" T 1CLE 1V COVENANTS Section 4.01. Compliance with Trust Agreement. The Trustee will not execute or deliver any Certificates in any manner other than in accordance with the provisions hereof, and the Local Agencies will not suffer or permit any default to occur hereunder, but will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by them. Section 4.02. Amendment of Agreements. The Local Agencies and the Authority will not amend or permit the amendment of the Agreements without (a)(1) a determination that such amendment does not materially adversely affect the interest of the Owners or (2) the written consents of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, and (b) an Opinion of Counsel to the effect that such amendment will not cause interest payable with respect to the Agreements to be included in gross income for federal income tax purposes; provided that no such supplement, amendment, modification or termination shall reduce the amount of 2014 Installment Sale Payments to be made to the Authority or the Trustee by any Local Agency pursuant to an Agreement, or extend the time for malting such payments, or permit the creation of any lien prior to or on a parity with the lien created by such Agreement on Revenues (except as expressly provided in such Agreement), in each case without the written consent of all of the Owners of the Certificates then Outstanding. Section 4.03. Against Encumbrances. The Authority will not matte any pledge of or place any charge or lien upon the Revenues except as provided herein, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except the Certificates. Section 4.04. Tax Covenants: Rebate Fund. (a) In addition to the accounts created pursuant to Section 3.03, the Trustee shall establish and maintain a fund separate from any other fund or account established and maintained hereunder designated as the Rebate Fund. There shall be deposited in the Rebate Fund such amounts, including the Rebate Amount, as are required to be deposited therein pursuant to each of the Tax Certificates. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in each Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Sections 3.01, 3.02, 3.04, 7.02 and 10.01 relating to the pledge of Revenues, the allocation of money in the Revenue Fund, the investments of money in any find or account, the application of funds upon acceleration and the defeasance of Outstanding Certificates, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section 4.04 and by each Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority and the Local Agencies with the terms of the Tax Certificates. 01 IsusA:758206726. 1 28 (b) Any funds remaining in the Rebate Fund after prepayment and payment with respect to all of the Certificates or provision made therefor satisfactory to the Trustee, including accrued interest and payment of any applicable fees to the Trustee and satisfaction of the Rebate Requirement (as defined in the Tax Certificates), shall be withdrawn by the Trustee and remitted to or upon the written direction of the Authority. Section 4.05. Accounting Records and Reports. The Trustee shall keep proper books of record and account in accordance with industry standards in which complete and correct entries shall be made of all transactions made by the Trustee relating to the receipt, investment, disbursement, allocation and application of all funds received by the Trustee hereunder. Such records shall specify the account or fund to which each investment (or portion thereof) held by the Trustee is to be allocated and shall set forth, in the case of each investment: (a) its purchase price; (b) identifying information, including par amount, coupon rate, and payment dates; (c) the amount received at maturity or its sale price, as the case may be; (d) the amounts and dates of any payments made with respect thereto; and (e) such documentation as is required to be obtained as evidence to establish that all investments have been purchased in arms' length transactions with no amounts paid to reduce the yield on the investments. Such records shall be open to inspection by the Authority and any Local Agency at any reasonable time during regular business hours on reasonable notice. Section 4.06. Observance of Laws and Regulations. The Local Agencies will faithfully observe and perform all lawful and valid obligations or regulations now or hereafter imposed on them by contract, or prescribed by any state or national law, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such observance or performance is material to the transactions contemplated hereby. Section 4.07. Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Owner, the Local Agencies will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee and the Owners all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby. Section 4.08. Recordation and Filing. The Local Agency will file, record, register, renew, refile and rerecord all such documents, including financing statements (or continuation statements in connection therewith), as may be required by law in order to maintain at all times a security interest in the Agreements under and pursuant to the Trust Agreement, all in such manner, at such times and in such places as may be required in order to fully perfect, preserve and protect the benefit, protection and security of the Owners, and the rights of the Trustee hereunder, and the Local Agencies will do whatever else may be necessary or be reasonably required in order to perfect and continue the pledge of and lien on the Agreements as provided herein. oHSUSA:758206726.1 29 Oectioa 4.09. Acquisition of the P roiects. Subject to and as provided in each Agreement, the Authority will cause to be acquired and constructed the Projects with all practicable dispatch and such acquisition will be made in an expeditious manner and in conformity with the law so as to complete the same as soon as possible. 01-iSUSA:758206726.1 30 ARTICLE V THE TRUSTEE Section 5.01. The Trustee. Wells Fargo Bank, National Association shall serve as the Trustee for the Certificates for the purpose of receiving all money which the Authority and the Local Agencies are required to deposit with the Trustee hereunder and for the purpose of allocating, applying and using such money as provided herein and for the purpose of paying the interest, principal and prepayment premiums, if any, evidenced and represented by the Certificates presented for payment in Los Angeles, California, with the rights and obligations provided herein. The Authority agrees that it will at all times maintain a Trustee having a designated office in San Francisco or Los Angeles, California. The Authority may at any time, unless there exists any event of default as defined in Section 7.01, remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided that any such successor shall (i) be a bank or trust company doing business and having a principal office in San Francisco or Los Angeles, California, (ii) have (or in the case of a bank or trust company which is part of a bank holding company system, the related bank holding company shall have) a combined capital (exclusive of borrowed capital) and surplus of at least seventy -five million dollars ($75,000,000) and (iii) be subject to supervision or examination by federal or state authority. 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 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 may at any time resign by giving written notice of such resignation to the Authority and by mailing to the Owners notice of such resignation. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. Any removal or resignation of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If, within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. The Trustee is hereby authorized to prepay the Certificates when duly presented for payment on their respective Certificate Payment Dates or on prior prepayment. The Trustee shall cancel all Certificates upon payment thereof or upon the surrender thereof by the Authority and shall destroy such Certificates it has received in accordance with its retention policy then in effect. The Trustee shall keep accurate records of all Certificates paid and discharged and canceled by it. The Authority, solely from amounts held in the Costs of Issuance Fund or paid by the Local Agencies specifically for such purpose, shall from time to time, subject to any agreement between the Authority and the Trustee then in force, pay to the Trustee compensation 0HSUSA:758206726.1 31 ^.,; �r 'nr Ito - v- o;.,1l.,,.•�.., Lll.. 'T....3L%,,. F .,n :+.. ..,J..,....,., ;,. ,....,1 ;_.._�._,J:a.._..__ 1.__1.._1[ L.. �.va iw ova vi�.w, i�.uitvui J�. uw 1tUDwV LVl Gill 1L3 QUVQllVGJ t111U GX�.1GllU16U1 GS ll1la UUlllg ULiL 1101 limited to advances to and fees and expenses of independent accountants and in -house and other counsel or other experts employed by it and reasonably required in the exercise and performance of its rights and obligations hereunder, and, to the extent permitted by law, indemnify and hold the Trustee and its officers, directors, employees and agents harmless against any claim, loss, liability, damages, expenses (including legal fees and expenses) or advances not arising from the Trustee's own active or passive negligence, willful misconduct or breach of fiduciary duty, which the Trustee may incur in the exercise and performance of its rights and obligations hereunder. The obligations of the Authority under this paragraph to compensate, indemnify, reimburse and hold the Trustee harmless shall constitute additional indebtedness hereunder, and such indebtedness shall have priority over the Certificates in respect of all property and funds held or collected by the Trustee as such, except funds held in trust by the Trustee for the benefit of the Owners of particular Certificates, including, without limitation, funds held by the Trustee in trust to prepay all or a portion of Outstanding Certificates prior to their respective Certificate Payment Dates for which a notice of prepayment has been sent as provided herein. Section 5.02. Liability of 'Trustee. The recitals of facts, agreements and covenants herein and in the Certificates shall be taken as recitals of facts, agreements and covenants of the Authority, and the Trustee assumes no responsibility for the use of any proceeds of the Certificates, the correctness of the same, the collection of the Revenues or makes any representation as to the sufficiency or validity hereof, of the Certificates or any security therefor or any offering material distributed in connection with the Certificates and shall not incur any responsibility in respect thereof other than in connection with the rights or obligations assigned to or imposed upon it herein, in the Certificates or in law or equity. The Trustee shall not be liable in connection with the performance of its duties hereunder except for its own negligence, willful misconduct or breach of fiduciary duty. The Trustee shall not be bound to recognize any person as the Owner of a Certificate unless and until such Certificate is submitted for inspection, if required, and such Certificate is registered in such person's name. Whenever the Trustee shall deem it necessary or desirable that a factual or legal matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the pant of the Trustee, be deemed to be conclusively proved and established by a certificate conforming to the requirements herein or an opinion of counsel, which certificate or opinion shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such matter or may require such additional evidence as it may deem reasonable. In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity and all persons, including without limitation the Owners, the Authority and the Local Agencies, having any claim against the Trustee arising from this Trust Agreement not attributable to the Trustee's negligence or willful misconduct shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein. The duties and obligations of the Trustee shall be determined solely by the express provisions of this Trust Agreement, the Trustee shall not be liable except for the performance of OJISUSA:758206726.1 32 such duties and obligations as are specifically set forth in this Trust Agreement, and no implied covenants or obligations (fiduciary or otherwise) shall be read into this Trust Agreement against the Trustee. The Trustee shall not be liable with respect to any action taken or not taken hereunder in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Certificates at the time Outstanding. The Trustee shall, during the existence of any event of default (which has not been cured), exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise of use under the circumstances in the conduct of its own affairs. 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 other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents and such immunities and exceptions and its right to payment of its fees and expenses shall survive its resignation or removal and the final payment and defeasance of the Certificates. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates. The Trustee, in its individual or any other capacity, may become the Owner of any Certificates or other obligations of any party hereto with the same rights which it would have if not the Trustee. At any and all reasonable times, the Trustee, and its agents shall have the right to fully inspect the Projects, including all books, papers and records of the Local Agencies pertaining to the Projects and the Certificates, and to take such memoranda therefrom and with regard thereto and make photocopies thereof as may be desired. The Trustee shall not be required to give any bond or surety in respect of the execution of said trusts and powers or otherwise in respect of the premises. Before taking or refraining from any action hereunder at the request or direction of the Owners, the Trustee may require that an indemnity bond satisfactory to the Trustee be furnished to it and be in full force and effect. None of the provisions contained herein or in the Agreements shall require the Trustee to expend or risk its own funds or continue to do so or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if it shall reasonably believe that repayment of such funds or adequate indemnity against such risk or liability is not assured to it. The Trustee may rely and shall be protected in acting or failing to act upon any paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. 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 Local Agencies to make any payment of principal or interest under the Agreements when due, unless the Trustee shall be specifically notified in writing at its corporate trust office of such default by the Owners of not less than 25% of the aggregate principal amount of Certificates then Outstanding. Notwithstanding any other provision hereof, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or official action or evidence thereof, required as a condition of such action deemed by the Trustee to be desirable for the purpose of establishing the rights of the Trustee with respect to the authentication of any Certificates, the withdrawal of any cash, the release of any property or the taking of any other action by the Trustee. 0xsUSA:758206726.1 33 ARTICLE, Vi AMENDMENT OF THE TRUST AGREEMENT Section 6.01. Amendment of the Trust Agreement. The Trust Agreement and the rights and obligations of the Authority, the Local Agencies, the Trustee and the Owners may be amended at any time by a Supplemental Trust Agreement which shall become binding when the written consents of the Owners of a majority in aggregate principal amount evidenced and represented by the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 6.02, are filed with the Trustee. No such amendment shall (l) extend the Certificate Payment Date of or reduce the interest rate on or amount of interest or principal or prepayment premium, if any, evidenced and represented by any Certificate without the express written consent of the Owner of such Certificate, or (2) permit the creation by the Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or on a parity with the pledge, charge and lien created hereby for the benefit of the Certificates, or (3) reduce the percentage of Certificates required for the written consent to any such amendment or any amendment of an Agreement pursuant to Section 4.02 hereof, or (4) modify any rights or obligations of the Trustee, the Authority or the Local Agencies without their prior written assent thereto, respectively. The Trust Agreement and the rights and obligations of the Authority, the Local Agencies and of the Owners may also be amended at any time by a Supplemental Trust Agreement which shall become binding upon adoption without the consent of any Owners, but only to the extent permitted by law and after receipt of an approving Opinion of Counsel, for any purpose that will not in the judgment of the Trustee materially adversely affect the interests of the Owners, including (without limitation) for any one or more of the following purposes - (a) to add to the agreements and covenants required herein to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority or the Local Agencies, or to surrender any right or power reserved herein to or conferred herein on the Authority or the Local Agencies; (b) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Authority or the Local Agencies may deem desirable or necessary and not inconsistent herewith; (c) to add to the agreements and covenants required herein, such agreements and covenants as may be necessary to qualify the Trust Agreement under the Trust Indenture Act of 1939; or (d) for any other purpose that does not materially adversely affect the interests of the Owners. Section 6.02. Disqualified Certificates. Certificates owned or held by or for the account of the Authority or the Local Agencies shall not be deemed Outstanding for the purpose 01 S USA:758206726.1 34 of any consent or other action or any calculation of Outstanding Certificates provided in this article, and shall not be entitled to consent to or take any other action provided in this article. Section 6.03. Endorsement or Replacement of Certificates After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Certificates may bear a notation by endorsement in form approved by the Authority as to such action, and in that case upon demand of the Owner of any Outstanding Certificates and presentation of his Certificate for such purpose at the office of the Trustee a suitable notation as to such action shall be made on such Certificate. If the Authority shall so determine, new Certificates so modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Certificate a new Certificate or Certificates shall be exchanged at the office of the Trustee without cost to each Owner for its Certificate or Certificates then Outstanding upon surrender of such Outstanding Certificates. Section 6.04. Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular Certificates held by him, provided that due notation thereof is made on such Certificates. Section 6.05. Information to Rating Agency. The Authority shall provide any Rating Agency rating the Certificates a copy of each amendment to the Trust Agreement or to the Agreement promptly following the execution or adoption of such amendment. OHSUSA:758206726. ] 35 ARl iI.LL V it EVENTS OF DEFAULT AND REMEDIES OF OWNERS Section 7.01. Events of Default. If any default in the payment of 2014 Installment Sale Payments or any other `Event of Default" defined in an Agreement shall occur and be continuing, or if any default shall be made by the Local Agency in the performance or observance of any other of the covenants, agreements or conditions on its part herein contained and such default shall have continued for a period of thirty (30) days after written notice thereof shall have been given to the Local Agency by the Trustee or the Owners of not less than a majority in aggregate principal amount evidenced and represented by the Certificates at the time Outstanding, then such default shall constitute an `Event of Default" hereunder, and in each and every such case during the continuance of such Event of Default the Trustee or the Owners of not less than a majority in aggregate principal amount evidenced and represented by the Certificates at the time Outstanding shall be entitled, upon notice in writing to the Local Agency, but subject to the provisions of Section 7.06, to exercise the remedies provided under the Agreement then in default which are necessary or desirable to collect such Local Agency's 2014 Installment Sale Payments. No grace period shall be permitted for payment defaults. The Owners of Certificates, for purposes of the Trust Agreement and the Agreement of each Local Agency, to the extent of their interest, shall be entitled to all rights and security of the Authority pursuant to each Agreement and the Trust Agreement. Each Local Agency recognizes the rights of the Owners of the Certificates, acting directly or through the Trustee, to enforce the obligations and covenants contained in the Agreements and the Trust Agreement; provided that in no event shall an Local Agency be liable for any obligations, covenants or damages except those which arise out of the Agreements, and, in particular, no Local Agency shall be liable for any obligations, liabilities, acts or omissions of any other Local Agency. Section 7.02. Application of Funds Upon Acceleration of Agreement. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article VIII shall be deposited into a segregated payment account of the Revenue Fund relating to each, if any, defaulting Local Agency's Agreement and be applied by the Trustee in the following order; provided that the Trustee shall obtain and follow the instructions contained in an Opinion of Counsel and rebate or set aside for rebate from the specified funds held hereunder, any amount pursuant to such instructions required to be paid to the United States of America under the Code: First, to the payment of the costs and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its agents, accountants and counsel and including any indemnification expenses; and Second, to the payment of the principal and interest payable with respect to the Certificates, in connection with a mandatory prepayment of Certificates pursuant to Section 2.03(b) hereof and the delivery of a Cash Flow Report. 01- isusA:758206726.1 36 Section 7.03. Other Remedies of the Trustee. The Trustee shall have the right (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights hereunder against any Local Agency or any supervisor, council member, board member, trustee, member, officer or employee thereof, and to compel such Local Agency or any such supervisor, council member, board member, trustee, member, officer or employee thereof to observe or perform its or his or her duties under applicable law and the agreements, conditions, covenants and terms contained herein, or in the applicable Agreement, required to be observed or performed by it or him or her; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee or the Owners; or (c) by suit in equity upon the happening of any default hereunder to require any Local Agency and any supervisor, council member, board member, trustee, member, officer and employee to account as the trustee of any express trust. Section 7.04. Non - Waiver. A waiver by the Trustee of any default hereunder or breach of any obligation hereunder shall not affect any subsequent default hereunder or any subsequent breach of an obligation hereunder or impair any rights or remedies on any such subsequent default hereunder or on any such subsequent breach of an obligation hereunder. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default hereunder shall impair any such right or remedy or shall be construed to be a waiver of any such default hereunder or an acquiescence therein, and every right or remedy conferred upon the Trustee by applicable law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or the Local Agencies, the Trustee and the Local Agencies shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 7.05. Actions by Trustee as Attorney -in -Fact. Any action, proceeding or suit which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners, whether or not the Trustee is a Owner, and the Trustee is hereby appointed (and the successive Owners, by taking and holding the Certificates executed and delivered hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attorney -in -fact of the Owners for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Owners as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attorney -in -fact. Section 7.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. If any remedial or]susn:758206726.1 37 action hereunder Is discontinued or abandoned, the Trustee and the Owners shall be restored to their former positions. Section 7.07. Limitation on Owners' Riglrt to Sue. No Owner of any Certificate executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law or equity, for any remedy under or upon this Trust Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an event of default as defined in Section 7.01 hereunder; (b) the Owners of at least a majority 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 institute such suit, action or proceeding in its own name; (c) said Owners shall have tendered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such request and consent shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, consent, 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 Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of the Trust Agreement shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Certificates. Section 7.08. Limited Liability of the Local Agencies. Except as expressly provided in the Agreements, the Local Agencies shall not have any obligation or liability to the Authority, the Trustee or the Owners, with respect to the Trust Agreement or the preparation, execution, delivery, transfer, exchange or cancellation of the Certificates or the receipt, deposit or disbursement of the principal and interest payable with respect to the Agreements by the Trustee, or with respect to the performance by the Trustee of any obligation contained herein required to be performed by it. Notwithstanding anything to the contrary herein or in any Agreement, no Local Agency shall incur any obligation on account of any default, action or omission of any other Local Agency. Section 7.09. Limited Liability of the Authority. Except as expressly provided herein, the Authority shall not have any obligation or liability to the Trustee or the Owners, with respect to the payment when due of the 2014 Installment Sale Payments by the Local Agencies, or with respect to the observance or performance by the Local Agencies of the other agreements, conditions, covenants and terms contained in the Agreements, or with respect to the performance by the Trustee of any obligation contained herein required to be performed by it. Notwithstanding anything to the contrary contained in the Certificates, the Trust Agreement or any other document related thereto, the Authority shall not have any liability hereunder or by reason hereof or in connection with any of the transactions contemplated hereby except to the oiisusA:758206726.1 38 extent payable from moneys received from or with respect to the Agreements and available thereof in accordance with the Trust Agreement. 01-1SUSA:758206726.1 39 ARTICLE V ill DEFEASANCE Section 8.01. Discharge of Certificates. (a) If the Local Agencies shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Certificates the interest, principal and prepayment premiums, if any, evidenced and represented thereby at the times and in the manner stipulated herein and therein, and the Insurer shall have been paid all amounts owed to the Insurer under the Insurance Policy and the Reserve Policy, then the Owners of such Certificates shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided herein, and all agreements, covenants and other obligations of the Authority and the Local Agencies to the Owners of such Certificates hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction and the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest and principal and prepayment premiums, if any, evidenced and represented by such Certificates. (b) Any Outstanding Certificates shall prior to the maturity date or prepayment date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (1) in case any of such Certificates are to be prepaid on any date prior to their respective Certificate Payment Dates, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice in accordance with Section 2.03, (2) there shall have been deposited with the Trustee either (A) money in an amount which shall be sufficient or (B) Defeasance Obligations, in each case the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee at the same time, shall be sufficient, in the opinion of an hndependent Certified Public Accountant, to pay when due the interest to become due with respect to such Certificates on and prior to the Certificate Payment Date or prepayment date thereof, as the case may be, and the principal and prepayment: premiums, if any, evidenced and represented by such Certificates, and (2) in the event such Certificates are not by their terms subject to prepayment within the next succeeding sixty (60) days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Owners of such Certificates that the deposit required by clause (2) above has been made with the Trustee and that such Certificates are deemed to have been paid in accordance with this section and stating the Certificate Payment Date or prepayment date upon which money is to be available for the payment of the principal and prepayment premiums, if any, with respect to such Certificates. In addition, the Authority shall cause to be delivered (i) a report of an Independent Certified Public Accountant or such other accountant as shall be acceptable to the Insurer verifying the sufficiency of the escrow established to pay the Certificates in full on the maturity or prepayment date ( "Verification "), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Certificates are no longer "Outstanding" under the Trust Agreement, and (iv) a certificate of discharge of the Trustee with respect to the Certificates; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed,, to the Authority and the 011susA:758206726.1 40 Trustee. The Insurer shall be provided with final drafts of the above - referenced documentation not less than five business days prior to the funding of the escrow. Certificates shall be deemed "Outstanding" under the Trust Agreement unless and until they are in fact paid and retired or the above criteria are met. Section 8.02. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Certificates which remains unclaimed for two (2) years after the date when such Certificates have become due and payable, either at their stated Certificate Payment Dates or by call for prepayment prior to such dates, if such money was held by the Trustee at such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Certificates have become due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall not look to the Trustee for the payment of such Certificates. Any moneys held by the Trustee in trust for the payment and discharge of any Certificates shall not bear interest or be otherwise invested from and after such Certificate Payment Date or prepayment date. 0Hsusn:758206726.1 41 ARTICLE 1X PROVISIONS RELATED TO THE INSURER AND THE INSURANCE POLICY Section 9.01. General Provisions. (a) The prior written consent of the Insurer shall be a condition precedent to the deposit of any Qualified Reserve Instrument provided in Lieu of a cash deposit into the Reserve Fund. Notwithstanding anything to the contrary set forth in this Trust Agreement, amounts on deposit in the Reserve Fund shall be applied solely to the payment of principal and interest due on the Certificates. (b) The Insurer shall be deemed to be the sole Owner of the insured Certificates for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the Owners of the Certificates insured by it are entitled to take pursuant to this Trust Agreement pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Trustee. (c) The Certificates shall not be accelerated without the consent of the Insurer and in the event the Certificates are accelerated, the Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid) and the Trustee shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date, the Insurer's obligations under the Insurance Policy with respect to the Certificates shall be fully discharged. (d) The Insurer is a third party beneficiary of this Trust Agreement. (e) Upon the occurrence of an optional or mandatory prepayment in part pursuant to Section 2.03(a) or 2.03(b) hereof, the selection of Certificates to be prepaid shall be subject to the approval of the Insurer. The exercise of any provision of this Trust Agreement which permits the purchase of Certificates in lieu of prepayment shall require the prior written approval of the Insurer if any Certificate so purchased is not cancelled upon purchase. ( Any amendment, supplement, modification to, or waiver of, this Trust Agreement or any other transaction document, including the Agreement and any underlying security agreement (each a "Related Document "), that requires the consent of Owners or adversely affects the rights and interests of the Insurer is subject to the prior written consent of the hlsurer. (g) Unless the Insurer otherwise directs, upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Acquisition Fund shall not be disbursed, but shall instead be applied to the payment of principal and interest due with respect to the Certificates or prepayment price of the Certificates. 011SUSA:758206726.1 42 (h) The rights granted to the Insurer under this Trust Agreement or any other Related Document to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Owners and such action does not evidence any position of the Insurer, affirmative or negative, as to whether the consent of the Owners or any other person is required in addition to the consent of the Insurer. (i) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of this Trust Agreement and the Certificates relating to such payments shall remain Outstanding and continue to be due and owing until paid in accordance with the Trust Agreement. The Trust Agreement shall not be discharged unless all amounts due or to become due to the Insurer have been paid in full or duly provided for. 0) Each of the Authority and Trustee covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time to preserve the priority of the pledge of the Revenues hereunder. (k) The Iblsurer shall be provided with the following information by the Authority, the Local Agency or the Trustee, as the case may be: (1) Annual audited financial statements within 180 days after the end of the Local Agency's fiscal year (together with a certification of the Local Agency that it is not aware of any default or Event of Default under the Installment Sale Agreement), and the Local Agency's annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time; (2) Notice of any draw upon the Local Agency's Reserve Subaccount within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Fund Requirement and (ii) withdrawals in connection with a prepayment of Certificates; (3) Notice of any default ]mown to the Trustee or Authority within five Business Days after knowledge thereof, (4) Prior notice of the advance refunding or prepayment of any of the Certificates, including the principal amount, maturities and CUSIP numbers thereof; (5) Notice of the resignation or removal of the Trustee and the appointment of, and acceptance of duties by, any successor thereto; (6) Notice of the commencement of any proceeding by or against the Authority or the Local Agency commenced under the United States Bankruptcy O1 ISUSA:758206726.1 43 r 11 _.. other ._._,: , , , Code v, any other applicable banKfuplcy, Insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding "); (7) Notice of the malting of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal or interest represented by the Certificates; (8) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to the Related Documents; and (9) All reports, notices and correspondence to be delivered to Owners under the terms of the Related Documents. In addition, to the extent that the Authority or the Local Agency has entered into a continuing disclosure agreement, covenant or undertaking with respect to the Certificates, all information furnished pursuant to such agreements shall also be provided to the Insurer, simultaneously with the furnishing of such information. (1) The Insurer shall have the right to receive such additional information as it may reasonably request. (in) The Local Agency will permit the Insurer to discuss the affairs, finances and accounts of the Local Agency or any information the Insurer lnay reasonably request regarding the security for the Certificates with appropriate officers of the Local Agency and will use commercially reasonable efforts to enable the Insurer to have access to the facilities, books and records of the Local Agency on any business day upon reasonable prior notice. (n) The Trustee shall notify the Insurer of any failure of the Local Agency to provide notices, certificates and other information under the Related Documents. (o) Notwithstanding satisfaction of the other conditions to the issuance of Additional Certificates set forth in the Trust Agreement, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the Reserve Fund is fully funded at the Reserve Fund Requirement (including the proposed issue) upon the issuance of such Additional Certificates, in either case unless otherwise permitted by the Insurer. (p) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under the Trust Agreement would adversely affect the security for the Certificates or the rights of the Owners, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy. (q) No contract shall be entered into or any action taken by which the rights of the Insurer or security for or sources of payment of the Certificates may be impaired or OHSUSA:758206726.1 44 prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. (r) Any interest rate exchange agreement ( "Swap Agreement ") entered into by the Local Agency shall meet the following conditions: (i) the Swap Agreement must be entered into to manage interest costs related to, or a hedge against (a) assets then held, or (b) debt then outstanding, or (iii) debt reasonably expected to be issued within the next twelve (12) months, and (ii) the Swap Agreement shall not contain any leverage element or multiplier component greater than 1.Ox unless there is a matching hedge arrangement which effectively off -sets the exposure from any such element or component. Unless otherwise consented to in writing by the Insurer, any uninsured net settlement, breakage or other termination amount then in effect shall be subordinate to payment by the Local Agency of the 2014 Installment Payments and on any debt on parity with such payments. The Local Agency shall not terminate a Swap Agreement unless it demonstrates to the satisfaction of the Insurer prior to the payment of any such termination amount that such payment will not cause the Local Agency to be in default under the Related Documents, including but not limited to, any monetary obligations thereunder. All counterparties or guarantors to any Swap Agreement must have a rating of at least "A -" and "AY' by Standard & Poor's (`S &P ") and Moody's Investors Service ( "Moody's "). If the counterparty or guarantor's rating falls below "A -" or "AY' by either S &P or Moody's, the counterparty or guarantor shall execute a credit support annex to the Swap Agreement, which credit support annex shall be acceptable to the Insurer. If the counterparty or the guarantor's long term unsecured rating falls below "Baal" or "BBB +" by either Moody's or S &P, a replacement counterparty or guarantor, acceptable to the Insurer, shall be required. Section 9.02. Claims Upon the Insurance Policy and Payments by and to the Insurer. (a) If, on the third Business Day prior to the related scheduled Interest Payment Date or Certificate Payment Date (each, a "Payment Date ") there is not on deposit with the Trustee, after making all transfers and deposits required under the Trust Agreement, moneys sufficient to pay the principal and interest evidenced by the Certificates due on such Payment Date, the Trustee shall give notice to the Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent ") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal and interest evidenced by the Certificates due on such Payment Date, the Trustee shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest evidenced by the Certificates and the amount required to pay principal evidenced by the Certificates, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. 01-ISUSA:758206726.1 45 _... 1 tl 1 n I ue r m.. rusiee snail designate any portion or payment of principal evidenced by Certificates paid by the Insurer, whether by virtue of mandatory sinking fund prepayment, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Certificates registered to the then current Owner, whether DTC or its nominee or otherwise, and shall issue a replacement Certificate to the Insurer, registered in the name of Assured Guaranty Municipal Corp., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Trustee's failure to so designate any payment or issue any replacement Certificate shall have no effect on the amount of principal or interest payable with respect to any Certificate or the subrogation rights of the Insurer. The Trustee shall keep a complete and accurate record of all fluids deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest and principal with respect to any Certificate. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. Upon payment of a claim under the Insurance Policy, the Trustee shall establish a separate special purpose trust account for the benefit of Owners referred to herein as the "Policy Payments Account" and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under the Insurance Policy in trust on behalf of Owners and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Owners in the same manner as principal and interest payments are to be made with respect to the Certificates under the sections hereof regarding payment of Certificates. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything herein to the contrary, subject to Section 7.09 hereof, the Authority agrees to pay to the Insurer, solely from Revenues, (i) a sum equal to the total of all amounts paid by the Insurer under the Insurance Policy (the "Insurer Advances "); and (ii) interest on such Insurer Advances from the date paid by the Insurer until payment thereof in full, payable to the Insurer at the Late Payment Rate per annum (collectively, the "Insurer Reimbursement Amounts "). "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3 %, and (ii) the then applicable highest rate of interest with respect to the Certificates and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. Subject to Section 7.09 hereof, the Authority hereby covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the Revenues and payable from the Revenues on a parity with debt service due on the Certificates. Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following a Certificate payment date shall promptly be remitted to the Insurer. olisusA:7ssao6726.1 46 (b) The Insurer shall, to the extent it makes any payment of principal of or interest on the Certificates, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insurance Policy. Each obligation of the Authority and the Local Agency to the Insurer under the Related Documents shall survive discharge or termination of such Related Documents. (c) The Local Agency shall pay or reimburse the Insurer any and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Trust Agreement or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Trust Agreement or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Trust Agreement or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Trust Agreement or any other Related Document. (d) The Insurer shall be entitled to pay principal or interest evidenced by the Certificates that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Certificates as a result of acceleration of the maturity thereof in accordance with the Trust Agreement, whether or not the Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy. (e) The notice address of the Insurer is: Assured Guaranty Municipal Corp., 31 West 52nd Street, New York, New York 10019, Attention: Managing Director — Surveillance, Re: Policy No. , Telephone: (212) 826 -0100; Telecopier: (212) 339 -3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." ol- isu SA: 7582067zb,1 47 CE All T ll A MISCELLANEOUS Section 10.01. Liability of Authority Limited to Revenues. The Certificates are limited obligations of the Authority and are payable, as to interest, principal and any premiuns upon the prepayment of any thereof, solely from the Revenues as provided herein, and the Authority is not obligated to pay them except from the Revenues. All the Certificates are equally secured by a pledge of and charge and lien upon the Revenues, and the Revenues constitute a trust fund for the security and payment of the interest, principal and prepayment premiums, if any, with respect to the Certificates as provided herein. The Certificates are not a debt of the Authority, the Local Agencies, the State of California or any of its political subdivisions, and neither the Authority, the Local Agencies, said State nor any of its political subdivisions is liable thereon, nor in any event shall the Certificates be payable out of any funds or properties other than those of the Authority as provided herein. The Certificates do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction. Section 10.02. Benefits of the Trust A14reement Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the Local Agencies, the Authority, the Trustee, the Insurer and the Owners any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the Local Agencies or the Authority shall be for the sole and exclusive benefit of the Trustee, the Authority, the Insurer and the Owners. Section 10.03. Successor Is Deemed Included In All References To Predecessor. Whenever either the Local Agencies, the Authority, or the Trustee or any officer thereof is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Local Agencies, the Authority or the Trustee or such officer, and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Local Agencies, the Authority or the Trustee or any officer thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 10.04. Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. The ownership of any Certificates and the amount, maturity, number and date of holding the same may be proved by the registration books relating to the Certificates at the office of the Trustee. OHSUSA:758206726 1 48 Any declaration, request or other instrument or writing of the Owner of any Certificate shall bind all future Owners of such Certificate with respect to anything done or suffered to be done by the Local Agencies, the Authority or the Trustee in good faith and in accordance therewith. Section 10.05. Waiver of Personal Liability; No Liability of Authority Members. No member, officer or employee of the Authority or any Local Agencies shall be individually or personally liable for the payment of the interest, principal or prepayment premiums, if any, with respect to the Certificates by reason of their execution and delivery, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by any applicable provisions of law, the Agreements or hereby. Notwithstanding anything to the contrary herein or in any other document, no entity that is a program participant of the Authority, its supervisors, councilmembers, trustees, officers, directors, employees, and agents, shall have any liability of any kind hereunder or by reason of or in connection with any of the transactions contemplated hereby, other than with respect to a program participant of the Authority in its capacity as a Local Agency hereunder. Section 10.06. Acquisition of Certificates by Authority. All Certificates acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Section 10.07. Destruction of Canceled Certificates. Whenever provision is made herein for the cancellation of any Certificates, the Trustee shall destroy such Certificates in accordance with its retention policy then in effect. Section 10.08. Content of Certificates; Post - Issuance Legal Opinions. Every Certificate of the Authority or any Local Agency with respect to compliance with any agreement, condition, covenant or term contained herein shall include: (a) a statement that the person or persons executing such certificate have read such agreement, condition, covenant or term and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not the Local Agency or the Authority has complied with such agreement, condition, covenant or term; and (d) a statement as to whether, in the opinion of the signers, the Local Agency or the Authority has complied with such agreement, condition, covenant or term. Any Certificate of the Authority or any Local Agency may be based, insofar as it relates to legal matters, upon an Opinion of Counsel unless the person or persons executing such certificate know that the Opinion of Counsel with respect to the matters upon which his or their certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters and information with respect to which is in the possession of the Local Agency or the Authority, upon a representation by an officer or officers of the Local Agency or the Authority unless the counsel executing such Opinion of Counsel knows that the 01- 1sUSA:758206726.1 49 repreSeiitatiOin will- i�11 reSpc�t L Mlle rnnatt Ir , upon winch ms opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Section 1.0.09. Publication for Successive Weeks. Any publication required to be made hereunder for successive weeks in a Financial Newspaper may be made in each instance upon any Business Day of the first week and need not be made on the same Business Day of any succeeding week or in the same Financial Newspaper for any subsequent publication, but may be made on different Business Days or in different Financial Newspapers, as the case may be. Section 10.10. Accounts and Funds; Business Days. Any account or fund required herein to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with the Tax Certificates and sound accounting practice and with due regard for the protection of the security of the Certificates and the rights of the Owners. Any action required to occur hereunder on a day which is not a Business Day shall be required to occur on the next succeeding Business Day. Section 10.11. Article and Section HeadinEs and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to "Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to the Trust Agreement as a whole and not to any particular article, section, subdivision or clause hereof. Section 10.12. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Local Agencies, the Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the Certificates, and the Owners shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law. The Local Agencies, the Authority and the Trustee hereby declare that they would have executed and delivered the Trust Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Certificates pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 10.13. Execution in Several Counterparts. This Trust Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Local Agencies, the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. OHSUSA:758206726.1 50 Section 10.14. Notices. Except as otherwise provided herein, for the purposes hereof, any notice, consent, request, requisition, direction, certificate or demand or other communication may be served or presented, and such notice or demand may be made and shall be deemed to have been sufficiently given or served for all purposes by being deposited, first -class postage prepaid, in a post office letter box, addressed, as the case may be, to the parties as follows: If to the Authority: California Statewide Communities Development Authority 2999 Oak Road, Suite 710 Walnut Creek, California 94597 Attention: Secretary If to the Trustee: Wells Fargo Bank, National Association 707 Wilshire Boulevard, 17th Floor Los Angeles, California 90017 Attention: Corporate Trust Department If to the Local Agencies: To the individual addressees as set forth in Exhibit A to the Purchase Agreement If to the Purchaser: Stifel, Nicolaus & Company, Incorporated [2121 Avenue of the Stars, Suite 2100] [Los Angeles, California 90067] Attention: John Kim Any such communication may also be sent by telecopy at the telecopy numbers given above. Any party may change its address by notice to each other party. ol-isusA:758206726.1 51 1" WITNESS WHEREOF, the Authority and the Local Agencies named in Schedule I hereto have caused this Trust Agreement to be signed in their respective names by such person as has been designated by their respective governing boards, and the Trustee, to evidence its acceptance of the trust hereby created, has caused the Trust Agreement to be signed in the name of the Trustee by an authorized officer of the Trustee, all as of the day and year first above written. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY M. Authorized Signatory WELLS FARGO BANKS NATIONAL ASSOCIATION, as Trustee : Authorized Signatory CITY OF LAKE ELSINORE [City Manager] 0HSUSn:758206726.1 52 EXHIBIT A FORM OF CERTIFICATE CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATE OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) Certificate Interest Rate Payment Date Dated as of % June 1, 20 , 2014 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: CUSIP No. THIS IS TO CERTIFY that the registered owner named above, as the registered owner of this California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificate of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), is the owner of a proportionate undivided interest in the rights to receive certain 2014 Installment Sale Payments (as that term is defined in the Trust Agreement hereinafter mentioned) under and pursuant to certain Installment Sale Agreements (the "Agreements ") by and between various Local Agencies named therein (the "Local Agencies "), each a duly organized and existing political subdivision of the State of California, and the California Statewide Communities Development Authority (the "Authority "), a joint powers authority duly organized and existing under and by virtue of the laws of the State of California, all of which rights to receive such 2014 Installment Sale Payments having been assigned without recourse by the Authority to Wells Fargo Bank, National Association, as trustee (the "Trustee "), a trust company duly organized and existing under and by virtue of the laws of the United States and having a corporate trust office in Los Angeles, California. The registered owner of this Certificate is entitled to receive, subject to the terms of the Agreements on the certificate payment date set forth above (the "Certificate Payment Date "), upon surrender of this Certificate on the Certificate Payment Date at the corporate trust office of the Trustee, the principal sum specified above representing the registered owner's fractional undivided share of the 2014 Installment Sale Payments designated as principal components coming due on the Certificate Payment Date, and on each June 1 and December 1, commencing [December 1, 2014] (each an "Interest Payment Date "). The Certificates shall evidence and represent interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is an Interest Payment Date, in which event they shall evidence and represent interest from such date, or unless such date of registration is prior to the first Interest Payment Date, in which event they shall evidence and represent interest 011SUSA:758206726.1 A -1 fi•ni�� 701 A. :,7— 1. ,.1, :r ..1_ r r provlucu, 1lowever, HIM 11 at L11e trine o1 r•egrstratron of any Certificate interest is then in default on the Outstanding Certificates, such Certificate shall evidence and represent interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Certificates. Payment of interest evidenced and represented by the Certificates due on or before the maturity or prior prepayment thereof shall be made to the person whose name appears in the Certificates registration records maintained by the Trustee pursuant to the Trust Agreement as the registered owner thereof as of the close of business on the Record Date preceding each Interest Payment Date, whether or not such day is a Business Day, such interest to be paid by check mailed on such Interest Payment Date (or the next Business Day if such Interest Payment Date is not a Business Day) to such registered owner at the address as it appears in such books or at such other address as may have been filed with the Trustee for that purpose. The Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer and the Trustee shall comply with such request for all Interest Payment Dates following the fifteenth (I 5th) day after receipt of such request until such request is rescinded. All such amounts are payable in lawful money of the United States of America. This Certificate is one of the duly authorized Certificates of the series set forth above, which have been executed by the Trustee pursuant to the terms of a Trust Agreement (together with any supplements or amendments thereto, the "Trust Agreement ") by and among the Trustee, the Local Agencies and the Authority, dated as of 1, 2014. Copies of the Trust Agreement are on file at the corporate trust office of the Trustee, and reference is hereby made to the Trust Agreement and to any and all amendments thereof and supplements thereto for a description of the agreements, conditions, covenants and terms securing the Certificates, for the nature, extent and manner of enforcement of such agreements, conditions, covenants and terms, for the rights and remedies of the registered owners of the Certificates with respect thereto and for the other agreements, conditions, covenants and terms upon which the Certificates are executed and delivered thereunder, to which agreements, conditions, covenants and terms the owner hereof, by acceptance hereof, hereby consents. To the extent and in the manner permitted by the terms of the Trust Agreement and the Agreements, the provisions of the Trust Agreement may be amended or supplemented by the parties thereto. This Certificate is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at the corporate trust office of the Trustee but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement, and upon surrender of this Certificate for cancellation accompanied by delivery of a duly executed written instrument of transfer in the form appearing hereon. Upon such transfer, a new Certificate or Certificates of the same series and Certificate Payment Date representing the same principal amount will be executed and delivered to the transferee in exchange herefor. The Certificates are exchangeable at the corporate trust office of the Trustee for a like aggregate principal amount of Certificates of authorized denominations of the same series and Certificate Payment Date, in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement. 0HS1JSA:758206726.1 A -2 The Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, whether or not this Certificate shall be overdue, and the Trustee shall not be affected by any knowledge or notice to the contrary; and payment of the interest and principal represented by this Certificate shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability represented by this Certificate to the extent of the sum or sums so paid. The Certificates are authorized to be executed and delivered in the form of fully registered Certificates in denominations of five thousand dollars ($5,000) each or any integral multiple thereof so long as no Certificate shall represent principal becoming payable on more than one Certificate Payment Date. The Certificates are subject to optional and mandatory prepayment prior to their respective Certificate Payment Dates, as provided in the Trust Agreement. The Certificates each evidence and represent a fractional undivided interest in the 2014 Installment Sale Payments in an amount equal to the aggregate principal amount of Certificates originally executed and delivered by the Trustee pursuant to the Trust Agreement and enjoy the benefits of a security interest in the moneys held in the funds established pursuant to the Trust Agreement, subject to the provisions of the Trust Agreement permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein. The obligations of the Local Agencies to make the 2014 Installment Sale Payments are special obligations of the Local Agencies payable from Revenues, and do not constitute debts of the Local Agencies or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. The Trustee has no obligation or liability to the Certificate owners for the payment of the interest or principal represented by the Certificates, but rather the Trustee's sole obligations are to administer, for the benefit of the Local Agencies and the Authority and the Certificate owners, the various funds established under the Trust Agreement and the Agreements. The Authority has no obligation or liability whatsoever to the Certificate owners. The Owner hereby has a proportionate undivided ownership interest in the 2014 Installment Sale Payments payable pursuant to the Agreements, as set forth in Schedule I to the Trust Agreement. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ( "DTC "), to Trustee or its agent for the registration of transfer, exchange, or payment, and any certificate executed and delivered is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein The Authority has certified to the Trustee that all acts, conditions and things required by the statutes of the State of California and the Trust Agreement to exist, to have happened and to OHSU SA: 758206726.1 A -3 have been per Urnied pr'ccedciit to aiid in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate. This is to further certify that the amount of this Certificate, together with all other Certificates executed and delivered under the Trust Agreement, is not in excess of the amount of Certificates authorized to be executed and delivered thereunder. IN WITNESS WHEREOF, this Certificate has been dated as of the date set forth above and has been executed by the manual signature of an authorized signatory of the Trustee. Date of Execution: 2014 WELLS FARCO BAND, NATIONAL, ASSOCIATION, as Trustee 01ISUSA:758206726.1 A -4 Authorized Signatory STATEMENT OF INSURANCE Assured Guaranty Municipal Corp. ( "AGM "), New York, New York, has delivered its municipal bond insurance policy (the "Policy ") with respect to the scheduled payments of principal of and interest evidenced and represented by this Certificate to Wells Fargo Bank, National Association, Los Angeles, California, or its successor, as trustee for the Certificates (the "Trustee "). Said Policy is on file and available for inspection at the principal office of the Trustee and a copy thereof may be obtained from AGM or the Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this Certificate acknowledges and consents to the subrogation rights of AGM as more fully set forth in the Policy. 01 1susA:758206726. 1 A -5 FORM OF ASS'IfiNMENl For value received, the undersigned do(es) hereby sell, assign and transfer unto whose address is and whose social security or Taxpayer Identification No. is the within Certificate and do(es) hereby irrevocably constitute and appoint attorney to transfer such Certificate on the Certificate register of the Trustee, with full power of substitution in the premises. Dated: Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Certificate in every particular, without alteration or enlargement or any change whatsoever. Signature must be guaranteed by an eligible guarantor institution. 011SUSn:758206726. ] A -( EXHIBIT B FORM REQUISITION FROM PROCEEDS SUBACCOUNT OF THE ACQUISITION FUND To: Wells Fargo Bank, National Association, as Trustee From: City of Lake Elsinore Dated Date: Re: California Communities T.RLP. — Total Road Improvement Program (the "Program ") Series 2014A Requisition No. The undersigned, on behalf of the City of Lake Elsinore (the "Local Agency "), acting as agent of the Authority pursuant to the Agreement, hereby requests payment, from the Proceeds Subaccount established for the Local Agency pursuant to the Program, the amount of $ [by wire /check/ACH (circle one)] for purposes for which the Local Agency is authorized to expend moneys. If the payment is by wire or ACH, please fill in the following information: Name, Address and Phone Number of Ban],,: Account No.: The undersigned hereby certifies as follows: The amount requisitioned hereby is for a Project Cost incurred in connection with its Project, is properly chargeable to the Proceeds Subaccount and has not been the subject of any previous requisition. The name and address of the person or persons to whom said amounts are to be disbursed and the amounts to be disbursed are as follows: OI- ISU SA: 758206726.1 B -1 2. As of the date hereof, no event has occurred and is continuing which constitutes an Event of Default under the Agreement would constitute an Event of Default but for the requirement that notice be given, or time elapse, or both. 3. The information contained herein is true and correct as of the date of this Requisition. 4. Capitalized terms will herein have the meanings assigned to such terms in the Trust Agreement, dated as of 1, 2014, among the California Statewide Communities Development Authority, Wells Fargo Bank, National Association and the Local Agencies named therein. Authorized Local Agency Representative OHSUSA:758206726.1 B -2 SCHEDULEI PARTICIPATING LOCAL AGENCY Local Agency City of Lake Elsinore Total Principal Amount a OHSUSA:758206726.1 S-1-1 Principal Amount SCHEDULE 11 INITIAL DEPOSIT TO PROCEEDS SUBACCOUNT ATTRIBUTABLE TO EACH LOCAL AGENCY Local Agency City of Lake Elsinore Total Proceeds 01-1SU SA: 758206726.1 S-11-1 Amount Deposited in the Proceeds Subaccount $[PRINCIPAL AMOUNT] CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) [MONTH] _, 2014 CERTIFICATE PURCHASE AGREEMENT California Local Agencies As listed in Exhibit A hereto California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Ladies and Gentlemen: Stifel, Nicolaus & Company, Incorporated (the "Underwriter "), offers to enter into this Certificate of Purchase Agreement (this "Purchase Contract ") with the local agencies identified in .Exhibit A hereto (severally and not jointly) (each, a "Local Agency" and, collectively, the "Local Agencies ") and the California Statewide Communities Development Authority (the "Authority ") with regard to the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), which Purchase Contract, upon the acceptance hereof by the Local Agencies and the Authority, will be binding upon the Authority, the Local Agencies, and the Underwriter. This offer is made subject to the written acceptance of this Purchase Contract by the Authority and the Local Agencies and the delivery of such acceptance to the Underwriter at or prior to 11:59 p.m., California time, on the date hereof, and, if it is not so accepted, such offer may be withdrawn by the Underwriter upon written notice to the Local Agencies and the Authority by the Underwriter at any time before its acceptance. The Authority is acting as sponsor of the California Communities' T.R.I.P — Total Road Improvement Program (the "Program ") and, pursuant to the 2014 Installment Sale Agreements (as defined herein), will appoint the Local Agencies agents with respect to certain aspects of such Local Agencies' participation in the Program. For all purposes under this Purchase Contract, each Local Agency shall be, and shall be deemed to be, acting severally and not jointly with any other Local Agency. 1. Upon the terms and conditions and upon the basis of the representations, warranties, and agreements hereinafter set forth, the Underwriter hereby agrees to purchase, and the Local Agencies and the Authority hereby agree to sell to the Underwriter for such purpose, all (but not less than all) of the $[PRINCIPAL AMOUNT] aggregate principal amount of the Certificates, which evidence and represent a proportionate and undivided interest in the Installment Sale Payments (as such term is defined in the applicable 2014 Installment Sale Agreement (as hereafter defined)) of each of the Local Agencies made pursuant to its respective 2014 Installment Sale Agreement, dated as of [MONTH] 1, 2014 (each, a "2014 Installment Sale Agreement" and, collectively, the "2014 Installment Sale Agreements "), by and between ACTIVE/73470786.1 the applicable Local Agency and tike Authority. Tihe purchase price of the Certitcates shall be $ (representing the par amount of the Certificates, [plus /less] a net original issue [premium /discount] of $ , less an Underwriter's discount of $ ); it being acknowledged that the Underwriter will on the Closing Date, on behalf of the Local Agencies, [CONFIRM:] [wire the $ aggregate premium for the Certificate Insurance Policy and the $ aggregate premium for the Reserve Policy to the Certificate Insurer (each as hereinafter defined) directly, and] deliver net proceeds to the Trustee in the amount of $ . The Preliminary Official Statement with respect to the Certificates, dated [POS DATE], 2014 (the "Preliminary Official Statement "), as amended to conform to the terms of this Purchase Contract, and dated the date hereof, and with such changes and amendments as are mutually agreed to by the Authority, the Local Agencies, and the Underwriter, including the cover page, the appendices, and all information incorporated therein by reference, is herein collectively referred to as the "Official Statement." The Authority represents that it has deemed the sections of the Preliminary Official Statement entitled "THE AUTHORITY" and "NO LITIGATION — The Authority" to be final as of the date of Preliminary Official Statement, pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule "), and has delivered, or will deliver, a certificate to the Underwriter substantially in the form of Exhibit C -1 attached hereto. Each Local Agency represents that it has deemed the Preliminary Official Statement to be final as of its date, except for (a) information regarding the Authority, [CONFIRM:] [the Certificate Insurer, the Reserve Policy, and the Certificate Insurance Policy,] (b) information relating to any other Local Agency, and (c) the omission of the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, dates and amounts of mandatory sinking fund payments, delivery dates, ratings, and identity of the purchasers and any other terms of the Certificates relating to such matters and any other information permitted to be omitted by the Rule, and has delivered, or will deliver, a certificate to the Underwriter substantially in the form of Exhibit C -2 attached hereto. 2. The Certificates shall mature on the dates and in the amounts, and shall evidence interest payable at the rates, set forth in Exhibit B hereto and as further described in the Official Statement and shall be executed and delivered under and pursuant to the Trust Agreement, dated as of [MONTH] 1, 2014 (the "Trust Agreement "), by and among the Authority, the Local Agencies, and Wells Fargo Bank, National Association (the "Trustee "). [CONFIRM:] [Concurrently with the execution and delivery of the Certificates, , a [STATE] stock insurance company (the "Certificate Insurer "), has agreed to deliver to the Trustee a municipal bond insurance policy (the "Certificate Insurance Policy ") and a municipal bond debt service reserve insurance policy (the "Reserve Policy "). The Certificate Insurance Policy will guaranty the scheduled payments when due of the principal and interest with respect to the Certificates. The Reserve Policy will be issued pursuant to the terms of an hnsurance Agreement, dated [MONTH] _, 2014 (the "Insurance Agreement "), by and between the applicable Local Agency and the Certificate hhsurer. The Reserve Policy constitutes a Qualified Reserve Instrument under and as defined in the Trust Agreement, and will be issued by the Certificate Insurer in an amount equal to the Reserve Fund Requirement.] Capitalized terms used herein without definition shall have the meanings given to such terms in the Trust Agreement. ACTIVE/73470786.1 3. The Underwriter agrees to make an initial bona fide public offering of all of the Certificates, at not in excess of the initial public offering yields or prices set forth on Exhibit B attached hereto. Following the initial public offering of the Certificates, the offering prices may be changed from time to time by the Underwriter. The Local Agencies and the Authority acknowledge and agree that: (i) the purchase and sale of the Certificates pursuant to this Purchase Contract is an arm's - length commercial transaction between the Local Agencies, the Authority, and the Underwriter; (ii) in connection therewith and with the discussions, undertakings, and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and are not acting as Municipal Advisor (as defined in Section 15B of The Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Local Agencies or the Authority with respect to the offering contemplated hereby or the discussions, undertakings, and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Local Agencies or the Authority on other matters); and (iv) the Local Agencies and the Authority have consulted their own legal, financial, and other advisors to the extent they have deemed appropriate. 4. The Authority and each of the Local Agencies hereby authorizes, or has previously authorized, the use by the Underwriter of (i) the Trust Agreement, (ii) each respective 2014 Installment Sale Agreement, (iii) each respective Continuing Disclosure Agreement, dated as of the Closing Date (each, a "Local Agency Continuing Disclosure Agreement" and, collectively, the "Local Agency Continuing Disclosure Agreements "), by and between the applicable Local Agency and the Trustee, as dissemination agent, [INCLUDE IF PARTY OTHER THAN THE TRUSTEE WILL SERVE AS DISSEMINATION AGENT:] [provided that , shall serve as dissemination agent (the "Dissemination Agent ") under the Local Agency Continuing Disclosure Agreement with the City of Lake Elsinore,] and (iv) each of the Preliminary Official Statement and the Official Statement, and any supplements or amendments thereto, and the information contained in each of such documents, in connection with the public offering and sale of the Certificates. The Authority will deliver to the Underwriter, within seven (7) business days after the date of this Purchase Contract and in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, copies of the Official Statement in final form (including all documents incorporated by reference therein) and any amendment or supplement thereto in such quantities as the Underwriter may reasonably request in order to comply with the obligations of the Underwriter pursuant to the Rule and the rules of the Municipal Securities Rulemaking Board. As soon as practicable following receipt thereof from the Authority, the Underwriter shall deliver the Official Statement to the Municipal Securities Rulemaking Board. 5. At 8:00 a.m., Los Angeles time, on [MONTH] , 2014, or at such other time or on such other business day as shall have been mutually agreed upon by the Authority, the Local Agencies, and the Underwriter (the "Closing Date "), the Authority will cause the Trustee to execute and deliver to the Underwriter at the office of or otherwise in care of The Depository Trust Company ( "DTC ") in New York, New York, or at such other place as the Authority and the Underwriter may mutually agree upon, the Certificates in fully - registered book -entry form, duly executed and registered in the name of Cede & Co., as nominee of DTC, and subject to the terms and conditions hereof, the Underwriter will accept such delivery and ACTIVE/73470786.1 pay the purchase pr ice of the Cer "trfieates by' vv iariSfcr payabic iii rrllrilcdratciy avarlabiC funds to or upon the order of the Authority at such place in Los Angeles, California, or New York, New York, as shall have been mutually agreed upon by the Authority and the Underwriter. Such delivery of and payment for the Certificates is referred to herein as the "Closing." The Certificates shall be made available for inspection by DTC at least one business day before the Closing. The Authority represents, warrants, and covenants to the Underwriter that: (A) The Authority is a joint powers authority under Article 1 of Chapter 5 of Division 7 of Title 1 of the California Government Code duly organized and validly existing under and by virtue of the Constitution and the laws of the State of California (the "State "). (B) The Authority has the legal right and power to execute and deliver, and to perform its obligations under, the Trust Agreement, the 2014 Installment Sale Agreements, and this Purchase Contract (collectively, the "Authority Documents "). The Authority has duly authorized the execution and delivery of the Certificates and the execution and delivery of,, and performance of its obligations under, the Authority Documents and, as of the date hereof, such authorizations are in full force and effect and have not been amended, modified, or rescinded. When executed and delivered by the respective parties thereto, the Authority Documents will constitute legal, valid, and binding obligations of the Authority in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws, the application of equitable principles relating to or affecting creditors' rights generally, and limitations on remedies against public entities in California. The Authority has complied, and will at the Closing be in compliance in all respects, with its obligations under the Authority Documents. (C) The Certificates will be paid from Installment Sale Payments pursuant to the respective 2014 Installment Sale Agreements, which payments have been duly and validly authorized pursuant to applicable law. (D) The Certificates will be executed and delivered in accordance with the Trust Agreement and will conform in all material respects to the descriptions thereof contained in the Official Statement. The Trust Agreement creates a valid pledge of, first lien upon, and security interest in, the pledged Instalhnent Sale Payments. (E) The information in the sections of the Official Statement entitled "THE AUTHORITY" and "NO LITIGATION — The Authority" is true and correct in all material respects, and such information does not contain any misstatement of any material fact and does not omit any statement necessary to make the statements, in the light of the circumstances in which such statements were made, not misleading. (F) The Authority covenants with the Underwriter" that for twenty -five (25) days after the Closing Date (the "Delivery Period "), if any event occurs that might or would cause the Official Statement, as then supplemented or amended, to contain an 4 ACTIVE/73470786.1 untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriter thereof, 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 Authority will cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement, at the expense of the Local Agencies, in a form and in a manner approved by the Underwriter. (G) The Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter. The Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale, or distribution of the Certificates. (H) If the Official Statement is supplemented or amended, the Official Statement, as so supplemented or amended, as of the date of such supplement or amendment, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (1) The Authority is not in breach of or in default under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which the Authority is a party, and no event has occurred and is continuing that, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any of the foregoing. (J) The authorization, execution, and delivery by the Authority of the Authority Documents, and compliance by the Authority with the provisions thereof, do not and will not conflict with or constitute a breach of or default by the Authority under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which it is bound or by which its properties may be affected, 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 Authority 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 Authority Documents. (K) No authorization, consent, or approval of, or filing or registration with, any Governmental Authority (as defined below) or court is, or under existing requirements of law will be, necessary for the valid execution and delivery of, or performance by the Authority of its obligations under, the Authority Documents, other than any authorization, consent, approval, filing, or registration as may be required ACTIVE /73470786.1 under the Blue Sky or securities laws of any state in connection with the ofibring, sale, execution, or delivery of the Certificates. All authorizations, consents, or approvals of, or filings or registrations with, any Governmental Authority or court necessary for the valid execution and delivery of, and performance by the Authority of its obligations with respect to, the Certificates will have been duly obtained or made prior to the execution and delivery of the Certificates (and disclosed to the Underwriter). As used herein, the term "Governmental Authority" refers to any legislative body or governmental official, department, commission, board, bureau, agency, instrumentality, body, or public benefit corporation. (L) The Authority shall furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request at the expense of the Underwriter and /or the Local Agencies in order (i) 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 (ii) to determine the eligibility of the Certificates for investment under the laws of such states and other jurisdictions, and shall use its best efforts to continue such qualifications in effect so long as required for the distribution of the Certificates; provided, however, that the Authority shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction. (M) To the knowledge of the Authority, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending or threatened (i) in any way questioning the existence of the Authority or the titles of the officers of the Authority to their respective offices; (ii) affecting, contesting, or seeking to prohibit, restrain, or enjoin the execution and delivery of the Certificates or the execution or delivery of any of the Authority Documents, or the payment or collection of any amounts pledged or to be pledged to pay the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Authority Documents or the consummation of the transactions contemplated thereby or any proceeding of the Authority taken with respect to any of the foregoing, or contesting the exclusion of the portion of the Installment Sale Payments designated as and comprising interest and received by the Owners of the Certificates from taxation or contesting the powers of the Authority and its authority to pledge the Installment Sale Payments; (iii) that may result in any material adverse change relating to the Authority that will materially adversely affect the Authority's ability to apply Installment Sale Payments to pay the Certificates when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (N) Other than in the ordinary course of its business or as contemplated by the Official Statement, between the date of this Purchase Contract and the Closing Date the ACTIVG/73470786.1 Authority will not, without the prior written consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a pledge of the Installment Sale Payments. (0) Any certificate signed by any official or other representative of the Authority and delivered to the Underwriter pursuant to this Purchase Contract shall be deemed a representation and warranty by the Authority to the Underwriter as to the truth of the statements therein made. 7. Each Local Agency represents, warrants, and covenants to the Underwriter and the Authority, solely for itself and not on behalf of any other Local Agency, that: (A) The Local Agency is a municipal corporation of the State duly organized and validly existing under and by virtue of the Constitution and laws of the State. (B) The Local Agency has the legal right and power to execute and deliver, and to perform its obligations under, the Trust Agreement, its applicable 2014 Installment Sale Agreement, its applicable Local Agency Continuing Disclosure Agreement, [CONFIRM:] [its applicable Insurance Agreement,] and this Purchase Contract (collectively, with respect to such Local Agency, the "Local Agency Documents "). The Local Agency has duly authorized the execution and delivery of, and the performance of its obligations under, the Local Agency Documents and as of the date hereof such authorizations are in full force and effect and have not been amended, modified, or rescinded. When executed and delivered by the respective parties thereto, the Local Agency Documents will constitute legal, valid, and binding obligations of the Local Agency in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws, the application of equitable principles relating to or affecting creditors' rights generally, and limitations on remedies against public entities in California. The Local Agency has complied, and will at the Closing be in compliance in all respects, with its obligations under the Local Agency Documents. (C) The Installment Sale Payments payable under the 2014 Installment Sale Agreement have been duly and validly authorized pursuant to applicable law. (D) The Certificates will be executed and delivered in accordance with the Trust Agreement and will conform in all material respects to the descriptions thereof contained in the Official Statement. The Trust Agreement creates a valid pledge of, first lien upon, and security interest in, the pledged Installment Sale Payments. (E) The information in the Official Statement (excluding any information with respect to the Authority, DTC, the book -entry only system, [CONFIRM:] [the Certificate Insurer, the Certificate Insurance Policy, the Reserve Policy,] and any Local Agencies other than such Local Agency) is true and correct in all material respects, and such information does not contain any misstatement of any material fact and does not ACTIVE/73470786.1 omit any stateinent necessary to make the statements, in the light of the circumstances in which such statements were made, not misleading. (F) The Local Agency covenants with the Underwriter that, during the Delivery Period, if any event occurs that might or would cause 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 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Local Agency shall notify the Underwriter thereof, 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 Local Agency will cooperate with the Underwriter and the Authority in the preparation of an amendment or supplement to the Official Statement, at the expense of the Local Agency or Local Agencies, as applicable, in a form and in a manner approved by the Underwriter. (G) The Local Agency will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter. The Local Agency will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale, or distribution of the Certificates. (H) If the Official Statement is supplemented or amended, the Official Statement as so supplemented or amended, as of the date of such supplement or amendment, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (I) The Local Agency is not in breach of or in default under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which the Local Agency is a party, and no event has occurred and is continuing that, with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any of the foregoing. (J) The authorization, execution, and delivery by the Local Agency of the Local Agency Documents, and compliance by the Local Agency with the provisions thereof, do not and will not conflict with or constitute a breach of or default by the Local Agency under any applicable constitutional provision, law, or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, consent, or other agreement to which it is bound or by which its properties may be affected. (K) No authorization, consent, or approval of, or filing or registration with, any Governmental Authority or court is, or under existing requirements of law will be, necessary for the valid execution and delivery of, or performance by the Local Agency ACI'IVE/73470786.1 of its obligations under, the Local Agency Documents, other than any authorization, consent, approval, filing, or registration as may be required under the Blue Sky or securities laws of any state in connection with the offering, sale, execution, or delivery of the Certificates. (L) The Local Agency 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 (i) 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 (ii) to determine the eligibility of the Certificates for investment under the laws of such states and other jurisdictions, and will use their best efforts to continue such qualifications in effect so long as required for the distribution of the Certificates; provided, however, that the Local Agency shall not be required to execute a general consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction. (M) There is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending or, to the best knowledge of the Local Agency, threatened against the Local Agency (i) in any way questioning the existence of the Local Agency or the titles of the officers of the Local Agency to their respective offices; (ii) affecting, contesting, or seeking to prohibit, restrain, or enjoin the execution and delivery of the Certificates or the execution or delivery of any of the Local Agency Documents, or the payment or collection of any amounts pledged or to be pledged to pay the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Local Agency Documents or the consummation of the transactions contemplated thereby or any proceeding of the Local Agency taken with respect to any of the foregoing, including, without limitation, the Local Agency's validation proceedings with respect to the Certificates and the Local Agency Documents, or contesting the exclusion of the portion of the Installment Sale Payments designated as and comprising interest and received by the Owners of the Certificates from taxation or contesting the powers of the Local Agency and its authority to pledge the Installment Sale Payments; (iii) that may result in any material adverse change relating to the Local Agency that will materially adversely affect the Local Agency's ability to pay Installment Sale Payments when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (N) Other than in the ordinary course of its business or as contemplated by the Official Statement, between the date of this Purchase Contract and the Closing Date the Local Agency will not, without the prior written consent of the Underwriter, offer or issue any certificates, bonds, notes, or other obligations for borrowed money or incur ACTIVL/73470786.1 any material liabilities, direct or contingent, payable from or secured by a pledge of the Installment Sale Payments. (0) The financial information regarding the Local Agency contained in the Official Statement fairly present the financial position and results of the operations of the Local Agency as of the dates and for the periods therein set forth, and, to the best of the Local Agency's knowledge, the Local Agency's audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied. (P) Any certificate signed by any official or other representative of the Local Agency and delivered to the Underwriter pursuant to this Purchase Contract shall be deemed a representation and warranty by the Local Agency to the Underwriter as to the truth of the statements therein made. (Q) Except as otherwise disclosed in the Official Statement, the Local Agency has not failed during the previous five (5) years to comply in all material respects with any previous undertakings in a written continuing disclosure contract or agreement under the Rule. (R) To the extent permitted by law, the Local Agency agrees to indemnify and hold harmless the Authority and its officers, directors, agents, and employees against any and all losses, claims, damages, liabilities, and expenses arising out of any statement or information in the Preliminary Official Statement or in the Official Statement (other than statements or information specifically related to the Authority, the Program, DTC, the book -entry only system, [CONFIRM:] [the Certificate Insurer, the Certificate Insurance Policy, the Reserve Policy,] and any Local Agency other than such Local Agency) that is untrue or incorrect in any material respect or that omits to state any material fact that is necessary to make such statement or information therein not misleading in any material respect. 8. