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2006 Series A RDA Bonds$14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A TRANSCRIPT OF PROCEEDINGS A. AUTHORIZING DOCUMENTS 1. Resolution No. 2006-02, entitled "Resolution of the Rosemead Community Development Commission Authorizing the Issuance of Not to Exceed $16,000,000 of the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A and the Execution and Delivery of a First Supplement to Indenture, a Bond Purchase Agreement, a Continuing Disclosure Agreement and an Official Statement, and Approving the a Preliminary Official Statement in Connection Therewith and Authorizing Related Actions" adopted on February 14, 2006, certified by the Secretary of the Commission as of the closing date. (Bond Counsel) 2. Resolution No. 2006-04, entitled "Resolution of the City Council of the City of Rosemead Approving the Issuance and Sale of Not to Exceed $16,000,000 Aggregate Principal Amount of Rosemead Community Development Commission Redevelopment Area Project No. 1, Tax Allocation Bonds, Series 2006A" adopted on February 14, 2006, certified by the Clerk of the City as of the closing date. (Bond Counsel) 3. Resolution No. 2006-01, entitled "Resolution of the Rosemead Financing Authority Authorizing the Execution and Delivery of a Purchase Contract by and among the Rosemead Community Development Commission, the Rosemead Financing Authority and the Underwriter Named Therein and Action Related Thereto" adopted on February 14, 2006, certified by the Secretary of the Authority, as of the closing date. (Bond Counsel) 4. Resolution No. 2006-03, entitled "Resolution of the Rosemead Community Development Commission (the "Commission") Authorizing the Execution and Delivery of a Joint Exercise of Powers Agreement with the City of Rosemead" adopted on February 14, 2006, certified by the Secretary of the Commission as of the closing date. (Bond Counsel) 5. Resolution No. 2006-05, entitled "Resolution of the City Council of the City of Rosemead (the "City") Authorizing the Execution and Delivery of a Joint Exercise of Powers Agreement With the Rosemead Community Development DOCSLA1:518644.1 41555-8 Commission" adopted on February 14, 2006, certified by the Clerk of the City as of the closing date. (Bond Counsel) 6. Joint Exercise of Powers Agreement, certified by the Secretary of the Authority. (Bond Counsel) B.. BASIC LEGAL DOCUMENTS 7. Original Indenture, dated as of October 1, 1993, by and between the Commission (or its predecessor) and U.S. Bank National Association (or its predecessor), as Trustee (the "Trustee"), certified by the Secretary of the Commission as of the closing date. (Bond Counsel) 8. First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as Trustee (the "Trustee"). (Bond Counsel) 9. Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the -Commission, the Trustee and U.S. Bank National Association, as dissemination agent. (Disclosure Counsel) 10. Tax Certificate, dated March 9, 2006, executed by the Commission. (Bond Counsel) C. DOCUMENTS RELATING TO THE SALE OF THE BONDS 11. Acknowledgement of Receipt of Report of Proposed Debt Issuance from California Debt and Investment Advisory Commission ("CDIAC"), together with Report. (Bond Counsel) 12. Preliminary Official Statement, dated February 15, 2006. (Disclosure Counsel) 13. Certificate Regarding Preliminary Official Statement, pursuant to Rule 15c2-12 of the Securities and Exchange Commission. (Disclosure Counsel) 14. Purchase Contact, dated February 23, 2006 by and among the Commission, the Authority and the Piper Jaffray & Co. (the "Underwriter"). (Disclosure Counsel) 15. Official Statement, dated February 23, 2006. (Disclosure Counsel) 16. Certificate of Mailing Report of Final Sale to CDIAC, together with Report. (Bond Counsel) D. DOCUMENTS RELATING TO DEFEASANCE OF THE SERIES 1993 BONDS 17. Escrow Agreement, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as escrow agent (the "Escrow Bank"). (Bond Counsel) DOCSLA1:518644.1 41555-8 2 18. Verification Report, dated as of March 9, 2006 (Verification Agent), together with copy of the confirmation showing purchase of escrow securities. (Escrow Agent) E. CLOSING DOCUMENTS RELATING TO THE AUTHORITY 19. Initial Notice as to Joint Powers Agreement, stamped to reflect the filing with the California Secretary of State. (Bond Counsel) 20. Statement of Facts Roster of Public agencies Filing, stamped to reflect the filing with the California Secretary of State and the County of Los Angeles. (Bond Counsel) 21. Incumbency and Signature Certificate of the Authority. (Bond Counsel) 22. Certificate of the Authority. (Bond Counsel) F. CLOSING DOCUMENTS RELATING TO THE COMMISSION 23. Incumbency and Signature Certificate of the Commission. (Bond Counsel) 24. Certificate of the Commission. (Bond Counsel) 25. Written Request and Requisition No. 1 of the Commission to the Trustee. (Bond Counsel) 26. Certificate of Mailing of Subordination Notices. (Bond Counsel) 27. Certificate of Fiscal Consultant and Financial Advisor. (Bond Counsel) 28. Certificate of Mailing Information Return for Tax-Exempt Governmental Obligations (Form 8038-G), to the Internal Revenue Service, together with Form 8038-G. (Bond Counsel) 29. Copy of DTC Blanket Issuer Letter of Representations. (Bond Counsel) G. CLOSING DOCUMENTS RELATING TO THE TRUSTEE 30. Certificate of the Trustee, together with excerpts from the Bylaws and Incumbency Certificate. (Bond CounseUTrustee) 31. Receipt for Purchase Price. (Bond Counsel) 32. Specimen Bonds. (Bond Counsel) H. CLOSING DOCUMENTS RELATING TO THE UNDERWRITER 33. Receipt and Certificate of Underwriter. (Bond Counsel) DOCSLA1:518644.1 41555-8 3 I. CLOSING DOCUMENTS RELATING TO THE INSURER 34. Commitment of Ambac Assurance Corporation for Municipal Bond Insurance. (Ambac) 35. Commitment of Ambac Assurance Corporation for Debt Service Reserve Surety Bond. (Ambac) 36. Rating Letters of Standard & Poor's Ratings Services. (Ambac) 37. Specimen Insurance Policy. (Ambac) 38. Guaranty Agreement, dated as of March 9, 2006, by and between the Commission and Ambac Assurance Corporation. (Ambac) 39. Specimen Surety Bond. (Ambac) J. LEGAL OPINIONS 40. Final Opinion of Orrick, Herrington & Sutcliffe LLP, as Bond Counsel. 41. Disclosure Counsel Opinions of Orrick, Herrington & Sutcliffe LLP. 42. Defeasance Opinion of Orrick, Herrington & Sutcliffe LLP. 43. Opinion of Wallin, Kress, Reisman & Kranitz LLP, as Counsel to the Commission. 44. Opinion of Trustee's Counsel. 45. Opinion of Insurer's Counsel. 46. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Trustee. 47. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Underwriter. 48. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Insurer. K. MISCELLANEOUS 49. Closing Memorandum. 50. Interested Parties List. DOCSLA1:518644.1 41555-8 4 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF SECRETARY OF THE COMMISSION REGARDING RESOLUTION NO. 2006-02 I, Nina Castruita, hereby certify that I am the Secretary of the Rosemead Community Development Commission (the "Commission"), a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the Commission. I hereby certify that the attached resolution is the full, true and correct copy of Resolution No. 2006-02, adopted at a regular meeting of the members of the Commission held on February 14, 2006, of which meeting all of the members of the Commission had due notice and at which a quorum was present and acting throughout. I hereby further certify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the meeting of the Commission on file and of record in my office and that it is a full, true and correct copy of said resolution; and that said resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: ~jj~c, dLkluda _ Nina Castruita, Secretary RESOLUTION NO. 2006-02 RESOLUTION OF THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $16,000,000 OF THE COMMISSION'S REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION BONDS, SERIES 2006A AND THE EXECUTION AND DELIVERY OF A FIRST SUPPLEMENT TO INDENTURE, A PURCHASE CONTRACT, A CONTINUING DISCLOSURE AGREEMENT AND AN OFFICIAL STATEMENT, AND APPROVING A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION THEREWITH AND AUTHORIZING RELATED ACTIONS WHEREAS, the Rosemead Community Development Commission (the "Commission") is a redevelopment agency, a public body, corporate and politic, duly created, established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law of the State of California (the "Law"), including the power to issue bonds for any of its corporate purposes; WHEREAS, a plan for a redevelopment project known and designated as "Redevelopment Project No. 1" (the "Project"), has been adopted and approved in accordance with the Law; WHEREAS, the plan contemplates that the Commission will issue its bonds to finance and/or refinance a portion of the cost of such Project; WHEREAS, the Commission has heretofore authorized and issued its Redevelopment Project No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds"), pursuant to an Indenture, dated as of October 1, 1993 (the "Original Indenture"), between the Conunissioiz, as successor to the Rosemead Redevelopment Agency, and U. S. Bank National Association, as successor trustee (the "Trustee"), for the purpose of financing and/or refinancing portions of the Project; WHEREAS, the Commission intends to provide for the issuance of its Rosemead Cornnunity Development Commission Redevelopment Project No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"), pursuant to the Original Indenture and a First Supplement to Indenture (the "First Supplemental Indenture"), between the Commission and the Trustee, for the purpose of financing and/or refinancing portions of the Project, including the refunding of a portion of the Series 1993A Bonds, and to pay costs of issuance relating to the Series 2006A Bonds; WHEREAS, the Commission proposes to sell the Series 2006A Bonds to the Rosemead Financing Authority (the "Authority"), which will in turn sell the Series 2006A Bonds to Piper Jaffray, as underwriter (the "Underwriter"), pursuant to a Purchase Contract (the "Purchase Contract"), among the Commission, the Underwriter and the Authority and pursuant to the DOCSLAI :5093882 1 41555-8 lvlarks-Roos Local Bond Pooling Act of 197 05, commencing itl1 Section 658-1 of the California Government Code; WHEREAS, the purchase by the Underwriter of the Series 2006A Bonds will result in significant public benefits in the form of demonstrable savings in effective interest rates, and the more efficient delivery of local agency services; WHEREAS, a fonTr of the Preliminary Official Statement (the "Preliminary Official Statement") to be distributed in connection with the public offering of the Series 2006A Bonds has been prepared; WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12") requires that, in order to be able to purchase or sell the Series 2006A Bonds, the Underwriter must have reasonably determined that the Commission has undertaken in a written agreement or contract for the benefit of the holders of the Series 2006A Bonds to provide disclosure of certain financial information and certain material events on an ongoing basis; WHEREAS, in order to cause such requirement to be satisfied, the Commission desires to execute and deliver a Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"); and WHEREAS, the Commission has been presented with the form of each document referred to herein relating to the financing contemplated hereby, and the Conunission has examined and approved each document and desires to authorize and direct the execution of such documents and the consummation of such financing; NOW, THEREFORE, BE IT RESOLVED BY THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, AS FOLLOWS: Section 1. The foregoing recitals are true and correct and the Commission hereby so finds and determines. Section 2. The issuance of not to exceed $16,000,000 aggregate principal amount of Rosemead Community Development Commission, Redevelopment Project No. 1, Tax Allocation Bonds, Series 2006A is hereby approved. Section 3. The form of the First Supplemental Indenture, on file with the Secretary of the Commission and incorporated into this Resolution by reference, is hereby approved. The Chair of the Commission, the Vice-Chair of the Commission, the Executive Director of the Commission, the Finance Officer of the Conunission, the Director of Community Development of the Commission, the Secretary of the Commission, or such other officer or employee of the Commission as the Executive Director may designate (the "Authorized Officers"), are each hereby authorized and directed, for and in the naive and on behalf of the Commission, to execute and deliver the First Supplemental Indenture in substantially the form on file with the Secretary and presented to this meeting, with such additions thereto or changes or insertions that hereafter become necessary in the interest of the Commission and which are approved by the Authorized Officer executing the same, in consultation with the Commission's bond counsel, such approval to be conclusively evidenced by such execution and delivery. DOCSLA 1:509388.2 2 41555-8 Section 4. The form of Purchase Contract relating to the Series '_'006. Bonds among the Authority, the Underwriter and the Commission, on file with the Secretary of the Conunission and incorporated into this Resolution by reference, is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the naive and on behalf of the Commission, to accept the offer to purchase the Series 2006A Bonds as reflected in the Purchase Contract and to execute and deliver the Purchase Contract in substantially the form on file with the Secretary and presented,to this meeting, with such additions thereto or changes or insertions that hereafter become necessary in the interest of the Commission and which are approved by the Authorized Officer executing the same, in consultation with the Commission's bond counsel, such approval to be conclusively evidenced by the execution and delivery of the Purchase Contract; provided, however, that such additions, changes or insertions in the-Purchase Contract shall not specify a true interest cost of the Series 2006A Bonds in excess of 5.40% with respect to Series 2006A Bonds. Section 5. The form of Continuing Disclosure Agreement relating to the Series 2006A Bonds, on file with the Secretary of the Commission and incorporated into this Resolution by reference (the "Continuing Disclosure Agreement"), is hereby approved. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Conunission, to execute and deliver the Continuing Disclosure Agreement in substantially the form on file with the Secretary of the Conunission, with such additions thereto or changes or insertions that hereafter become necessary in the interest of the Commission and which are approved by the Authorized Officer executing the same, in consultation with the Commission's bond counsel, such approval to be conclusively evidenced by the execution and delivery of the Continuing Disclosure Agreement. Section 6. The form of Preliminary Official Statement relating to the Series 2006A Bonds, on file with the Secretary of the Commission and incorporated into this resolution by reference, is hereby approved. The Authorized Officers are each hereby authorized and directed to execute a certificate deeming the Prelirninaiy Official Statement final as of its date, except for certain final pricing and related information, pursuant to Securities Exchange Commission Rule 15c2-12. The Underwriter is hereby authorized to distribute the Preliminary Official Statement as so deemed final to prospective purchasers of the Series 2006A Bonds. The Authorized Officers are each hereby authorized and directed, for and in the name and on behalf of the Commission, to execute a final Official Statement (the "Official Statement") in substantially the form of such deemed final Preliminary Official Statement, including such final pricing and related information and with such additions thereto or changes therein as hereafter become necessary in the interest of the Connnission and which are approved by the Authorized Officer executing the same, such approval to be conclusively evidenced by the execution and delivery of such Official Statement. The Undel-writer is hereby authorized to distribute copies of said final Official Statement to all actual purchasers of the Series 2006A Bonds. Section 7. The Chair, Vice-Chair, Executive Director, General Counsel, Treasurer, Secretary and all other officers, agents and employees of the Commission are hereby authorized and directed, in the name and on behalf of the Commission, to take such actions, execute and deliver such documents and certificates, including an escrow agreement with respect to the refunding of a portion of the Series 1993A Bonds, a tax certificate and certificates relating to the Official Statement, and do any and all things which they, or any of them, deem necessary or DOCSLA I :5093SS.2 j 41555-5 desirable to accomplish the lawful issuance, sale and deliver}, of the Series 2006A Bonds in accordance with the Original Indenture, the First Supplemental Indenture, the Official Statement, this Resolution and all related documents. Section 8. This Resolution shall become effective inunediately upon its passage. I, Nina Castruita, Secretary pf the Rosemead Community Development Commission, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of said Conunission held on February 14, 2006, by the following vote, to wit: AYES: NOES: ABSENT: ATTEST: ~ M- e-, U V City Clerk Cam. a ca ~ ~ Secretary of the Rosemead Comm v Development Coirunission ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION 1z~l.e By: '~4e j~J 4uuth4oorried Officer DOCSLA1:509388.2 4 4]555-5 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD ) I, Nina Castruita, Secretary of the Rosemead Community Development Commission, do hereby certify that the foregoing Resolution No. 2006-02 being: RESOLUTION OF THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $16,000,000 OF THE COMMISSION'S REDEVELOP PROJECT NO. 1 TAX ALLOCATION BONDS, SERIES 2006a AND THE EXECUTION AND DELIVERY OF A FIRST SUPPLEMENT TO INDENTURE, A PURCHASE CONTRACT, A CONTINUING DISCLOSURE AGREEMENT AND AN OFFICIAL STATEMENT, AND APPROVING A PRELIMINARY OFFICIAL STATEMENT IN CONNECTION THEREWITH AND AUTHORIZING RELATED ACTIONS was duly and regularly approved and adopted by the Rosemead Community Development Commission on the 14th of February 2006, by the following vote to wit: Yes: CLARK, IMPERIAL, NUNEZ, TAYLOR, TRAN No: NONE Absent: NONE Abstain: NONE kl~ci a&la~ Nina Castruita Secretary $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF CITY CLERK REGARDING RESOLUTION NO. 2006-04 I, Nina Castruita, hereby certify that I am the City Clerk of the City of Rosemead (the "City'), a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the City. I hereby certify that the attached resolution is the full, true and correct copy of Resolution No. 2006-04, adopted at a regular meeting of the members of the City Council of the City (the "City Council') held on February 14, 2006, of which meeting all of the members of the City Council had due notice and at which a quorum was present and acting throughout. I hereby further certify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the meeting of the City Council on file and of record in my office and that it is a full, true and correct copy of said resolution; and that said resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect. Dated: March 9, 2006 CITY OF ROSEMEAD By: (I ~1 Nina Castruita, City Clerk RESOLUTION NO. 2006-04 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD APPROVING THE ISSUANCE AND SALE OF NOT TO EXCEED $16,000,000 AGGREGATE, PRINCIPAL AMOUNT OF ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT NO. 1, TAX ALLOCATION BONDS, SERIES 2006A WHEREAS, the Rosemead Community Development Commission (the "Commission"), has authorized the issuance and sale of not to exceed $16,000,000 aggregate principal amount of its Redevelopment Project No. 1, Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"), for the purpose of providing f ands to aid in financing and/or refinancing redevelopment activities in connection with the Conunission's Redevelopment Project No. 1, including the refunding of certain outstanding bonds, pursuant to an Indenture, by and between the Conunission and U.S. Bank National Association (the "Trustee"), as successor trustee, as amended and supplemented by a First Supplement to Indenture, between the Commission and the Trustee (collectively, the "Indenture"); WHEREAS, the Commission proposes to sell the Series 2006A Bonds to the. Rosemead Financing Authority (the "Authority"), vtThich will in turn sell the Series 2006A Bonds to Piper Jaffray, as underwriter (the "Underwriter"), pursuant to a Purchase Contract (the "Purchase Contract"), among the Conunission, the Underwriter. and the Authority and pursuant to the Marks-Roos. Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Goverunent Code; and WHEREAS, the City hereby finds that the use of the Act to assist the Commission in financing and/or refinancing the Redevelopment Project will -result in significant public benefits in the form of demonstrable savings in effective interest rates, and the more efficient delivery of local agency services; NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Rosemead, as follows: Section 1. The foregoing recitals are true and correct and the City Council hereby so finds and determines. Section 2. The issuance and sale of not to exceed $16,000,000 aggregate principal amount of the Series 2006A Bonds by the Commission, in accordance with the terms and conditions set forth in the Indenture, is hereby approved. DOCSLA I :i0939S.' 41 5j5-9 Section 3. This resolution shall take effect from and after its adoption and approval. I, Nina Castluita, Clerk of 'the City of Rosemead, hereby certify, that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of they City Council of the City of Rosemead held 6 February 14, 2006, by the following vote, to wit: AYES: NOES: ABSENT: tt4aj r ( c City Clerk of the City of Rosemead CITY OF ROSEMEAD. By: Mayor ATTEST: City Clerk DOCSLA1:509398.2 41555-5 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD. I, Nina Castruita, City Clerk of the City of Rosemead, do hereby certify that the foregoing Resolution No. 2006-04 being: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD APPROVING THE ISSUANCE AND SALE OF THE NOT TO EXCEED $16,000,000 AGGREGATE, PRINCIPAL AMOUNT OF ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION AND REDEVELOPMENT PROJECT NO. 1, TAX ALLOCATION BONDS, SERIES 2006A was duly and regularly approved and adopted by the Rosemead