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties, and covenants of the Authority and each of the Local Agencies contained herein and in the Authority Documents and the Local Agency Documents to which each of the Authority or each of the Local Agencies, as applicable, is a party, and the performance by the Authority and by each of the Local Agencies of their respective obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter's obligations under this Purchase Contract are and shall be subject to the following further conditions: (A) The representations and warranties of the Authority and the Local Agencies contained herein shall be true, complete, and correct in all material respects on the date hereof and at and as of the Closing, as if made at and as of the Closing, and the statements made in all certificates and other documents delivered to the Underwriter at the Closing pursuant hereto shall be true, complete, and correct in all material respects at the Closing; the Authority and each of the Local Agencies shall be in compliance with each of the agreements made by it in this Purchase Contract (unless ]0 ncTrvri73470786.1 such agreements are waived by the Underwriter); there shall not have occurred an adverse change in the financial position, results of operations, or financial condition of any of the Local Agencies that materially adversely affects the ability of any of the Local Agencies to pay Installment Sale Payments when due or otherwise perform any of its obligations under the Local Agency Documents; and there shall not have occurred an adverse change in the financial position of the Authority that materially adversely affects the ability of the Authority to make payments of principal and interest with respect to the Certificates when due or otherwise perform any of its obligations under the Authority Documents. (B) At the time of the Closing, the Authority Documents and the Local Agency Documents shall be in full force and effect, and shall not have been amended, modified, or supplemented (except as may be agreed to in writing by the Underwriter); all actions that, in the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agencies ( "Special Counsel "), shall be necessary in connection with the transactions contemplated hereby shall have been duly taken and shall be in full force and effect; and each Local Agency shall perform or shall have performed its obligations required under or specified in the Local Agency Documents to be performed at or prior to the Closing and the Authority shall perform or shall have performed its obligations required under or specified in the Authority Documents to be performed at or prior to the Closing. (C) At the time of the Closing, the Official Statement (as amended and supplemented) shall be true and correct in all material respects, and shall not omit any statement or information necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (D) Except as disclosed in the Official Statement or in a schedule delivered to the Underwriter at the Closing, no decision, ruling, or finding shall have been entered by any court or Governmental Authority since the date of this Purchase Contract (and not reversed on appeal or otherwise set aside) that has any of the effects described in Section 8(F) hereof. (E) (i) No default by any Local Agency or the Authority shall have occurred and be continuing in the payment of the principal of or premium, if any, or interest on any bond, note, or other evidence of indebtedness issued by any Local Agency or the Authority, respectively, and (ii) no bankruptcy, insolvency, or other similar proceeding in respect of any Local Agency or the Authority shall be pending or, to the knowledge of each such Local Agency or the Authority, contemplated. (F) The Underwriter may terminate this Purchase Contract by written notification to the Authority and the Local Agencies if at any time after the date hereof and prior to the Closing: (1) legislation shall have been enacted by the United States or the State or shall have been reported out of committee or be pending in committee, or a decision shall have been rendered by a court of the United States or the Tax Court of ACTIVE/73470786.1 the United States, or a ruling snail have been made or a regulation, proposed regulation, or a temporary regulation shall have been published in the Federal Register or any other release or announcement shall have been made by the Treasury Department of the United States or the Internal Revenue Service, with respect to Federal or State taxation upon revenues or other income or payments of the general character of the Certificates, which, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or (2) the United States shall have become engaged in hostilities that have resulted in a declaration of war or a national emergency or the President of the United States of America shall have committed the armed forces of the United States of America to combat so as to adversely affect the financial markets in the United States of America and that, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or (3) there shall have occurred a general suspension of trading on the New York Stock Exchange, or a general banking moratorium shall have been declared by Federal, California, or New York authorities having jurisdiction and being in force; or (4) there shall have occurred an adverse change in the financial position, results of operations, or financial condition of any Local Agency that, in the reasonable opinion of the Underwriter, materially adversely affects the market for the Certificates; or (5) any legislation, ordinance, rule, or regulation shall be introduced in, or be enacted by, any governmental body, department, or agency of the State, or a decision by any court of competent jurisdiction within the State or any court of the [Jnited States shall be rendered that, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Certificates; or (6) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation, or official statement by, or all behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering, or sale of obligations of the general character of the Certificates, or the execution, delivery, offering, or sale of the Certificates, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Certificates, or the Certificates, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Trust Agreement needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (7) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, which restrictions materially adversely 12 ACTIVE /734707W I affect the ability of underwriters to trade obligations of the general character of the Certificates; or (8) any rating of the Certificates shall have been downgraded, suspended, or withdrawn by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the Certificates; or (9) the commencement of any action, suit, or proceeding described in Section 6(M) or 7(M) that, in the judgment of the Underwriter, materially adversely affects the market price of the Certificates; or (10) [CONFIRM:] [any rating of the Certificate Insurer shall have been downgraded, suspended, or withdrawn by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the Certificates; or] (11) any event occurring, or information becoming known, that, in the reasonable judgment of the Underwriter, makes any statement or information contained in the Official Statement, as of its date, untrue in any material adverse respect, or has the effect that the Official Statement, as of its date, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (G) At or prior to the Closing, the Underwriter shall receive the following documents: (1) the opinion of Special Counsel, dated the Closing Date, in substantially the form included in the Official Statement as Appendix C, addressed to the Local Agencies (and accompanied by reliance letters to the Authority, the Underwriter, the Trustee, [CONFIRM:] [and the Certificate Insurer]); (2) a supplemental opinion of Special Counsel, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Underwriter, to the effect that: (i) the Certificates are not subject to registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; [CONFIRM:] [provided that no opinion shall be expressed with respect to the Certificate Insurance Policy or the Reserve Policy;] (ii) this Purchase Contract has been duly executed and delivered by each Local Agency and is a valid and binding agreement of each Local Agency; and (iii) the statements contained in the Official Statement under the captions "INTRODUCTION," "THE CERTIFICATES," "SECURITY AND 13 ACI'IVE/73470786.1 `T�r�rr7 OF w�tc H r y PAYMENT FOR THE CERTIFICATES," "TAX MATTERS," "APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF PRINCIPAL LEGAL DOCUMENTS," and "APPENDIX C — PROPOSED FORM OF SPECIAL COUNSEL OPINION," insofar as such statements expressly summarize certain provisions of the Trust Agreement, the 2014 Installment Sale Agreements, the Certificates, and the opinion of Special Counsel concerning certain federal tax matters relating to the Certificates, are accurate in all material respects; (3) an opinion of counsel to each Local Agency, in form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Authority, the Underwriter, [CONFIRM:] [and the Certificate Insurer,] to the effect that: (i) the Local Agency is a municipal corporation duly organized and validly existing under and by virtue of the laws of thie State; (ii) the Local Agency has full legal power and lawful authority to enter into the Local Agency Documents; (iii) the resolution of the Local Agency approving and authorizing the execution and delivery of the Local Agency Documents and approving the Official Statement (the "Local Agency Resolution ") was duly adopted at a meeting of the city council or other governing body of the Local Agency that was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Local Agency Resolution is in full force and effect and has not been modified, amended, or rescinded as of the Closing Date; (iv) the Local Agency Documents have been duly authorized, executed, and delivered by the Local Agency and, assuming due authorization, execution, and delivery by the other parties thereto, such documents constitute the legal, valid, and binding agreements of the Local Agency enforceable in accordance with their terms, subject to laws relating to bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought; (v) the execution and delivery by the Local Agency of the Local Agency Documents, and compliance by the Local Agency with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute a breach of or default under any law, administrative regulation, court decree, resolution, or agreement to which the Local Agency is subject to or by which it is bound; (vi) [CONFIRM:] [the Reserve Policy, as defined in the Insurance Agreement, is a Qualified Reserve Instrument, as defined in the Trust Agreement, and the repayment obligations owed to the Certificate Insurer in 14 ACTIVE/73470786.1 connection with the Reserve Policy are secured by a valid lien on Revenues (as defined in the Trust Agreement), subject to the first pledge of and lien upon the Revenues for the payment of the Certificates;] (vii) nothing has come to such counsel's attention that would lead such counsel to believe that the Official Statement (excluding therefrom financial information and other statistical data included in the Official Statement, and any information with respect to any Local Agencies other than such Local Agency, the Authority, the Program, DTC, the book -entry only system, [CONFIRM:] [the Certificate Insurer, the Reserve Policy, or the Certificate Insurance Policy,] as to which no view need be expressed) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (viii) except as otherwise disclosed in the Official Statement, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, or public board or body, pending or, to the best knowledge of such counsel, threatened against the Local Agency (a) in any way questioning the existence of the Local Agency or the titles of the officers of the Local Agency to their respective offices; (b) affecting, contesting, or seeking to prohibit, restrain, or enjoin the execution and delivery of the Certificates or any of the Local Agency Documents, or the payment or collection of any amounts pledged or to be pledged to pay the Installment Sale Payments or the principal and interest with respect to the Certificates, or in any way contesting or affecting the validity of the Certificates or the Local Agency Documents or the consummation of the transactions contemplated thereby or any proceeding of the Local Agency taken with respect to any of the foregoing, or contesting the exclusion of the interest payable with respect to the Certificates from taxation or contesting the powers of the Local Agency and its authority to pledge the Installment Sale Payments; (c) that may result in any material adverse change relating to the Local Agency that will materially adversely affect the Local Agency's ability to pay the Installment Sale Payments when due; or (d) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ix) no additional authorization, approval, consent, waiver, or any other action by any person, board, or body, public or private, not previously obtained is required as of the Closing Date for the Local Agency to enter into the Local Agency Documents, or to perform its obligations thereunder; 15 ACT] V1✓ /73470786.1 an opinion of Special Counsel, as counsel to the Authority, ill form and substance satisfactory to the Underwriter, dated the Closing Date, addressed to the Underwriter [CONFIRM:] [and the Certificate Insurer], to the effect that: (i) the Authority is a joint powers agency organized and existing under the laws of the State of California; and (ii) the resolution of the Authority approving and authorizing the execution and delivery of the Authority Documents and approving the Official Statement (the "Authority Resolution ") was duly adopted at a meeting of the governing body of the Authority. The Authority Resolution is in full force and effect and has not been amended, modified or rescinded; (5) a letter from Goodwin Procter LLP, Los Angeles, California, counsel to the Underwriter ( "Underwriter's Counsel "), dated the Closing Date, addressed to the Underwriter, to the effect that, based upon its participation in the preparation of the Official Statement as Underwriter's Counsel and without having undertaken to determine independently the fairness, accuracy, or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that, as of the date of the Closing, the Official Statement (excluding therefrom the reports, financial and statistical data and forecasts therein, the information with respect to DTC and the book -entry system, [CONFIRM:] [the information with respect to the Certificate Insurer, the Reserve Policy, and the Certificate Insurance Policy,] and the information included in the Appendices thereto, as to which no view need be expressed) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (6) a certificate of each Local Agency, in form and substance satisfactory to the Underwriter, dated the Closing Date, to the effect that: (i) the representations, warranties, and covenants of the Local Agency contained in this Purchase Contract are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Local Agency has complied with all of the terms and conditions of the Purchase Contract required to be complied with by the City at or prior to the Closing Date; (ii) the Local Agency has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date pursuant to the Purchase Contract with respect to the execution and delivery of the Certificates; (iii) to the best knowledge of the Local Agency, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened against the Local Agency, affecting the existence of the Local Agency or the 16 ACTIVE/73470786.1 titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain, or enjoin the sale, execution, or delivery of the Certificates or contesting or affecting, as to the Local Agency, the validity or enforceability of the Certificates, the Local Agency Documents or contesting the tax exempt status of interest represented by the Certificates, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Local Agency or any authority for the execution and delivery of the Certificates, or in any way contesting or challenging the consummation of the transactions contemplated under the Local Agency Documents, or, except as disclosed in the Official Statement, that might result in a material adverse change in the financial condition of the Local Agency or materially adversely affect the Local Agency's rights to receive and expend revenues allocated to the Local Agency by the Riverside County Transportation Commission (the "Commission ") that are derived from a retail transactions and use tax imposed in the County of Riverside, California pursuant to the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State and Ordinance No. 02 -001, the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on May 8, 2002, and approved by at least two - thirds of electors voting on such proposition in the November 5, 2002 election, as supplemented and amended, nor is there any basis known to the Local Agency for any such action, suit, proceeding, inquiry, or investigation, wherein an unfavorable decision, ruling, or finding would materially adversely affect the authorization, execution, delivery, or performance by the Local Agency of the Local Agency Documents or the execution by the Trustee of the Certificates; (iv) no event affecting the Local Agency has occurred since the date of the Official Statement that has not been disclosed therein or in any supplement or amendment thereto, which event should be in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) between the date of the Purchase Contract and the Closing Date, the Local Agency has not offered or issued any bonds, notes, or other obligations for borrowed money, or incurred any material liabilities, other than with the written consent of the Underwriter, nor has there been any adverse change of a material nature in the financial position, results of operations, or condition, financial or otherwise, of the Local Agency; (7) a certificate of the Authority, in form and substance satisfactory to the Underwriter, dated the Closing Date, to the effect that: (i) the representations and warranties of the Authority contained in this Purchase Contract are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; and 17 ACTIVli/73470786.1 ku) there has been no material adverse change in the financial condition or results of operations of the Authority fi°onn the date of the Official Statement to the Closing Date; (8) a certificate, dated the date of the Preliminary Official Statement, from the Authority addressed to the Underwriter, in the form attached hereto as Exhibit C -1 and a certificate, dated the date of the Preliminary Official Statement, from each Local Agency addressed to the Underwriter, in the form attached hereto as Exhibit C -2; (9) an opinion of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter, the Authority, [CONFIRM:] [and the Certificate Insurer,] to the effect that: (i) the Trustee is a national banking association and is validly existing, dully qualified to do business and in good standing under the laws of each jurisdiction in which the performance of its duties under the Trust Agreement and the Local Agency Continuing Disclosure Agreements, if any, pursuant to which the Trustee serves as dissemination agent (collectively, the "Trustee Documents ") would require such qualification and has the requisite power and authority to execute, deliver and perform its obligations under the Trustee Documents; (ii) the Trustee is duly eligible and qualified to act as Trustee under the Trust Agreement; (iii) the Trustee has all requisite power, authority and legal right to execute and deliver the Trustee Documents and to perform its obligations under the Trustee Documents, and has taken all necessary corporate action to authorize the execution and delivery of and the performance of its obligations under the Trustee Documents; (iv) the Trustee has duly executed and delivered the Trustee Documents. Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Trustee Documents are the legal, valid and binding agreements of the Trustee enforceable against the Trustee in accordance with their terms, except to the extent enforceability thereof may be subject to (A) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights and remedies heretofore or hereafter enacted, and (B) the application of equitable principles and the exercise of judicial discretion in appropriate cases; (v) the Certificates have been duly executed and delivered by the Trustee; (vi) the execution, delivery and performance of the Trustee Documents by the Trustee and the consummation of the transactions contemplated thereby do not and will not (a) to the knowledge of such counsel, 18 ACTIVE/73470780.1 conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, or other agreement or instrument to which the Trustee is a party or by which the Trustee is bound or to which any of the property or assets of the Trustee or any of its subsidiaries is subject, (b) result in any violation of the provisions of the charter, articles of association, by -laws, or applicable resolutions of the Trustee, or (c) to the knowledge of such counsel, result in any violation of any statute or any order, rule, or regulation of any court or government agency or body having jurisdiction over the Trustee or any of its properties or assets; and (vii) to the knowledge of such counsel, there are no actions, proceedings or investigations pending or threatened against the Trustee before any court, administrative agency or tribunal (a) asserting the invalidity of the Trustee Documents, (b) seeking to prevent the consummation of any of the transactions contemplated thereby, or (c) that might materially and adversely affect the performance by the Trustee of its obligations under, or the validity or enforceability of the Trustee Documents; (10) a certificate, dated the Closing Date, signed by a duly authorized officer of the Trustee, to the effect that: (i) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States of America, having the necessary power to enter into, accept, and administer the trusts created under the Trust Agreement and to execute and deliver the Certificates to the Underwriter; (ii) the Trustee Documents have been duly authorized, executed, and delivered by a duly authorized officer of the Trustee, and the execution, delivery, and performance of the Trustee Documents has been duly authorized by all necessary action of the Trustee; (iii) the Trustee Documents constitute the legal, valid, and binding obligations of the Trustee enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought; (iv) the Certificates have been duly executed and delivered by a duly authorized officer of the Trustee; (v) no consent, approval, authorization, or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Trustee Documents or the performance by the Trustee of its duties and obligations under the Trustee Documents; 19 ACTT VE /73470786.1 VIA the execution and delivery by the Trustee of the Trustee Documents 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 body having jurisdiction over the Trustee or any of its activities or properties (except that no representation, warranty, or agreement need be made by such counsel with respect to any federal or State securities or blue sky laws or regulations); (vii) the Trustee's action in executing and delivering the Trustee Documents will not contravene the articles or bylaws of the Trustee and is in full compliance with, and does not conflict with, any applicable law or governmental regulation currently in effect, and such action does not conflict with or violate any contract to which the Trustee is a party or any administrative or judicial decision by which the Trustee is bound; and (viii) there is no action, suit, proceeding, or investigation, at law or in equity, before or by any court or governmental agency, public board, or body that has been served on the Trustee, or to the best knowledge of the Trustee, threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Trustee Documents or contesting the powers of the Trustee or its authority to enter into and perform its obligations thereunder; (11) [TO BE USED IF A PARTY OTHER THAN THE TRUSTEE WILL SERVE AS DISSEMINATION AGENT:] a certificate, dated the Closing Date, signed by a duly authorized officer of the Dissemination Agent, to the effect that: (i) the Dissemination Agent is a corporation validly existing and in good standing under the laws of the State of California and has full corporate power and authority to enter into and perform its obligations under and the Local Agency Continuing Disclosure Agreement with the City of Lake Elsinore (the "Lake Elsinore Continuing Disclosure Agreement "); (ii) the Lake Elsinore Continuing Disclosure Agreement has been duly authorized, executed, and delivered by a duly authorized officer of the Dissemination Agent, and the execution, delivery, and performance of tine Lake Elsinore Continuing Disclosure Agreement has been duly authorized by all necessary action of the Dissemination Agent; (iii) the Lake Elsinore Continuing Disclosure Agreement constitutes the legal, valid, and binding obligation of the Dissemination Agent enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of 20 ACTIVC/73470786.1 creditors' rights generally and by the application of equitable principles, if equitable remedies are sought; (iv) no consent, approval, authorization, or other action by any governmental or regulatory authority having jurisdiction over the Dissemination Agent that has not been obtained is or will be required for the execution and delivery of the Lake Elsinore Continuing Disclosure Agreement or the performance by the Dissemination Agent of its duties and obligations under the Lake Elsinore Continuing Disclosure Agreement; (v) the execution and delivery by the Dissemination Agent of the Lake Elsinore Continuing Disclosure 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 Dissemination Agent is a party or by which it is bound, or any law or any rule, regulation, order, or decree of any court or governmental agency or body having jurisdiction over the Dissemination Agent or any of its activities or properties (except that no representation, warranty, or agreement need be made with respect to any federal or State securities or blue sky laws or regulations); (vi) the Dissemination Agent's action in executing and delivering the Lake Elsinore Continuing Disclosure Agreement will not contravene the articles or bylaws of the Dissemination Agent and is in full compliance with, and does not conflict with, any applicable law or governmental regulation currently in effect, and such action does not conflict with or violate any contract to which the Dissemination Agent is a party or any administrative or judicial decision by which the Dissemination Agent is bound; and (vii) there is no action, suit, proceeding, or investigation, at law or in equity, before or by any court or governmental agency, public board, or body that has been served on the Dissemination Agent, or, to the best knowledge of the Dissemination Agent, threatened against the Dissemination Agent that in the reasonable judgment of the Dissemination Agent would affect the existence of the Dissemination Agent or in any way contesting or affecting the validity or enforceability of the Lake Elsinore Continuing Disclosure Agreement or contesting the powers of the Dissemination Agent or its authority to enter into and perform its obligations thereunder; (12) certified copies of each Local Agency Resolution, the Authority Resolution, and an incumbency resolution of the Trustee; (13) copies each of the Authority Documents, the Local Agency Documents, the Trustee Documents, and the Official Statement, duly executed and delivered by the respective parties thereto; 21 A CTI V F-1/734707 86.1 l I -f) tax certificates of ure Authority and of each Local Agency, each in form satisfactory to Special Counsel, signed by an appropriate officer of each of the Authority and each Local Agency; (15) [CONFIRM:] [evidence satisfactory to the Underwriter that the Certificates shall have received the Certificate Insurance Policy by the Certificate Insurer that unconditionally guarantees the timely payments of all debt service with respect to the Certificates;] (16) [CONFIRM:] [evidence satisfactory to the Underwriter that the Trustee shall have received the Reserve Policy from the Certificate Insurer, which Reserve Policy constitutes a Qualified Reserve Instrument under and as defined in the Trust Agreement;] (17) [CONFIRM:] [an opinion of counsel to the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel, and Underwriter's Counsel, with respect to, among other matters, the Certificate Insurance Policy and the Reserve Policy;] (18) [CONFIRM:] [a certificate of the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel, and Underwriter's Counsel, with respect to, among other matters, the Certificate Insurance Policy and the Reserve Policy;] (19) [CONFIRM:] [a no- default certificate of the Certificate Insurer, in form and substance satisfactory to the Underwriter, Special Counsel, and Underwriter's Counsel;] (20) . evidence that the underlying rating on the Certificates of " "by Standard & Poor's Ratings Services is in full force and effect on the Closing Date; (21) [CONFIRM:] [evidence that the rating on the Certificates of " "by Standard & Poor's Ratings Services as a result of the Certificate Insurance Policy provided by the Certificate Insurer is in full force and effect on the Closing Date ;] (22) copies of the statements with respect to the sale of the Certificates required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code; (23) copy of the default judgment rendered on 2014, by the Superior Court of the State of California for the County of Riverside in the action entitled City of Lake Elsinore v. All Persons Interested in the Matter, etc., Case No. ; (24) a letter from the Commission in form and substance satisfactory to the Underwriter to the effect that Measure A Receipts (as such term is defined in the 22 ACTIVE /73470786.1 Official Statement) received by the applicable Local Agency may be pledged to the payment of Installment Sale Payments: (25) evidence that the federal tax information form 8038 -G for the Authority and for each Local Agency, as applicable, has been prepared by Special Counsel for filing; and (26) such additional legal opinions, certificates, proceedings, instruments, and other documents as the Underwriter, Special Counsel, or Underwriter's Counsel may reasonably request to evidence compliance by the Local Agencies and the Authority with legal requirements, the accuracy, as of the time of Closing, of the Authority and the Local Agencies' representations herein contained, and the due performance or satisfaction by the Local Agencies and the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Local Agencies and the Authority. If any of the Local Agencies or the Authority shall be unable to satisfy the conditions to the Underwriter's obligations contained in this Purchase Contract or if the Underwriter's obligations shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and none of the Local Agencies, the Authority, or the Underwriter shall have any further obligation hereunder. 9. The performance by each of the Authority and the respective Local Agencies of its obligations is conditioned upon (i) the performance by the Underwriter of its obligations hereunder and (ii) receipt by the Authority, the Local Agencies, and the Underwriter of opinions and certificates being delivered at the Closing by persons and entities other than the Authority and the Local Agencies. 10. (A) The Underwriter shall be under no obligation to pay, and the Local Agencies shall pay, the following expenses incident to the performance of the Authority's and the Local Agencies' obligations hereunder: (1) the fees and disbursements of Special Counsel and Underwriter's Counsel; (2) the cost of printing and delivering the Certificates, the Preliminary Official Statement and the Official Statement (and any amendment or supplement prepared pursuant to Section 4 of this Purchase Contract); (3) the fees and disbursements of the Trustee, accountants, financial advisers, legal counsel, and any other experts or consultants retained by the Authority or the Local Agencies, rating agency fees, and costs, fees, and expenses pertaining to the provision of any municipal bond insurance policy or municipal bond debt service reserve insurance policy; (4) expenses (included in the expense component of the spread) incurred on behalf of the Local Agencies' employees that are incidental to implementing 23 ACTIVE/73470786.1 this Purchase Contract, including, but not limited to, meals, transportation, lodging, and entertainment of such employees; and (5) any other expenses and costs of the Authority and the Local Agencies incident to the performance of their respective obligations in connection with the authorization, execution, delivery, and sale of the Certificates, including out -of- pocket expenses and regulatory expenses, and any other expenses agreed to by the parties. (B) The Underwriter shall pay from the expense component of the Underwriter's spread all expenses incurred by it in connection with the public offering and distribution of the Certificates including, without limitation: (1) all advertising expenses in connection with the offering of the Certificates; and (2) all out -of- pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Certificates (excluding the fees and expenses of its counsel) including, without limitation, CUSIP Bureau and California Debt and Investment Advisory Commission fees, if any, except as provided in subsection (A) above or as otherwise agreed to by the Underwriter, the Authority, and the Local Agencies. 11. Any notice or other communication to be given to the Authority under this Purchase Contract may be given by delivering the same in writing to the California Statewide Communities Development Authority, 1100 K Street, Suite 101, Sacramento, California 95814, Attention: Treasurer, or to such other person as the Treasurer may designate in writing; any notice or other communication to be given to any Local Agency under this Purchase Contract may be given by delivering the same in writing to such address and to such person as the applicable Local Agency may designate in writing; and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, 515 South Figueroa St, Suite 1800, Los Angeles, California 90071, Attention: John W. Kim. The approval of the Underwriter when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing signed by the Underwriter and delivered to the Authority. 12. For all purposes of this Purchase Contract, a default shall not be deemed to be continuing if it has been cured, waived, or otherwise remedied. This Purchase Contract shall be governed by and construed in accordance with the laws of the State applicable to contracts made and performed within the State. 13. This Purchase Contract 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. [The remainder of this page is intentionally left blank.] 24 ACTIVE/73470786.1 14. This Purchase Contract when accepted by the Authority and the Local Agencies in writing shall constitute the entire agreement among the Local Agencies, the Authority, and the Underwriter and is made solely for the benefit of the Local Agencies, the Authority, and the Underwriter (including the successors or assigns of the Underwriter). No other person shall acquire or have any right hereunder or by virtue hereof. Very truly yours, STIFEL, NICOLAUS & COMPANY, INCORPORATED By: Its: The foregoing is hereby agreed to and accepted as of the date first above written: CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY In Authorized Signatory Time of Execution: LOCAL AGENCIES LISTED ON EXHIBIT A HERETO [Authorized Officers of each Local Agency shall execute this Purchase Contract by signing Pricing Confirmation Supplement in Exhibit D hereto.] 25 ACTIVE/73470786.1 EXHIBIT A $[PRINCIPAL AMOUNT] California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) LOCAL AGENCIES CITY OF LAKE ELSINORE A —] ACTIVE /73470786.1 EXHIBIT B $[PRINCIPAL AMOUNT] California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) SCHEDULE OF TERMS AND PRICES Maturity Date Principal Interest (June 1) Amount Rate Price Yield Serial Certificates: Term Certificates: Total $[PRINCIPAL AMOUNT] B- 1 ACTIVE/73470796.1 E riiniT C -I FORM OF 15e2 -12 CERTIFICATE CERTIFICATE OF AUTHORITY AS TO FINALITY OF PRELIMINARY OFFICIAL STATEMENT I hereby certify that I am a member of the commission of the California Statewide Communities Development Authority (the "Authority ") or an authorized administrative delegatee thereof ( "Authorized Signatory "), and as such I am authorized to execute this certificate on behalf of the Authority. I understand that there has been delivered to Stifel, Nicolaus & Company, Incorporated, as underwriter (the "Underwriter ") of the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), a Preliminary Official Statement relating to the Certificates, dated [POS DATE], 2014 (including the cover page, the introduction and all appendices thereto, the "Preliminary Official Statement "), which, as to only the sections thereof entitled "THE AUTHORITY" and "NO LITIGATION — The Authority," the Authority deems to be final as of its date for purposes of Rule 15c2 -12 promulgated under the Securities Exchange Act of 1934 ( "Rule 15c2 -12 "), except for information permitted to be omitted therefrom by Rule l 5c2 -12. Dated: [POS DATE], 2014 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Authorized Signatory C -1- 1 ACT] VL/73470786.1 EXHIBIT C -2 "DEEMED FINAL CERTIFICATE" FOR PRELIMINARY OFFICIAL STATEMENT [POS DATE], 2014 Stifel, Nicolaus & Company, Incorporated 515 South Figueroa St, Suite 1800 Los Angeles, California 90071 Attention: John W. Kim Re: California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) Ladies and Gentlemen: With respect to the proposed sale of the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), the California Statewide Communities Development Authority (the "Authority ") has delivered to you a Preliminary Official Statement, dated the date hereof (the "Preliminary Official Statement "), the City of , for purposes of compliance with Rule 15c2 -12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Rule "), deems the Preliminary Official Statement to be final as of its date, except for (a) information regarding Authority, the Program, [CONFIRM:] [the Certificate Insurer, the Reserve Policy, and the Certificate Insurance Policy] (each as defined in the Preliminary Official Statement), (b) information relating to any other Local Agencies (as defined in the Preliminary Official Statement), and (c) the omission of the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, dates and amounts of mandatory sinking fund payments, delivery dates, ratings, and identity of the purchasers and any other terms of the Certificates relating to such matters and any other information permitted to be omitted by the Rule. [NAME OF LOCAL AGENCY] By:_ Name: Title: C -2- 1 ACTIVG/73470786.1 E�XXX"X T ,", $[PRINCIPAL AMOIJNTI California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) FORM OF PRICING CONFIRMATION SUPPLEMENT CITY OF LAKE ELSINORE PRICING INFORMATION Purchase Price Calculation Proportionate Principal Amount of Certificates: $[PRINCIPAL AMOUNT].00 [Pius /Less]: Net Original issue [Premium /Discount]: Less: Underwriter's Discount: Total Purchase Price Use of Proceeds Costs of Issuance: [CONFIRM:] Certificate Insurance Policy: [CONFIRM:] Reserve Policy: Net Proceeds: Total Use of Proceeds IMPORTANT DATES Resolution Date of Local Agency: Purchase Date: Closing Date: Certificate Payment Dates: Interest Payment Dates: Final Maturity Date: D -1 ACTI VL/73470786.1 ,201 [MONTH] 2014 [MONTH] 2014 June 1 of each year, commencing June 1, 20_ June I and December 1 of each year, commencing [June /December] 1, 20 June 1, 20 IN WITNESS WHEREOF, the Purchase Contract is agreed to, and this Pricing Confirmation Supplement appearing as Exhibit D thereto is accepted, all on the Purchase Date set forth above. CITY OF LAKE ELSINORE LIZA N Title: Time of Execution: D -2 ACTIVE/73470786.1 2014 INSTALLMENT SALE AGREEMENT by and between the CITY OF LAKE ELSINORE as Purchaser and the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, as Seller for the CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) Dated as of 1, 2014 0HSUSA:758206712.1 TABLE OF CONTENTS Page ARTICLEI DEFINITIONS .................................................................. ............................... 3 Section 1.01. Definitions ............................................................. ............................... 3 Section 1.02. Terms defined in the Trust Agreement ............... ............................... 10 ARTICLElI THE PROJECT ............................................................... ............................... 11 Section 2.01. Design, Acquisition, Construction and Sale of the Project ................ 11 ARTICLE 111 2014 INSTALLMENT SALE PAYMENTS; ADMINISTRATION FEE................................................................................. ............................... 12 Section 3.01. Purchase Price and Administration Fee ............. ............................... 12 Section 3.02. Payment of 2014 Installment Sale Payments and Administration Fee .............................................. ............................... 12 Section 3.03. Prepayment of 2014 Installment Sale Payments . ............................... 15 ARTICLE IV ADDITIONAL CONTRACTS ....................................... ............................... 16 Section 4.01. Additional Contracts ........................................... ............................... 16 ARTICLE V REPRESENTATIONS AND COVENANTS OF THE LOCAL AGENCY AND THE AUTHORITY ............................. ............................... 17 Section 5.01. Authority; Compliance with 2014 Installment Sale Agreement andTrust Agreement ........................................... ............................... 17 Section 5.02. Use of Proceeds of Certificates ........................... ............................... 17 Section 5.03. Against Encumbrances ........................................ ............................... 17 Section 5.04. Maintenance of Revenues ................................... ............................... 18 Section 5.05. Tax Covenants .................................................... ............................... 18 Section 5.06. Prompt Acquisition and Construction of the Project ......................... 19 Section 5.07. Accounting Records and Financial Statements ... ............................... 19 Section 5.08. Protection of Security and Rights of the Authority and the Trustee................................................................. ............................... 19 Section 5.09. Further Assurances .............................................. ............................... 19 Section 5.10. Continuing Disclosure ........................................ ............................... 19 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................. ............................... 20 Section 6.01. Events of Default and Acceleration of Principal ............................... 20 Section 6.02. Application of Revenues Upon Acceleration ..... ............................... 21 Section 6.03. Other Remedies ................................................... ............................... 21 Section6.04. Non- Waiver ......................................................... ............................... 21 01-1 St) SA: 758206712.1 -i- TABLE OF CONTENTS (Con.�:nueu) Page Section 6.05. Remedies Not Exclusive ..................................... ............................... 22 ARTICLE VII DISCHARGE OF OBLIGATIONS ................................ ............................... 23 Section 7.01. Discharge of Obligations .................................... ............................... 23 ARTICLE VIII MISCELLANEOUS ....................................................... ............................... 25 Section 8.01. Liability of Local Agency Limited to Revenues . ............................... 25 Section 8.02. Benefits of 2014 Installment Sale Agreement .... ............................... 25 Section 8.03. Successor Is Deemed Included in all References to Predecessor ...... 25 Section 8.04. Waiver of Personal Liability ............................... ............................... 25 Section 8.05. Article and Section Headings, Gender and References ..................... 25 Section 8.06. Partial Invalidity .................................................. ............................... 26 Section8.07. Assignment ......................................................... ............................... 26 Section8.08. Net Contr act ........................................................ ............................... 26 Section8.09. California Law .................................................... ............................... 26 Section 8.10. Indemnification ................................................... ............................... 26 Section8.11. Funds ................................................................... ............................... 26 Section 8.12. Notices; Authorized Local Agency Representative ........................... 27 Section 8.13. Effective Date ..................................................... ............................... 27 Section 8.14. Execution in Counterparts ................................... ............................... 27 EXHIBIT A — 2014 INSTALLMENT SALE PAYMENTS SCHEDULE ............................... A -1 EXHIBIT B — DESCRIPTION OF PROJECT ........................................... ............................... B -1 Ol ISUSA:75820G712.1 -ii- 2014 INSTALLMENT SALE AGREEMENT This 2014 INSTALLMENT SALE AGREEMENT (the "2014 Installment Sale Agreement "), dated as of 1, 2014, by and between the CITY OF LAKE ELSINORE, a municipal corporation organized and existing under the Constitution of the State of California (the "Local Agency "), and the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California (the "Authority "), WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and operating pursuant to Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California; WHEREAS, Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California authorizes and empowers the Authority to cause certificates of participation to be executed and delivered to assist local agencies in financing projects and programs consisting of certain public improvements or working capital or liability and other insurance needs whenever a local agency determines that there are significant public benefits from so doing; WHEREAS, the Local Agency has determined that the design, acquisition and construction of certain roadway improvements and street resurfacing, as hereinafter described (the "Project ") is necessary and proper for Local Agency purposes and uses, and under the terms of applicable law, the payment for such Project may be made from Revenues, as such term is hereinafter defined, and is for the common benefit of the Local Agency as a whole; WHEREAS, in order to achieve a lower net interest cost and lower costs of issuance in connection with financing the Project, the Local Agency has determined to participate with certain other local agencies in the California Communities T.R.I.P. — Total Road Improvement Program (the "Program ") established by the Authority to finance projects, such as the Project; WHEREAS, pursuant to the Program the Authority has determined to acquire and construct the Project for, and sell the Project to, the Local Agency; WHEREAS, the Local Agency has determined to make installment sale payments as hereinafter described to the Authority for the repayment of the costs of the design, acquisition and construction of the Project and the incidental costs and expenses related thereto paid by the Authority; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of the 2014 Installment Sale Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into the 2014 Installment Sale Agreement; OHSUSA:758206712.1 11 \TV vv�, I LJMNLry Cr, IIN C ON S11Jr,RA T 10N OF THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED VALUABLE CONSIDERATION, THE PARTIES HERETO FOLLOWS: 011SUSA:758206712.1 PREMISES AND OF THE HEREIN AND FOR OTHER DO HEREBY AGREE AS ARTICLE I DEFINITIONS Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any opinion or report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: Accountant's Report "Accountant's Report" means a report signed by an Independent Certified Public Accountant. Accreted Value "Accreted Value" means, with respect to any Capital Appreciation Certificates, as of the date of calculation, the initial amount thereof plus the interest accrued thereon to such date of calculation, compounded from the date of initial delivery at the approximate interest rate thereof on each June 1 and December 1, as determined in accordance with the table of accreted values for any Capital Appreciation Certificates prepared at the time of sale thereof, assuming in any year that such Accreted Value increases in equal daily amounts on the basis of a year of three hundred sixty (360) days composed of twelve (12) months of thirty (30) days each. Acquisition Fund "Acquisition Fund" means the fund by that name established pursuant to Section 2.11 of the Trust Agreement. Administration Fee "Administration Fee" means an amount equal to the suns of the Authority Fee, the Trustee Fee, the Rebate Analyst Fee and any other similar fee payable in connection with the administration of the Program, payable on the 15th day of the month preceding each June 1, commencing June 1, 2015, for the administrative costs of the Project and the Program. Authority "Authority" means the California Statewide Communities Development Authority, a joint exercise of powers authority duly organized and existing under and by virtue of the laws of the State of California and an Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988, among a number of California cities, counties and special districts, including the Local Agency, as amended. 