City Council on the 14th of February 2006, by the following vote to wit: Yes: CLARK, IMPERIAL, NUNEZ, TAYLOR, TRAN No: NONE Absent: NONE Abstain: NONE Nina Castruita City Clerk $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF SECRETARY OF THE AUTHORITY REGARDING RESOLUTION NO. 2006-01 I, Nina Castruita, hereby certify that I am the Secretary of the Rosemead Financing Authority (the "Authority"), a joint exercise of powers authority, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the Authority. I hereby certify that the attached resolution is the full, true and correct copy of Resolution No. 2006-01, adopted at a regular meeting of the Board of Directors of the Authority (the "Board") held on February 14, 2006, of which meeting all of the members of the Board had due notice and at which a quorum was present and acting throughout. I hereby further certify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the meeting of the Board on file and of record in my office and that it is a full, true and correct copy of said resolution; and that said resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect. Dated: March 9, 2006 ROSEMEAD FINANCING AUTHORITY By: ILQ QCQ~ta Nina Castruita, Secretary RESOLUTION NO. 2006-01 A RESOLUTION OF THE ROSEMEAD FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE CONTRACT BY AND AMONG THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, THE ROSEMEAD FINANCING AUTHORITY AND THE UNDERWRITER NAMED THEREIN AND ACTION RELATED THERETO WHEREAS, the Rosemead Community Development Commission (the "Commission") has determined to issue its Rosemead Community Development Commission, Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A, in the aggregate principal amount of not to exceed $16,000,000 (the "Bonds"); WHEREAS, the Rosemead Financing Authority (the "Authority"), pursuant to the Marks-Roos Local Bond Pooling Act of 1985 (Article 4, Chapter 5, Division 7, Title 1 of the California Govermnent Code) has the authority to purchase and resell the Bonds; and NOW, THEREFORE, BE IT RESOLVED by the Governing Board of the Rosemead Financing Authority, as follows: Section 1. Execution of Purchase Contract. The Chairman, Vice-Chairman, Treasurer, the Executive Director and Secretary of the Authority (each an "Authorized Officer") are each authorized acting alone to execute and deliver the Purchase Contract (the "Purchase Contract"), by and among the Authority, the Commmission and Piper Jaffray & Co., as underwriter, in substantially the form presented to this meeting and on file with the Secretary of the Authority. Section 2. Other Actions. The Authorized Officers are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds as contemplated in the Purchase Contract, and any such actions previously taken by the aforementioned officers are hereby ratified, confirmed and approved in all respects. DOCSI, 1:509388.? 41555-5 Section 3. Effective Date. This resolution shall take effect from and after its adoption. I, Nina Castruita, Secretary of the Rosemead Financing Authority, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of said Commission held on February 14, 2006, by the following vote, to wit: AYES: NOES: ABSENT: cdA. ~JU Y I+CtX UI 1 ! Secretary of the Rosemead Financing v Authority ATTEST: ~zL- ~n~745, City Clerk DOCSLA1:509388.2 41555-8 ROSEMEAD FINANCING AUTHORITY By. 7~ Z", Mayor 2 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD 1 I, Nina Castruita, Secretary of the Rosemead Financing Authority, do hereby certify that the foregoing Resolution No. 2006-01 being: A RESOLUTION OF THE ROSEMEAD FINANCING AUTHORITY AUTHORIZING THE EXECUTION AND DELIVERY OF A PURCHASE DEVELOPMENT COMMISSION, THE ROSEMEAD FINANCING AUTHORITY AND THE UNDERWRITER NAMED THEREIN AND ACTION RELATED THERETO was duly and regularly approved and adopted by the Rosemead Financing Authority on the 14th of February 2006, by the following vote to wit: Yes: CLARK, IMPERIAL, NUNEZ, TAYLOR, TRAN No: NONE Absent: NONE Abstain: NONE Cti. Nina Castruita Secretary $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS . SERIES 2006A CERTIFICATE OF SECRETARY OF THE COMMISSION REGARDING RESOLUTION NO. 2006-03 I, Nina Castruita, hereby certify that I am the Secretary of the Rosemead Community Development Commission (the "Commission"), a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the Commission. I hereby certify that the attached resolution is the full, true and correct copy of Resolution No. 2006-03, adopted at a regular meeting of the members of the Commission held on February 14, 2006, of which meeting all of the members of the Commission had due notice and at which a quorum was present and acting throughout. I hereby further certify that I have carefully compared the same with the original resolution as so,adopted at said meeting and entered in the minutes of the meeting of the Commission on file and of record in my office and that it is a full, true and correct copy of said resolution; and that said resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By:, - Nina Castruita, Secretary RESOLUTION NO. 2006-03 RESOLUTION OF THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT WITH THE CITY OF ROSEMEAD WHEREAS, agencies formed under the Joint Exercise of Powers Act, Section 6500 et seq. of the California Government Code (the "Joint Powers Act"), are permitted to provide financing for any of their members or other local public agencies in the State of California in connection with the acquisition, construction and improvement of public capital improvements or working capital requirements of such members or other local agencies; and WHEREAS, the City of Rosemead and the Rosemead Community Development Commission (the "Commission") desire to form an Authority under the Joint Powers Act, to be known as the Rosemead Financing Authority, for the purpose of providing an entity which can assist in providing financing for purposes which are authorized under the Joint Powers Act; and WHEREAS, there has been prepared and submitted to this meeting a form of Joint Exercise of Powers Agreement (such Joint Exercise of Powers 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 "Joint Powers Agreement"); NOW, THEREFORE, BE IT RESOLVED, by the members of the Rosemead Community Development Commission, as follows: finds. Section 1. All of the recitals herein contained are true and correct and the Commission so Section 2. The form of the Joint Powers Agreement, on file with the Secretary of the Commission, is hereby approved, and the Chairman, the Executive Director and the Finance Director of the Commission, and such other officers of the Commission as said Chairman, Executive Director or Finance Director may designate (the "Authorized Officers"), are each hereby authorized and directed, for and in the name and on behalf of the Commission, to execute and deliver the Joint Powers 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. Section 3. The officers and employees of the Commission are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. Section 4. All actions heretofore taken by the officers, employees and agents of the Commission with respect to the transactions set forth above are hereby approved, confirmed and ratified. DOCSLA1:509457.2 41555-8 Section 5. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the members of the Rosemead Community Development Commission at a meeting of said Commission on February 14, 2006, by the following vote of said members: Ayes: Noes: Absent: Abstain: ATTEST: jl~#-h (~14U City Clerk C.Q. ~r as3 p Secretary of the Rosemead Commumty Development Commission ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Chairpers n DOCSLA1:509457.2 41555-8 2 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD ) I, Nina Castruita, Secretary of the Rosemead Community Development Commission, do hereby certify that the foregoing Resolution No. 2006-03 being: RESOLUTION OF THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT WITH THE CITY OF ROSEMEAD was duly and regularly approved and adopted by the Rosemead Community Development Commission on the 14th of February 2006, by the following vote to wit: Yes: CLARK, IMPERIAL, NUNEZ, TAYLOR, TRAN No: NONE Absent: NONE Abstain: NONE 14 M-a Nina Castruita Secretary $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF CITY CLERK REGARDING RESOLUTION NO. 2006-05 I, Nina Castruita, hereby certify that I am the City Clerk of the City of Rosemead (the "City"), a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the City. I hereby certify that the attached resolution is the full, true and correct copy of Resolution No. 2006-05, adopted at a regular meeting of the members of the City Council of the City (the "City Council") held on February 14, 2006, of which meeting all of the members of the City Council had due notice and at which a quorum was present and acting throughout. I hereby further certify that I have carefully compared the same with the original resolution as so adopted at said meeting and entered in the minutes of the meeting of the City Council on file and of record in my office and that it is a full, true and correct copy of said resolution; and that said resolution has not been amended, modified or rescinded since the date of adoption and is now in full force and effect. Dated: March 9, 2006 CITY OF ROSEMEAD By: ~&a A11A nuJ~- Nina Castruita, City Clerk RESOLUTION NO. 2006-05 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT WITH THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION WHEREAS, agencies formed under the Joint. Exercise of Powers Act, Section 6500 et seq. of the Califoniia Govermnent Code (the "Joint Powers Act"), are permitted to provide financing for any of their members or other local public agencies in the State of California in connection with the acquisition, construction and improvement of public capital improvements or working capital requirements of such members or other local agencies; and WHEREAS, the City of Rosemead (the "City") and the Rosemead Community Development Commission desire to form an Authority under the Joint Powers Act, to be known as the Rosemead Financing Authority, for the purpose of providing an entity which can assist in providing financing for purposes which are authorized under the Joint Powers Act; and WHEREAS, there has been prepared and submitted to this meeting a form of Joint Exercise of Powers Agreement (such Joint Exercise of Powers 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 "Joint Powers Agreement'); NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Rosemead, as follows: Section 1. All of the recitals herein contained are true and correct and the City Council so finds. Section 2. The form of the Joint Powers Agreement, on file with the City Clerk, is hereby approved, and the Mayor, the City Manager and the Finance Director, and any such other officer of the City as such Mayor, City Manager or Finance Director may designate (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 Joint Powers 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. Section 3. The officers and employees of the City are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable in order to consummate the transactions herein authorized and otherwise to carry out, give effect to and comply with the terms and intent of this Resolution. Section 4. 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. DOCSLA 1:~09432.2 41555-8 Section 5. This Resolution shall take effect immediately upon its adoption. I, Nina Castruita, Clerk of the City of Rosemead, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the Council of the City of Rosemead held on February 14, 2006, by the following vote, to wit: AYES: NOES: ABSENT: C ,aL4 City Clerk of the City of Rosemead CITY OF ROSEMEAD By: , Mayor ATTEST: A,& ' It,- City Clerk DOCSLA ] :509437.2 41555-5 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) SS. CITY OF ROSEMEAD ) I, Nina Castruita, City Clerk of the City of Rosemead, do hereby certify that the foregoing Resolution No. 2006-05 being: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT WITH THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION was duly and regularly approved and adopted by the Rosemead City Council on the 14th of February 2006, by the following vote to wit: Yes: CLARK, IMPERIAL, NUNEZ, TAYLOR, TRAN No: NONE Absent: NONE Abstain: NONE Nina Castruita City Clerk $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE REGARDING EFFECTIVENESS OF EXERCISE OF JOINT POWERS AGREEMENT The undersigned hereby states and certifies: (a) that the undersigned is the duly appointed, qualified and acting Secretary of the Rosemead Financing Authority, a joint exercise of powers entity organized and existing under the laws of the State of California (the "Authority") and operating pursuant to Articles 1 through 4 (commencing with section 6500) of Chapter 5, Division 7, Title 1 of the California Government Code (the "Act"), and pursuant to a Joint Exercise of Powers Agreement, dated as of February 1, 2006 (the "Joint Powers Agreement"), by and between the City of Rosemead and the Rosemead Community Development Commission, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that attached hereto is a true, correct and complete copy of the Joint Powers Agreement, which Joint Powers Agreement has not been amended, modified, or supplemented, from the form attached hereto, has not been terminated, and is in full force and effect as of the date hereof, and (c) that, to the best of my knowledge, all filings with respect to the Joint Powers Agreement required to be made by the Authority under the Act on or prior to the date hereof have been made with the Secretary of State of the State of California. Dated: March 9, 2006 ROSEMEAD FINANCING AUTHORITY By: GL 5. - Nina Castruita, Secretary JOINT EXERCISE OF POWERS AGREEMENT by and between CITY OF ROSEMEAD and ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Dated as of February 1, 2006 DOCSLA1:509439.2 41555-8 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1 Section 1.01 Definitions 1 ARTICLE II GENERAL PROVISIONS 2 Section 2.01 Purpose 2 Section 2.02 Creation of Authority 3 ARTICLE III BOARD OF DIRECTORS 3 Section 3.01 Board of Directors 3 Section 3.02 Powers 3 Section 3.03 Compensation 3 Section 3.04 Meetings of the Board of Directors 3 ARTICLE IV OFFICERS, EMPLOYEES AND AGENTS 4 Section 4.01 Officers 4 Section 4.02 Designation of Officers 4 Section 4.03 Subordinate Officers 5 Section 4.04 Executive Director 5 Section 4.05 Treasurer 5 Section 4.06 Secretary 5 Section 4.07 Authority Counsel 5 Section 4.08 Assistant Officers 5 Section 4.09 Employees, Agents and Independent Contractors 6 Section 4.10 Privileges and Immunities; No Employment by City or Commission 6 ARTICLE V POWERS 6 Section 5.01 General Powers 6 Section 5.02 Power to Issue Revenue Bonds 6 Section 5.03 Specific Powers 6 Section 5.04 Manner of Exercising Powers 8 Section 5.05 Non-Liability For Obligations of Authority 8 Section 5.06 Indemnity by Authority for Litigation Expenses of Officer, Director or Employee 8 Section 5.07 Execution of Contracts 8 DOCSLA1:509439.2 _i_ 41555-8 TABLE OF CONTENTS (continued) Page Section 5.08 Fiscal Year 8 ARTICLE VI CONTRIBUTION; ACCOUNTS AND REPORTS; FUNDS 9 Section 6.01 Contributions 9 Section 6.02 Accounts and Reports 9 Section 6.03 Funds 9 ARTICLE VII TERM; DISSOLUTION 10 Section 7.01 Term 10 Section 7.02 Termination 10 ARTICLE VIII MIS CELLANEOUS PROVISIONS 10 Section 8.01 Notices 10 Section 8.02 Section Headings 10 Section 8.03 Law Governing 10 Section 8.04 Amendments 10 Section 8.05 Enforcement by Authority 11 Section 8.06 Counterparts 11 Section 8.07 Successors 11 DOCSLAI :509439.2 -11- 41555-8 JOINT EXERCISE OF POWERS AGREEMENT THIS JOINT EXERCISE OF POWERS AGREEMENT (this "Agreement"), dated as of February 1, 2006, is by and between the CITY OF ROSEMEAD, a municipal corporation organized and existing under and by virtue of the Constitution and laws of the State of California (the "City"), and the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic organized and existing under and by virtue of the laws of the State of California (the "Commission"). WITNESSETH: WHEREAS, agencies formed under the Joint Exercise of Powers Act, Section 6500 et seq. of the California Government Code (the "Joint Powers Act"), are permitted to provide financing for any of their members or other local public agencies in the State of California in connection with the acquisition, construction and improvement of public capital improvements or working capital requirements of such members or other local agencies; and WHEREAS, the City and the Commission desire to form an Authority under the Joint Powers Act, to be known as the Rosemead Financing Authority, for the purpose of providing an entity which can assist in providing financing for purposes which are authorized under the Joint Powers Act; NOW, THEREFORE, in consideration of the above premises and of the mutual promises herein contained, the City and the Commission do hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless the context otherwise requires, the words and terms defined in this Article shall, for the purposes hereof, have the meanings herein specified. "Agreement" means this Joint Exercise of Powers Agreement, as originally executed and as it may from time to time be amended in accordance with the provisions hereof. "Authority" means the Rosemead Financing Authority, a joint exercise of powers agency organized and existing under and by virtue of the laws of the State of California, established pursuant to Section 2.02 hereof. "Board of Directors" means the Board of Directors of the Authority. "Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985 (Article 4 of the Joint Powers Act), as now in effect or hereafter amended, Article 2 of the Joint Powers Act, as now in effect or hereafter amended, or any other law available for use by the Authority in the authorization and issuance of bonds to provide for the financing of Obligations and/or Public Capital Improvements. DOCSLAI :509439.2 41555-8 "Bond Purchase Agreement" means an agreement between the Authority and a Local Agency, pursuant to which the Authority agrees to purchase Obligations from a Local Agency. "City" means the City of Rosemead, a municipal corporation organized and existing under and by virtue of the Constitution and laws of the State of California. "Commission" means the Rosemead Community Development Commission, a public. body, corporate and politic organized and existing under and by virtue of the laws of the State of California.` "Fiscal Year" means the period from July 1 in any calendar year to and including June 30 in the succeeding calendar year. "Joint Powers Act" means the Joint Exercise of Powers Act, Section 6500 et seq. of the California Government Code. "Local Agency" means the City, the Commission or any other city, county, city and county, authority, district or public corporation of the State of California. "Obligations" has the meaning ascribed to the term "Bonds" in Section 6585(c) of the Joint Powers Act. "Public Capital Improvements" has the meaning ascribed to such term in Section 6585(g) of the Joint Powers Act. "Revenue Bonds" means bonds, commercial paper, floating rate and variable maturity securities, and any other evidences of indebtedness of the Authority and also includes certificates of participation and lease purchase agreements. "Working Capital Requirements" means the requirements of any Local Agency for funds to be used by, or on behalf of, such Local Agency for any purpose for which such Local Agency may borrow money pursuant to Section 53852 of the California Government Code. ARTICLE II GENERAL PROVISIONS Section 2.01 Purpose. This Agreement is made pursuant to the Joint Powers Act providing for the joint exercise of powers common to the City and the Commission, and for other purposes as permitted under the Joint Powers Act and the Bond Law. The purpose of this Agreement is to provide for the financing or refinancing of Public Capital Improvements for, and Working Capital Requirements of, any Local Agency through the acquisition by the Authority of such Public Capital Improvements, the purchase by the Authority of Obligations of any Local Agency pursuant to Bond Purchase Agreements, the lending of funds by the Authority to a Local Agency or the entering into of contractual arrangements by the Authority with a Local Agency. Section 2.02 Creation of Authority. Pursuant to the Joint Powers Act, there is hereby created a public entity to be known as the "Rosemead Financing Authority". The Authority shall DOCSLA1:509439.2 41555-8 2 be a public entity separate and apart from the City and Commission, and shall administer this Agreement. ARTICLE III BOARD OF DIRECTORS Section 3.01 Board of Directors. The Authority shall be administered by the Board of Directors, which shall be comprised of five members, unless and until changed by amendment of this Agreement. Each member of the City Council shall be a member of the Board of Directors. The Board of Directors shall always consist of the persons then serving as members of the City Council, and each person who, currently or in the future, serves as a member of the City Council shall serve, during the period in which he or she serves in such capacity, as a member of the Board of Directors. Each member shall assume membership on the Board of Directors upon his or her becoming a member of the City Council, without any further act by any person, body or entity. Each member shall hold membership on the Board of Directors until the expiration of his or her term as a member of the City Council, or until he or she resigns, is removed or for any other reason no longer serves as a member of the City Council, without any further act by any person, body or entity. The Mayor of the City shall be Chairperson of the Board of Directors and such Chairperson shall preside at all meetings of the Board of Directors. The Mayor Pro Tempore of the City shall be the Vice Chairperson of the Board of Directors and such Vice Chairperson shall preside at meetings of the Board of Directors during the absence or disability of the Chairperson. Section 3.02 Powers. Subject to the limitations of this Agreement and the laws of the State of California, the powers of the Authority shall be vested in and exercised by and its property controlled and its affairs conducted by the Board of Directors of the Authority. Section 3.03 Compensation. Members of the Board of Directors shall serve without compensation. Section 3.04 Meetings of the Board of Directors. (a) Call, Notice and Conduct of Meetings. All meetings of the Board of Directors, including without limitation, regular, adjourned regular and special meetings, shall be called, noticed, held and conducted