011SUSA:758206712.1 3 Authority Fee "Authority Fee" means the annual administration fee of the Authority payable, in advance, on 2014 and thereafter on each June 1, commencing June 1, 2015, equal to .015% of the outstanding amount of the principal components of the 2014 Installment Sale Payments. Authorized Authority Representative "Authorized Authority Representative" means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. Authorized Local Agency Representative "Authorized Local Agency Representative" means the person or persons designated in Section 8.12 hereof or any other person at the time designated to act on behalf of such Local Agency by written certificate furnished to the Trustee, containing the specimen signature of such person and signed on behalf of such Local Agency by an Authorized Local Agency Representative. Business Day "Business Day" means any day on which the Trustee is open for business at its corporate trust office in Los Angeles, California. Capital Appreciation Certificates "Capital Appreciation Certificates" means any certificates of participation in 2014 Installment Sale Payments described as such when executed and delivered. Certificates "Certificates" means the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.RLP. — Total Road Improvement Program), executed and delivered in accordance with the Trust Agreement. Code "Code" means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder. Continuing Disclosure Agreement "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated , 2014, by and between the Local Agency and Urban Futures Inc. as Dissemination Agent, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. 01 JSUSA:758206712.1 4 Contracts "Contracts" means all installment sale contracts, capital leases or similar obligations of the Local Agency authorized and executed by the Local Agency under and pursuant to applicable law, the interest and principal and prepayment premium, if any, payments under and pursuant to which are payable fi-onn Revenues on a parity with the payment of the 2014 Installment Sale Payments. 'npht CPrviep "Debt Service" means, for any Fiscal Year, the sum of that portion of the Installment Sale Payments required to be made at the times provided in the Contracts that would have accrued during such Fiscal Year if such Installment Sale Payments were deemed to accrue daily in equal amounts from, in each case, the next preceding Installment Sale Payment Date of interest or principal or the date of the pertinent Contract, as the case may be; provided, that (a) if any of the Installment Sale Payments due under any of such Contracts are evidenced by Capital Appreciation Certificates, then the Accreted Value payment shall be deemed a principal payment and interest that is compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or payment date of such Capital Appreciation Certificate; (b) if any of the Installment Sale Payments due under any such Contracts bear interest payable pursuant to a variable interest rate formula, the interest rate on such Contracts for periods when the actual interest rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on the date of calculation, or if such Contracts are not yet outstanding, the initial rate (if then established and binding), (ii) if the Contracts have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii)(1) if interest on such Contracts is excludable from gross income under the applicable provisions of the Code, the most recently published "Bond Buyer 25 Bond Revenue Index" (or comparable index if no longer published), or (2) if interest is not so excludable, the interest rate on direct U.S. Treasury obligations with comparable maturities; (c) if any of the Contracts is secured by an irrevocable letter of credit issued by a bank having a combined capital and surplus of at least $75,000,000, the principal payments or deposits with respect to such Contracts nominally due in the last Fiscal Year in which such Contracts mature may, at the option of the Local Agency, be treated as if they were due as specified in any loan agreement or reimbursement agreement issued in connection with such letter of credit or pursuant to the repayment provisions of such letter of credit and interest on such Contracts after such Fiscal Year shall be assumed to be payable pursuant to the terms of such loan agreement or reimbursement agreement or repayment provisions and (d) if any of such Contracts is not secured by a letter of credit as described in clause (c) of this definition and 20% or more of the original principal of the Installment Sale Payments due under such Contracts is not due until the filial stated nnaturity of the Installment Sale Payments due under such Contracts, such principal may, at the option of the Local Agency, be treated as if it were due based upon a level amortization of such principal over the term of such Installment Sale Payments or 30 years, whichever is greater. Event of Default "Event of Default" means an event described in Section 6.01. 01]SUSA:758206712.1 5 rederai Securities "Federal Securities" means United States of America Treasury bills, notes, bonds or certificates of indebtedness, or obligations for which the full faith and credit of the United States of America are pledged for the payment of interest and principal and interest strips of the Resolution Funding Corporation for which separation of principal and interest is maintained in book -entry form. Fiscal Year "Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the governing body of the Local Agency as the Fiscal Year of the Local Agency. Gas Tax Account "Gas Tax Account" means the account established pursuant to State law by ordinance adopted by the governing body of the Local Agency and pursuant to section 3.02 hereof. Gas Tax Revenues "Gas Tax Revenues" means all amounts received by the Local Agency fronn the State in accordance with Streets and Highways Code Sections 2103, 2104(d),(e) and (f), 2105, 2106 and 2107, as such provisions may be amended, and all other revenues (except revenues received by the Local Agency in accordance with Streets and Highways Code Section 2107.5), if any, received by the Local Agency from taxes imposed on the purchase of motor vehicle fuels and any payments, subventions or reimbursements received by the Local Agency from the State in lieu of such revenues. Independent Certified Public Accountant "Independent Certified Public Accountant" means any firm of certified public accountants appointed by the Local Agency which is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants. 2014 Installment Sale Agreement "2014 Installment Sale Agreement" means this installment sale agreement by and between the Local Agency and the Authority, dated as of 1, 2014, as originally executed and as it may from time to time be amended or supplemented in accordance herewith and with the terms of the Trust Agreement. Installment Sale Payments; 2014 Installment Sale Payments "Installment Sale Payments" means the installment sale, rental or other periodic payments scheduled to be paid by the Local Agency under and pursuant to the Contracts. 01 ISUSA:758206712.1 6 "2014 Installment Sale Payments" means the Installment Sale Payments scheduled to be paid by the Local Agency under and pursuant to this 2014 Installment Sale Agreement. Installment Sale Payment Date; 2014 Installment Sale Payment Date "Installment Sale Payment Date" means any date on which Installment Sale Payments are scheduled to be paid by the Local Agency under and pursuant to any Contract. "2014 Installment Sale Payment Date" means any date on which 2014 Installment Sale Payments are scheduled to be paid by the Local Agency under and pursuant to this 2014 Installment Sale Agreement. Interest Payment Date "Interest Payment Date" means a date on which interest evidenced and represented by the Certificates is due and payable, being June 1 and December 1 of each year, commencing [December 1, 2014]. Local Agency; Local Agencies "Local Agency" means the City of Lake Elsinore, a municipal corporation organized and existing under the Constitution of the State of California. The plural term "Local Agencies" refers to the Local Agencies listed in Schedule I to the Trust Agreement. Maximum Annual Debt Service "Maximum Annual Debt Service" means the greatest total Debt Service payable in any Fiscal Year during the period commencing with the then current Fiscal Year and terminating with the Fiscal Year in which payments are due under the last Contract. Measure A Ordinance "Measure A Ordinance" means Ordinance No. 02 -001, the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Riverside County Transportation Commission on May 8, 2002, and approved by at least two - thirds of electors voting on such proposition in the November 5, 2002 election, as supplemented and amended. Measure A Project "Measure A Project" means a capital project for which Measure A Receipts may be expended. Measure A Receipts "Measure A Receipts" means Measure A Revenues allocated by the Riverside County Transportation Commission to the Local Agency pursuant to the Measure A Ordinance, to the extent the Project constitutes a Measure A Project, for deposit in the Pledged Tax Fund in accordance with Section 3.02. OHS USA: 758206712.1 7 Measure A Receipts Account "Measure A Receipts Account" means the account by that name established pursuant to Section 3.02 hereof. Measure A Revenues "Measure A Revenues" means revenues of the Riverside County Transportation Commission derived from a retail transactions and use tax (Measure A funds) imposed in the County of Riverside pursuant to the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented, and the Measure A Ordinance. Collection of the Measure A Revenues terminates on June 30, 2033. Opinion of Counsel "Opinion of Counsel" means a written opinion of counsel of national reputation generally recognized to be well qualified in the field of law relating to municipal obligations such as the Certificates, retained by the Local Agency and satisfactory to the Trustee (who shall be under no liability by reason of such approval). Other Available Revenues "Other Available Revenues" means revenues, other than Revenues as herein defined, legally available to the Local Agency to make Installment Sale Payments, if any; provided, Other Available Revenues includes Measure A Revenues which are Measure A Receipts pledged to the payment of 2014 Installment Sale Payments. Policy Costs "Policy Costs" has the meaning set forth in the Insurance Agreement. Proceeds Subaccount "Proceeds Subaccount" means the Proceeds Subaccount of the Acquisition Fund established pursuant to Section 2.11 of the Trust Agreement. Pro Rata Share of Principal "Pro Rata Share of Principal" means, during any month an amount of principal becoming due and payable hereunder on the next succeeding Certificate Payment Date that would have accrued if such principal were deemed to accrue monthly in equal amounts from the preceding Certificate Payment Date. 014SUSA:75$206712.1 Project "Project" means the design, engineering, permitting and construction by the Authority, for sale to the Local Agency, of certain street and roadway improvements and resurfacing, all as described more particularly in Exhibit B, attached hereto and incorporated herein. Purchase Price "Purchase Price" means the total of all 2014 Installment Sale Payments owed by the Local Agency to the Authority under the conditions and terms hereof for the repayment of the costs of the design, acquisition and construction of the Project and the incidental costs and expenses related thereto paid by the Authority. Rebate Amount "Rebate Amount" means, for any given period, the amount determined by the Rebate Analyst as required to be rebated or paid as a yield reduction payment to the United States of America with respect to the Certificates. Rebate Analyst "Rebate Analyst" means BLX Group. Rebate Analyst's Fee "Rebate Analyst's Fee" means the fee payable to the Rebate Analyst, payable annually on each Certificate Payment Date in the amount of $650 (if the Local Agency elects to have a 5- year calculation of the Rebate Amount performed) and $1,500 (if the local Agency elects to have an annual calculation of the Rebate Amount performed). RnhatP Fend "Rebate Fund" means the fund by that name established in Section 5.04 of the Trust Agreement. Revenues "Revenues" means all Gas Tax Revenues and Measure A Receipts; provided, however, that Revenues shall not include Gas Tax Revenues with respect to the 2014 Installment Sale Payments, and Gas Tax Revenues are not pledged to the payment of the 2014 Installment Sale Payments. Reserve Fund "Reserve Fund" means the fund by that name established pursuant to Section 3.03 of the Trust Agreement. 01 S I)SA:758206712.1 9 17 ,. ,. .. -- -.,, T____a 71__.....e_.___. 1xeset ye P and ReUulreakeni "Reserve Fund Requirement" means, as of any date of calculation, an amount equal to the least of (i) 10% of the initial stated principal amount (within the meaning of Section 148 of the Code) of the 2014 Installment Sale Payments; (ii) 125% of the average annual 2014 Installment Sale Payments, or (iii) the Maximum Annual Debt Service. Reserve Subaccount "Reserve Subaccount" means the subaccount by that name established pursuant to Section 3.03 of the Trust Agreement. Tax Certificate "Tax Certificate" means the Tax Certificate dated the date of initial execution and delivery of the Certificates and executed and delivered by the Local Agency. Trust Agreement "Trust Agreement" means that certain Trust Agreement dated as of 1, 2014, by and among the Trustee, the Local Agencies and the Authority, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. Trustee "Trustee" means Wells Fargo Bank, National Association, with its corporate trust office in Los Angeles, California, acting in its capacity as trustee under and pursuant to the Trust Agreement, and its successors and assigns as provided in the Trust Agreement. Trustee Fee "Trustee's Fee" means the annual administration fee of the Trustee, in the amount of $2,000 payable in advance on , 2014 and thereafter on each June 1, commencing June 1, 2015. Section 1.02. Terms defined in the Trust Agreement. Capitalized terms not otherwise defined herein have the meanings set forth in the Trust Agreement. 0HSUSA:7582067121 10 ARTICLE II THE PROJECT Section 2.01. Design, Acquisition, Construction and Sale of the Project. The Authority hereby agrees to cause the design, acquisition and construction of the Project for, and to sell the Project to, the Local Agency; and the Local Agency agrees to transfer whatever real or personal property interest it may possess which may be required in order for the Authority to cause such design, acquisition and construction of the Project. In order to implement this provision, the Authority hereby appoints the Local Agency as its agent for the purpose of such design, acquisition and construction, and the Local Agency hereby agrees to enter into such engineering, design and construction contracts and purchase orders as may be necessary, as agent for the Authority, to provide for the complete design, acquisition and construction of the Project. The Local Agency hereby agrees that as such agent it will cause the acquisition and construction of the Project to be diligently completed after the deposit of funds in the Proceeds Subaccount of the Acquisition Fund for such purpose pursuant to Section 2.11 of the Trust Agreement, and that it will use its best efforts to cause the design, acquisition and construction of the Project to be completed by 1, 201, except for unforeseeable delays beyond the reasonable control of the Local Agency. The Authority hereby agrees to sell, and hereby sells, the Project to the Local Agency. The Local Agency hereby agrees to purchase, and hereby purchases, the Project from the Authority. Notwithstanding the foregoing, it is hereby expressly understood and agreed that the Authority shall be under no liability of any kind or character whatsoever for the payment of any costs or expenses incurred by the Local Agency (whether as agent for the Authority or otherwise) for the acquisition and construction of the Project and that all such costs and expenses shall be paid by the Local Agency, regardless of whether the funds deposited in the Proceeds Subaccount of the Acquisition Fund are sufficient to cover all such costs. 011susn:758206712.1 11 ARTICLE H! 2014 INSTALLMENT SALE PAYMENTS; ADMINISTRATI ®N FEE Section 3.01. Purchase Price and Administration Fee. (a) The Purchase Price to be paid by the Local Agency to the Authority hereunder is the sum of the principal amount of the Local Agency's obligation hereunder plus the interest to accrue on the unpaid balance of such principal amount from the date hereof over the term hereof, subject to prepayment as provided in Section 3.03. (b) The principal amount of the Purchase Price to be paid by the Local Agency to the Authority hereunder is $ (c) The interest to accrue on the unpaid balance of such principal amount shall be paid by the Local Agency as and shall constitute interest paid on the principal amount of the Local Agency's Purchase Price obligation hereunder. (d) Interest on the unpaid balance of the principal amount of the Purchase Price shall accrue, from the date of the initial execution and delivery of the Certificates, on the principal component of each 2014 Installment Sale Payment at the following rates calculated on the basis of a 360 -day year comprised of twelve 30 -day months: Principal Component Principal Interest Due Date (June 1) Amount Rate $ (e) In addition, the Local Agency shall pay the Administration Fee for the administrative cost of the Project and the Program. Section 3.02. Payment of 2014 Installment Sale_ Payments and Administration Fee. The Local Agency shall, subject to prepayment as provided in Section 3.03, pay the Authority or the Trustee, as appropriate, (i) the Purchase Price, without offset or deduction of any kind, by paying the principal installments of the 2014 Installment Sale Payments, which principal installments shall be due annually on each Certificate Payment Date, (ii) the interest installments of the 2014 Installment Sale Payments, which interest installments shall be due semiannually on each Interest Payment Date and (iii) the Administration Fee which shall be due annually on each Certificate Payment Date. The 2014 Installment Sale Payments Schedule is set forth in Exhibit 01 1susA:758206712.1 12 A attached hereto. Each 2014 Installment Sale Payment and the Administration Fee shall be payable on and shall be required to be deposited with the Trustee on or before the fifteenth day of the calendar month immediately preceding its due date. The obligation of the Local Agency to pay the Purchase Price by paying the 2014 Installment Sale Payments and the Administration Fee is, subject to Section 8.01, absolute and unconditional, and until such time as the 2014 hlstallnent Sale Payments shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Section 7.01), the Local Agency will not discontinue or suspend any 2014 Installment Sale Payments or Administration Fee required to be paid by it under this Section when due, whether or not the Project or any part thereof is complete, or its use is suspended, interfered with, reduced, curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party to any agreement for any cause whatsoever. In order to carry out and effectuate the obligation of the Local Agency contained herein to pay the Purchase Price by paying the 2014 Installment Sale Payments and the Administration Fee, the Local Agency established the "City of Lake Elsinore Pledged Tax Fund" (the "Pledged Tax Fund" and within the Pledged Tax Fund, the "Measure A Receipts Account," and if at some later date, Gas Tax Revenues are included as Revenues, the "Gas Tax Account "), which fund and accounts therein the Local Agency agrees and covenants to maintain so long as any 2014 Installment Sale Payments remain unpaid, and all money on deposit therein shall be applied and used only as provided herein. The Local Agency agrees and covenants that (i) all Gas Tax Revenues received by it shall be deposited when and as received in the Local Agency's Gas Tax Account and (ii) all Measure A Receipts received by it shall be deposited when and as received in the Measure A Receipts Account. All of the Revenues and all money in the Pledged Tax Fund, exclusive of Gas Tax Revenues and in the funds or accounts so specified and provided for in this 2014 Installment Sale Agreement, are hereby irrevocably pledged to the punctual payment of the 2014 Installment Sale Payments and the Administration Fee, and the Revenues shall not be used for any other purpose while any of the 2014 Installment Sale Payments remain outstanding; subject to the provisions of this 2014 Installment Sale Agreement permitting application thereof for the purposes and on the terms and conditions set forth herein. This pledge shall constitute a first lien on the Revenues for the payment of the 2014 Installment Sale Payments and the Administration Fee in accordance with the terms thereof. Notwithstanding the foregoing, the Local Agency may satisfy its obligation to deposit 2014 Installment Sale Payments with the Trustee by depositing Other Available Revenues with the Trustee, and if and when so deposited, shall be irrevocably pledged to the payment of 2014 Installment Sale Payments. All Revenues on deposit in the Pledged Tax Fund shall be set aside and deposited by the Local Agency in the various funds and accounts within the Revenue Fund at the following times in the following order of priority: 0xsusn:758206712.1 13 (a) interest and Principal Fund Deposits. On or before the 15th day preceding each Interest Payment Date, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency's Interest Payment Account in the Interest Fund within the Revenue Fund established under the Trust Agreement (the "Interest Payment Account "), a sum equal to the interest becoming due and payable hereunder on the next succeeding Interest Payment Date, except that no such deposit need be made if the Trustee then holds money in the Interest Payment Account equal to the amount of interest becoming due and payable hereunder on the next succeeding Interest Payment Date; and on or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Principal Payment Account in the Principal Fund within the Revenue Fund established under the Trust Agreement (the "Principal Payment Account "), a sum equal to the principal becoming due and payable hereunder on the next succeeding 2014 Installment Sale Payment Date, except that no such deposit need be made if the Trustee then holds money in the Principal Payment Account equal to the amount of Principal becoming due and payable hereunder on the next succeeding 2014 Installment Sale Payment Date; and all money on deposit in the Interest Payment Account and the Principal Payment Account shall be used to make and satisfy the 2014 Installment Sale Payments due on each date and such payments shall be deposited by the Trustee to the Interest Account or the Principal Account, as the case may be, as defined in, created under and in accordance with the terms of, the Trust Agreement. (b) Reserve Fund Deposit. On or before the 15th day of each month, the Local Agency shall, from the Revenues in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency's Subaccount in the Reserve Fund (the "Reserve Subaccount ") in the Reserve Fund within the Revenue Fund that sum, if any, necessary to restore the Reserve Subaccount to an amount equal to the Reserve Fund Requirement, all in accordance with and subject to the terms and conditions of Section 3.03 of the Trust Agreement. All money in the Reserve Subaccount shall be used and withdrawn by the Trustee for the purposes specified in Section 3.03 of the Trust Agreement. The Local Agency further agrees to pay to the Insurer all amounts owed to it under the Insurance Agreement in connection with any draw on the Reserve Policy, solely from available Revenues and subject to the first pledge of and lien upon the Revenues for the payment of the Certificates. (c) Administration Fund Deposit. On or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the remaining Revenues on deposit in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency's Administration Subaccount in the Administration Fund within the Revenue Fund established under the Trust Agreement (the "Administration Subaccount "), a sum equal to the Administration Fee becoming due and payable hereunder on the next Certificate Payment Date, and all money on deposit in the Administration Subaccount shall be used to pay the Administration Fee due on such Certificate Payment Date, in accordance with the terms of the Trust Agreement. o11susa:758206712.] 14 Notwithstanding the foregoing, provided all transfers required by subparagraphs (b) and (c) above have been made, on any Business Day moneys on deposit in the Pledged Tax Fund in excess of the sum of (i) interest becoming due and payable hereunder on the next succeeding Interest Payment Date (less amounts then held by the Trustee in the Interest Payment Account) and (ii) the Pro Rata Share of Principal (less amounts then held by the Trustee in the Principal Payment Account) may be expended by the Local Agency at any time for any purpose permitted by law. Section 3.03. Prepayment of 2014 Installment Sale Payments. The Local Agency may prepay from any source of available funds as a whole or in part on any date, on or after June 1, 2023, all or any part of the principal amount of the unpaid 2014 Installment Sale Payments becoming due on or after June 1, 2024, in such order of prepayment as the Local Agency may determine upon written direction to the Authority and the Trustee (or, if the Local Agency fails to designate the order of prepayment, on a proportionate basis among the 2014 Installment Sale Payments and by lot within an Installment Payment Date), at a prepayment price equal to the principal amount prepaid, plus accrued interest to the date of prepayment. Before making any prepayment pursuant to this section, the Local Agency shall give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be paid and the order thereof, which date shall be not less than thirty (30) days nor more than sixty (60) days from the date such notice is given. 01 IS ISA:758206712.1 15 AI \11LLL 1 V� ADDITIONAL CONTRACTS Section 4.01. Additional Contracts. So long as the Local Agency is not in default hereunder, the Local Agency may at any time execute any Contract the Installment Sale Payments under and pursuant to which, as the case may be, are payable from the Revenues on a parity with the payment by the Local Agency of the 2014 Installment Sale Payments as provided herein; provided, that the audited Revenues, less Policy Costs for the Fiscal Year next preceding the date of the adoption by the governing body of the Local Agency of the resolution authorizing the execution of such Contract, as evidenced by both a calculation prepared by the Local Agency and a special report prepared by an Independent Certified Public Accountant on such calculation on file with the Local Agency shall have produced a sum equal to at least 150% of the Maximum Annual Debt Service on all Contracts outstanding after the execution of such amendment or Contract. Notwithstanding the foregoing provisions, there shall be no limitations on the ability of the Local Agency to execute any Contract at any time to refund any outstanding Contract. 011SUSA:758206712.1 16 F.11 4 M Eel a ATA REPRESENTATIONS AND COVENANTS OF THE LOCAL AGENCY AND THE AUTHORITY Section 5.01. Authority; Compliance with 2014 Installment Sale Agreement and Trust Agreement. The Local Agency is a municipal corporation organized and existing under the Constitution of the State of California, with full legal right, power and authority to execute, deliver and perform its obligations under this 2014 Installment Sale Agreement, and compliance with the provision hereof will not materially conflict with or constitute a material breach of or default under any applicable provision of law, or any applicable regulation or agreement to which the Local Agency is a party or may be subject. The Local Agency will punctually pay the 2014 Installment Sale Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate the 2014 Installment Sale Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including Acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities. The Authority will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Trust Agreement required to be observed and performed by it, and it is expressly understood and agreed by and among the parties to the 2014 Installment Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and terms contained in each such agreement is an essential and material term of the obligation of the Local Agency to repay the costs of the acquisition and construction of the Project and the costs and expenses incidental thereto paid by the Authority pursuant to, and in accordance with, and as authorized under law and the 2014 Installment Sale Agreement. Section 5.02. Use of Proceeds of Certificates. The Authority and the Local Agency agree that the proceeds of the Certificates deposited in the Local Agency's Proceeds Subaccount of the Acquisition Fund will be used by the Local Agency, as agent for the Authority, to pay the costs of the acquisition and construction of the Project and to pay the incidental costs and expenses related thereto as provided herein and in the Trust Agreement. Section 5.03. Against Encumbrances. The Local Agency will pay or cause to be paid when due all sums of money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished, or alleged to have been furnished, to or for the Local Agency payable from the Revenues or which may impair the security for the 2014 01-ISLISA:758206712.1 17 hhstanment Sale Payments and will keep the Revenues free of any and aii liens against any portion of the Revenues. In the event any such lien attaches to or is filed against any portion of the Revenues, the Local Agency will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the Local Agency desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the Local Agency will forthwith pay or cause to be paid and discharged such judgment. The Local Agency will, to the maximum extent permitted by law, indemnify and hold the Authority and the Trustee harmless from, and defend each of them against, any claim, demand, loss, damage, liability or expense (including attorneys' fees) as a result of any such lien or claim of lien against any portion of the Revenues. The Local Agency may pledge, encumber or otherwise secure its obligations with the Revenues, provided, that except as permitted by Section 4.01 hereof, in all instances any such pledge, lien or security is wholly subordinate and junior to the obligations of the "Local Agency contained herein. Section 5.04. Maintenance of Revenues. The Local Agency will use its best efforts to comply with all provisions of law and any regulations issued thereunder relating to the Revenues, including, but not limited to, the Measure A Ordinance, Sections 2119 and 2151 through 2155 of the California Streets and Highways Code and Sections 65089.3 and 65089.4 of the California Government Code relating to conformance with the congestion management program relating to the Local Agency, and will take any and all reasonable actions required in order to maintain the Local Agency's ability to receive the Revenues and apply the same as provided herein; provided, that nothing herein shall require the Local Agency to take any action or expend any Local Agency funds to comply with any such requirements deemed unreasonable in the sole discretion of the Local Agency, so long as failure to take such action or expend such funds will not cause the amount of estimated Revenues to be received by the Local Agency in the next Fiscal Year to be less than 150% of the Maximum Annual Debt Service as of the date of calculation. Section 5.05. Tax Covenants. The Local Agency will not directly or indirectly use or permit the use of the proceeds of the obligation provided herein or any other funds of the Local Agency or take or omit to take any action which would cause such obligation to be an "arbitrage bond" within the meaning of Section 148 of the Code, or a "federal- guaranteed obligation" under Section 149(b) of the Code, or a "private activity bond" as described in Section 141 of the Code. To that end, so long as any 2014 Installment Sale Payment are unpaid, the Local Agency will comply with all requirements of such sections of the Code to the extent applicable to the obligation provided herein and with the provisions of the Tax Certificate. Upon calculation by the Rebate Analyst of a Rebate Amount, the Local Agency shall, fi-onh any source of available funds, immediately transfer an amount of money equal to the Rebate Amount to the Trustee for deposit in the Rebate Fund established pursuant to Section 5.04 of the Trust Agreement. The Authority and the Local Agency will at all times do and perform all acts and things permitted by law which are necessary or desirable in order to assure that the interest evidenced and represented by the Certificates will not be included in the gross income of the owners of 01 ISUSA758206712.1 18 such certificates for federal income tax purposes under the Code and will take no action that would result in such interest being so included. Section 5.06. Prompt Acquisition and Construction of the Project. The Local Agency will take all necessary and appropriate steps to acquire and construct the Project, as agent of the Authority, with all practicable dispatch and in an expeditious manner and in conformity with law so as to complete the same as soon as possible. Section 5.07. Accounting Records and Financial Statements. (a) The Local Agency will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Revenues and the Project, which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions. (b) The Local Agency will prepare and file with the Trustee annually within six months after the close of each Fiscal Year or, if not then available, as soon thereafter as possible, audited financial statements of the Local Agency for the preceding Fiscal Year. Section 5.08. Protection of Security and Rilzhts of the Authority and the Trustee. The Local Agency will preserve and protect the security hereof and the rights of the Authority and the Trustee to the 2014 Installment Sale Payments hereunder and will warrant and defend such rights against all claims and demands of all persons. Section 5.09. Further Assurances. The Local Agency will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Authority of the rights and benefits provided to it herein. Section 5.10. Continuing Disclosure. The Local Agency hereby covenants and agrees that it will enter into and comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this 2014 Installment Sale Agreement, failure of the Local Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; however, the Trustee shall at the written request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Owner of at least 25% aggregate principal amount in Outstanding Certificates, or any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Local Agency to comply with its obligations under this Section. For purposes of this Section, `Beneficial Owner" means any person which has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries). 01-1SUSA:758206712.1 19 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES Section 6.01. Events of Default and Acceleration of Principal. If one or more of the following "Events of Default" shall happen, that is to say -- (1) if default shall be made in the due and punctual payment of any 2014 Installment Sale Payment when and as the same shall become due and payable; (2) if default shall be made by the Local Agency in the performance of any of the agreements or covenants contained herein required to be performed by it, and such default shall have continued for a period of 30 days after the Local Agency shall have been given notice in writing of such default by the Authority or the Trustee; or (3) if the Local_ Agency shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Local Agency seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the Local Agency or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event of Default specified in clause (1) above, the Trustee shall, and for any other such Event of Default the Trustee may, by notice in writing to the Local Agency, declare the entire principal amount of the unpaid 2014 Installment Sale Payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding. This subsection is subject to the condition, however, that if at any time after the entire principal amount of the unpaid 2014 Installment Sale Payments and the accrued interest thereon shall have been so declared due and payable and before any judgment or decree for the payment of the money due shall have been obtained or entered the Local Agency shall deposit with the Trustee a sum sufficient to pay the unpaid principal amount of the 2014 Installment Sale Payments due and payable prior to such declaration and the accrued interest thereon, with interest on such overdue installments at the rate or rates applicable to such unpaid principal amounts of the 2014 Installment Sale Payments if paid in accordance with their terms, and the reasonable expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of the entire principal amount of the unpaid 2014 Installment Sale Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then and in every such case the Trustee, by written notice to the Local Agency, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon. 01- IsusA:758206712.1 20 Section 6.02. Application of Revenues Upon Acceleration. All Revenues upon the date of the declaration of acceleration by the Trustee as provided in Section 6.01 and all Revenues thereafter received shall be applied in the following order -- First, to the payment of the costs and expenses of the Trustee and the Authority, if any, in carrying out the provisions of this article, including reasonable compensation to its agents, accountants and counsel and including any indemnification expenses; Second, to the payment of the interest then due and payable on the entire principal amount of the unpaid 2014 Installment Sale Payments, and, if the amount available shall not be sufficient to pay in full all such interest then due and payable, then to the payment thereof ratably, according to the amounts due thereon without any discrimination or preference; and Third, to the payment of the unpaid principal amount of the 2014 hnstallment Sale Payments which has become due and payable, whether on the original due date or upon acceleration, with interest on the overdue principal and interest amounts of the unpaid 2014 Installment Sale Payments at the rate or rates of interest then applicable to such 2014 Installment Sale Payments if paid in accordance with their terms, and, if the amount available shall not be sufficient to pay in full all the amounts due with respect to the 2014 Installment Sale Payments on any date, together with such interest, then to the payment thereof ratably, according to the principal amount due on such date, without any discrimination or preference. Section 6.03. Other Remedies. The Trustee shall have the right (a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Local Agency or any councilnember, officer or employee thereof, and to compel the Local Agency or any such councilmember, officer or employee to perform and carry out its or his duties under law and the agreements and covenants required to be performed by it or him contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority or the Trustee; or (c) by suit in equity upon the happening of an Event of Default to require the Local Agency and its council members, officers and employees to account as the trustee of an express trust. Section 6.04. Non - Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the Local Agency, which is absolute and unconditional, to pay the 2014 Installment Sale Payments from the Revenues to the Trustee at the respective due dates or upon prepayment, or shall affect or impair the right of the Trustee, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any 0HSUSa:75820671 z.l 21 such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Trustee, the Authority and the Local Agency and the Trustee shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Section 6.05. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by law. The exercise of remedies hereunder shall be subject to the provisions of the Trust Agreement, including Articles x%11 and lX thereon. 011SUSA:758206712.1 22 ARTICLE VII DISCHARGE OF OBLIGATIONS Section 7.01. Discharge of Obligations. (a) If the Local Agency shall pay or cause to be paid all the 2014 Installment Sale Payments at the times and in the manner provided herein, and all amounts owed the Insurer shall have been paid in full, the right, title and interest of the Authority herein and the obligations of the Local Agency hereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied. (b) Any unpaid principal installment of the 2014 Installment Sale Payments shall on its payment date or date of prepayment be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if the Local Agency makes payment of such 2014 Installment Sale Payments and the prepayment premium, if applicable, in the manner provided herein. (c) All or any portion of unpaid principal installments of the 2014 Installment Sale Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if (i) notice is provided by the Local Agency to the Trustee as required by the Trust Agreement, (ii) there shall have been deposited with the Trustee either money in an amount which shall be sufficient, or Permitted Investments (as that term is defined in the Trust Agreement) of the type described in clause (1) of the definition of Permitted Investments and which are not subject to redemption prior to maturity (including any such Permitted Investments issued or held in book entry form on the books of the Treasury of the United States of America) or tax - exempt obligations of a state or a political subdivision thereof which have been defeased under irrevocable escrow instructions by the deposit of such money or Permitted Investments and which are then rated in the highest rating category by the Rating Agency, the interest on and principal of which when paid will provide money which, together with money, if any, deposited with the Trustee, shall be sufficient, in the opinion of an Independent Certified Public Accountant, to pay when due the interest to become due with respect to the principal installments of such 2014 Installment Sale Payments and the principal installments of such 2014 Installment Sale Payments or such portions thereof on and prior to their payment dates or their dates of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto and (iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that the action taken pursuant to this subsection will not cause the interest evidenced and represented by the Certificates to be includable in gross income under the Code for federal income tax purposes. (d) After the payment of all 2014 Installment Sale Payments and prepayment premiums, if any, as provided in this section, and payment of all fees and expenses of the Trustee, the Trustee, upon request of the Local Agency, shall cause an accounting for such period or periods as may be requested by the Local Agency to be prepared and filed with the Local Agency and the Authority and shall execute and deliver to the Local Agency and the Authority all such instruments as may be necessary or desirable to evidence such total discharge 01-ISUSA:758206712.1 23 and satisfaction of the 20i4 installment Sale Agreement, and the Trustee shall pay over and deliver to the Local Agency, as an overpayment of 2014 Installment Sale Payments, all such money or investments held by it pursuant hereto other than such money and such investments as are required for the payment or prepayment of the 2014 Installment Sale Payments, which money and investments shall continue to be held uninvested by the Trustee in trust for the payment of the 2014 Installment Sale Payments and shall be applied by the Trustee pursuant to the Trust Agreement. 01 ISUSA:758206712.1 24 ARTICLE VIII MISCELLANEOUS Section 8.01. Liability of Local Agency Limited to Revenues. Notwithstanding anything contained herein, the Local Agency shall not be required to advance any moneys derived from any source of income other than the Revenues for the payment of the 2014 Installment Sale Payments or for the performance of any agreements or covenants required to be performed by it contained herein. The obligation of the Local Agency to make the 2014 Installment Sale Payments is a special obligation of the Local Agency payable solely from the Revenues as provided herein, and does not constitute a debt of the Local Agency or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. Section 8.02. Benefits of 2014 Installment Sale Agreement. Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the Local Agency, the Insurer or the Trustee any right, remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the Authority, the Local Agency or the Trustee shall be for the sole and exclusive benefit of the other parties. Section 8.03. Successor Is Deemed Included in all References to Predecessor. Whenever either the Authority or the Local Agency or the Trustee is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority or the Local Agency or the Trustee, and all agreements and covenants required hereby to be performed by or on behalf of the Authority or the Local Agency or the Trustee shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Section 8.04. Waiver of Personal Liability. No councihnember, officer or employee of the Local Agency shall be individually or personally liable for the payment of the 2014 Installment Sale Payment, but nothing contained herein shall relieve any councihnember, officer or employee of the Local Agency from the performance of any official duty provided by any applicable provisions of law or hereby. Section 8.05. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections," "Exhibits" and other subdivisions or clauses are to the corresponding articles, sections, exhibits, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith" and other words of similar import refer to the 2014 Installment Sale Agreement as a whole and not to any particular article, section, exhibit, subdivision or clause hereof. 01- ISUSA:758206712.1 25 Section 8. 0v6. Partial Invaiidi_V. if any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Authority or the Local Agency shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The Authority and the Local Agency hereby declare that they would have executed the 2014 Installment Sale Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Section 8.07. Assignment. The 2014 Installment Sale Agreement and any rights hereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement; to which assignment the Local Agency hereby expressly acknowledges and consents. Any other assignment without the consent of the Trustee and the Insurer shall be void. Section 8.08. Net Contract. The 2014 Installment Sale Agreement shall be deemed and construed to be a net contract, and the Local Agency shall pay absolutely net during the term hereof the 2014 Installment Sale Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set -off whatsoever. Section 8.09. California Law. The 2014 Installment Sale Agreement shall be construed and governed in accordance with the laws of the State of California. Section 8.10. Indemnification. The Local Agency shall, to the full extent then permitted by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its directors, officers and employees and the Trustee and its directors, officers and employees from and against any and all liability, obligations, losses, claims and damages whatsoever, regardless of the cause thereof, and expenses in connection therewith, including, without limitation, reasonable counsel fees and expenses, penalties and interest arising out of or as the result of the acquisition, construction, installation and use of the Project and each portion thereof or any accident in connection with the operation, use, condition or possession of the Project or any portion thereof resulting in damage to property or injury to or death to any person including, without limitation, any claim alleging latent and other defects, whether or not discoverable by the Local Agency or the Authority; any claim for patent, trademark or copyright infringement; and any claim arising out of strict liability in tort. The indemnification arising under this Section shall continue in full force and effect notwithstanding the full payment of all obligations hereunder or the termination hereof for any reason. The Local Agency agrees not to withhold or abate any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the Project. The Local Agency and the Authority mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either's learning thereof. Section 8.11. Funds. Any fund required to be established and maintained herein by the Local Agency may be established and maintained in the accounting records of the Local Agency either as an account or a fund, and may, for the purpose of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a OHSUSA:758206712.1 26 fund; but all such records with respect to any such fund shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Certificates and the rights of the owners of such Certificates. Section 8.12. Notices; Authorized Local A14ency Representative. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely: If to the Local Agency: City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 Attention: [Treasurer] If to the Authority: California Statewide Communities Development Authority 2999 Oak Road, Suite 710 Walnut Creek, CA 94597 Attention: Secretary Local Agency Authorized Representatives: TITLE (1) [Mayor] (2) [City Manager] (3) [Treasurer] Section 8.13. Effective Date. The 2014 Instalhnent Sale Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for the payment thereof shall have been made pursuant to Article VII). Section 8.14. Execution in Counterparts. The 2014 Installment Sale Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 01ISUSA:75820671 2.1 27 IN `Jv i T NESS `J` HE, RE, OF, tine parties hereto have executed and attested the 2014 Installment Sale Agreement by their officers thereunto duly authorized as of the day and year first written above. CITY OF LAKE ELSINORE APPROVED AS TO FORM By: Local Agency Counsel [City Manager] CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY 011SUSA:758206712.1 28 Authorized Signatory EXHIBIT A 2014 INSTALLMENT SALE PAYMENTS SCHEDULE Payment Interest Date Installment 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ 12/01/ 06/01/ l2 /O1/ 06/01/ 12/01/ 06/01/ OHSUSA:758206712.1 Total 2014 Principal Installment Sale Installment Payments S $ Xlriini T B DESCRIPTION OF PROJECT [The construction of streets and roadways within the corporate limits of the City of Lake Elsinore, which improvements are eligible costs payable from Revenues, including engineering, inspection, contract administration and other incidental costs. The designation of which particular streets and roadways to be improved shall be made by the City Manager of the Local Agency.] 01 1SUSA:758206712.1 L -0 O N `o - E —_ o a L a o N N o a U C @ U N Q N Q O > � N @ a 0 0 0 ` N @ o @ 0 o- p C N > p E U U O C p u � � o o @ n `5 u � � c o a 3 c o co to a — E 0 w C 7 to U S p U) N O W O d) U F) c o 2 C �0 0 E E 0 a @ U E 60, 1Z Z E — @ 5 c o aE� E '— :2 o 2 Do U ll O o m 3 L a) N N N � w O a o c N in .V a3Eo C U 0 ro o 0 C E .c U OU a N c O U a3 p C_ C to G G O o w «. � C U c o > E @ O N c w n C .N m o -= U d) U O @ 0) Q) C U � E 0 0 Q o 0 d w m F o H E m PRELIMINARY OFFICIAL STATEMENT DATED , 2014 NEW ISSUE — BOOK -ENTRY ONLY [INSURED RATING:] [Standard & Poor's: "_" ( outlook)] [UNDERLYING] RATING: Standard & Pools: ` =" ( outlook) (See "RATING IS].") In the opinion of Orrick, Herrington & Snchffe LLP, Special Counsel to the Local Agency, hosed upon rah analysis of evi.sting laws, regulations, n1h)kgs, and court decisions, and assunning, among other maner•.s, the acctower of certain representations and compliance with certain covenants, tie interest on the Izsialbnew Sale Payments paid by the Local Agency under the 2014 Installment Sale Agreement and received by the owners of the Ceriifr'caies is excluded f nun gross income ford federal income iox purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt, front Slate of L "aliforma personal income tares. In the .further opinion of Special Counsel, such interest is not a .s7)ectjc preference item for purposes of the federal Individual or corporate alternative minimum taxes, although Special Counsel ohserves that such interest is included in adlusied current earnings when calculating corporate alternative mininnon taxable income. Special Counsel expresses no opinion regarding any other lax consequences related to the ownership or disposition of or the amount, accrual or receipt of the interest on, the Izstallnrem Sale Payments. See "7Aa A4A77'RRS. " Dated: Date of Delivery $[PRINCIPAL AMOUNT]" CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interest of the Owners Thereof in Installment Sale Payments to be Made by The City of Lake Elsinore Pursuant to a 2014 Installment Sale Agreement Due: June 1, as shown on inside cover THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE CERTIFICATES. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL, TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Patti cipation, Series 20I4A (T.R.I.P. — Total Road Improveutent Program) (the "Certificates "), are being executed and delivered in the aggregate principal amount of $[PRINCIPAL AMOUNT]" by Wells Fargo Bank, National Association, as tustee (the "Trustee "), pursuant to the provisions of a Trust Agreement, dated as of 1, 2014 (the "Trust Agreement "), by and among the California Statewide Coni n inities Development Authority (the "Authority"), the Tntstee, and the City of Lake Elsinore (the "Local Agency "). Capitalized teens used on this cover page and not otherwise defined shall have the meanings ascribed to them elsewhere ill this Official Statement. See in particular "APPENDIX A — SUMMARY OF PRINCIPAL, LEGAL DOCUMENTS — Definitions." The proceeds fiom the sale of the Certificates will be used to (i) finance the design, acquisition, and construction of certain local roadway improvements and street resurfacing projects within the jurisdiction of the Local Agency (the "Project "), (ii) [CONFIRM:] obtain an insurance policy that constitutes a Qualified Reserve Insoument (as defined herein) ill lieu of the required deposit to a reserve subaccount within the reserve find for the Certificates, and (iii) pay the costs incurred in connection with the execution, sale, and delivery of the Certificates. The Project will be sold by the Authority to the Local Agency pursuant to a 2014 Installment Sale Agreement, dated as of 1, 2014 (the "2014 Installment Sale Agreement "), by and between the Authority and the Local Agency. See "ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS," "THE LOCAL AGENCY AND THE PROJECT," and "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES — Reserve Fund." The Local Agency is required under the 2014 Installment Sale Agreement to make installment sale payments (collectively, the "Installment Sale Payments ") to the Authority, which Installment Sale Payments are payable from a first lien on all Measure A Receipts (as defined herein), generally consisting of certain amounts received by the Local Agency from a 0.5% retail transactions and use tax that is collected in the County of Riverside, California for a thirty -year period ending on June 30, 2039, to the extent the Project constitutes a Measure A Project (as defined herein), for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement. Installment Sale Payments are scheduled in an amount sufficient to pay, when due, the annual principal and interest with respect to the Certificates. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES," "MEASURE A REVENUES; MEASURE A RECEIPTS," and "RISK FACTORS." The Measure A Receipts are the sole source of payment of the Installment Sale Payments. Neither the general find of the Local Agency nor ally other moneys of the Local Agency are available to pay or seem the Installment Sale Payments or the Certificates. The obligation of the Local Agency to pay its Installment Sale Payments is not subject to abatement. The Certificates will be executed and delivered in filly registered form without coupons and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Certificates. Individual purchases of Certificates may be made in book -entry form only, ill the principal amount of $5,000 or integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased. See "THE CERTIFICATES — Book -Entry Only System." Payments of principal and interest with respect to the Certificates will be made by the Trustee to DTC, which will in turn remit such principal and interest to its participants for subsequent dispersal to beneficial owners of the Certificates as described herein. Interest with respect to the Certificates is payable semiannually each June I and December 1, commencing _ 1, 20, until the maturity or the earlier prepayment thereof. Principal with respect to the Certificates will be paid on each June I, commencing June 1, 20, upon surrender of such Certificate at the principal corporate office of the Trustee upon maturity or the earlier prepayment thereof. 'File Certificates are subject to optional, mandatory, and mandatory sinking fund prepayment prior to their stated principal payment dates as described herein. [The scheduled payment of principal and interest with respect to the Certificates when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Certificates by [INSURER]. See "CERTIFICATE INSURANCE POLICY" and "APPENDIX E — SPECIMEN [MUNICIPAL BOND] INSURANCE POLICY. "] [INSERT INSURER LOGO] THE OBLIGATION OF THE LOCAL AGENCY TO MAKE INSTALLMENT SALE PAYMENTS UNDER THE 2014 INSTALLMENT SALE AGREEMENT IS A SPECIAL OBLIGATION OF THE LOCAL AGENCY PAYABLE SOLELY FROM MEASURE A RECEIPTS AND DOES NOT CONSTITUTE A DEBT OF THE LOCAL AGENCY, THE AUTHORITY, THE STATE OF CALIFORNIA (THE "STATE "), OR ANY POLITICAL SUBDIVISION OF THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE LOCAL AGENCY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH 'THE LOCAL AGENCY, THE S'T'ATE, OR ANY POLITICAL SUBDIVISION OF THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTTIORIT'Y HAS NO TAXING POWER. [See Maturity Schedule on Inside Cover] The Certificates are of when, as, and if executed and delivered to and received by the Underwriter, snhjeci to the approval of legality by Orrick, llerrington &Sutcliffe LLP, Los Angeles, Ca/ifot•nia, Special Counsel to the Local Agency. Certain legal matters will be passe upon,for the Authority b }r Orrick, Herrington &Sutcliffe LLP, Los Angeles, California, for the City of Lake Elsinore by ICONFIRM:J Barbara Leibold, Esq., City Attorney, andfor the Underwriter by Goodwin Procter LLP, Los Angeles, California, as Underwriter's Counsel. It is anticipated that the Certificates in Gook- entrvfor•m will be available for delivery to DTC in New York, New York, on or about _ _ 2014. STIFEL Dated: 2014. Preliminary; subject to change. MATURITY SCHEDULE Maturity Maturity Date Principal Interest Date Principal Interest June 1) Amount Rate Yield Price CUSIP I')No. ,Tune 1 Amount Rate Yield Price CUSIP t'1 No. S % Term Certificates due June 1, 20_ Yield: _ %; Price: CUSIP ")No. $ % Term Certificates due June 1, 20_ Yield: _ %; Price: CUSIP (')No. (1) CIISIPQ is a registered trademark of the American Bankers Association. Copyright© 1999 -2014 American Bankers Association. All rights reserved. CUSIPV data are provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LI.,C on behalf of the American Bankers Association. These data are not intended to create a database and do not serve in any way as a substitute for CUSIP Global Services. CUSIPO numbers are provided for convenience of reference only. Neither the Authority nor the Local Agency takes any responsibility for the accuracy of such numbers. 51PRINCIPAL AMOUNTI" CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CER'T'IFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. —TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interest of the Owners Thereof in Installment Sale Payments to be Made by The City of Lake Elsinore Pursuant to a 2014 Installment Sale Agreement PARTICIPATING LOCAL AGENCY City of Lake Elsinore, California Natasha Johnson, Mayor Steve Manos, Mayor Pro Tem Daryl Hickman, Council Member Brian Tisdale, Council Member Robert E. Magee, Council Member Grant Yates, City Manager Barbara Leibold, Esq., City Attorney Jason Simpson, Director ofAdministrative Services PROFESSIONAL SERVICES Special Counsel Orrick, Herrington & Sutcliffe LLP Los Angeles, California Underwriter's Counsel Goodwin Procter LLP Los Angeles, California Trustee Wells Fargo Bank, National Association Los Angeles, California Financial Advisor Urban Futures, Inc. Orange, California .. Preliminary; subject to change. No dealer, broker, salesperson, or other person has been authorized by the Local Agency, the Authority, or Stlfel, Nlcolaus & Company, Incorporated (fl,e "tJ1)(1- ir•iter "), to give any information or to make any representations other than those contained in this Official Statement 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 the Certificates, 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 to be a contract with the purchasers of the Certificates. Statements contained in this Official Statement that involve estimates, forecasts, or matters of opinion, whether or not expressly described as such herein, are intended solely as such and are not to be construed as representations of fact. The information set forth in this Official Statement has been obtained from the Local Agency, the Authority, and other sources that are believed to be reliable, but it is not guaranteed as to accuracy or completeness and it is not to be construed as a representation by the Local Agency or the Authority. 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 will, under any circumstances, create any implication that there has been no change in the affairs of the Local Agency or the Authority since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. 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. THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE CERTIFICATES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT 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. THE UNDERWRITER MAY OFFER AND SELL THE CERTIFICATES TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. [INSURER DISCLOSURE, IF APPLICABLE] TABLE OF CONTENTS Page INTRODUCTION............................................................................................................... ..............................1 Description of the Certificates ....................................................................................... ..............................1 Authorization................................................................................................................. ..............................2 JudicialValidation ......................................................................................................... ..............................2 Use of Certificate Proceeds ........................................................................................... ..............................2 Paymentof Principal and Interest .................................................................................. ..............................2 Prepayment of Certificates ............................................................................................ ..............................3 Security and Sources of Payment for the Certificates ................................................... ..............................3 Special, Limited Obligation of the Local Agency ......................................................... ..............................4 ContinuingDisclosure ................................................................................................... ..............................4 Forward - Looking Statements ........................................................................................ ..............................4 ReferencesQualified ..................................................................................................... ..............................5 ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS .......................... ..............................5 THECERTIFICATES ......................................................................................................... ..............................5 Authorization and Registration of Certificates .............................................................. ..............................5 Judicial Validation of Certificates ................................................................................. ..............................5 Paymentof Certificates ................................................................................................. ..............................6 Prepaymentof Certificates ............................................................................................ ..............................6 Purchase of Certificates in Lieu of Prepayment ............................................................ ..............................7 Selection of Certificates for Prepayment ....................................................................... ..............................7 Notice of Prepayment; Effect of Notice ........................................................................ ..............................8 Partial Prepayment or Purchase of Certificates ............................................................. ..............................8 Effectof Prepayment ..................................................................................................... ..............................8 Book -Entry Only System .............................................................................................. ..............................9 DebtService ................................................................................................................. .............................11 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES .................... .............................12 InstallmentSale Payments ............................................................................................ .............................12 Pledge of Measure A Receipts ..................................................................................... .............................12 PledgedTax Fund ......................................................................................................... .............................13 Deposit of Other Available Revenues .......................................................................... .............................14 AdditionalContr acts ..................................................................................................... .............................14 ReserveFund ................................................................................................................ .............................15 [Reserve Policy] ........................................................................................................... .............................16 [Certificate Insurance Policy] ....................................................................................... .............................17 THELOCAL AGENCY AND THE PROJECT ................................................................. .............................17 ParticipatingLocal Agency .......................................................................................... .............................17 TheProject ................................................................................................................... .............................18 MEASURE A REVENUES; MEASURE A RECEIPTS ................................................... .............................18 Pledge of Measure A Receipts ..................................................................................... .............................18 TheMeasure A Sales Tax ............................................................................................. .............................19 Riverside County Transportation Commission ............................................................ .............................20 Senior Lien Measure A Obligations ............................................................................. .............................20 Collection and Allocation of Measure A Revenues ..................................................... .............................21 Historical Measure A Revenues — City of Lake Elsinore ............................................. .............................22 Measure A Fund Financial Statements ......................................................................... .............................23 MAXIMUM ANNUAL DEBT SERVICE COVERAGE .................................................. .............................24 h [CERTIFICATE INSURANCE POLICY] ......................................................................... .............................24 RISKFACTORS ................................................................................................................ .............................25 Installment Sale Payments Constitute Limited Obligations ......................................... .............................25 PassiveRevenue Source ............................................................................................... .............................25 Allocation of Measure A Revenues to City of Lake Elsinore is Subordinate to Payment of Senior Lien MeasureA Obligations .......................................................................................... .............................25 Limitations on Use of Measure A Revenues ................................................................ .............................26 AdditionalContr acts ..................................................................................................... .............................26 Lossof Tax Exemption ................................................................................................ .............................26 Limitations on Remedies; Bankruptcy ......................................................................... .............................26 Constitutional Limitations on Appropriations .............................................................. .............................27 California State Legislature or Electorate May Change Items Subject to Measure A Sales Tax ..............27 Increases in Sales Tax Rate May Cause Declines in Measure A Revenues ................. .............................27 Increased Internet Use May Reduce Measure A Sales " Tax .......................................... .............................28 No Liability of Authority to Owners ............................................................................ .............................28 Economic, Political, Social, and Environmental Conditions ........................................ .............................28 CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS.................................................................................................... .............................28 Article XIIIB of the California Constitution — Limitations on Appropriations ............ .............................28 Articles XIIIC and XIIID of the California Constitution — The Right to Vote on Taxes .......................... 29 FutureInitiatives ........................................................................................................... .............................31 THEAUTHORITY ............................................................................................................ .............................31 TAXMATTERS ................................................................................................................. .............................31 RATINGS........................................................................................................................... .............................33 CONTINUINGDISCLOSURE .......................................................................................... .............................33 UNDERWRITING............................................................................................................. .............................34 NOLITIGATION ............................................................................................................... .............................34 TheAuthority ............................................................................................................... .............................34 TheLocal Agency ........................................................................................................ .............................34 CERTAINLEGAL MATTERS .......................................................................................... .............................34 MISCELLANEOUS........................................................................................................... .............................35 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ................... ............................... A -1 APPENDIX B GENERAL INFORMATION REGARDING PARTICIPATING LOCAL AGENCY — CITY OF LAKE ELSINORE ................................................................ ............................B -1 APPENDIX C PROPOSED FORM OF SPECIAL COUNSEL OPINION .................. ............................0 -1 APPENDIX D FORM OF LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT............ D -1 APPENDIX E SPECIMEN [MUNICIPAL BOND] INSURANCE POLICY ......... ............................... E -1] OFFICIAL STATEMENT $[PRINCIPAL AMOUNT]* CALIFORNIA COMMUNITIES LOCAL MEASURE A SALES TAX REVENUE (INSTALLMENT SALE) CERTIFICATES OF PARTICIPATION, SERIES 2014A (T.R.I.P. — TOTAL ROAD IMPROVEMENT PROGRAM) Evidencing Proportionate and Undivided Interest of the Owners Thereof in Installment Sale Payments to be Made by the City of Lake Elsinore, California Pursuant to a 2014 Installment Sale Agreement INTRODUCTION This Official Statement, which includes the cover page, inside cover page, Table of Contents, and Appendices (the "Official Statement "), provides certain information concerning the execution and delivery of the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) (the "Certificates "), in an aggregate principal amount of $[PRINCIPAL AMOUNT]. Descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each such document for complete details of all terms and conditions therein. All statements in this Official Statement are qualified in their entirety by reference to the applicable documents. This Introduction is subject in all respects to the more complete information contained elsewhere in this Official Statement, and the offering of the Certificates to potential investors is made only by means of the entire Official Statement. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Definitions." Description of the Certificates The Certificates will be dated the date of their initial delivery and will mature on the dates and in the principal amounts set forth on the inside cover page hereof. The Certificates will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, which will act as securities depository for the Certificates. The Certificates evidence proportionate and undivided interests of the registered owners thereof (the "Owners ") in installment sale payments (the "Installment Sale Payments ") to be made by the City of Lake Elsinore (the "City of Lake Elsinore" or the "Local Agency ") to the California Statewide Communities Development Authority (the "Authority "), as the purchase price for certain (CONFIRM /REVISE:] local roadway improvements and street resurfacing projects throughout the geographic boundaries of the Local Agency (the "Project ") pursuant to a 2014 Installment Sale Agreement, dated as of 1, 2014 (the "2014 Installment Sale Agreement "), by and between the Authority and the Local Agency. See "THE CERTIFICATES," "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES," and "THE LOCAL AGENCY AND THE PROJECT." * Preliminary; subject to change. Authorization The Certificates are being executed and delivered by Wells Fargo Bank, National Association, as trustee (the "Trustee "), pursuant to (i) a Trust Agreement, dated as of 1, 2014 (the "Trust Agreement "), by and among the Authority, the Trustee, and the Local Agency, and (ii) a resolution adopted by the Authority on , 20_, and a resolution adopted by the City of Lake Elsinore on , 20 (collectively, the "Resolutions "). See "THE CERTIFICATES — Authorization" and Registration of Certificates" and "APPENDIX A -- SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." Judicial Validation The City of Lake Elsinore filed a complaint in the Superior Court of the State of California for the County of Riverside (the "Riverside County Superior Court") pursuant to California Government Code Section 53510 et seq. and California Code of Civil Procedure Section 860 et seq. (collectively, the "Validation Law ") seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. The City of Lake Elsinore filed its, complaint on 20 There was no answering party in the action and, on _,20 —, the City of Lake Elsinore obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Riverside County Superior Court within 30 days after the entry of such judgment (i.e., by no later than , 20__) and, since there was no answering party in the action, only issues related to the jurisdiction of the Riverside County Superior Court to enter a judgment in the action may be raised during such period. The appeal period expired for such action on 20 . Use of Certificate Proceeds The proceeds from the sale of the Certificates will be used to (i) finance the design, acquisition, and construction of the Project, (ii) [CONFIRM:] obtain an insurance policy that constitutes a Qualified Reserve Instrument (as defined herein) in lieu of the required deposit to a reserve subaccount (the "Reserve Subaccount ") within the reserve fund for the Certificates (the "Reserve Fund "), and (iii) pay the costs incurred in connection with the execution, sale, and delivery of the Certificates, CONFIRM:] including, but not limited to, the cost of the Certificate Insurance Policy (as defined herein). See "ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS," "THE LOCAL AGENCY AND THE PROJECT," and "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES — Reserve Fund." Payment of Principal and Interest Interest with respect to the Certificates is payable semiannually on June 1 and December 1, commencing 1, 20_ (each, an " hnterest Payment Date "), and is payable by check mailed by first class mail on the date such interest is due to the Owner at his address as it appears on the registration books maintained by the Trustee; provided, however, that an Owner of $1,000,000 or more in aggregate principal amount evidenced by the Certificates may request in writing that the Trustee pay the interest evidenced by such Certificates by wire transfer and the Trustee shall comply with such request for all Interest Payment Dates following the 15th day after receipt of such request until such request is rescinded. Principal with respect to the Certificates will be payable on .Lune I of each year, commencing June 1, 20_ (each, a "Certificate Payment Date "), upon surrender of such Certificate at the principal corporate trust office of the Trustee in Los Angeles, California, upon the maturity or earlier prepayment thereof. See "THE CERTIFICATES." Prepayment of Certificates The Certificates are subject to optional, mandatory, and mandatory sinking fund prepayment under certain circumstances as described herein. See "THE CERTIFICATES — Prepayment of Certificates." Security and Sources of Payment for the Certificates Installment Sale Payments. Pursuant to the 2014 Installment Sale Agreement, the Local Agency is required to pay to the Trustee, from a first lien on the Measure A Receipts (as defined below), the Installment Sale Payments, which Installment Sale Payments are designed to be sufficient, in both time and amount, to pay, when due, the principal and interest evidenced and represented by the Certificates. The term "Measure A Receipts" is defined in the 2014 Installment Sale Agreement to mean Measure A Revenues (as defined below) allocated by the Riverside County Transportation Commission (the "Commission ") to the Local Agency pursuant to the Measure A Ordinance (as defined below), to the extent the Project constitutes a Measure A Project (as defined below), for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement. The term "Measure A Revenues" is defined in the 2014 Installment Sale Agreement to mean revenues of the Commission derived from a retail transactions and use tax (the "Measure A Sales Tax ") imposed in the County of Riverside, California (the "County "), pursuant to the Riverside County Transportation Sales Tax Act, Division 25 (Section 240000 et seq.) of the Public Utilities Code of the State of California, as now in effect and as it may from time to time hereafter be amended or supplemented (the "Measure A Sales Tax Act "), and the Measure A Ordinance. The term "Measure A Ordinance" is defined in the 2014 Installment Sale Agreement to mean Ordinance No. 02 -001, the Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, adopted by the Commission on May 8, 2002, and approved by at least two - thirds of electors voting on such proposition in the November 5, 2002 election, as supplemented and amended. The term "Measure A Project" is defined in the 2014 Installment Sale Agreement to mean a capital project for which Measure A Receipts may be expended. The entire Project constitutes a Measure A Project. See "THE LOCAL AGENCY AND THE PROJECT — The Project." A portion of the Measure A Revenues are allocated by the Commission to the Local Agency for the Local Agency's local streets and roads program on a basis that is subordinate to the Commission's payment of its Senior Lien Measure A Obligations, as described herein. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Senior Lien Measure A Obligations" and " — Collection and Allocation of Measure A Revenues" and "RISK FACTORS — Senior Lien Measure A Obligations." In addition, only the portion of Measure A Revenues allocated by the Commission to the Local Agency constituting Measure A Receipts may be applied to pay the Installment Sale Payments. See "RISK FACTORS — Limitations on Use of Measure A Revenues." Pursuant to the Trust Agreement, the Authority will assign to the Trustee all of the Authority's rights and remedies under the 2014 Installment Sale Agreement, including, but not limited to, the Authority's security interest in and lien upon the Measure A Receipts. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES," "MEASURE A REVENUES; MEASURE A RECEIPTS," and "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." Reserve Fund and Reserve Subaccount. Pursuant to the Trust Agreement, the Trustee is required to maintain amounts on deposit in the Reserve Subaccount of the Reserve Fund for the Local Agency, which amounts are held by the Trustee and pledged to the payment of principal and interest with respect to the Certificates, in amounts equal to the Local Agency's Reserve Fund Requirement (as defined herein) for such Reserve Subaccount. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES — Reserve Fund" 1CONFIRM:1 and "— Reserve Policy" and "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Trust Agreement." [Certificate Insurance Policy. Concurrently with the execution and delivery of the Certificates, [INSURER] (the "Certificate Insurer ") will issue its [Municipal Bond] Insurance Policy for the Certificates (the "Certificate Insurance Policy "). The Certificate Insurance Policy guarantees the scheduled payment of principal and interest with respect to the Certificates when due as set forth in the form of the Certificate Insurance Policy included as Appendix E to this Official Statement. See "CERTIFICATE INSURANCE POLICY. "] Special, Limited Obligation of the Local Agency THE OBLIGATION OF THE LOCAL, AGENCY TO MAKE INSTALLMENT SALE PAYMENTS UNDER THE 2014 INSTALLMENT SALE AGREEMENT IS A SPECIAL OBLIGATION OF THE LOCAL AGENCY PAYABLE SOLELY FROM MEASURE A RECEIPTS AND DOES NOT CONSTITUTE A DEBT OF THE LOCAL AGENCY, THE AUTHORITY, THE STATE OF CALIFORNIA (THE "STATE ") OR ANY POLITICAL SUBDLVISION OF THE STATE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH TIIE LOCAL AGENCY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE LOCAL AGENCY, THE STATE, OR ANY POLITICAL SUBDIVISION OF THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER. Continuing Disclosure In connection with the execution and delivery of the Certificates, the Local Agency will covenant in a continuing disclosure agreement (the "Continuing Disclosure Agreement "), executed for the benefit of Owners, to provide certain financial information and operating data and notices of certain events, if material. See "CONTINUING DISCLOSURE" and "APPENDIX D — FORM OF LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT." Forward- Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward - looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21 E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "intend," "expect," "propose," "estimate," "project," "budget," "anticipate," or other similar words. The achievement of certain results or other expectations contained in such forward - looking statements involves known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements described to be materially different from any future results, performance, or achievements expressed or implied by such forward - looking statements. No updates or revisions to these forward- looking statements are expected to be issued if or when the expectations, events, conditions, or circumstances on which such statements are based change. The forward - looking statements in this Official Statement are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such forward - looking statements. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD - LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. References Qualified The summaries of and references to all documents, statutes, reports, and other instruments referred to in this Official Statement do not purport to be complete, comprehensive, or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report, or instrument. ESTIMATED SOURCES AND USES OF CERTIFICATE PROCEEDS The following table details the estimated sources and uses of Certificate proceeds. Estimated Sources: Principal Amount Represented by Certificates [Less /Plus]: Net Original Issue [Discount/Premium] Less: Underwriter's Discount Total Sources Estimated Uses: [Transfer to Certificate Insurer for Certificate Insurance Policy Premium] [Transfer to Certificate Insurer for Reserve Policy Premium] Deposit into the Costs of Issuance Fund (1) Deposit into the Proceeds Subaccount of the Acquisition Fund IZ> Total Uses Moneys in the Costs of Issuance Find are expected to be used to pay the fees and expenses of Special Counsel, Underwriter's Counsel, the Trustee, the Financial Advisor, and the rating agency, as well as printing and other miscellaneous costs. «� Moneys in the Proceeds Subaccount will be applied to the acquisition and construction of the Pro.ject. See "THE LOCAL AGENCY AND THE PROJECT." THE CERTIFICATES Authorization and Registration of Certificates The Certificates are being executed and delivered by the Trustee pursuant to the Trust Agreement and the Resolutions. The Certificates will be dated the date of their initial delivery and will mature on the dates and in the principal amounts set forth on the inside cover page hereof. The Certificates will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, which will act as securities depository for the Certificates. See "THE CERTIFICATES — Book -Entry Only System" and "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Trust Agreement." Judicial Validation of Certificates The City of Lake Elsinore filed a complaint in the Riverside County Superior Court pursuant to the Validation Law seeking to validate certain issues raised by the proposed execution and delivery of the Certificates. The City of Lake Elsinore filed its complaint on , 20_. There was no answering party in the action and, on , 20_, the City of Lake Elsinore obtained a judgment in its favor that enjoins the institution of any action or proceeding raising any issue as to which such judgment is binding and conclusive. An appeal of such judgment could only be filed with the Riverside County Superior Court within 30 days after the entry of such judgment (i.e., by no later than , 20) and, since there was no answering party in the action, only issues related to the jurisdiction of the Riverside County Superior Court to enter a judgment in the action may be raised during such period. The appeal period expired for such action on 20. Pa`y'nienio1 Certificates The Certificates will be executed and delivered in fully registered form without coupons and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Certificates. Individual purchases of Certificates may be made in book -entry form only, in the principal amount of $5,000 or integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Certificates purchased. Payments of principal and interest with respect to the Certificates will be made by the Trustee to DTC, which will in turn remit such principal and interest: to its participants for subsequent dispersal to beneficial owners of the Certificates as described herein. Interest with respect to the Certificates is payable semiannually on each Interest Payment Date, commencing 1, 20_, until the maturity or the earlier prepayment thereof. Principal and any prepayment premiums with respect to each Certificate will be paid on each Certificate Payment Date upon surrender of such Certificate at the principal corporate office of the Trustee upon maturity or the earlier prepayment thereof. See "THE CERTIFICATES — Book -Entry Only System." Prepayment of Certificates Optional Prepayment of Certificates. The Certificates maturing on or before June 1, 20 are not subject to optional prepayment prior the respective stated maturities. The Certificates maturing on or after June 1, 20_, will be subject to optional prepayment prior to maturity, at the option of the Authority upon direction of the Local Agency, on or after June 1, 20_, in whole or in part (by lot among Certificates with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate), on any date, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. The Local Agency is required to provide written notice to the Authority and the Trustee at least 45 days prior to the prepayment date (or such lesser period of time acceptable to the Trustee in its sole discretion) specifying the principal amount evidenced by and maturities of the Installment Sale Payments to be prepaid. Mandatory Prepayment of Certificates Upon Acceleration. The Certificates are subject to mandatory prepayment prior to maturity, in whole or in part (by lot among Certificates with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate), on any date, from amounts received upon the acceleration of Installment Sale Payments upon the occurrence of an event of default under the 2014 Installment Sale Agreement, at a prepayment price equal to the principal amount to be prepaid, plus accrued interest to the date fixed for prepayment, without premium. Mandatory Sinking Fund Prepayment. The Certificates maturing on June 1, 20_, are subject to mandatory prepayment on June 1 of each year commencing June 1, 20 , in part, from mandatory sinking fund payments, on each June l specified below, at a prepayment price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor shall be as follows: Mandatory Prepayment Date June 1 Principal Amount 20_ $ 20 20 20_ (Maturity) The amount of each such prepayment shall be reduced in the event and to the extent that Installment Sale Payments payable on the corresponding Certificate Payment Date are optionally prepaid by the Local Agency pursuant to the 2014 Installment Sale Agreement and applied to the prepayment of Certificates maturing on June 1, 20 The Certificates maturing on June 1, 20 , are subject to mandatory prepayment on June 1 of each year commencing June 1, 20 , in part, from mandatory sinking fund payments, on each June 1 specified below, at a prepayment price equal to the principal evidenced thereby, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium. The principal evidenced by such Certificates to be so prepaid and the dates therefor shall be as follows: Mandatory Prepayment Date June 1 Principal Amount 20 $ 20 20 20_ (Maturity) The amount of each such prepayment shall be reduced in the event and to the extent that Installment Sale Payments payable on the corresponding Certificate Payment Date are optionally prepaid by the Local Agency pursuant to the 2014 Installment Sale Agreement and applied to the prepayment of Certificates maturing on June 1, 20. Purchase of Certificates in Lieu of Prepayment In lieu of prepayment of any Certificates, amounts on deposit in the Revenue Fund held under the Trust Agreement, or in any sinking account therein, may also be used and withdrawn by the Trustee at any time, upon the written request of the Authority, for the purchase of such Certificates at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest that is payable from the Interest Fund) as the Authority may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date. The principal amount represented by any Certificates so purchased by the Trustee in any twelve -month period ending 60 days prior to any Certificate Payment Date in any year will be credited towards and shall reduce the principal amount represented by any Certificates required to be prepaid on such Certificate Payment Date in such year. [Any purchase of Certificates in lieu of prepayment shall require the prior written approval of the Certificate Insurer if any Certificate so purchased is not cancelled upon purchase.] Selection of Certificates for Prepayment Whenever provision is made in the Trust Agreement for the prepayment or purchase of less than all of the Certificates or any given portion thereof, the Trustee will, subject to the following sentence, select the Certificates to be prepaid or purchased, from all Certificates subject to prepayment or purchase or such given portion thereof equal to a multiple of $5,000 or any integral multiple thereof not previously called for prepayment or purchase. Upon notice of any optional prepayment pursuant to the Trust Agreement, or receipt of moneys resulting in a mandatory prepayment pursuant to the Trust Agreement, the Trustee will request the Cash Flow Consultant to prepare a Cash Flow Report identifying the principal amount and maturities of the Certificates to be prepaid; [provided that upon the occurrence of an optional prepayment or mandatory prepayment upon acceleration in part, the selection of Certificates to be prepaid shall be subject to the approval of the Certificate Insurer so long as it has not failed to comply with its payment obligations under the Certificate Insurance Policy.] The Trustee will promptly notify the A iidnnrity in willing of t Lomas f �erti fic a r the n � r nb any p�'ep'uyiin eiu or purchase vi �,ci t�fi�ateS ai'lU of the 1�e1�1I11GALCS Or portions thereof so selected for prepayment or purchase. Notice of Prepayment; Effect of Notice So long as DTC is acting as securities depository for the Certificates, notice of redemption, containing the information required by the Trust Agreement, will be mailed by first class mail, postage prepaid, by the Trustee to DTC (not to the Beneficial Owners of any Certificates designated for redemption) not less than thirty (30) nor more than sixty (60) days prior to the prepayment or purchase date, or, if the Certificates are no longer held by the Depository, to the Securities Depositories and the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System. Each notice of prepayment or purchase shall state the date of such notice, the date of initial execution and delivery of the Certificates, the prepayment or purchase date, the Prepayment Price or Purchase Price, the place or places of prepayment or purchase (including the name and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the Certificates of each Certificate Payment Date or Dates, and, if less than all of the Certificates of any such Certificate Payment Date, the distinctive certificate numbers of the Certificates with such Certificate Payment Date, to be prepaid or purchased and, in the case of Certificates to be prepaid or purchased in part only, the respective portions of the principal amount thereof to be prepaid or purchased. Each such notice shall also state that on said date there will become due and payable on each of said Certificates the Prepayment Price or Purchase Price represented thereby or of said specified portion of the principal amount thereof in the case of a Certificate to be prepaid or purchased in part only, together with interest accrued with respect thereto to the prepayment or purchase date, and that from and after such prepayment or purchase date, interest thereon shall cease to accrue, and shall require that such Certificates be then surrendered at the address or addresses of the Trustee specified in the prepayment or purchase notice. Conditional notice of prepayment may be given at the direction of the Authority and shall be given if funds sufficient to prepay the Certificates are not then on deposit with the Trustee. Failure by the Trustee to give notice to the Municipal Securities Rulemaking Board through its Electronic Municipal Marketplace Access (EMMA) System or Securities Depositories, or failure by the Trustee to mail notice of prepayment or purchase to any one or more of the respective Owners of any Certificates designated for prepayment or purchase, shall not affect the sufficiency of the proceedings for prepayment or purchase. Partial Prepayment or Purchase of Certificates Upon surrender of any Certificate to be prepaid or purchased in part only, the Trustee will execute and deliver to the registered owner thereof, at the expense of the Authority, a new Certificate or Certificates of authorized denominations, and having the same Certificate Payment Date, equal in aggregate principal amount to the unprepaid or unpurchased portion of the Certificate surrendered. Effect of Prepayment Notice of prepayment having been duly given as described above, and moneys for payment of the principal and prepayment premium, if any, represented by the Certificates (or portions thereof) so called for prepayment (the "Prepayment Price "), together with interest accrued to the prepayment date with respect to such Certificates (or portions thereof), being held by the Trustee, on the prepayment date designated in such notice, the Certificates (or portions thereof) so called for prepayment shall become due and payable at the Prepayment Price specified in such notice and interest accrued with respect thereto to the prepayment date, interest with respect to the Certificates so called for prepayment shall cease to accrue, said Certificates (or portions thereof) will cease to be entitled to any benefit or security under the Trust Agreement, and the Owners of said Certificates shall have no rights in respect thereof except to receive payment of said Prepayment Price and accrued interest. Book -Entry Only System The.following information regarding DTC and its book -entry system has been provided by DTC and has not been verified for accuracy or completeness by the Authority or the Local Agency, and neither the Authority nor the Local Agency shall have any liability with respect thereto. Neither the Authority nor the Local Agency shall have any responsibility or liability for° any aspects of the records maintained by DTC relating to, or payments made on account of, beneficial ownership, or,for maintaining, supervising, or reviewing any records maintained by DTC relating to beneficial ownership, of interests in the Certificates. DTC will act as securities depository for the Certificates. The Certificates will be executed and delivered as fully - registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has a Standard & Poor's rating of AA +. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission ( "SEC "). More information about DTC can be found at www.dtcc.com. The foregoing internet address is included.for reference only and the information on the internet site is not apart of this Official Statement or incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information included in such internet site. Purchases of the Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate (`Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Certificates except in the event that use of the book -entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as prepayments, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Prepayment notices shall be sent to DTC. If less than all of the Certificates are being prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be prepaid. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Certificates unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments with respect the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Authority or the Trustee, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, the Certificates are required to be printed and delivered. 10 The Authority may decide to discontinue use of the system of book -entry only transfers through DTC (or a successor securities depository). In that event, Certificates will be printed and delivered to DTC. THE INFORMATION IN THIS SECTION CONCERNING DTC AND DTC'S BOOK -ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE LOCAL AGENCY AND THE AUTHORITY BELIEVE TO BE RELIABLE, BUT NEITHER THE LOCAL AGENCY NOR THE AUTHORITY TAKES ANY RESPONSIBILITY FOR THE ACCURACY THEREOF. Debt Service The table below presents the annual debt service with respect to the Certificates (including sinking account prepayments), assuming that there are no optional prepayments, for the year ending on June I in the years shown below: Debt Service Schedule Date June 1 Principal Interest Total Source: Underwriter. X SECURITY AN, i i' Al \TL SV V nCi VF PA Y'MLl�l l FOR THE, l l R 1 11 1l ATLJ Installment Sale Payments The Certificates evidence proportionate and undivided interests of the Owners thereof in the Installment Sale Payments to be made by the Local Agency pursuant to the 2014 Installment Sale Agreement. Pursuant to the 2014 Installment Sale Agreement, the Local Agency is required to pay to the Trustee, from a first lien on the Measure A Receipts, the Installment Sale Payments, which are designed to be sufficient in both time and amount, to pay, when due, the principal and interest evidenced and represented by the Certificates. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES — Pledge of Measure A Receipts" below. Pursuant to the Trust Agreement, the Authority will assign to the Trustee, for the benefit of the Owners, its rights under the 2014 Installment Sale Agreement, including, but not limited to, the Authority's security interest in and lien upon the Measure A Receipts. See "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS." Pledge of Measure A Receipts All Measure A Receipts held by the Trustee in any fund or account established under the Trust Agreement (other than amounts on deposit in the Acquisition Fund and the Rebate Fund established under the Trust Agreement) will be irrevocably pledged to the payment of the principal, interest, and prepayment premium, if any, evidenced and represented by the Certificates as provided in the Trust Agreement, and the Measure A Receipts will not be used for any other purpose while any of the Certificates remain outstanding; provided, however, that out of the Measure A Receipts there may be applied such sums for such purposes as are permitted under the Trust Agreement and the 2014 Installment Sale Agreement. Such pledge will constitute a first pledge of and charge and lien upon the Measure A Receipts on deposit in the funds and accounts established under the Trust Agreement (other than amounts on deposit in the Acquisition Fund and the Rebate Fund) for the payment of the interest and principal with respect to the Certificates in accordance with the terms of the Trust Agreement. Pursuant to the Trust. Agreement, the Authority will assign to the Trustee all of the Authority's rights and remedies under the 2014 Installment Sale Agreement, including, but not limited to, the Authority's security interest in and lien upon the Measure A Receipts. The term "Measure A Receipts" is defined in the 2014 Installment Sale Agreement to mean Measure A Revenues allocated by the Commission to the Local Agency pursuant to the Measure A Ordinance, to the extent the Project constitutes a Measure A Project, for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement. The Local Agency's entire Project constitutes a Measure A Project. See "THE LOCAL AGENCY AND THE PROJECT — The Project." The term "Measure A Revenues" is defined in the 2014 Installment Sale Agreement to mean revenues of the Commission derived from the Measure A Sales Tax imposed in the County pursuant to the Measure A Sales Tax Act and the Measure A Ordinance. Measure A Revenues are allocated by the Commission to the Local Agency on a basis that is subordinate to the Commission's payment with respect to its Senior Lien Measure A Obligations, as described herein. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Senior Lien Measure A Obligations" and " — Collection and Allocation of Measure A Revenues" and "RISK FACTORS — Senior Lien Measure A Obligations." Also, only the portion of Measure A Revenues allocated by the Commission to the Local Agency constituting Measure A Receipts may be applied to pay the Installment Sale Payments. See "RISK FACTORS — Limitations on Use of Measure A Revenues." 12 For more information regarding the portion of Measure A Revenues historically allocated by the Commission to the Local Agency, see "MEASURE A REVENUES; MEASURE A RECEIPTS — Historical Measure A Revenues — City of Lake Elsinore." See also `RISK FACTORS." Pledged Tax Fund In order to carry out and effectuate the pledge, charge, and lien contained in the Trust Agreement, the Authority will covenant that all Measure A Receipts when and as received shall be received by the Authority, as payment of Installment Sale Payments, in trust for the benefit of the Owners and shall be deposited when and as received by the Authority in the Revenue Fund created and maintained by the Trustee under the Trust Agreement. All Measure A Receipts shall be accounted separately for the Local Agency and held in trust in the Revenue Fund and applied as provided in the 2014 Installment Sale Agreement. The following funds and accounts will be established within the Revenue Fund: (i) Interest Fund and, within the Interest Fund, an Interest Payment Account for the Local Agency; (ii) Principal Fund and, within the Principal Fund, a Principal Payment Account for the Local Agency; (iii) Reserve Fund and, within the Reserve Fund, a Reserve Subaccount for the Local Agency; (iv) Administration Fund and, within the Administration Fund, an Administration Subaccount for the Local Agency; and (v) Surplus Account. In order to carry out and effectuate the obligation of the Local Agency contained in the 2014 Installment Sale Agreement to pay the Installment Sale Payments and the Administration Fee (as defined below), the Local Agency will agree and covenant in the 2014 Installment Sale Agreement that it has established a Pledged Tax Fund (the "Pledged Tax Fund ") and within the Pledged Tax Fund, a "Measure A Receipts Account," which fund and account therein the Local Agency will agree and covenant to maintain so long as any 2014 Installment Sale Payments remain unpaid, and all money on deposit therein shall be applied and used only as provided in the 2014 Installment Sale Agreement. The Local Agency will agree and covenant that all Measure A Receipts received by it shall be deposited when and as received in the Measure A Receipts Account. All of the Revenues (which term is defined in the 2014 Installment Sale Agreement to mean all Measure A Receipts) and all money in the Pledged Tax Fund and in the funds or accounts so specified and provided for the 2014 Installment Sale Agreement will be irrevocably pledged to the punctual payment of the Installment Sale Payments and the Administration Fee, and the Revenues and such other money shall not be used for any other purpose while any of the Installment Sale Payments remain outstanding; subject to the provisions of the 2014 Installment Sale Agreement permitting application thereof for the purposes and on the terms and conditions set forth therein. Such pledge shall constitute a first lien on the Revenues and such other money for the payment of the Installment Sale Payments and the Administration Fee in accordance with the terms of the 2014 Installment Sale Agreement. Pursuant to the 2014 Installment Sale Agreement, all money on deposit in the Pledged Tax Fund shall be set aside and deposited by the Local Agency in the various fiends and accounts within the Revenue Fund at the following times in the following order of priority: Interest Fund and Principal Fund Deposits. On or before the 15th day preceding each Interest Payment Date, the Local Agency shall, from the money in the Pledged Tax Fund, transfer to the Trustee for deposit in the Interest Payment Account in the Interest Fund within the Revenue Fund, a sum equal to the interest becoming due and payable on the next succeeding Interest Payment Date, except that no such deposit need be made if the Trustee then holds money in such Interest Payment Account equal to the amount of interest becoming due and payable with respect to the Local Agency on the next succeeding Interest Payment Date; and on or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the money in the Pledged 13 T ax uiid, transfer to the Trustee for deposit in the Principal Payment Account in the Principal Fund within the Revenue Fund, a sum equal to the principal becoming due and payable on the next succeeding Certificate Payment Date, except that no such deposit need be made if the Trustee then holds money in such Principal Payment Account equal to the amount of principal becoming due and payable with respect to the Local Agency on the next succeeding Certificate Payment Date. Reserve Fund Deposit. On or before the 15th day of each month, the Local Agency shall, from the money in the Pledged Tax Fund, transfer to the Trustee for deposit in the Reserve Subaccount in the Reserve Fund within the Revenue Fund that sum, if any, necessary to restore such Reserve Subaccount to an amount equal to the Reserve Fund Requirement, all in accordance with and subject to the terms and conditions of the Trust Agreement. All money in the Reserve Subaccount shall be used and withdrawn by the Trustee for the purposes specified in the Trust Agreement. Administration Fund Deposit. On or before the 15th day preceding each Certificate Payment Date, the Local Agency shall, from the remaining money on deposit in the Pledged Tax Fund, transfer to the Trustee for deposit in the Local Agency's Administration Subaccount in the Administration Fund within the Revenue Fund, a sun equal to the Administration Fee becoming due and payable under the Trust Agreement on the next Certificate Payment Date, and all money on deposit in the Administration Subaccount shall be used to pay the Administration Fee due on such Certificate Payment Date, in accordance with the terms of the Trust Agreement. "Administration Fee" means an amount equal to the sum of the respective annual administration fees charged by the Authority, the Trustee, and the Rebate Analyst, payable on the 15th day of the month preceding each Principal Payment Date. Notwithstanding the foregoing, provided all transfers described above under the subheadings "Reserve Fund Deposit" and "Administrative Fund Deposit" have been made, on any Business Day moneys on deposit in the Pledged Tax Fund in excess of the sum of (i) interest becoming due and payable under the 2014 Installment Sale Agreement on the next succeeding Interest Payment Date (less amounts then held by the Trustee in the Interest Payment Account) and (ii) the Pro Rata Share of Principal (less amounts then held by the Trustee in the Principal Payment Account) may be expended by the Local Agency at any time for any purpose permitted by law. "Pro Rata Share of Principal" is defined in the 2014 Installment Sale Agreement to mean, during any month, an amount of principal becoming due and payable thereunder on the next succeeding Certificate Payment Date that would have accrued if such principal were deemed to accrue monthly in equal amounts from the preceding Certificate Payment Date. Deposit of Other Available Revenues Notwithstanding the pledge of Measure A Receipts as described above, the Local Agency may satisfy its obligation to deposit Installment Sale Payments with the Trustee by depositing Other Available Revenues with the Trustee and, if and when so deposited, such Other Available Revenues shall be irrevocably pledged to the payment of Installment Sale Payments. Unless and until deposited with the Trustee, such Other Available Revenues are not pledged to the payment of Installment Sale Payments. The term "Other Available Revenues" is defined in the 2014 Installment Sale Agreement as revenues, other than Measure A Receipts, legally available to the Local Agency to make Installment Sale Payments. Additional Contracts So long as the Local Agency is not in default under the 2014 Installment Sale Agreement, the Local Agency may at any time execute any installment sale contracts, capital leases, or similar obligations 14 of the Local Agency (each, a "Contract "), authorized and executed by the Local Agency under and pursuant to applicable law, that constitute additional charges against its Measure A Receipts without the consent of Owners of the Certificates. See "APPENDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — 2014 Instalhnent Sale Payments; Administration Fee — Additional Contracts." To the extent that other Contracts are executed by the Local Agency, the funds available to pay the Installment Sale Payments may be decreased. In addition, there is no limitation on the ability of the Local Agency City to execute any Contract at any time to refund any outstanding Contract. Reserve Fund The Trustee will set aside from amounts deposited by the Local Agency in the Revenue Fund and deposit in the Local Agency's Reserve Subaccount that amount of money (or other authorized deposit of security) that shall be required to maintain the Local Agency's Reserve Subaccount in the full amount of the Local Agency's Reserve Fund Requirement. No deposit need be made in the Reserve Subaccount so long as there shall be on deposit therein a sum equal to the Reserve Fund Requirement. All money in the Reserve Subaccount (including all amounts that may be obtained from any insurance policy on deposit in the Reserve Subaccount) shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Local Agency's Interest Payment Account or the Principal Payment Account, in that order, in the event of any deficiency at any time in either of such accounts, but solely for the purpose of paying the interest, principal, or prepayment premiums, if any, payable in connection with the 2014 Installment Sale Agreement, except that any cash amounts in the Reserve Subaccount in excess of the amount required to be on deposit therein shall be withdrawn from the Reserve Subaccount on each Interest Payment Date and deposited in the Local Agency's Interest Payment Account. In lieu of making a Reserve Fund Requirement deposit or in replacement of moneys then on deposit in the Reserve Subaccount (which shall be transferred by the Trustee to the Local Agency upon delivery of an insurance policy satisfying the requirements stated below), the Local Agency may also deliver to the Trustee an insurance policy (a "Qualified Reserve Instrument ") securing an amount, together with moneys or Permitted Investments on deposit in the Reserve Subaccount, no less than the Reserve Fund Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of the principal and interest components of the 2014 Installment Sale Agreement and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies) are rated in the two highest rating categories (without respect to any modifier) of the Rating Agency. [The prior written consent of the Certificate Insurer shall be condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Reserve Subaccount, if any.] Notwithstanding anything to the contrary set forth in the Trust Agreement, amounts on deposit in the Reserve Subaccount shall be applied solely to the payment of debt service due on the Certificates. If and to the extent that the Reserve Subaccount has been funded with a combination of cash (or Permitted Investments) and a Qualified Reserve Instrument, then all such cash (or Permitted Investments) shall be completely used before any demand is made on such Qualified Reserve Instrument, and replenishment of the Qualified Reserve Instrument shall be made prior to any replenishment of any cash (or Permitted Investments). If the Reserve Subaccount is funded, in whole or in part, with more than one Qualified Reserve Instrument, then any draws made against such Qualified Reserve Instrument shall be made pro -rata. The term "Reserve Fund Requirement" is defined in the Trust Agreement to mean, as of any date of calculation, an amount equal to the least of (i) 10% of the initial stated principal amount (within the meaning of Section 148 of the Code) of the 2014 Installment Sale Payments under the 2014 Installment Sale Agreement; (ii) 125% of the average annual 2014 Installment Sale Payments under the 2014 Installment Sale Agreement; or (iii) the Maximum Annual Debt Service. 15 See "tIPPI EivDIX A — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Trust Agreement." (Reserve Policy] [The Certificate Insurer will issue a [Municipal Bond] Debt Service Reserve Insurance Policy (the "Reserve Policy ") for the purpose of funding the Reserve Fund for the Certificates. The Reserve Policy will be issued by the Certificate Insurer in an amount equal to the Reserve Fund Requirement applicable to the Certificates. The Reserve Policy is a Qualified Reserve Instrument. The premium for the Reserve Policy is to be fully paid at or prior to the execution and delivery of the Certificates.] [As long as the Reserve Policy shall be in full force and effect, the Local Agency and the Trustee, as appropriate, shall comply with the following provisions: (a) The Local Agency shall repay any draws under the Reserve Policy and pay all related reasonable expenses incurred by the Certificate Insurer and shall pay interest thereon from the date of payment by the Certificate Insurer at the Late Payment Rate. "bate Payment Rate" ,neans the lesser of (x) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ( "Prime Rate ") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3 %, and (ii) the then applicable highest rate of interest with respect to the Certificates and (y) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the Certificate Insurer shall specify. If the interest provisions of this subparagraph (a) shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness described herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party related to such indebtedness, be applied as additional interest for any later periods of time when amounts are outstanding to the extent that interest otherwise due for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied to principal immediately upon receipt of such moneys by the Certificate Insurer, with the same force and effect as if the Local Agency had specifically designated such extra sums to be so applied and the Certificate Insurer had agreed to accept such extra payment(s) as additional interest for such later periods. In no event shall any agreed to or actual exaction as consideration for the indebtedness described herein exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, "Policy Costs ") shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to one twelfth of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to the Certificate Insurer shall be credited first to interest due, then to the expenses due, and then to principal due. As and to the extent that payments are made to the Certificate Insurer on account of principal due, the coverage under the Reserve Policy will be increased by a like amount, subject to the terms of the Reserve Policy. The obligation to pay Policy Costs shall be secured by a valid lien on all revenues and other collateral pledged as security for the payment of Installment Sale Payments (subject only to the priority of payment provisions set forth in the Trust Agreement). All cash and investments in the Reserve Fund shall be transferred to the Merest Fund or Principal Fund, as applicable, for payment of debt service with 16 respect to the Certificates before any drawing may be made on the Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash ( "Credit Facility "). Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the Reserve Policy) on which there is available coverage shall be made on a pro rata basis (calculated by reference to the coverage then available thereunder) in applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, "available coverage" means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (b) If the Local Agency shall fail to pay any Policy Costs in accordance with the requirements of subparagraph (a) above, the Certificate Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Trust Agreement, other than (i) acceleration of the maturity of the Certificates or (ii) remedies which would adversely affect owners of the Certificates. (c) The Trust Agreement shall not be discharged until all Policy Costs owing to the Certificate Insurer shall have been paid in full. The Local Agency's obligation to pay such amounts shall expressly survive payment in full of the Installment Sale Payments. (d) The Local Agency shall include any Policy Costs then due and owing to the Certificate Insurer in the calculation of the additional Contracts test in the Trust Agreement. (e) The Trust Agreement shall require the Trustee to ascertain the necessity for a claim upon the Reserve Policy in accordance with the provisions of subparagraph (a) above and to provide notice to the Certificate Insurer accordance with the terms of the Reserve Policy at least five business days prior to each date upon which interest or principal is due with respect to the Certificates. Where deposits are required to be made by the Local Agency with the Trustee to the Interest Fund or Principal Fund, as applicable, more often than semi- annually, the Trustee shall be instructed to give notice to the Certificate Insurer of any failure of the Local Agency to make timely payment in full of such deposits within two business days of the date due.] (Certificate Insurance Policy] [The scheduled payment of principal and interest with respect to the Certificates when due will be guaranteed under the Certificate Insurance Policy to be issued concurrently with the delivery of the Certificates by the Certificate Insurer. For a more detailed description of the Certificate Insurance Policy and the Certificate Insurer, see "CERTIFICATE INSURANCE POLICY" and "APPENDIX E — SPECIMEN [MUNICIPAL BOND] INSURANCE POLICY. "] THE LOCAL AGENCY AND THE PROJECT Participating Local Agency Certain economic and demographic information regarding the City of Lake Elsinore, as the participating Local Agency, is included in Appendix B. See "MEASURE A REVENUES; MEASURE A RECEIPTS" for a discussion of the portion of Measure A Revenues that has historically been allocated by the Commission to the Local Agency. Only the portion of Measure A Revenues allocated by the 17 Commission to the Local Agency constituting Measure A Receipts may be applied to pay the installment Sale Payments. The Project The Local Agency is undertaking the Project as part of the Local Agency's ongoing effort to accelerate street system improvements within its jurisdiction. The Project is expected to include the components described below. The Project will be comprised of facilities that are eligible for expenditure of Measure A Receipts under applicable laws of the State. The entire Project constitutes a Measure A Project. The Project is expected to cost approximately [CITY TO COMPLETE:] $ _, which cost is expected to be paid from proceeds from the sale of the Certificates and from additional Measure A Revenues. The Project is currently expected to include the improvements described in the following table. DESCRIPTION OF PLANNED CITY OF LAKE ELSINORE PROJECT COMPONENTS AND ESTIMATED COSTS [CITY TO CONFIRM /COMPLETE TABLE:1 Name of Project Component Description of Project Component Estimated Cost Interstate 15 at Railroad Canyon Road improvements on southbound deceleration lane $ Interstate 15 /State Route 74 Road improvements on Central Avenue interchange and ramps Avenue 7 Road and sidewalk improvements on Avenue 7 to Mill Street at Railroad Canyon Elementary School Main Street Interchange Road improvements at Main Street interchange intersection Grand Avenue Project Roadway construction (in cooperation with County) Canyon Hills Road and Sage Lane Traffic signal installation Arterial Rehabilitation Program Rehabilitation of pavement on arterial roads, including (but not limited to) Main Street, Railroad Canyon Road, Mission Trail Road, Lakeshore Drive, Grand Avenue, Avenue 7, and Interstate 15 Total Source: City of Lake Elsinore, MEASURE A REVENUES; MEASURE A RECEIPTS Pledge of Measure A Receipts Pursuant to the 2014 Installment Sale Agreement, the City of Lake Elsinore will pledge its Measure A Receipts for the payment of Installment Sale Payments. The term "Measure A Receipts" is defined in the 2014 Installment Sale Agreement to mean Measure A Revenues allocated by the Commission to the City of Lake Elsinore pursuant to the Measure A Ordinance, to the extent the Project constitutes a Measure A Project, for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement. The term "Measure A Project" is defined in the 2014 Installment Sale 18 Agreement to mean a capital project for which Measure A Receipts may be expended. The entire Project constitutes a Measure A Project. See "THE LOCAL AGENCY AND THE PROJECT — The Project." The term "Measure A Revenues" is defined in the 2014 Installment Sale Agreement to mean revenues of the Commission derived from the Measure A Sales Tax imposed in the County pursuant to the Measure A Sales Tax Act and the Measure A Ordinance. In accordance with the Measure A Sales Tax Act, on November 5, 2002, more than two - thirds of the voters of the County voting on the measure approved the Measure A Ordinance, which authorized the imposition of the Measure A Sales Tax, a one - half of one percent (0.5 %) retail transaction and use tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use, or other consumption in the County of such property purchased from any retailer for storage, use, or other consumption in the County, subject to certain limited exceptions described below. The Measure A Sales Tax commenced on July 1, 2009, is administered by the Commission, and will be collected for a thirty - year period ending on June 30, 2039. For more information regarding the portion of Measure A Revenues historically allocated by the Commission to the City of Lake Elsinore, see " — Historical Measure A Revenues — City of Lake Elsinore" below. See also `RISK FACTORS." The Measure A Sales Tax On November 8, 1988, more than two - thirds of the voters approved Ordinance No. 88 -01, the Rivet-side County Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax Ordinance, which authorized the imposition of a one -half of one percent (0.5 %) retail transactions and use tax on the gross receipts of retailers from the sale of tangible personal property sold in the County and a use tax at the same rate upon the storage, use, or other consumption in the County of such property purchased from any retailer for storage, use, or other consumption in the County, subject to certain limited exceptions (the "1988 Sales Tax "). The 1988 Sales Tax ceased to be effective on June 30, 2009, and the 1988 Sales Tax does not secure payment of the Certificates. The 1988 Sales Tax was levied by the Commission at the same rate and on the same types of transactions as the Measure A Sales Tax. See " — Historical Measure A Revenues — City of Lake Elsinore" below. The Measure A Sales Tax imposed in the County for transportation purposes and administered by the Commission is in addition to the sales or use tax levied statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the statewide tax rate by one quarter of one percent — increasing the statewide rate from 7.25% to 7.50% — for four years, effective January 1, 2013, through December 31, 2016. In general, the State Sales Tax (as defined below) applies to the gross receipts of retailers from the sale of tangible personal property. The State use tax is imposed on the storage, use, or other consumption in the State of property purchased from a retailer for such storage, use, or other consumption. Since the use tax does not apply to cases where the sale of the property is subject to the sales tax, the application of the use tax generally is to purchases made outside of the State for use within the State. The Measure A Sales Tax is generally imposed upon the same transactions and items subject to the sales and use tax levied by the State (hereinafter collectively referred to as the "State Sales Tax "), with generally the same exceptions. Many categories of transactions are exempt from the State Sales Tax and the Measure A Sales Tax. The most important of these exemptions are: sales of food products for home consumption, prescription medicine, edible livestock and their feed, seed and fertilizer used in raising food for human consumption, and gas, electricity, and water when delivered to consumers through mains, lines, and pipes. In addition, "Occasional Sales" (i.e., sales of property not held or used by a seller in the course of activities for which he or she is required to hold a seller's permit) are generally exempt from the State Sales Tax and from the Measure A Sales Tax; however, the "Occasional Sales" exemption 19 does not apply to the sale of an entire business and other` sales of machinery and equipment used m a business. Sales of property to be used outside the County that are shipped to a point outside the County, pursuant to the contract of sale, by delivery to such point by the retailer, or by delivery by the retailer to a carrier for shipment to a consignee, at such point, are exempt from the State Sales Tax and from the Measure A Sales Tax. Action by the State Legislature or by voter initiative could change the transactions and items upon which the State Sales Tax and the Measure A Sales Tax are imposed. Such changes or amendments could have either an adverse or beneficial effect on Measure A Revenues. Neither the Authority nor the Local Agency is currently aware of any proposed legislative change that would have a material adverse effect on Measure A Revenues. Riverside County Transportation Commission The State Legislature created the Commission in 1976 as one of four transportation commissions designed to provide more local participation in and control of transportation matters in the southern California area. The Commission is charged with a number of responsibilities in serving the residents of the County, the most prominent of which is administering the sales tax program created by the Measure A Sales Tax Act. The Commission's other responsibilities include: (1) serving as the congestion management agency for the County and (2) serving as the Service Authority for Freeway Emergencies, which operates the freeway service patrol for the County. Senior Lien Measure A Obligations [CONFIRM /UPDATE:] The Measure A Ordinance provides that not more than $975,000,000 in aggregate principal arnount of bonds or other evidence of indebtedness issued by the Commission and secured by Measure A Revenues may be outstanding at any one time. The Commission has issued $462,200,000 in original principal arnount of Sales Tax Revenue Bonds (Limited Tax Bonds), 2014 Series A (the "2014 Bonds "), $37,630,000 in original principal amount of Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series A (Tax - Exempt), $112,370,000 in original principal amount of Sales Tax Revenue Bonds (Limited Tax Bonds), 2010 Series B (Taxable Build America Bonds), and $185,000,000 in original, aggregate principal amount of Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, 2009 Series B, and 2009 Series C (the "2009 Bonds" and, collectively, with the 2014 Bonds and the other bonds listed in this sentence, the "Senior Lien Bonds "). Following the issuance of the 2014 Bonds, the Senior Lien Bonds are outstanding in the aggregate principal amount of approximately $773,600,000. All Senior Lien Bonds are secured by a first lien pledge of Measure A Revenues. The Senior Lien Bonds were issued pursuant to an Indenture dated as of June 1, 2008, as supplemented from time to time (collectively, the "Measure A Revenues Indenture "), by and between the Commission and U.S. Bank National Association, as trustee ( "the Measure A Revenues Trustee "). Pursuant to the Measure A Revenues Indenture, the Commission may issue from time to time additional bonds or other obligations on a parity with the Senior Lien Bonds (collectively, "Parity Obligations "). The Commission may also issue from time to time obligations payable out of Measure A Revenues on a basis subordinate to the payment of the principal, premium, interest, and reserve fund requirements for the Senior Lien Bonds and all Parity Obligations (collectively, "Subordinate Obligations "). For example, the Commission has instituted a program pursuant to which it may issue commercial paper notes as Subordinate Obligations in an aggregate principal amount of up to [CONFIRM /UPDATE:] $120,000,000. No such Subordinate Obligations are presently outstanding. [CONFIRM /UPDATE:] The Commission has also entered into swap agreements with respect to the Sales Tax Revenue Bonds (Limited Tax Bonds) 2009 Series A, 2009 Series B, and 2009 Series C (collectively, the "Swap Agreements "). The Commission's obligation to make early termination payments 20 under the Swap Agreements is secured by a pledge of the Measure A Revenues that is subordinate to the pledge in favor of the Senior Lien Bonds, any Parity Obligations, and any Subordinate Obligations. The Commission may also obtain liquidity facilities or credit enhancement ( "Liquidity Facilities /Credit Enhancement ") for its Senior Lien Bonds and all Parity Obligations. [CONFIRM /UPDATE:] The Commission has obtained such Liquidity Facilities /Credit Enhancement for its outstanding 2009 Bonds. All payments with respect to the Senior Lien Bonds, Parity Obligations, Subordinate Obligations, the Swap Agreements, and the Liquidity Facilities /Credit Enhancement (collectively, the "Senior Lien Measure A Obligations ") will be made from Measure A Revenues before any remaining Measure A Revenues will be transferred to the Commission for allocation by the Commission to the City of Lake Elsinore. See " — Collection and Allocation of Measure A Revenues" below. See also `RISK FACTORS." Collection and Allocation of Measure A Revenues Collection of the Measure A Sales Tax is administered by the California Board of Equalization (the "Board of Equalization "). The Commission and the Board of Equalization have entered into an agreement for state administration of district transactions and use taxes to authorize payment of Measure A Revenues directly to the Measure A Revenues Trustee, as trustee under the Measure A Revenues Indenture. The Board of Equalization, after deducting amounts payable to itself, is required to remit the balance of amounts received from the Measure A Sales Tax directly to the Measure A Revenues Trustee. The Measure A Revenues Trustee is required to apply the Measure A Revenues to make deposits to the funds and accounts established under the Measure A Revenues Indenture to pay the Senior Lien Bonds and any Parity Obligations and to transfer the remaining amounts to make payments with respect to any Subordinate Obligations, Swap Agreements, and Liquidity Facilities /Credit Enhancement. After payments have been made with respect to the Senior Lien Measure A Obligations, the remaining unapplied Measure A Revenues, if any, are transferred to the Commission for use for any purpose contemplated by the Measure A Ordinance. Pursuant to the Measure A Ordinance, the Commission, after making a deduction for administration, first allocates such remaining unapplied Measure A Revenues to be applied for transportation purposes to the Western County, Coachella Valley, and Palo Verde Valley areas within the County in proportion to the Measure A Revenues generated within those areas. [CONFIRM /UPDATE:] Currently, the Commission allocates such remaining unapplied Measure A Revenues as follows: (i) approximately 75.9% to the Western County area; (ii) approximately 23.4% to the Coachella Valley; and (iii) approximately 0.7% to the Palo Verde Valley area. [CONFIRM /REVISE:] The City of Lake Elsinore is within the Western County area of the County. Approximately 29% of the portion of the Measure A Revenues allocated by the Commission to the Western County area is applied to the local streets and roads program within such area. To the extent any portion of the Project to be constructed by the City of Lake Elsinore is designated by the Commission as a qualified project for purposes of the local streets and roads program established under the Measure A Ordinance, such portion will constitute a Measure A Project. The entire City of Lake Elsinore Project constitutes a Measure A Project. See "THE LOCAL AGENCY AND THE PROJECT — The Project." The funds made available in the Western County area for purposes of the local streets and roads program are distributed to the cities in the Western County area and the County by a formula based 75% on proportionate population and 25% on proportionate revenues generated by the Measure A Ordinance within each jurisdiction. In order to be eligible for these funds, the City of Lake Elsinore is required to: (i) file a Five -Year Capital Improvement Plan for the use of these, updated annually, with the Commission, (ii) participate in a Transportation Uniform Mitigation Fee ( "TUMF ") Program developed and administered by the Western Riverside Council of Governments, (iii) participate in the Multi- Species 21 Habitat Conservation Plan ( "MSHCP ") developed and administered by the Western Riverside County Regional Conservation Authority, and (iv) comply with a maintenance of effort requirement. See " — Historical Measure A Revenues — City of Lake Elsinore" below for a table setting forth the portion of the Measure A Revenues historically allocated by the Commission to the City of Lake Elsinore for fiscal years 2009 -10 through 2013 -14. The portion of such Measure A Revenues allocated by the Commission to the City of Lake Elsinore, to the extent the Project constitutes a. Measure A Project, for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement, constitutes Measure A Receipts. Measure A Receipts are pledged to make the Installment Sale Payments. Historical Measure A Revenues — City of Lake Elsinore The following table sets forth the portion of the Measure A Revenues historically allocated by the Commission to the City of Lake Elsinore for fiscal years 2009 -10 through 2013 -14. PORTION OF MEASURE A REVENUES HISTORICALLY ALLOCATED TO THE CITY OF LAKE ELSINORE Fiscal Years 2009 -10 through 2013 -14 [CITY TO COMPLETE TABLE:1 Portion of Measure A Percent Change from Fiscal Year Revenues Allocated Prior Fiscal Year 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 Source: City of Lake Elsinore, The City of Lake Elsinore is unable to predict whether annual Measure A Revenues will increase or decrease or what portion, if any, of such Measure A Revenues it will receive. For a summary of historical taxable retail sales within the City of Lake Elsinore, see the table entitled "Taxable Retail Sales" in "APPENDIX B — GENERAL INFORMATION REGARDING THE CITY OF LAKE ELSINORE." [Remainder of Page Intentionally Left Blank 22 Measure A Fund Financial Statements The following tables present the Balance Sheet and the Schedule of Revenues, Expenditures, and Fund Balances relating to the City of Lake Elsinore's Measure A Fund for the fiscal year ended June 30, 2013. [TO BE UPDATED FOR FISCAL YEAR 2013 -14, WHEN INFORMATION IS AVAILABLE:] BALANCESHEET CITY OF LAKE ELSINORE MEASURE A FUND For the Fiscal Year Ended June 30, 2013 ASSETS: Cash and Investments $737,960 Accounts Receivable 15,883 Accrued Interest Receivable 66 Due from other governments 268.858 Total Assets $1,022,767 LIABILITIES AND FUND BALANCES: Liabilities Accounts Payable $79,307 Other Accrued Liabilities 3,242 Total liabilities $82,549 Fund Balances: Restricted for Transportation $940,218 Total Fund Balances $940,218 Total Liabilities and Fund Balances $1,022,767 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES CITY OF LAKE ELSINORE MEASURE A FUND For the Fiscal Year Ended June 30, 2013 REVENUES Intergovernmental $1,010,820 Investment I»come 576 Miscellaneous 380 Total Revenues $1,011,776 EXPENDITURES Public Services $380,254 Capital Outlay 475.756 Total Expenditures $856,010 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES $155,766 OTHER FINANCING SOURCES (USE) Transfers In $0 Transfer Out 0 Total Otber Financing Sources (Uses) $0 NET CHANGE IN FUND BALANCES $155,766 Fund Balance (deficit), Beginning of Year (July 1) $784,452 Fund Balance (deficit), End of Year (June 30) $940,218 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended .tune 30, 2013. 