in accordance with the provisions of the Ralph M. Brown Act, Section 54950 et seq. of the California Government Code. (b) Regular Meetings. Regular meetings of the Board of Directors shall be held at such time as the Board of Directors may fix by resolution from time to time, and if any day so fixed shall fall upon a legal holiday then, upon the next succeeding business day at the same hour. No notice of any regular meeting of the Board of Directors need be given to the members of the Board of Directors. DOCSLA1:509439.2 41555-8 3 (c) Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the Chairperson of the Board of Directors, the Executive Director of the Authority or by a majority of the members of the Board of Directors. (d) Quorum. A majority of the members of the Board of Directors shall constitute a quorum at any meeting of the Board of Directors. Every act or decision done or made by a majority of the members of the Board of Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. ARTICLE IV OFFICERS, EMPLOYEES AND AGENTS Section 4.01 Officers. The officers of the Authority shall be an Executive Director, a Treasurer, a Secretary and such other officers as the Board of Directors may appoint. Section 4.02 Designation of Officers. The City Manager of the City shall be the Executive Director of the Authority. The Executive Director of the Authority shall always be the person then serving as City Manager of the City, and each person who, currently or in the future, serves as City Manager of the City shall be, during the period in which he or she serves in such capacity, Executive Director of the Authority. A person shall become Executive Director of the Authority upon his or her becoming City Manager of the City, without any further act by any person, body or entity. A person shall serve as Executive Director of the Authority until he or she resigns, is removed or for any other reason no longer serves as City Manager of the City, without any further act by any person, body or entity. . The Finance Director of the City shall be the Treasurer of the Authority. The Treasurer of the Authority shall always be the person then serving as Finance Director of the City, and each person who, currently or in the future, serves as Finance Director of the City shall be, during the period in which he or she serves in such capacity, Treasurer of the Authority. A person shall become Treasurer of the Authority upon his or her becoming Finance Director of the City, without any further act by any person, body or entity. A person shall serve as Treasurer of the Authority until he or she resigns, is removed or for any other reason no longer serves as Finance Director of the City, without any further act by any person, body or entity. The City Clerk of the City shall be the Secretary of the Authority. The Secretary of the Authority shall always be the person then serving as City Clerk of the City, and each person who, currently or in the future, serves as City Clerk of the City shall be, during the period in which he or she serves in such capacity, Secretary of the Authority. A person shall become Secretary of the Authority upon his or her becoming City Clerk of the City, without any further act by any person, body or entity. A person shall serve as Secretary of the Authority until he or she resigns, is removed or for any other reason no longer serves as City Clerk of the City, without any further act by any person, body or entity. Section 4.03 Subordinate Officers. other than those hereinabove mentioned as the whom shall hold office for such period, have The Board of Directors appoint such officers business of the Authority may require, each of such authority and perform such duties as are DOCSLA1:509439.2 41555-8 4 provided in this Agreement, or as the Board of Directors from time to time may authorize or determine. Section 4.04 Executive Director. The Executive Director shall be the chief executive officer of the Authority and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Authority. He or she shall be an ex officio member of all standing committees, and shall have the general powers and duties of management of the Authority and shall have such other powers and duties as may be prescribed by the Board of Directors or this Agreement. Section 4.05 Treasurer. Subject to the applicable provisions of any indenture or resolution providing for a trustee or other fiscal agent, the Treasurer is designated as the depository of the Authority to have custody of all the money of the Authority, from whatever source, and, as such, shall have the powers, duties and responsibilities specified in Section 6505.5 of the Joint Powers Act. The Treasurer is hereby designated as controller of the Authority and, as such, shall have the powers, duties and responsibilities specified in Section 6505.5 of the Joint Powers Act. The controller of the Authority shall draw checks to pay demands against the Authority when the demands have been approved by the Authority. The City shall determine the charges to be made against the Authority for the services of the Treasurer. The Treasurer 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 in the amount of $5,000, as required by Section 6505.1 of the Joint Powers Act. Such bond may be maintained as a part of or in conjunction with any other bond maintained on such person.by the City, it being the intent of this Section not to require duplicate or overlapping bonding requirements from those bonding requirements which are otherwise applicable to the City. Section 4.06 Secretary. The Secretary shall keep or cause to be kept a book of minutes at the principal office of the Authority or at such other place as the Board of Directors may order, of all meetings of the Board of Directors, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Board of Directors meetings and the proceedings thereof. The Secretary shall give or cause to be given notice of all meetings of the Board of Directors, shall keep the Authority records in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or this Agreement. Section 4.07 Authority Counsel. The City Attorney of the City shall serve as Authority Counsel. Section 4.08 Assistant Officers. The Board of Directors may appoint such assistants to act in the place of the Treasurer, Secretary or other officers of the Authority as the Board of Directors shall from time to time deem appropriate. Section 4.09 Employees, Agents and Independent Contractors. The Board of Directors shall have the power to engage such employees as may be necessary or appropriate for the purposes of this Agreement. The Board of Directors shall also have the power to engage DOCSLA1:509439.2 41555-8 such agents and independent contractors as may be necessary or appropriate for purposes of this Agreement. Section 4.10 Privileges and Immunities; No Employment by City or Commission. All of the privileges and immunities from liability, exemption from laws, ordinances and rules, all pension, relief, disability, workers' compensation and other benefits which apply to the activities of officers, agents or employees of a public agency when performing their respective functions shall apply to them to the same degree and extent while engaged in the performance of any of the functions and other duties under this Agreement. None of the officers, employees, agents or independent contractors employed or engaged by the Authority shall be deemed, by reason of his or her employment or engagement by the Authority to be employed or engaged by the City or the Commission or, by reason of his or her employment or engagement by the Authority, to be subject to any of the requirements of the City or the Commission. ARTICLE V POWERS Section 5.01 General Powers. The Authority shall exercise in the manner herein provided the powers common to the City and the Commission, or as otherwise permitted under the Joint Powers Act, and necessary to the accomplishment of the purposes of this Agreement, subject to the restrictions set forth in Section 5.04 hereof. As provided in the Joint Powers Act, the Authority shall be a public entity separate from the City and the Commission. The Authority shall have the power to finance or refinance Public Capital Improvements for, and Working Capital Requirements of, any Local Agency through the acquisition by the Authority of such Public Capital Improvements, the purchase by the Authority of Obligations of any Local Agency pursuant to Bond Purchase Agreements, the lending of funds by the Authority to a Local Agency or the entering into of contractual arrangements by the Authority with a Local Agency. Section 5.02 Power to Issue Revenue Bonds. The Authority shall have all of the powers provided in the Joint Powers Act, including Article 4 of the Joint Powers Act, and including the power to issue Revenue Bonds under the Bond Law. Section 5.03 Specific Powers. The Authority is hereby authorized, in its own name, to do all acts necessary for the exercise of the foregoing powers, including but not limited to, any or all of the following: (a) to make and enter into contracts; (b) to employ agents or employees; (c) to acquire, construct, manage, maintain or operate any Public Capital Improvement, including the common power of the City and the Commission to acquire any Public Capital Improvement other than by the power of eminent domain; DOCSLA1:509439.2 41555-8 6 (d) to sue and be sued in its own name; (e) to issue Revenue Bonds and otherwise to incur debts, liabilities or obligations, provided that no such Revenue Bond, debt, liability or obligation shall constitute a debt, liability or obligation of the City or the Commission; (f) to apply for, accept, receive and disburse grants, loans and other aids from any agency of the United States of America or of the State of California; (g) to invest any money in the treasury pursuant to Section 6505.5 of the Joint Powers Act that is not required for the immediate necessities of the Authority, as the Authority determines is advisable, in the same manner and upon the same conditions as local agencies, pursuant to Section 53601 of the California Government Code; (h) to apply for letters of credit or other form of financial guarantees in order to secure the repayment of Revenue Bonds and enter into agreements in connection therewith; (i) to carry out and enforce all the provisions of this Agreement; 0) to make and enter into Bond Purchase Agreements; (k) to purchase Obligations of any Local Agency; (1) to engage the services of private consultants to render professional and technical assistance and advice in carrying out the purposes of this Agreement; (m) as provided by applicable law, to employ and compensate bond counsel, financial consultants, and other advisers determined necessary by the Authority in connection with the issuance and sale of any Revenue Bonds; (n) to contract for engineering, architectural, accounting, or other services determined necessary by the Authority for the successful development of a Public Capital Improvement; (o) to pay the reasonable costs of consulting engineers, architects, accountants, and construction, land-use, recreation, and environmental experts employed by any sponsor or participant if the Authority determines those services are necessary for the successful development of Public Capital Improvements; (p) to take title to, and sell by installment sale or otherwise, lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands which are located within the State of California which the Authority determines are necessary or convenient for the financing or refinancing of Public Capital Improvements, or any portion thereof, (q) to lease to, and to lease from, a Local Agency lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands which are located within the State of California which the Authority determines are necessary or DOCSLA1:509439.2 41555-8 convenient for the financing or - refinancing of Public Capital Improvements, or any portion thereof, and (r) to exercise any and all other powers as may be provided in the Joint Powers Act. Section 5.04 Manner of Exercising Powers. The powers of the Authority shall be exercised in the manner provided in the Joint Powers Act and shall be subject (in accordance with Section 6509 of the Joint Powers Act) to the restrictions upon the manner of exercising such powers of the City. Section 5.05 Non-Liability For Obligations of Authority. The debts, liabilities and obligations of the Authority shall not be the debts, liabilities and obligations of the City or the Commission. No member, officer, agent or employee of the Authority shall be individually or personally liable for the payment of the principal of or premium or interest on any obligations of the Authority or be subject to any personal liability or accountability by reason of any obligations of the Authority; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by the instruments authorizing the issuance of any obligations of the Authority. Section 5.06 Indemnity by Authority for Litigation Expenses of Officer, Director or Employee. Should any director, officer or employee of the Authority be sued, either alone or with others, because he or she is or was a director, officer or employee of the Authority, in any proceeding arising out of his or her alleged misfeasance or nonfeasance in the performance of his or her duties or out of any alleged wrongful act against the Authority or by the Authority, indemnity for such persons reasonable expenses, including attorneys' fees incurred in the defense of the proceedings, may be assessed against the Authority or its receiver by the court in the same or a separate proceeding if the person sued 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. The amount of such indemnity shall equal the amount of the expenses, including attorneys' fees, incurred in the defense of the proceeding. Section 5.07 Execution of Contracts. The Board of Directors may authorize any officer, employee or agent of the Authority, to enter into any contract or execute any contract or execute any instrument in the name of and on behalf of the Authority and such authority may be in general or confined to specific instances and unless so authorized by the Board of Directors, no such officer, agent or employee shall have any power or authority to bind the Authority by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount. Section 5.08 Fiscal Year. The Fiscal Year of the Authority shall, unless and until changed by the Board of Directors, commence on the lst day of July of each year and shall end on the 30th day of June of the next succeeding year. DOCSLA1:509439.2 41555-8 ARTICLE VI CONTRIBUTION; ACCOUNTS AND REPORTS; FUNDS Section 6.01 Contributions. The City and the Commission may in the appropriate circumstance when required hereunder (a) make contributions from their treasuries for the purposes set forth herein, (b) make payments of public funds to defray the cost of such purposes, (c)'make advances of public funds for such purposes, such advances to be repaid as provided herein, or (d) use their personnel, equipment or property in lieu of other contributions or advances. The provisions of Section 6513 of the California Government Code are hereby incorporated into this Agreement. Section 6.02 Accounts and Reports. The Authority shall establish and maintain such funds and accounts as may be required by good accounting practice. The books and records of the Authority shall be open to inspection at all reasonable times by the City and the Commission and their representatives. The Authority shall give an audited written report of all financial activities for each Fiscal Year to the City and the Commission within 210 days after the close of each Fiscal Year. The Treasurer, as controller of the Authority, shall either make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of the Authority. 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 an account and record is made by a certified public accountant or public accountant, a report thereof shall be filed as public records with the City and the Commission and with the county auditor of Los Angeles County, and shall be sent to any public agency or person in the State of California that submits a written request to the Authority. Such report shall be filed within 12 months of the end of the Fiscal Year under examination. By unanimous request of the Board of Directors, the annual special audit may be replaced with an audit covering a two-year period. 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 the purpose. Section 6.03 Funds. Subject to the applicable provisions of any instrument or agreement which the Authority may enter into, which may provide for a trustee or other fiscal agent to receive, have custody of and disburse Authority funds, the Treasurer of the Authority shall receive, have the custody of and disburse Authority funds as nearly as possible in accordance with generally accepted accounting practices, shall make the disbursements required by this Agreement or to carry out any of the provisions or purposes of this Agreement. DOCSLA 1:509439.2 41555-8 9 ARTICLE VII TERM; DISSOLUTION Section 7.01 Term. This Agreement shall become effective, and the Authority shall come into existence, on the date of execution and delivery hereof, and this Agreement shall thereafter continue in full force and effect until terminated pursuant to Section 7.02 hereof. Section 7.02 Termination. This Agreement may be terminated by agreement of the City and the Commission; provided, however, that this Agreement shall not be terminated so long as Revenue Bonds of the Authority are outstanding or so long as the Authority is a party to any material contract remaining in effect. Upon termination of this Agreement, the Authority shall be dissolved and, after payment or provision for payment of all debts and liabilities, the assets of the Authority shall be distributed to the City and the Commission in such manner as shall be agreed upon by the City and the Commission. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.01 Notices. Notices hereunder shall be in writing and shall be sufficient if delivered to the address of each party hereto set forth below or at such other address as is provided by a party hereto in writing to the other party hereto. City of Rosemead 8838 E. Valley Boulevard Rosemead, California 91770 Attention: City Manager Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Attention: Executive Director Section 8.02 Section Headings. All Section headings in this Agreement are for convenience of reference only and are not to be construed as modifying or governing the language in the Section referred to or to define or limit the scope of any provision of this Agreement. Section 8.03 Law Governing. This Agreement is made in the State of California under the constitution and laws of the State of California, and is to be so construed. Section 8.04 Amendments. This Agreement may be amended at any time, or from time to time, except as limited by contract with the owners of Revenue Bonds issued by the Authority or the owners of certificates of participation in payments to be made by the Authority, the City, the Commission or a Local Agency or by applicable regulations or laws of any jurisdiction having authority, by one or more amendments executed by the City and the DOCSLA1:509439.2 41555-8 10 Commission either as required in order to carry out any of the provisions of this Agreement or for any other purpose. Section 8.05 Enforcement by Authority. The Authority is hereby authorized to take any or all legal or equitable actions, including but not limited to injunction and specific performance, necessary or permitted by law to enforce this Agreement. Section 8.06 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Agreement. Section 8.07 Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors of the City and the Commission. No party hereto may assign any right or obligation hereunder without the written consent of the other party hereto. DOCSLA1:509439.2 41555-8 11 IN WITNESS WHEREOF, the parties hereto have caused this Joint Exercise of Powers Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above. ATTEST: City Clerk ATTEST: ALN--a- lto~u& Secretary APPROVED AS TO FORM: CITY OF ROSEMEAD By: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By Authori d Officer By: City Attorney DOCSLA1:509439.2 41555-8 12 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF SECRETARY OF THE COMMISSION REGARDING ORIGINAL INDENTURE I, Nina Castruita, hereby certify that I am the .Secretary of the Rosemead Community Development Commission (formerly the Rosemead Redevelopment Agency, the "Commission"), a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California, and that as such, I am familiar with the facts herein certified and authorized and qualified to execute the same on behalf of the Commission. I hereby certify that attached hereto is a full, true and correct copy of the Indenture, dated as of October 1, 1993, by and between the Rosemead Redevelopment Agency and State Street Bank and Trust Company of California, N.A., as trustee, which has not been amended, supplemented or modified as of the date hereof, except by the First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as successor trustee. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Loo e4,o&e& Nina Castruita, Secretary ROSEIVIEAD REDEVELOPMENT AGENCY and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A. as Trustee INDENTURE Dated as of October 1 1993 Relating to Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A And Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B LA1-56146.3 TABLE OF CONTENTS Paae Parties 1 Recitals 1 ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions 2 SECTION 1.02. Equal Security 15 ARTICLE II THE BONDS; SERIES 1993 BOND PROVISIONS SECTION 2.01. Authorization 16 SECTION 2.02. Terms of Series 1993 Bonds 16 SECTION 2.03. Form of Series 1993 Bonds 17 SECTION 2.04. Redemption of Series 1993 Bonds; Selection of Bonds; Purchase in Lieu of Redemption; Notice 18 SECTION 2.05. Execution of Bonds 21 SECTION 2.06. Transfer and Registration of Bonds 21 SECTION 2.07. Exchange of Bonds 22 SECTION 2.08. Bond Registration Books 22 SECTION 2.09. Mutilated, Destroyed, Stolen or Lost Bonds 22 SECTION 2.10. Temporary Bonds 23 SECTION 2.11. Validity of Bonds 23 SECTION 2.12. Book-Entry System 23 ARTICLE III ISSUANCE OF SERIES 1993 BONDS; APPLICATION OF PROCEEDS OF SALE SECTION 3.01. Issuance of Series 1993 Bonds 25 SECTION 3.02. Application of Proceeds of Sale of Series 1993 Bonds and Amounts Held Under the 1991 Prior Indenture and the 1987 Prior Resolution Allocation Among Funds and Accounts 25 LA1-56146.3 i Pate ARTICLE IV ISSUANCE OF ADDITIONAL BONDS SECTION 4.01. Conditions for the Issuance of Additional Bonds 26 SECTION 4.02. Procedure for the Issuance of Additional Bonds 28 SECTION 4.03. Limit on Indebtedness 29 ARTICLE V PLEDGED TAX REVENUES; CREATION OF FUNDS SECTION 5.01. Pledge of Pledged Tax Revenues 29 SECTION 5.02. Special Fund; Debt Service Fund; Receipt and Deposit of Pledged Tax Revenues 29 SECTION 5.03. Establishment of Funds 30 SECTION 5.04. Redevelopment Fund 30 SECTION 5.05. Expense Fund 31 SECTION 5.06. [Intentionally left blank.] 