23 MAXIMUM ANNUAL DEBT SERVICE COVERAGE The following table sets forth the maximum annual debt service coverage with respect to the Certificates. The maximum annual debt service coverage is based upon Measure A Revenues allocated to the City of Lake Elsinore for fiscal year 2013 -14. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Historical Measure A Revenues — City of Lake Elsinore." Measure A Receipts constitute the portion of the Measure A Revenues allocated by the Commission to the City of Lake Elsinore pursuant to the Measure A Ordinance, to the extent the Project constitutes a Measure A Project, for deposit in the Pledged Tax Fund in accordance with the 2014 Installment Sale Agreement. The entire Project constitutes a Measure A Project. See "THE LOCAL AGENCY AND THE PROJECT — The Project." MAXIMUM ANNUAL DEBT SERVICE COVERAGE BASED UPON FISCAL YEAR 2013 -14 MEASURE A REVENUES ALLOCATED TO THE CITY OF LAKE ELSINORE 'TO BE COMPLETE, D BY CITY AND UNDL+ RWRI ER:1 Maximum 2013 -14 Measure A Annual Debt Debt Service Revenues Service 1 2> Coverage (2) $ $ x (1) Source: City of Lake Elsinore, Projected based on actual data through , 2014. (2) Source: Underwriter. [CERTIFICATE INSURANCE POLICY] [The following information has been .furnished by [INSURER] (referred to herein as the "Certificate Insurer" or "[INSURER'S SH®RT NAME]") for use in this Official Statement. Reference is made to Appendix E for a specimen of the Certificate Insurance Policy.] (TO BE INSERTED IF APPLICABLE] 24 RISK FACTORS Investment in the Certificates involves risks that may not be appropriate for certain investors. The following is a discussion of certain risk factors that should be considered, in addition to other matters set forth herein, in evaluating the Certificates for investment. The information set forth below does not purport to be an exhaustive listing of the risks and other considerations that may be relevant to an investment in the Certificates. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Installment Sale Payments Constitute Limited Obligations The obligation of the Local Agency to make Installment Sale Payments under the 2014 Installment Sale Agreement is a special obligation of the Local Agency and does not constitute a debt of the Local Agency, the Authority, the State, or any political subdivision of the State within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the Local Agency, the State, or any political subdivision of the State is obligated to levy or pledge any form of taxation or for which the Local Agency, the State, or any political subdivision of the State has levied or pledged any form of taxation. The Authority has no taxing power. Passive Revenue Source The payment of principal and interest with respect to the Certificates is secured solely by a pledge by the Local Agency of the Local Agency's Measure A Receipts, and certain funds under the 2014 Installment Sale Agreement. The Local Agency does not have any control over the amount of Measure A Receipts to be received by the Local Agency because (1) Measure A Revenues constitute revenues of the Commission derived from a retail transactions and use tax imposed in the County pursuant to the Measure A Sales Tax Act and the Measure A Ordinance, the number of transactions and revenues generated under which tax the Local Agency has no ability to control, and Measure A Receipts are allocated by the Commission to the Local Agency only after the payment of all Senior Lien Measure A Obligations, and (2) the Local Agency does not have any control over the collection or distribution procedures related to any State taxes or local retail transactions and use taxes. There can be no assurance that Measure A Receipts will be available in the amounts estimated in this Official Statement. A decrease in Measure A Revenues would adversely affect the amount and /or availability of Measure A Receipts. In addition, the Local Agency must continuously meet certain requirements set forth in the Measure A Ordinance in order to be eligible to receive Measure A Revenues from the Commission and apply Measure A Receipts to pay the Installment Sale Payments. Such requirements include the annual adoption by the Local Agency of a resolution approving the Local Agency's Five -Year Capital Improvement Plan, participation by the City of Lake Elsinore in the TUMF and MSHCP Programs, and compliance by the City of Lake Elsinore with a maintenance of effort requirement. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Collection and Allocation of Measure A Revenues." Allocation of Measure A Revenues to City of Lake Elsinore is Subordinate to Payment of Senior Lien Measure A Obligations Collection of the Measure A Sales Tax is administered by the Board of Equalization. The Commission and the Board of Equalization have entered into an agreement for state administration of district transactions and use taxes to authorize payment of Measure A Revenues directly to the Measure A Revenues Trustee, as trustee under the Measure A Revenues Indenture. The Board of Equalization, after deducting amounts payable to itself, is required to remit the balance of amounts received from the Measure A Sales Tax directly to the Measure A Revenues Trustee. The Measure A Revenues Trustee is 25 required to apply the Measure A Revenues to make deposits to the funds and accounts established under the Measure A Revenues Indenture to pay the Senior Lien Bonds and any Parity Obligations and to transfer the remaining amounts to make payments with respect: to any Subordinate Obligations and Swap Agreements. All payments with respect to the Senior Lien Bonds, Parity Obligations, Subordinate Obligations, and the Swap Agreements will be made from Measure A Revenues before any remaining Measure A Revenues will be released by the Measure A Revenues Trustee and transferred to the Commission for allocation by the Commission for use for any purpose contemplated by the Measure A Ordinance, including, without limitation, the allocation of Measure A Revenues to the City of Lake Elsinore. The Measure A Ordinance provides that not more than $975,000,000 in aggregate principal amount of bonds or other evidences of indebtedness issued by the Commission and secured by Measure A Revenues may be outstanding at any one time. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Senior Lien Measure A Obligations" and " — Collection and Allocation of Measure A Revenues." Limitations on Use of Measure A Revenues Not all of the Measure A Revenues allocated by the Co,«mrsslon to the Local Agency may be applied to pay the Installment Sale Payments. Only the Measure A Receipts may be so applied. See "MEASURE A REVENUES; MEASURE A RECEIPTS — Collection and Allocation of Measure A Revenues." Additional Contracts Subject to certain restrictions, the Local Agency is permitted to enter into other Contracts that constitute additional charges against its Measure A Receipts without the consent of Owners of the Certificates. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES — Additional Contracts." To the extent that other Contracts are executed by the Local Agency, the funds available to pay the Installment Sale Payments may be decreased. In addition, there is no limitation on the ability of the Local Agency to execute any Contract at any time to refund any outstanding Contract. Loss of Tax Exemption As discussed under the heading "TAX MATTERS," certain acts or omissions of the Local Agency in violation of its covenants in the Trust Agreement and the 2014 Installment Sale Agreement could result in the interest represented by the Certificates being includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Certificates. Should such an event of taxability occur, the Certificates would not be subject to a special prepayment and would remain outstanding. Should such event of taxability be attributable solely to the acts or omissions of the Local Agency, such violation could result in the interest represented by the Certificates (attributable on a pro rata basis to the Local Agency's Installment Sale Payments) being includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Certificates. Limitations on Remedies; Bankruptcy The rights of the owners of the Certificates are subject to the limitations on legal remedies against municipalities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the owners of the Certificates, and enforcement of the Local Agency's obligations under the 2014 Installment Sale Agreement, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor's rights generally, now or hereafter in effect, equity principles that may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the 26 The section headings herein are for convenience only and are not to be construed as modifying or governing the language in the section referred to. Wherever in this Agreement any consent or approval is required, the same shall not be unreasonably withheld. This Agreement is made in the State of California, under the Constitution and laws of such state and is to be so construed. This Agreement is the complete and exclusive statement of the agreement among the parties hereto, which supercedes and merges all prior proposals, understandings, and other agreements, including, without limitation, the Initial Agreement, whether oral, written, or implied in conduct, between and among the parties relating to the subject matter of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their proper officers thereunto duly authorized, and their official seals to be hereto affixed, as of the day and year first above written. [SEAL] ATTEST: By Name: Title: 1191 Program Participant: M Name: Title: respective functions within the territorial limits of their respective public agencies, shall apply to them to the same degree and extent while engaged as members of the Commission or otherwise as an officer, agent or other representative of the Authority or while engaged in the performance of any of their functions or duties extraterritorially under the provisions of this Agreement. Section 17. Amendments. Except as provided in Section 13 above, this Agreement shall not be amended, modified, or altered except by a written instrument duly executed by each of the Program Participants. Section 18. Effectiveness. This Agreement shall become effective and be in full force and effect and a legal, valid and binding obligation of each of the Program Participants at 9:00 a.m., California time, on the date that the Commission shall have received from each of the Initial Participants an executed counterpart of this Agreement, together with a certified copy of a resolution of the governing body of each such Initial Participant approving this Agreement and the execution and delivery hereof. Section 19. Partial Invalidity. If anyone or more of the terms, provisions, promises, covenants or conditions of this Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms, provisions, promises, covenants and conditions of this Agreement shall not be affected thereby, and shall be valid and enforceable to the fullest extent permitted by law. Section 20. Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors of the parties hereto. Except to the extent expressly provided herein, no party may assign any right or obligation hereunder without the consent of the other parties. Section 21. Miscellaneous. 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 instrument. W, Qualifying public agencies may be added as parties to this Agreement and become Program Participants upon: (i) the filing by such public agency of an executed counterpart of this Agreement, together with a certified copy of the resolution of the governing body of such public agency approving this Agreement and the execution and delivery hereof; and (ii) adoption of a resolution of the Commission approving the addition of such public agency as a Program Participant. Upon satisfaction of such conditions, the Commission shall file such executed counterpart of this Agreement as an amendment hereto, effective upon such filing. Section 14. Indemnification. To the full extent permitted by law, the Commission may authorize indemnification by the Authority of any person who is or was a member or alternate member of the Commission, or an officer, employee or other agent of the Authority, and who was or is a party or is threatened to be made a party to a proceeding by reason of the fact that such person is or was such a member or alternate member of the Commission, or an officer, employee or other agent of the Authority, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful and, in the case of an action by or in the right of the Authority, acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. Section 15. Contributions and Advances. Contributions or advances of public funds and of the use of personnel, equipment or property may be made to the Authority by the parties hereto for any of the purposes of this Agreement. Payment of public funds may be made to defray the cost of any such contribution. Any such advance may be made subject to repayment, and in such case shall be repaid, in the manner agreed upon by the Authority and the party making such advance at the time of such advance. Section 16. Immunities. All of the privileges and immunities from liabilities, exemptions from laws, ordinances and rules, all pension, relief, disability, workers' compensation, and other benefits which apply to the activity of officers, agents or employees of Program Participants when performing their 11 Any costs of the audit, including contracts with or employment of, certified public accountants or public accountants in making an audit pursuant to this Section, shall be borne by the Authority and shall be a charge against any unencumbered funds of the Authority available for that purpose. In any Fiscal Year the Commission may, by resolution adopted by unanimous vote, replace the annual special audit with an audit covering a two -year period. The Treasurer of the Authority, within 120 days after the close of each Fiscal Year, shall give a complete written report of all financial activities for such Fiscal Year to each of the Program Participants to the extent such activities are not covered by the reports of the trustees for the Bonds. T h e trustee a p p o i n t e d u n d e r e a c h I n d e n t u r e s h a l l e s t a b l i s h suitable funds, furnish financial reports and provide suitable accounting procedures to carry out the provisions of said Indenture. Said trustee may be given such duties in said Indenture as may be desirable to carry out this Agreement. Section 11. Funds. Subject to the applicable provisions of each Indenture, which may provide for a trustee to receive, have custody of and disburse Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority funds pursuant to the accounting procedures developed under Section 10 hereof, and shall make the disbursements required by this Agreement or otherwise necessary to carry out any of the provisions or purposes of this Agreement. Section 12 Notices and Program Participants clerk of the governing Section 13. Notices. other communications hereunder to the shall be sufficient if delivered to the body of each Program Participant. Withdrawal and Addition of Parties. A Program Participant may withdraw from this Agreement upon written notice to the Commission; provided, however, that no such withdrawal shall result in the dissolution of the Authority so long as any Bonds remain outstanding under an Indenture. Any such withdrawal shall be effective only upon receipt of the notice of withdrawal by the Commission which shall acknowledge receipt of such notice of withdrawal in writing and shall file such notice as an amendment to this Agreement effective upon such filing. IN Authority. The Bonds shall be only special obligations of the Authority, and the Authority shall under no circumstances be obligated to pay the Bonds or the respective project costs except from revenues and other funds pledged therefor. Neither the Program Participants, CSAC, LCC, nor the Authority shall be obligated to pay the principal of, premium, if any, or interest on the Bonds, or other costs incidental thereto, except from the revenues and funds pledged therefor, and neither the faith and credit nor the taxing power of the Program Participants nor the faith and credit of CSAC, LCC, or the Authority shall be pledged to the payment of the principal of, premium, if any, or interest on the Bonds nor shall the Program Participants, CSAC, LCC, or the Authority in any manner be obligated to make any appropriation for such payment. No covenant or agreement contained in any Bond or Indenture shall be deemed to be a covenant or agreement of any member of the Commission, or any officer, agent or employee of the Authority in his individual capacity and neither the Commission of the Authority nor any officer thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal liability or accountability by reason of the issuance of any Bonds. Section 10. Accounts and Reports. All funds of the Authority shall be strictly accounted for. The Authority shall establish and maintain such funds and accounts as may be required by good accounting practice and by any provision of any Indenture (to the extent such duties are not assigned to a trustee of Bonds). The books and records of the Authority shall be open to inspection at all reasonable times by each Program Participant. The Treasurer of the Authority shall cause an independent audit to be made of the books of accounts and financial records of the Agency by a certified public accountant or public accountant in compliance with the provisions of Section 6505 of the Joint Exercise of Powers Act. In each case the minimum requirements of the audit shall be those prescribed by the State Controller for special districts under Section 26909 of the Government Code of the State of California and shall conform to generally accepted auditing standards. When such an audit of accounts and records is made by a certified public accountant or public accountant, a report thereof shall be filed as public records with each Program Participant and also with the county auditor of each county in which a Program Participant is located. Such report shall be filed within 12 months of the end of the Fiscal Year or Years under examination. Section 6. Disposition of Assets. At the end of the term hereof or upon the earlier termination of this Agreement as set forth in Section 2 hereof, after payment of all expenses and liabilities of the Authority, all property of the Authority both real and personal shall automatically vest in the Program Participants and shall thereafter remain the sole property of the Program Participants; provided, however, that any surplus money on hand shall be returned in proportion to the contributions made by the Program Participants. Section 7. Bonds. The Authority shall issue Bonds for the purpose of exercising its powers and raising the funds necessary to carry out its ournoses under this An nemPnt 2n: r nn c rnAw, the discretion of Authority, be issued in series The services of bond counsel, financing consultants and other consultants and advisors working on the projects and /or their financing shall be used by the Authority. The fees and expenses of such counsel, consultants, advisors, and the expenses of CSAC, LCC, and the Commission shall be paid from the proceeds of the Bonds or any other unencumbered funds of the Authority available for such purpose. Section 9. Local Approval. A copy of the application for financing of a project shall be filed by the Authority with the Program Participant in whose jurisdiction the project is to be located. The Authority shall not issue Bonds with respect to any project unless the governing body of the Program Participant in whose jurisdiction the project is to be located, or its duly authorized designee, shall approve, conditionally or unconditionally, the project, including the issuance of Bonds therefor. Action to approve or disapprove a project shall be taken within 45 days of the filing with the Program Participant. Certification of approval or disapproval shall be made by the clerk of the governing body of the Program Participant, or by such other officer as may be designated by the applicable Program Participant, to the Authority. Section 8. Bonds Only Limited and Special Obligations of Authority. The Bonds, together with the interest and premium, if any, thereon, shall not be deemed to constitute a debt of any Program Participant, CSAC, or LCC or pledge of the faith and credit of the Program Participants, CSAC, LCC, or the 8 Agreement and may be exercised in the manner and according to the method provided in this Agreement. All such powers common to the parties are specified as powers of the Authority. The Authority is hereby authorized to do all acts necessary for the exercise of such powers, including, but not limited to, any or all of the following: to make and enter into contracts; to employ agents and employees; to acquire, construct, provide for maintenance and operation of, or maintain and operate, any buildings, works or improvements; to acquire, hold or dispose of property wherever located; to incur debts, liabilities or obligations; to receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and any governmental entity; to sue and be sued in its own name; and generally to do any and all things necessary or convenient to the promotion of economic development, including without limitation the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and the increase of the tax base, all as herein contemplated. Without limiting the generality of the foregoing, the Authority may issue or cause to be issued bonded and other indebtedness, and pledge any property or revenues as security to the extent permitted under the Joint Exercise of Powers Act, including Article 2 and Article 4, the Act or any other applicable provision of law. The manner in which the Authority shall exercise its powers and perform its duties is and shall be subject to the restrictions upon the manner in which a California county could exercise such powers and perform such duties until a California general law city shall become a Program Participant, at which time it shall be subject to the restrictions upon the manner in which a California general law city could exercise such powers and perform such duties. The manner in which the Authority shall exercise its powers and perform its duties shall not be subject to any restrictions applicable to the manner in which any other public agency could exercise such powers or perform such duties, whether such agency is a party to this Agreement or not. Section 5. Fiscal Year. For the purposes of this Agreement, the term "Fiscal Year" shall mean the fiscal year as established from time to time by the Authority, being, at the date of this Agreement, the period from July 1 to and including the following June 30, except for the first Fiscal Year which shall be the period from the date of this Agreement to June 30, 1988. 7 (2) Special Meetings. Special meetings of the Commission may be called in accordance with the provisions of Section 54956 of the Government Code of the State of California. (3) Ralph M. Brown Act. All meetings of the Commission, including, without limitation, regular, adjourned regular, special, and adjourned special meetings shall be called, noticed, held and conducted in accordance with the provisions of the Ralph M. Brown Act (commencing with Section 54950 of the Government Code of the State of California). (4) Minutes. The Secretary of kept minutes of the regular, adjourned special meetings soon as possible after each minutes to be forwarded to (5) Quorum. the Authority shall cause to be adjourned regular, special, and of the Commission and shall, as meeting, cause a copy of the each member of the Commission. A majority of the members of the Commission which includes at least one member appointed by the governing body of each of CSAC and LCC shall constitute a quorum for the transaction of business. No action may betaken by the Commission except upon the affirmative vote of a majority of the members of the Commission which includes at least one member appointed by the governing body of each of CSAC and LCC, except that less than a quorum may adjourn a meeting to another time and place. E. RULES AND REGULATIONS. The Authority may adopt, from time to time, by resolution of the Commission such rules and regulations for the conduct of its meetings and affairs as may be required. Section 4. Powers. The Authority shall have any and all powers relating to economic development authorized by law to each of the parties hereto and separately to the public entity herein created, including, without limitation, the promotion of opportunities for the creation and retention of employment, the stimulation of economic activity, and the increase of the tax base, within the jurisdictions of such parties. Such powers shall include the common powers specified in this y employees to serve as treasurer, auditor, and controller of the Authority (the "Treasurer ") pursuant to Section 6505.6 of the Joint Exercise of Powers Act to serve for such term as shall be determined by the Commission. Subject to the applicable provisions of any resolution, indenture or other instrument or proceeding authorizing or securing Bonds (each such resolution, indenture, instrument and proceeding being herein referred to as an "Indenture ") providing for a trustee or other fiscal agent, the Treasurer is designated as the depositary of the Authority to have custody of all money of the Authority, from whatever source derived. The Treasurer of the Authority shall have the powers, duties and responsibilities specified in Section 6505.5 of the Joint Exercise of Powers Act. The Treasurer of the Authority is designated as the public officer or person who has charge of, handles, or has access to any property of the Authority, and such officer shall file an official bond with the Secretary of the Authority in the amount specified by resolution of the Commission but in no event less than $1 ,000. If and to the extent permitted by law, any such officer may satisfy this requirement by filing an official bond in at least said amount obtained in connection with another public office. The Commission shall have the power to appoint such other officers and employees as it may deem necessary and to retain independent counsel, consultants and accountants. The Commission shall have the power, by resolution, to the extent permitted by the Joint Exercise of Powers Act or any other applicable law, to delegate any of its functions to one or more of the members of the Commission or officers or agents of the Authority and to cause any of said members, officers or agents to take any actions and execute .any documents or instruments for and in the name and on behalf of the Commission or the Authority. D. MEETINGS OF THE COMMISSION. ( 1 ) Regular Meetings. The Commission shall provide for its regular meetings; provided, however, it shall hold at least one regular meeting each year. The date, hour and place of the holding of the regular meetings shall be fixed by resolution of the Commission and a copy of such resolution shall be filed with each party hereto. 5 serving in his or her individual capacity as a member of the Commission. The Commission shall be the administering agency of this Agreement, and, as such, shall be vested with the powers set forth herein, and shall execute and administer this Agreement in accordance with the purposes and functions provided herein. Four members of the Commission shall be appointed by the governing body of CSAC and three members of the Commission shall be appointed by the governing body of LCC. Initial members of the Commission shall serve a term ending June 1, 1991. Successors to such members shall be selected in the manner in which the respective initial member was selected and shall serve a term of three years. Any appointment to fill an unexpired term, however, shall be for such unexpired term. The term of office specified above shall be applicable unless the tern -, of office-' of the respective member is terminated as hereinafter provided, and provided that the term of any member shall not expire until a successor thereto has been appointed as provided herein. Each of CSAC and LCC may appoint an alternate member of the Commission for each member of the Commission which it appoints. Such alternate member may act as a member of the Commission in place of and during the absence or disability of such regularly appointed member. All references in this Agreement to any member of the Commission shall be deemed to refer to and include the applicable alternate member when so acting in place of a regularly appointed member. Each member or alternate member of the Commission may be removed and replaced at any time by the governing body by which such member was appointed. Any individual, including any member of the governing body or staff of CSAC or LCC, shall be eligible to serve as a member or alternate member of the Commission. Members and alternate members of the Commission shall not receive any compensation for serving as such but shall be entitled to reimbursement for any expenses actually incurred in connection with serving as a member or alternate member, if the Commission shall determine that such expenses shall be reimbursed and there are unencumbered funds available for such purpose. C. OFFICERS; DUTIES; OFFICIAL BONDS. The Commission shall elect a Chair, a Vice - Chair, and a Secretary of the Authority from among its members to serve for such term as shall be determined by the Commission. The Commission shall appoint one or more of its officers or 4 Section 1. Purpose. This Agreement is made pursuant to the provisions of the Joint Exercise of Powers Act, relating to the joint exercise of powers common to public agencies, in this case being the Program Participants. The Program Participants each possess the powers referred to in the recitals hereof. The purpose of this Agreement is to establish an agency for, and with the purpose of, issuing Bonds to finance projects within the territorial limits of the Program Participants pursuant to the Act, Article 2, Article 4, or other appliable provisions of law; provided, however that nothing in this Agreement shall be construed as a limitation on the rights of the Program Participants to pursue economic development outside of this Agreement, including the rights to issue Bonds through industrial development authorities under the Act, or as otherwise permitted by law. Within the various jurisdictions of the Program Participants such purpose will be accomplished and said powers exercised in the manner hereinafter set forth. Section 2. Term. This Agreement shall become effective as of the date hereof and shall continue in full force and effect for a period of forty (40) years from the date hereof, or until such time as it is terminated in writing by all the Program Participants; provided, however, that this Agreement shall not terminate or be terminated until the date on which all Bonds or other indebtedness issued or caused to be issued by the Authority shall have been retired, or full provision shall have been made for their retirement, including interest until their retirement date. Section 3. Authority. A. CREATION AND POWERS OF AUTHORITY. ( 1 ) Pursuant to the Joint Exercise of Powers Act, there is hereby created a public entity to be known as the "California Statewide Communities Development Authority" (the "Authority "), and said Authority shall be a public entity separate and apart from the Program Participants. Its debts, liabilities and obligations do not constitute debts, liabilities or obligations of any party to this Agreement. B. COMMISSION. The Authority shall be administered by a Commission (the "Commission ") which shall consist of seven members, each 3 WHEREAS, in furtherance of the Program, certain California counties (collectively, the "Initial Participants ") have entered into that certain Joint Exercise of Powers Agreement dated as of November 18, 1987 (the "Initial Agreement "), pursuant to which the California Counties Industrial Development Authority has been established as a separate entity under the Joint Exercise of Powers Act for the purposes and with the powers specified in the Initial Agreement; and WHEREAS, the League of California Cities ( "LCC ") has determined to join as a sponsor of the Program and to actively participate in the administration of the Authority; and WHEREAS, the Initial Participants have determined to specifically authorize the Authority to issue Bonds pursuant to Article 2 of the Joint Exercise of Powers Act ( "Article 2 ") and Article 4 of the Joint Exercise of Powers Act ( "Article 4 "), as well as may be authorized by the Act or other applicable law; and WHEREAS, the Initial Participants desire to rename the California Counties Industrial Development Authority to better reflect the additional sponsorship of the Program; and WHEREAS, each of the Initial Participants has determined that it is in the public interest of the citizens within its boundaries, and to the benefit of such Initial Participant and the area and persons served by such Initial Participant, to amend and restate in its entirety the Initial Agreement in order to implement the provisions set forth above; and WHEREAS, it is the desire of the Program Participants to use a public entity established pursuant to the Joint Exercise of Powers Act to undertake projects within their respective jurisdictions that may be financed with Bonds issued pursuant to the Act, Article 2, Article 4, or other applicable provisions of law; and WHEREAS, the projects undertaken will result in significant public benefits, including those public benefits set forth in Section 91502.1 of the Act, an increased level of economic activity, or an increased tax base, and will therefore serve and be of benefit to the inhabitants of the jurisdictions of the Program Participants; NOW, THEREFORE, the Program Participants, for and in consideration of the mutual promises and agreements herein contained, do agree to restate and amend the Initial Agreement in its entirety to provide as follows: N AMENDED AND RESTATED JOINT EXERCISE OF POWERS AGREEMENT RELATING TO THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY THIS AGREEMENT, dated as of June 1, 1988, by and among the parties executing this Agreement (all such parties, except those which have withdrawn in accordance with Section 13 hereof, being herein referred to as the "Program Participants "): W I T N E S S E T H WHEREAS, pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California (the "Joint Exercise of Powers Act ") , two or more public agencies may by agreement jointly exercise any power common to the contracting parties; and WHEREAS, each of the Program Participants is a "public agency" as that term is defined in Section 6500 of the Government Code of the State of California, and WHEREAS, each of the Program Participants is empowered to promote economic development, including, without limitation, the promotion of opportunities for the creation or retention of employment, the stimulation of economic activity, and the increase of the tax base, within its boundaries; and WHEREAS, a public entity established pursuant to the Joint Exercise of Powers Act is empowered to issue industrial development bonds pursuant to the California Industrial Development Financing Act (Title 10 (commencing with Section 91500 of the Government Code of the State of California)) (the "Act ") and to otherwise undertake financing programs under the Joint Exercise of Powers Act or other applicable provisions of law to promote economic development through the issuance of bonds, notes, or other evidences of indebtedness, or certificates of participation in leases or other agreements (all such instruments being herein collectively referred to as "Bonds "); and WHEREAS, in order to promote economic development within the State of California, the County Supervisors Association of California ( "CSAC ") , together with the California Manufacturers Association, has established the Bonds for Industry program (the "Program "). (APPENDIX E[ (SPECIMEN [MUNICIPAL BOND] INSURANCE POLICY] E -1 EXHIBIT A TO CONTINUING DISCLOSURE AGREEMENT NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Obligor: City of Lake Elsinore Name of Certificates: California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program) Date of Execution and Delivery: [Closing Date] NOTICE IS HEREBY GIVEN that the City of Lake Elsinore, California (the "Reporting Local Agency ") has not provided an Annual Report with respect to the above -named Certificates as required by the Continuing Disclosure Agreement, dated [Closing Date]. The Reporting Local Agency anticipates that the Annual Report will be filed by Dated: CITY OF LAKE ELSINORE Authorized Signatory o Section 13. Counterparts. This Disclosure Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original. Date: [Closing Date] CITY OF LAKE ELSINORE Authorized Signatory [URBAN FUTURES, INC.], as Dissemination Agent C D -7 Authorized Signatory Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Reporting Local Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Reporting Local Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Reporting Local Agency shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Reporting Local Agency to comply with any provisions of this Disclosure Agreement any Participating Underwriter or any holder or beneficial owner of the Certificates, or the Trustee on behalf of the holders of the Certificates, may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Reporting Local Agency to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed a default under the Trust Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the Reporting Local Agency to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties Immunities and Liabilities of Dissemination A ent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Reporting Local Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities that it may incur arising out of or in the exercise or performance of its duties as described hereunder, if any, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Reporting Local Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Certificates. The Dissemination Agent shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the Reporting Local Agency pursuant to this Disclosure Agreement. The Reporting Local Agency shall pay the reasonable fees and expenses of the Dissemination Agent for its duties as described hereunder. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Reporting Local Agency, the Dissemination Agent, the Trustee, the Participating Underwriter and holders and beneficial owners from time to time of the Certificates, and shall create no rights in any other person or entity. [Remainder of Page Intentionally Left Blank] D -6 Agency shall file a notice of such occurrence with MSRB, with a copy to the 'Trustee, Ithe Certificate Insurer,] and the Participating Underwriter. Such notice must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as prescribed by MSRB. Section 6. Termination of Reporting Obligation. The obligations of the Reporting Local Agency and the Dissemination Agent specified in this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment, or payment in full of all of the Certificates. If such termination occurs prior to the final maturity of the Certificates, the Reporting Local Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 7. Dissemination Ate. The Reporting Local Agency may from time to time appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Reporting Local Agency shall act as Dissemination Agent. The initial Dissemination Agent shall be Urban Futures, Inc. Section 8. Amendment, Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Reporting Local Agency may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to annual or event information to be provided hereunder, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the Reporting Local Agency or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel have complied with the requirements of the Rule at the time of the primary offering of the Certificates, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver (i) is approved by holders of the Certificates in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of the Reporting Local Agency or nationally recognized bond counsel, materially impair the interest of Certificates owners. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Reporting Local Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to MSRB. Unscheduled draws on debt service reserves reflecting financial difficulties. Unscheduled draws on credit enhancements reflecting financial difficulties. Substitution of any credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security. Modifications to rights of security holders, if material. Certificate calls, if material, and tender offers. Defeasances. 10. Release, substitution, or sale of property securing repayments of the securities, if material. 11. Rating changes. 12. Bankruptcy, insolvency, receivership, or similar event of the Reporting Local Agency [this Listed Event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Reporting Local Agency in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Reporting Local Agency, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Reporting Local Agency]. 13. Consummation of a merger, consolidation, or acquisition involving the Reporting Local Agency or the sale of all or substantially all of the assets of the Reporting Local Agency, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) Upon and after the occurrence of a Listed Event listed under subsection (a)(2), (a)(7), (a)(8), (a)(] 0), (a)(] 3), or (a)(14) above, the Reporting Local Agency shall as soon as possible determine if such event would be material under applicable federal securities laws. If the Reporting Local Agency determines that knowledge of the occurrence of such Listed Event would be material under applicable federal securities laws, the Reporting Local Agency shall file a notice of such occurrence with MSRB, with a copy to the Trustee, Ithe Certificate Insurer,] and the Participating Underwriter, within ten business days after the occurrence of such Listed Event. Such notice must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as prescribed by MSRB. (c) Within ten business days after the occurrence of any Listed Event (other than a Listed Event listed under subsection (a)(2), (a)(7), (a)(8), (a)(10), (a)(13), or (a)(14) above), the Reporting Local D -4 generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available at the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following information with respect to the Reporting Local Agency and the Certificates for the fiscal year to which the Annual Report relates, which information may be provided by its inclusion in the audited financial statements of the Reporting Local Agency for such fiscal year described in subsection (a) above: Principal amount of the Certificates outstanding (including principal amount and years of maturity of Certificates, if any, called for prepayment in advance of maturity) and any bonds or certificates of participation issued or executed and delivered, as applicable, to refund the same. 2. Balance in the funds and accounts established under the Trust Agreement or the 2014 Installment Sale Agreement. 3. If the amount on deposit in the Reserve Subaccount is not equal to the Reserve Fund Requirement, the amount of the delinquency or surplus, as applicable. 4. A description of the status of construction of the Reporting Local Agency's Project, including (i) a description of any land use entitlements acquired or amended with respect to any portion of the Project during the period covered by the Annual Report, and (ii) any previously undisclosed legislative, administrative, or judicial challenges to the development of the Project, if material. 5. Updated information set forth in the table of the Official Statement entitled "Portion of Measure A Revenues Historically Allocated to the City of Lake Elsinore." 6. Any material changes to the Reporting Local Agency's allocation of Measure A Receipts or with respect to its expectations with regard to the anticipated or projected Measure A Receipts. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Reporting Local Agency or related public entities, that are available to the public on MSRB's Internet Web site or filed with the SEC. If the document included by reference is a final official statement, it must be available from MSRB. The Reporting Local Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Reporting Local Agency shall give, or cause to be given, not in excess of ten business days after the occurrence of any of the following events, notice of the occurrence of such event with respect to the Certificates: Principal and interest payment delinquencies. 