31 SECTION 5.07. Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund 31 SECTION 5.08. Investment of Moneys in Funds and Accounts 34 ARTICLE VI COVENANTS OF THE AGENCY SECTION 6.01. Punctual Payment 35 SECTION 6.02. Against Encumbrances 35 SECTION 6.03. Extension or Funding of Claims for Interest 35 SECTION 6.04. Management and Operation of Properties 36 SECTION 6.05. Payment of Claims 36 SECTION 6.06. Books and Accounts; Financial and Project Statements 36 SECTION 6.07. Protection of Security and Rights of Owners 37 SECTION 6.08. Payment of Taxes and Other Charges 37 SECTION 6.09. Financing the Project 37 SECTION 6.10. Taxation of Leased Property 37 SECTION 6.11. Disposition of Property in Project Area 38 SECTION 6.12. Amendment of Redevelopment Plan 38 SECTION 6.13. Pledged Tax Revenues 39 SECTION 6.14. Further Assurances . 39 SECTION 6.15. Tax Covenants; Rebate Fund 39 SECTION 6.16. Agreements with Other Taxing Agencies 40 SECTION 6.17. Annual Review of Pledged Tax Revenues 40 LA1-56146.3 ii Page ARTICLE VII THE TRUSTEE SECTION 7.01. Appointment of Trustee 41 SECTION 7.02. Acceptance of Trusts 41 SECTION 7.03. Fees, Charges and Expenses of Trustee 44 SECTION 7.04. Notice to Bond Owners of Default 44 SECTION 7.05. Intervention by Trustee 44 SECTION 7.06. Removal of Trustee 44 SECTION 7.07. Resignation by Trustee 45 SECTION 7.08. Appointment of Successor Trustee 45 SECTION 7.09. Merger or Consolidation 45 SECTION 7.10. Concerning any Successor Trustee 45 SECTION 7.11. Appointment of Co-Trustee 46 SECTION 7.12. Limited Liability of Trustee 46 ARTICLE VIII AMENDMENT OF THE INDENTURE SECTION 8.01. Amendment Requirements. 47 SECTION 8.02. Disqualified Bonds 48 SECTION 8.03. Endorsement or Replacement of Bonds After Amendment ..................................48 SECTION 8.04. Amendment by Mutual Consent 49 SECTION 8.05. Opinion of Counsel 49 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF OWNERS SECTION 9.01. Events of Default and Acceleration of Maturities 49 SECTION 9.02. Application of Funds Upon Acceleration 50 SECTION 9.03. Other Remedies of Owners 51 SECTION 9.04. Non-Waiver 51 SECTION 9.05. Actions by Trustee as Attorney-in-Fact 52 SECTION 9.06. Remedies Not Exclusive 52 SECTION 9.07. Owners' Direction of Proceedings 52 SECTION 9.08. Limitation on Owners' Right to Sue 52 SECTION 9.09. Bond Insurer's Direction of Proceedings 53 LA1-56146.3 iii Page ARTICLE X DEFEASANCE SECTION 10.01. Discharge of Indebtedness 53 SECTION 10.02. Unclaimed Moneys 55 ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of Agency Limited to Pledged Tax Revenues 55 SECTION 11.02. Benefits of Indenture Limited to Parties 56 SECTION 11.03. Successor Is Deemed Included in All References to Predecessor 56 SECTION 11.04. Execution of Documents by Owners 56 SECTION 11.05. Waiver of Personal Liability 57 SECTION 11.06. Acquisition of Bonds by Agency 57 SECTION 11.07. Content of Certificates and Reports 57 SECTION 11.08. Notice to Bond Insurer 58 SECTION 11.09. Funds and Accounts 58 SECTION 11.10. Article and Section Headings and References 58 SECTION 11.11. Partial Invalidity 58 SECTION 11.12. Execution in Several Counterparts 59 SECTION 11.13. Business Days 59 SECTION 11.14. Governing Law 59 SECTION 11.15. Notices 59 EXECUTION 61 APPENDIX A FORM OF BOND A-1 LA1-56146.3 iv INDENTURE THIS INDENTURE (the "Indenture") is made and entered into as of October 1, 1993, by and between the ROSEM ?AD REDEVELOPMENT AGENCY, a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California (the "Agency"), and State Street Bank and Trust Company California, N.A., a banking corporation duly organized and existing under the laws of the State of California and authorized to accept and execute trusts of the character herein set forth with a corporate trust office located in Los Angeles, California, as trustee (the "Trustee"); WITNESSETH: WHEREAS, the Agency is a redevelopment agency, a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California and referred to herein as the "Law") and the powers of such agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, a redevelopment plan for a redevelopment project known and designated as "Redevelopment Project Area No. 1" has been adopted and approved and all requirements of law for, and precedent to, the adoption and approval of said plan have been duly complied with; and WHEREAS, the plan contemplates that the Agency will issue its bonds to finance or refinance a portion of the cost of such redevelopment; and WHEREAS, the Agency has heretofore authorized and issued (i) $14,930,000 aggregate principal amount of its Rosemead Redevelopment Agency Project Area No. 1 Tax Allocation Notes, Series 1987 (the "Series 1987 Notes") and (ii) $11,725,240.05 aggregate principal amount of Rosemead Redevelopment Agency, Redevelopment Project Area No. 1 Subordinate Lien Tax Allocation Bonds, Series 1991 (the "Series 1991 Bonds"), each for the purpose of financing portions of the Agency's Redevelopment Project No. 1; and WHEREAS, the Agency, by Resolution No. 93-24, adopted October 12, 1993 (the "Resolution"), authorized the issuance of not to exceed thirty-five million dollars ($35,000,000) aggregate principal amount of its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series. 1993A (the "Series 1993A Bonds"), for the purpose of refinancing portions of the redevelopment project by refunding the Series 1991 Bonds and financing certain additional redevelopment projects; and WHEREAS, the Agency, by Resolution No. 93-24, adopted October 12, 1993 (the "Resolution"), authorized the issuance of not to exceed three million two hundred thousand dollars ($3,200,000) aggregate principal amount of its Redevelopment Project Area No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B (the "Series 1993B Bonds"), for the purpose of refinancing portions of the redevelopment project by refunding the Series 1987 Notes (the Series 1987 Notes and the Series 1991 Bonds are collectively referred to as the "Refunded Bonds"); and LA1-56146.3 WHEREAS, the Agency has determined to issue the Series 1993A Bonds and the Series 1993B Bonds (collectively,' the "Series 1993 Bonds") pursuant to this Indenture and to secure the Series 1993 Bonds in the manner provided herein; and WHEREAS, the Agency has determined that all things necessary to cause the Series 1993 Bonds, when authenticated by the Trustee and issued as in this Indenture provided, to be legal, special obligations of the Agency, enforceable in accordance with their terms, and to constitute this Indenture a valid agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the creation, execution and delivery of this Indenture and the creation, execution and issuance of the Series 1993 Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Agency does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of the Bonds and of any certificate, opinion, report, request or other document herein or therein mentioned have the meanings herein specified. A gnc The term "Agency" means the Rosemead Redevelopment Agency, a public body, corporate and politic, duly organized and existing under and pursuant to the law. Annual Debt Service: Average Annual Debt Service; Maximum Annual Debt Service The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year. LA1-56146.3 2 "Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from amounts constituting capitalized interest or (b) principal and interest allocable to that portion of the proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a Supplemental Indenture, provided that (i) projected interest earnings on such proceeds, plus such amounts, if any, deposited by the Agency in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from escrow, insofar as they. relate to Pledged Tax Revenue coverage and satisfaction of the Reserve Account Requirement, are substantially similar to those for the issuance of Additional Bonds. The term "Average Annual Debt Service" means the average Bond Year Annual Debt Service over all Bond Years. The term "Maximum Annual Debt Service" means the largest Annual Debt Service during the period from the date of such determination through the final maturity date of any Outstanding Bonds. Authorized Investments The term "Authorized Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: A. 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 TGRS) 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 of fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FHA) Certificates of beneficial ownership Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") LA1-56146.3 3 GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations 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 and written confirmation thereof is provided by the Agency to the Trustee): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation 04EL IC 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. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior Debt obligations 5. Resolution Funding Corte (REFCORP) obligations D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of AAAm-G, AAAm, or AAm. 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. The collateral must be held by a third party and the Owners must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits issued by any United States bank or trust company whose long-term obligations are rated "A+" or better by S&P or "A-1" or better by Moody's. LA1-56146.3 4 G. Investment Agreements, including guaranteed investment contracts, acceptable to the Bond Insurer. H. Commercial paper rated, at the time of purchase, "Prime - 1 " by Moody's or "A-1" or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's or S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or banks 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. K. Repurchase agreements providing for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee 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 Trustee in exchange for the securities at a specified date. Repurchase agreements must satisfy the following criteria or be approved by the Bond Insurer. 