2. Non - payment related defaults, if material. D -3 "Partieipating Underwriter" shall mean Stifel, Nicolaus & Company, Incorporated, the original underwriter of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Rule" shall mean Rule 15c2- 12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time. "SEC" shall mean the Securities and Exchange Commission. Section 3. Provision of Annual Reports. (a) The Reporting Local Agency shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing 1CONFIRM:1 March 31, 2015, provide to MSRB [and the Certificate Insurer] an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than 15 calendar days prior to said date, the Reporting Local Agency shall provide its Annual Report to the Dissemination Agent, if such Dissemination Agent is a different entity than the Reporting Local Agency. The Annual Report must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as is prescribed by MSRB, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that any audited financial statements of the Reporting Local Agency may be submitted separately from the balance of the Annual Report, and not later than the date required above for the filings of the Annual Report. If the Reporting Local Agency's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The Reporting Local Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished hereunder. The Dissemination Agent may conclusively rely upon such certification of the Reporting Local Agency and shall have no duty or obligation to review such Annual Report. (b) If the Reporting Local Agency is unable to provide to MSRB an Annual Report by the date required in subsection (a), the Reporting Local Agency shall send to MSRB a notice in substantially the form attached as Exhibit A. Such notice must be submitted in an electronic format as prescribed by MSRB, accompanied by such identifying information as prescribed by MSRB. (c) The Dissemination Agent shall: provide any Annual Report received by it to MSRB by the date required in subsection (a); file a report with the Reporting Local Agency and the Trustee (if the Dissemination Agent is other than the Trustee) certifying that the Annual Report has been provided to MSRB pursuant to this Disclosure Agreement and stating the date it was provided; and take any other actions mutually agreed upon between the Dissemination Agent and the Reporting Local Agency. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: (a) Audited financial statements of the Reporting Local Agency, which include information regarding the funds and accounts of the Reporting Local Agency, if any, prepared in accordance with D -2 APPENDIX D FORM OF LOCAL AGENCY CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement ") is executed and delivered by and between the City of Lake Elsinore (the "Reporting Local Agency ") and [CONFIRM:] Urban Futures, Inc., in its capacity as dissemination agent (the "Dissemination Agent "), in connection with the execution and delivery of the California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program), in an aggregate principal amount of $ (the "Certificates "). The Certificates are being executed and delivered Wells Fargo Bank, National Association, as trustee (the "Trustee "), pursuant to the provisions of that certain Trust Agreement, dated as of 1, 2014 (the "Trust Agreement "), by and among the California Statewide Communities Development Authority (the "Authority "), the Trustee, and the Reporting Local Agency, in order to provide funds to finance the acquisition, construction, and improvement of certain public improvements within the jurisdiction of the Reporting Local Agency. The Reporting Local Agency and the Dissemination Agent hereby certify, covenant, and agree as follows: Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the parties hereto for the benefit of the holders and beneficial owners of the Certificates and in order to assist the Participating Underwriter in complying with Rule 15c2- 12(b)(5) promulgated under the Securities and Exchange Act of 1934. Section 2. Definitions. In addition to the definitions set forth in the Trust Agreement and in the 2014 Installment Sale Agreement, dated as of 1, 2014 (the "2014 Installment Sale Agreement " "), by and between the Authority and the Reporting Local Agency, which apply to any capitalized terms used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Reporting Local Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Annual Report Date " shall mean the date in each year that is nine (9) months after the end of the Reporting Local Agency's fiscal year, the end of which, as of the date of this Disclosure Agreement, is June 30. ["Certifcate Insurer" shall mean [INSURER], a company, or any successor thereto or assignee thereof.] "Dissemination Agent" shall mean, initially, Urban Futures, Inc., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent that is so designated in writing by the Reporting Local Agency and has filed with the then - current Dissemination Agent a written acceptance of such designation. "Listed Events " shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "MS7?B" shall mean the Municipal Securities Rulemaking Board. "Official Statement" means the Official Statement dated 20, relating to the Certificates. D -1 Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Installment Sale Payments evidenced by the Certificates to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Certificates, the Installment Sale Agreement, the Trust Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against public entities such as cities in the State of California. We express no opinion with respect to the enforceability of any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set -off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non - exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the real or personal property described in the Installment Sale Agreement or the accuracy or sufficiency of the description contained therein of any such property. Our services did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Certificates and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Installment Sale Agreement and the Trust Agreement have been duly executed and delivered by, and constitute the valid and binding obligations of, the Local Agency. 2. The obligation of the Local Agency to pay the Installment Sale Payments, and the interest thereon, and other payments required to be made by it under the Installment Sale Agreement is a special obligation of said Local Agency payable, in the manner provided in the Installment Sale Agreement, solely from Revenues and other funds provided for in the Installment Sale Agreement lawfully available therefor. 3. Assuming due authorization, execution and delivery of the Trust Agreement and the Certificates by the Trustee, the Certificates are entitled to the benefits of the Trust Agreement. 4. Interest on the Installment Sale Payments paid by the Local Agency under the Installment Sale Agreement and received by the registered owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the amount, accrual or receipt of such interest or the ownership or disposition of the Certificates. Faithfully yours, C -2 APPENDIX C PROPOSED FORM OF SPECIAL COUNSEL OPINION Upon execution and delivery of the Certificates, Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agency, proposes to render their final approving opinion with respect thereto in substantially the following form: [Date of Delivery] City of Lake Elsinore Lake Elsinore, California California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. —Total Road improvement Program) (Final Opinion) Ladies and Gentlemen: We have acted as special counsel to the City of Lake Elsinore, California (the "Local Agency ") in connection with the execution and delivery of California Communities Local Measure A Sales Tax Revenue (Installment Sale) Certificates of Participation, Series 2014A (T.R.I.P. — Total Road Improvement Program), evidencing principal in the aggregate amount of $ (the "Certificates "). In such connection, we have reviewed the Installment Sale Agreement, dated as of 1, 2014 (the "Installment Sale Agreement "), between the Local Agency and the California Statewide Communities Development Authority (the "Authority "), the Trust Agreement, dated as of 1, 2014 (the "Trust Agreement "), among the Authority, the Local Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee "), the Tax Certificate, dated the date hereof (the "Tax Certificate "), opinions of counsel to the Local Agency, the Authority, the Trustee and others, certificates of the Local Agency, the Authority, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Installment Sale Agreement and the Trust Agreement. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions, including a default judgment rendered on , 2014, by the Superior Court of the State of California for the County of Riverside in the action entitled City of Lake Elsinore v. All Persons Interested in the Matter, etc., Case No. , and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Certificates has concluded with their execution and delivery, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Local Agency. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the first paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Installment Sale Agreement, the Trust C -1 City of Lake Elsinore Top Ten Property Taxpayers Percentage of Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013 Outstanding Debt The following table describes the City of Lake Elsinore's outstanding long term debt as of June 30, 2013 and June 30, 2012. Taxable Total Taxable Taxpayer Assessed Value Assessed Value Ridgestone Partners, LP $ 39,061,793 1.02% Pacific Aggregates, Inc. 36,300,763 0.95 Mohr Affinity, LLC 30,163,000 0.79 Diamond Stadium Group 23,253,209 0.61 Rivers Edge Apartments, LLC 19,000,000 0.50 Pacific Clay Products, Inc. 18,431,104 0.48 Richmond American Homes of Maryland 17,653,279 0.46 Lake Elsinore Marketplace 16,960,464 0.44 Wahnart Stores, Inc. 16,923,230 0.44 Costeo Wholesale 16,919,144 0.44 Total $234,665,986 6.12% Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013 Outstanding Debt The following table describes the City of Lake Elsinore's outstanding long term debt as of June 30, 2013 and June 30, 2012. Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended ,tune 30, 2013 Building Activity The following table summarizes building activity in the City of Lake Elsinore from fiscal year 2008 -09 through fiscal year 2012 -13. City of Lake Elsinore Building Activity Valuations Fiscal Years 2008 -09 through 2012 -13 (000s omitted) Fiscal Year 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 Construction Permits Issued 505 771 829 760 909 Property Value Per Permit (000s omitted) $21,474 $42,848 $50,899 $43,381 $124,755 New Home Building Permits Issued 43 211 223 210 660 Source: City of Lake Elsinore Comprehensive Anuual Financial Report for Fiscal Year Ended June 30, 2013. ,I Outstanding Outstanding Balance as of Balance as of Type of Debt June 30, 2013 June 30, 2012 Local Agency Revenue Bonds $ 83,470,000 $ 61,835,000 'Tax Allocation Bonds 56,125,000 58,580,000 Deferred Amounts (464,968) - 2,026,446 Revenue Refunding Bonds 12,565,000 12,975,000 Other Post - Employment Benefit Obligations 6,136,940 4,706,761 Compensated Absences 636,903 644,691 Total $158,468,875 $136,715,006 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended ,tune 30, 2013 Building Activity The following table summarizes building activity in the City of Lake Elsinore from fiscal year 2008 -09 through fiscal year 2012 -13. City of Lake Elsinore Building Activity Valuations Fiscal Years 2008 -09 through 2012 -13 (000s omitted) Fiscal Year 2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 Construction Permits Issued 505 771 829 760 909 Property Value Per Permit (000s omitted) $21,474 $42,848 $50,899 $43,381 $124,755 New Home Building Permits Issued 43 211 223 210 660 Source: City of Lake Elsinore Comprehensive Anuual Financial Report for Fiscal Year Ended June 30, 2013. ,I agencies within Riverside County (including the City of Lake Elsinore) are, in effect, guaranteed the full amount of their respective share of the amount of secured ad valorem property taxes levied. The following table describes the City of Lake Elsinore's property tax levies and collections for fiscal years 2003 -04 through 2012 -13. City of Lake Elsinore Property Tax Levies and Collections Fiscal Yeats 2007 -08 through 2012 -13 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. Assessed Property Values The following table describes the assessed value of the secured and unsecured real property within the City of Lake Elsinore for fiscal years 2003 -04 through 2012 -13. City of Lake Elsinore Assessed Value of Taxable Property Fiscal Years 2003 -04 through 2012 -13 Assessed Value of Taxes Collected Secured June 30 Taxes Levied Within the $1,866,609,717 Ycar Ended for the Fiscal Year of 2,782,744,310 June 30 Fiscal Year Levv Percent of Levv 2004 $1,091,168 $1,129,675 103.53% 2005 1,327,699 1,405,509 105.86 2006 1,446,320 1,742,413 120.47 2007 1,714,890 2,131,576 124.30 2008 2,208,181 2,313,581 104.77 2009 2,230,658 2,254,961 101.09 2010 1,894,552 1,958,553 103.38 2011 1,900,256 1,797,763 94.61 2012 1,874,319 1,770,492 94.46 2013 1,844,800 1,767,808 95.83 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. Assessed Property Values The following table describes the assessed value of the secured and unsecured real property within the City of Lake Elsinore for fiscal years 2003 -04 through 2012 -13. City of Lake Elsinore Assessed Value of Taxable Property Fiscal Years 2003 -04 through 2012 -13 Assessed Value of Unsecured Real Property 71,497,030 93,464,511 88,656,079 84,372,528 119,986,192 114,156,049 104,903,811 148,435,245 145,931,118 167,898,562 Total Assessed Value $1,938,106,747 2,276,109,121 2,871,430,389 3,670,623,178 4,925,757,048 4,927,408,004 4,062,119,890 3,928,751,948 3,923,526,176 3,834,397,783 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. Principal Taxpayers The following table lists the top ten property taxpayers in the City of Lake Elsinore as of June 30, 2013. Assessed Value of Year Ended Secured June 30 Real Property 2004 $1,866,609,717 2005 2,182,644,610 2006 2,782,744,310 2007 3,586,25050 2008 4,805,770,856 2009 4,813,251,955 2010 3,957,216,079 2011 3,780,316,703 2012 3,777,595,058 2013 3,666,499,221 Assessed Value of Unsecured Real Property 71,497,030 93,464,511 88,656,079 84,372,528 119,986,192 114,156,049 104,903,811 148,435,245 145,931,118 167,898,562 Total Assessed Value $1,938,106,747 2,276,109,121 2,871,430,389 3,670,623,178 4,925,757,048 4,927,408,004 4,062,119,890 3,928,751,948 3,923,526,176 3,834,397,783 Source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. Principal Taxpayers The following table lists the top ten property taxpayers in the City of Lake Elsinore as of June 30, 2013. Major Employers The following table describes the largest employers within the City of Lake Elsinore as of June 30, 2013: Percentage of Total City of Number of Lake Elsinore Employer Employees Employment Lake Elsinore Unified School District 2,429 13.65% M &.M Framing 350 1.97 Stater Brothers 314 1.76 Costco 244 1.37 Wahnart 225 1.26 E. V. M. W. D. 160 0.90 Home Depot 135 0.76 Target 134 0.75 Cardenas Market 125 0.70 Lowe's 109 0.61 Totals 4,225 23.74% source: City of Lake Elsinore Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013. Property Tax Rates In June of 1978, California voters approved Proposition 13 (the Jarvis -Gann Initiative), which added Article XIIIA to the California Constitution ( "Article XIIIA"). Article XIIIA limits ad valorem taxes on real property to 1% of the full cash value, plus taxes necessary to repay indebtedness approved by the voters prior to July 1, 1978. [CITY TO CONFIRM /REVISE:] Currently, there are no voter - approved obligations that impact the residents of the City of Lake Elsinore. Property Tax Levies, Collections, and Delinquencies In Riverside County, property taxes on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll becomes tax delinquent on June 30. Such property may thereafter be prepaid by payment of the delinquent taxes plus the delinquency penalty, plus a prepayment penalty of one and one -half percent per month to the time of prepayment. If taxes remain unpaid for a period of five years or more, the property is subject to sale by the Riverside County Tax Collector. In Riverside County, property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of one and one -half percent per month begins to accrue on November 1. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer, (2) filing a certificate in the office of the Riverside County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer, (3) filing a certificate of delinquency for record in the Riverside County Recorder's office in order to obtain a lien on certain property of the taxpayer, and (4) seizure and sale of personal property, improvements, or possessory interests belonging or assessed to the taxpayer. Riverside County has adopted the Teeter Plan pursuant to Sections 4701 through 4717 of the California Revenue and Taxation Code (the "Teeter Plan "). The Teeter Plan permits counties to use a method of apportioning taxes whereby all local agencies, including cities, receive from such counties 100% of their respective share of the amount of secured ad valorem taxes levied, without regard to actual collections of the taxes levied. So long as the Teeter Plan is continued within Riverside County, the local B -2 APPENDIX B GENERAL INFORMATION REGARDING PARTICIPATING LOCAL AGENCY The.following information regarding the City of Lake Elsinore is presented for informational purposes only. The Certificates do not constitute a general obligation debt of the Local Agency, and the Local Agency has not pledged its full faith and credit to the repayment of the Certificates. Neither the General Fund nor the taxing power of the Local Agency, the County of Riverside, the State of California or any political subdivision of the State of California is pledged to the payment of the Installment Sale Payments or the Certificates. The Certificates are payable solely.froni the sources described in the Official Statement. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES" and "MEASUREA REVENUES, MEASUREA RECEIPTS" herein. CITY OF LAKE ELSINORE {CITY TO C0NFiRI:ilUPDA T E ENTIRE APPENDIX: j General The City of Lake Elsinore, California (the "City of Lake Elsinore "), was founded in 1883 and incorporated as a general law city effective April 23, 1888 in San Diego County. In 1893, the Elsinore Valley, previously located in San Diego County, became part of the new County of Riverside (the "County "). The City encompasses approximately 39 square miles, with over 10 miles of lake shore, and is located at the southwestern end of the County, 73 miles east of downtown Los Angeles and 74 miles north of downtown San Diego. As of June 30, 2013, the City of Lake Elsinore's population was approximately 55,430. Government The City operates under a Council - Manager form of municipal government. policy - making and legislative authority are vested in the City Council consisting of five members elected bi- annually at -large to four -year alternating terms. The Mayor is selected by the City Council from among its members. The City Council appoints a City Manager who is responsible for the day -to -day administration of City business and the coordination of all departments of the City. The City Council members and the expiration dates of their respective terms are as follows: Name Natasha Johnson Steve Manos Daryl Hickman Brian Tisdale Robert E. Magee Labor Force and Unemployment Office Mayor Mayor Pro Tern Council Member Council Member Council Member Term Expires November 2016 November 2016 November 2014 November 2014 November 2016 According to statistics compiled by the California Employment Development Department, as of December 31, 2013, the City of Lake Elsinore had a labor force of approximately 18,000 workers and an unemployment rate of approximately 10.0% and, as of the same date, the County had a labor force of approximately 953,200 and an unemployment rate of approximately 10.3°/x. B -1 APPENDIX A SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The following summary discussion of selected provisions of the Trust Agreement and the 2014 Installment Sale Agreement is made subject to all of the provisions of such documents. This summary discussion does not purport to be a complete statement of said provisions and prospective purchasers of the Certificates are referred to the complete texts of said documents, copies of which are available upon request sent to the Trustee. [TO BE PROVIDED BY BOND COUNSEL] A -1 compieteness or fairness of this Official Statement. Certain legal matters will be passed upon for the Authority by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, for the City of Lake Elsinore by Barbara Leibold, Esq., City Attorney, and for the Underwriter by Goodwin Procter LLP, Los Angeles, California, as Underwriter's Counsel. MISCELLANEOUS The purpose of this Official Statement is to supply information to prospective buyers of the Certificates. Quotations from and summaries and explanations of the Certificates and other documents contained herein do not purport to be complete and reference is made to said documents for full and complete statements of their provisions. This Official Statement and its distribution have been duly authorized and approved by the Authority and the Local Agency. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, As agent for and on behalf of the Local Agency am Authorized Signatory 35 [CITY TO CONFIRM:] Neither the City nor any of its related entities has ever failed to comply with any previous undertaking to provide annual continuing disclosure reports or material event notices in a complete and timely manner pursuant to the Rule. UNDERWRITING The Certificates are being purchased by Stifel, Nicolaus & Company, Incorporated (the "Underwriter "). The Underwriter has agreed to purchase the Certificates at a price of $ (which represents the aggregate principal amount represented by the Certificates, [less /plus] a net original issue [discount /premium] of $ , less an Underwriter's discount of $ The contract of purchase pursuant to which the Certificates are being purchased by the Underwriter provides that the Underwriter will purchase all of the Certificates if any are purchased. The obligation of the Underwriter to make such purchase is subject to certain terms and conditions set forth in the contract of purchase. The Underwriter may offer and sell the Certificates to certain dealers and dealer banks and banks acting as agent and others at prices lower than the public offering prices stated on the inside cover page hereof and said public offering prices may be changed from time to time by the Underwriter. Although the Underwriter expects to maintain a secondary market in the Certificates after the initial offering, no guaranty can be made that such a market will develop or be maintained by the Underwriter or others. NO LITIGATION The Authority AUTHORITY TO CONFIRM:] To the knowledge of the Authority, there is no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, governmental agency, or public board or body, pending or threatened seeking to restrain or enjoin the execution, delivery, or sale of the Certificates, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Certificates, the validity or enforceability of the documents executed by the Authority in connection with the Certificates, the completeness or accuracy of this Official Statement, or the existence or powers of the Authority relating to the sale of the Certificates. The Local Agency [CITY TO CONFIRM:] The Local Agency will certify that there is no action, suit, or proceeding known to the Local Agency to be pending against the Local Agency or, to the best knowledge of the Local Agency, threatened against the Local Agency, seeking to restrain or enjoin the execution or delivery of the Certificates, the Trust Agreement, or the 2014 Installment Sale Agreement, or in any way contesting or affecting the validity of the foregoing or any proceeding of the Local Agency taken with respect to any of the foregoing or that will materially affect the ability of the Local Agency to pay its Installment Sale Payments when due. CERTAIN LEGAL MATTERS The validity and enforceability of the 2014 Installment Sale Agreement and the Trust Agreement and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the Local Agency. A complete copy of the proposed form of Special Counsel opinion is contained in Appendix C hereto. Special Counsel undertakes no responsibility for the accuracy, 34 tax bracket, and the Obama. Administration proposed legislation that would limit the exclusion from gross income of interest on obligations like the interest on the Installment Sale Payments to some extent for high- income individuals. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Special Counsel is expected to express no opinion. The opinion of Special Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Special Counsel's judgment as to the proper treatment of the Certificates for federal income tax purposes. It is not binding on the Internal Revenue Service ( "IRS ") or the courts. Furthermore, Special Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority or the Local Agency, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof, or the enforcement thereof by the IRS. The Authority and the Local Agency have covenanted, however, to comply with the requirements of the Code. Special Counsel's engagement with respect to the Certificates ends with the delivery of the Certificates and, unless separately engaged, Special Counsel is not obligated to defend the Authority, the Local Agency, or the Owners regarding the tax - exempt status of the Certificates in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority, the Local Agency, and their appointed counsel, including the Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax - exempt obligations is difficult, obtaining an independent review of IRS positions with which the Authority or the Local Agency legitimately disagree may not be practicable. Any action of the IRS, including but not limited to selection of the Certificates for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues may affect the market price for, or the marketability of, the Certificates, and may cause the Authority, the Local Agency, or the Owners to incur significant expense. RATINGS It is anticipated that Standard & Poor's Ratings Services, a division of The McGraw -Hill Companies, will assign its municipal bond rating of " " ( outlook) to the Certificates, [based on the issuance of the Certificate Insurance Policy by the Certificate Insurer at the time of delivery of the Certificates. In addition, such rating agency has assigned an underlying municipal bond rating of " " (_outlook)] to the Certificates. There is no assurance that any such rating[s] will be in effect for any given period of time or that [either or both] such rating[s] will not be revised downward or withdrawn entirely by the rating agency if, in the judgment of such agency, circumstances so warrant. Any such downward revision or withdrawal may have an adverse effect on the market price of the Certificates. Such rating[s] reflect[s] only the views of the rating agency furnishing such rating[s] and an explanation of the significance of a rating may be obtained only from such rating agency. CONTINUING DISCLOSURE The Local Agency will covenant in a Continuing Disclosure Agreement to provide certain financial information and operating data and notices of certain listed events and to file such information and notices with the Municipal Securities Rulemaking Board. The specific nature of the information required to be provided is set forth in the Continuing Disclosure Agreement, a form of which is attached hereto as Appendix D. These covenants are being made in order to assist the Underwriter in complying with Rule 15c2- 12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934 (the "Rule"), 33 first price at which a substantial amount of such maturity of the Certificates is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). The original issue discount with respect to any maturity of the Certificates accrues daily over the term to maturity of such Certificates on the basis of a constant interest rate compounded semiannually (with straight -line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Certificates to determine taxable gain or loss upon disposition (including sale, prepayment, or payment on maturity) of such Certificates. Owners of the Certificates should consult their own tax advisors with respect to the tax consequences of ownership of Certificates with original issue discount, including the treatment of Owners who do not purchase such Certificates in the original offering to the public at the first price at which a substantial amount of such Certificates is sold to the public. Certificates purchased, whether at original execution and delivery or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier repayment date) ( "Premium Certificates ") will be treated as having amortizable premium. No deduction is allowable for the amortizable premium in the case of obligations, like the Premium Certificates, the interest on the Installment Sale Payments of which is excluded from gross income for federal income tax purposes. However, the amount of tax - exempt interest received, and an Owner's basis in a Premium Certificate, will be reduced by the amount of amortizable premium properly allocable to such Owner. Owners of Premium Certificates should consult their own tax advisors with respect to the proper treatment of amortizable premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of the interest on the Installment Sale Payments. Each of the Authority and the Local Agency has made certain representations and covenanted to comply with certain restrictions, conditions, and requirements designed to ensure that the interest on the Installment Sale Payments will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in the interest on the Installment Sale Payments being included in gross income for federal income tax purposes, possibly from the date of original delivery of the Certificates. The opinion of Special Counsel assumes the accuracy of these representations and compliance with these covenants. Special Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Special Counsel's attention after the date of delivery of the Certificates may adversely affect the value of, or the tax status of the interest on, the Installment Sale Payments. Accordingly, the opinion of Special Counsel is not intended to, and may not, be relied upon in connection with any such actions, events, or matters. Although Special Counsel is of the opinion that the interest on the Installment Sale Payments is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on the Installment Sale Payments may otherwise affect an Owner's federal, state, or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Owner or the Owner's other items of income or deduction. Special Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause the interest on the Installment Sale Payments to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. For example, Representative Dave Camp, Chair of the House Ways and Means Committee released draft legislation that would subject interest on obligations like the interest on the Installment Sale Payments to a federal income tax at an effective rate of 10% or more for individuals, trusts, and estates in the highest 32 Future initiatives Article XIIIB, Article XIIIC, and Article XIIID were each adopted as measures that qualified for the ballot pursuant to the State's Constitutional initiative process. From time to time other initiative measures could be adopted, affecting the ability of the Local Agency to increase or apply revenues and to make or increase appropriations or the ability of the Commission to levy, collect, or allocate Measure A Sales Tax, all of which could adversely impact the amount of Measure A Revenues received by the Local Agency. THE AUTHORITY The Authority is a joint powers agency organized pursuant to a Joint Powers Agreement among a number of California counties, cities, and special districts entered into pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. Since its formation in 1988; the Authority has issued more than [CONFIRM/U.DDATE:1 $47.2 billion in tax - exempt financings. Any obligation, other than the obligations represented by the Certificates, previously or to be issued or otherwise incurred by the Authority will be secured by instruments separate and apart from the Trust Agreement and the 2014 Installment Sale Agreement. The holders of such other obligations of the Authority will have no claim on the security for the Certificates and the Owners will have no claim on the security of such other obligations issued by the Authority. The Authority is governed by a seven - member commission and is currently comprised of three members from the California State Association of Counties, two members from the League of California Cities, one member from the City of Sacramento, and one member from the County of Sacramento (collectively, the "Commissioners "). Neither the Authority nor its Commissioners or officers have any obligations or liability to the Owners of the Certificates with respect to the payment of Installment Sale Payments by the Local Agency under the 2014 Installment Sale Agreement, or with respect to the performance of the Local Agency of other covenants made by the Local Agency in the 2014 Installment Sale Agreement. TAX MATTERS In the opinion of Orrick, )-Herrington & Sutcliffe LLP ( "Special Counsel "), Special Counsel to the Local Agency, based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the interest on the Installment Sale Payments paid by the Local Agency under the 2014 Installment Sale Agreement and received by the owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code ") and is exempt from State of California personal income taxes. Special Counsel is of the further opinion that such interest is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Special Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Special Counsel is set forth in Appendix C hereto. To the extent the issue price of any maturity of the Certificates is less than the amount to be paid at maturity of such Certificates (excluding amounts stated to be interest and payable at least annually over the term of such Certificates), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Owner thereof, is treated as the interest on the Instalhnent Sale Payments, which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Certificates is the 31 legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, fees, or charges. No assurance can be given that the voters within the jurisdiction of the Local Agency will not, in the future, approve initiatives which reduce or repeal, or prohibit the future imposition or increase of, local taxes, assessments, fees or charges currently comprising a substantial part of the Local Agency's general fund. "Assessments," "fees," and "charges" are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described below. If not, the scope of the initiative power under Article XIIIC potentially could include any general fund local tax, assessment, or fee not received from or imposed by the federal or State government or derived from investment income. The voter approval requirements of Proposition 218 reduce the flexibility of the Local Agency to raise revenues for its general fund, and no assurance can be given that the Local Agency will be able to impose, extend, or increase taxes in the future to meet increased expenditure needs. Article XIIID also added several new provisions relating to how local agencies may levy and maintain "assessments" for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments that exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that the assessment must confer a "special benefit," as defined in Article XIIID, over and above any general benefits conferred, and (iii) a majority protest procedure that involves the mailing of a notice and a ballot to the record owner of each affected parcel, a public hearing, and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. "Assessment" in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property and applies to landscape and maintenance assessments for open space areas, street medians, street lights, and parks. In addition, Article XIIID added several provisions affecting "fees" and "charges," defined for purposes of Article XIIID to mean "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by [a local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service." All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges that (i) generate revenues exceeding the funds required to provide the property related service, (ii) are used for any propose other than those for which the fees and charges are imposed, (iii) are for a service not actually used by, or immediately available to, the owner of the property in question, or (iv) are used for general governmental services, including police, fire, ambulance, or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Depending on the interpretation of what constitutes a "property related fee" under Article XIIID, there could be future restrictions on the ability of the Local Agency to charge its respective enterprise funds for various services provided. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The Local Agency must then hold a hearing upon the proposed imposition or increase and, if written protests against the proposal are presented by a majority of the owners of the identified parcels, the Local Agency may not impose or increase the fee or charge. Moreover, except for fees or charges for wastewater, water, and refuse collection services, or fees for electrical and gas service, which fees or charges are not treated as "property related" for purposes of Article XIIID, no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the Local Agency, two - thirds voter approval by the electorate residing in the affected area. [CITY TO CONFIRM:] The Local Agency does not believe that the provisions of Article XIIIC or Article XIIID will directly impact the Measure A Receipts available to the Local Agency to make its Installment Sale Payments required pursuant to the 2014 Installment Sale Agreement. 30 Appropriations of an entity of local government subject to Article XIIIB include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance, and disability insurance funds. Appropriations subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. "Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues, and (iii) certain State subventions received by local governments. Article XIIIB includes a requirement that if an entity's revenues in any year exceed the amount permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years. Article XIIIB allows voters to approve a temporary waiver of a government's Article XI11B limmit. Such a waiver is often referred to as a "Gann limit waiver." The length of any such waiver is limited to four years. The Gann limit waiver does not provide any additional revenues to the Local Agency or allow the Local Agency to finance additional services. Installment Sale Payments are subject to the Article XIIIB appropriations limitations. For fiscal year 2012 -13, the City of Lake Elsinore calculated its appropriations limit at [CITY TO PROVIDE:] $ . For fiscal year 2013 -14, the City of Lake Elsinore calculated its appropriations limit at [CITY TO PROVIDE:] $ . For fiscal year 2014 -15, the City of Lake Elsinore has budgeted its appropriations limit at [CITY TO PROVIDE:] $ . [CITY TO CONFIRM:] The Local Agency has never made appropriations that exceeded the limitation on appropriations under Article XIIIB. The impact of the appropriations limit on the Local Agency's financial needs in the future is unknown. Articles XIIIC and XIIID of the California Constitution — The Right to Vote on Taxes On November 5, 1996, State voters approved Proposition 218, entitled the "Right to Vote on 'Faxes Act" ( "Proposition 218 "). Proposition 218 added Article XIIIC ( "Article XIIIC ") and Article XIIID ( "Article XIIID") to the California Constitution, which Articles contain a number of provisions affecting the ability of local agencies to levy and collect both existing and future taxes, assessments, fees, and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the ability of the Local Agency to meet certain obligations. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes, even if deposited in a general fund such as a general fund of the Local Agency, require a two - thirds vote. Article XIIIC further provides that any general purpose tax imposed, extended, or increased, without voter approval, after December 31, 1994, may continue to be imposed only if approved by a majority vote in an election, which must be held within two years of November 5, 1996. Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees, and charges, regardless of the date such taxes, assessments, fees, and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than 29 Increased Internet Use May Reduce Measure A Sales Tax The increasing use of the Internet to conduct electronic commerce may affect the levels of Measure A Sales Tax receipts. Internet sales of physical products by businesses located in the State, and Internet sales of physical products delivered to the State by businesses located outside of the State are generally subject to the Measure A Sales Tax. It is possible, however, that some of these transactions may avoid taxation either through error or deliberate nonreporting and this potentially reduces the amount of the Measure A Sales Tax. As a result, the more that Internet use increases, along with a failure to collect sales taxes on such Internet purchases, the more Measure A Revenues may be reduced. No Liability of Authority to Owners Subject to any provisions in the Trust Agreement to the contrary, the Authority has no obligation or liability to the Owners of the Certificates with respect to the payment when due of the Installment Sale Payments by the Local Agency or with respect to the performance by the Local Agency of other agreements and covenants required to be performed by the Local Agency under the 2014 Installment Sale Agreement or the Trust Agreement, or with respect to the performance by the Trustee of any of the Trustee's rights or obligations under the Trust Agreement. Economic, Political, Social, and Environmental Conditions The level of Measure A Sales Tax revenues collected depends on the level of taxable sales transactions within the County, which, in turn, depends on the level of general economic activity in the County and the State generally. Prospective investors are encouraged to evaluate current and prospective economic, political, social, and environmental conditions as part of an informed investment decision. Changes in economic, political, social, or environmental conditions on a local, state, federal, or international level may adversely affect investment risk generally. Such conditional changes may include (but are not limited to) the reduction or elimination of previously available State of federal revenues, fluctuations in business production, consumer prices, or financial markets, unemployment rates, technological advancements, shortages or surpluses in natural resources or energy supplies, changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism, environmental damage and natural disasters. CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS Article XIIIB of the California Constitution — Limitations on Appropriations On November 6, 1979, State voters approved Proposition 4, the so- called Gann Initiative, which added Article XIIIB to the California Constitution ( "Article XIIIB "). In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111, which is described below under the caption "Proposition l I L" Article XIIIB limits the annual appropriations of the State and of any city, county, school district, authority, or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted annually for changes in the cost of living, population, and cost of services rendered by the governmental entity. The "base year" for establishing such appropriation limit is fiscal year 1978 -79. Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies, so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the Constitutional limit. Decreases are required where responsibility for providing services is transferred from the government entity. 28 Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs the bankruptcy proceedings for public agencies such as the Local Agency and the Commission, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Certificates to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. Special Counsel has limited its opinion as to the validity and enforceability of the 2014 Installment Sale Agreement and the Trust Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditor's rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation, or modification of the rights of the Owners. Constitutional Limitations on Appropriations California law imposes various taxing, revenue, and appropriations limitations on public agencies such as the Local Agency. See "CONSTITUTIONAL PROVISIONS AFFECTING LOCAL AGENCY REVENUES AND APPROPRIATIONS" herein for a discussion of these limitations. California State Legislature or Electorate May Change Items Subject to Measure A Sales Tax With limited exceptions, the Measure A Sales Tax will be imposed upon the same transactions and items subject to the sales tax levied statewide by the State. In the past, the California State Legislature and the State electorate have made changes to the transactions and items subject to the State's general sales tax and, therefore, the Measure A Sales Tax. In 1991, the California State Legislature enacted legislation that expanded the transactions and items subject to the general statewide sales tax to include fuel for aviation and shipping, bottled water, rental equipment, and newspapers and magazines. In 1992, the State electorate approved an initiative that eliminated candy, gum, bottled water, and confectionery items as items subject to the State's general sales tax. In each case, the same changes were made to transactions or items then subject to the 1988 Sales Tax, a tax similar to the Measure A Sales Tax. The State Legislature or the voters within the State, through the initiative process, could change or limit the transactions and items upon which the statewide sales tax and the Measure A Sales Tax are imposed. Any such change or limitation could have an adverse impact on the Measure A Revenues collected and the portion of such Measure A Revenues, and, correspondingly, the portion of Measure A Receipts, allocated by the Commission to the Local Agency. For a further description of the Measure A Sales Tax, see "MEASURE A REVENUES; MEASURE A RECEIPTS." Increases in Sales Tax Rate May Cause Declines in Measure A Revenues The 0.5% Measure A Sales Tax imposed in the County for transportation purposes and administered by the Commission is in addition to the sales or use tax levied statewide by the State. On November 6, 2012, State voters approved Proposition 30, which, among other things, increased the statewide tax rate by one quarter of one percent (increasing the statewide rate from 7.25% to 7.50 %) for four years, effective January 1, 2013, through December 31, 2016, and the total County tax to 8 %. Additional future increases, if any, in the State sales tax or the sales tax levied in the County could have an adverse effect on consumer spending decisions and consumption, resulting in a reduction of Measure A Revenues. 27