1. Repurchase Agreements must be between the municipal entity or Trustee and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody's, or b. Banks rated "A" or above by S&P and Moody's. 2. Each repurchase agreement contract must be in writing and 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 & FMAC) b. The term of each repurchase agreement 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). LA1-56146.3 5 d. Valuation of Collateral (1) The securities must be valued weekly, marked-to-market at current market price plus accrued interest. (a) 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 repurchase agreement, plus accrued interest. If, however, the securities used as collateral are FNMA or FMAC, then the value of collateral must equal 105 3. Legal opinion which must be delivered to the municipal entity or Trustee to the effect that the repurchase agreement meets guidelines under state law for legal investment or public funds. L. Any state-administered pool investment fund in which the issuer is statutorily permitted or required to invest and which will accept deposits and withdrawals directly from the Trustee; provided, that such investment is held in the name or to the credit of the Trustee. M. Shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, as it may be amended; provided that such shares are held in the name and to the credit of the Trustee. Authorized Representative The term "Authorized Representative" means the Chair, the Executive Director, the Treasurer of the Agency, or any other officer of the Agency duly authorized. Bonds Series 1993A Bonds, Series 1993B Bonds. Series 1993 Bonds, Additional Bonds, Serial Bonds, Term Bonds The term "Bonds" means the Series 1993 Bonds and all Additional Bonds. The term "Series 1993A Bonds" means the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A, authorized to be issued pursuant to Section 2.01. The term "Series 1993B Bonds" means the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B, authorized to be issued pursuant to Section 2.01. The term "Series 1993 Bonds" means the Series 1993A Bonds and the Series 1993B Bonds. LA1-56146.3 6 The term "Additional Bonds" means all tax allocation bonds of the Agency authorized and executed pursuant to the Indenture and issued and delivered in accordance with Article IV. The term "Serial Bonds" means Bonds for which no mandatory sinking account payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from mandatory sinking account payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bond Insurance Policy The term "Bond Insurance Policy" means the municipal bond insurance policy, if any, issued by the applicable Bond Insurer and guaranteeing, in whole or in part, the payment of principal of and interest on a Series of Bonds. Bond Year The term "Bond Year" means (i) with respect to the initial Bond Year, the period extending from the date the Series 1993 Bonds are originally delivered to and including October 1, 1994, and (ii) thereafter, each successive twelve-month period. Notwithstanding the foregoing, the term Bond Year as used in the Tax Certificate is defined in the manner set forth in the Tax Certificate. Book Entry Bonds The term "Book-Entry Bonds" means Bonds of any Series registered in the name of the Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of Section 2.12 hereof. Business Day The term "Business Day" has the meaning set forth in Section 11.13. Certificate of the Agencv The term "Certificate of the Agency" means an instrument in writing signed by the Chair or Vice-Chair of the Agency, or by the Treasurer of the Agency, or by any other officer of the Agency duly authorized by the Agency for that purpose. city The term "City" means the City of Rosemead, California. LA1-56146.3 7 Code The term "Code" means the Internal Revenue Code of 1986, and any regulations promulgated thereunder. Consultant's Report The term "Consultant's Report" means a report signed by an Independent Financial. Consultant or an Independent Redevelopment Consultant, as may be appropriate to the subject of the report, and including: (1) a statement that the person or firm making or giving such report has read the pertinent provisions of this Indenture to which such report relates; (2) a brief statement as to the nature and scope of the examination or investigation upon which the report is based; and (3) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said Independent Financial Consultant or Independent Redevelopment Consultant to express an informed opinion with respect to the subject matter referred to in the report. County Agreement The term "County Agreement" means that certain agreement for reimbursement of tax increment funds by and among the Agency, the County of Los Angeles, the Consolidated Fire Protection District and the Los Angeles County Public Library. Dated Date The term "Dated Date" means, with respect to any Series of Bonds, the dated date of such Bonds as specified in the Supplemental Indenture establishing such Series of Bonds, or, with respect to the Series 1993 Bonds, October 1, 1993. Depository The term "Depository" means the securities depository acting as Depository pursuant to Section 2.12 hereof. DTC The term "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. LA1-56146.3 8 Escrow Agreement. Series 1987 The term "Escrow Agreement, Series 1987" means that certain Refunding Escrow Agreement dated as of October 1, 1993 by and between the Agency and First Interstate Bank of California, as escrow agent, providing for the defeasance of the Series 1987 Notes. Escrow Agreement. Series 1991 The term "Escrow Agreement, Series 1991" means that certain Refunding Escrow Agreement dated as of October 1, 1993 by and between the Agency and State Street Bank and Trust Company of California, N.A., as escrow agent, providing for the defeasance of the Series 1991 Bonds. Federal Securities The term "Federal Securities" means noncallable securities described in paragraphs (A) and (B) of the definition of Authorized Investments as and to the extent that such securities are eligible for the legal investment of Agency funds. Fiscal Year The term "Fiscal Year" means the period commencing on July 1 of each year and terminating on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the Agency as its Fiscal Year in accordance with the Law and identified in writing to the Trustee. Housing Fund The term "Housing Fund" means the Low and Moderate Income Housing Fund, established pursuant to Section 33334.3 of the Law with respect to the Project Area and held by the Agency. Indenture The term "Indenture" means this Indenture and all Supplemental Indentures. Independent Certified Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the Agency, and who, or each of whom: (1) is in fact independent and not under the domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and LA1-56146.3 9 (3) is not connected with the Agency as a member, officer or employee of the Agency, but who may be regularly retained to make annual or other audits of the books of or reports to the Agency. Independent Financial Consultant The term "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the Agency and satisfactory to and approved by the Trustee (which shall be under no liability by reason of such approval) and who, or each of whom: (1) is in fact independent and not under the domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3) is not connected with the Agency as a member, officer or employee of the Agency, but who may be regularly retained to make annual or other reports to the Agency. Independent Redevelopment Consultant The term "Independent Redevelopment Consultant" means a consultant or firm of such consultants generally recognized to be well qualified in the field of consulting relating to tax allocation bond financing by California redevelopment agencies, appointed and paid by the Agency, and who, or each of whom: (1) is in fact independent and not under the domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3) is not connected with the Agency as a member, officer or employee of the Agency, but who may be regularly retained to make annual or other reports to the Agency. Information Services The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's "Municipal and Government, " 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and S&P "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or to such other addresses and/or such other services providing information with respect to called bonds as the Agency may designate to the Trustee in writing. LA1-56146.3 10 Interest Payment Date The term "Interest Payment Date" means each April 1 or October 1 on which interest on any Series of Bonds is scheduled to be paid. Investment Agreement The term "Investment Agreement" means an investment agreement or guaranteed investment contract by and between the Trustee and a national or state chartered bank or savings and loan institution (including the Trustee) or other financial institution or insurance company, respecting the investment of moneys in certain funds or accounts established pursuant to this Indenture; provided that, at the time of execution thereof, any such bank, institution, or company has unsecured debt obligations or claims-paying ability rated in one of the two highest rating categories by Moody's and S&P; and provided, further, that the Agency shall provide written notice to Moody's and S&P at least 15 days prior to entering into an Investment Agreement, together with a copy of the proposed form of such agreement. Law The term "Law" means the Community Redevelopment Law of the State of California (being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended), and all laws amendatory thereof or supplemental thereto. Letter of Representations The term "Letter of Representations" means the letter of the Agency and the Trustee delivered to and accepted by the Depository on or prior to the issuance of a Series of Book-Entry Bonds setting forth the basis on which the Depository serves as depository for such Book-Entry Bonds, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository. Moody's The term "Moody's" means Moody's Investors Service. Nominee The term "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.12 hereof. Outstanding The term "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.02) all Bonds except LA 1-56146.3 11 (1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of Section 10.01; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant to this Indenture. Owner The term "Owner" means the registered owner of any Outstanding Bond. Participants The term "Participants" means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Book-Entry Bonds as securities depository. 1991 Prior Indenture The term "1991 Prior Indenture" means that certain Indenture, dated as of September 1, 1991, between the Agency and State Street Bank and Trust Company of California, N.A., as trustee, as heretofore amended or supplemented. 1987 Prior Resolution The term "1987 Prior Resolution" means that certain resolution adopted by the Agency on August 11, 1987, as the same may heretofore have been supplemented or amended. Pledged Tax Revenues The term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Agency in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Agency makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, and (c) amount, if any, received by the Agency pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. LA1-56146.3 12 Principal Payment Date The term "Principal Payment Date" means any date on which principal of any Series of Bonds is scheduled to be paid, which dates shall be as set forth in Section 2.02 hereof for the Series 1993 Bonds. Project The term "Project" means the undertaking of the Agency pursuant to the Redevelopment Plan and the Law for the redevelopment of the Project Area. Project Area The term "Project Area" means the project area described in the Redevelopment Plan, known as the Redevelopment Project Area No. 1. Oualified Reserve Instrument The term "Qualified Reserve Instrument" means a letter of credit meeting the requirements of Section 5.07(4)(b) or an insurance policy meeting the requirements of Section 5.07(4)(c). Record Date The term "Record Date" means the 15th day of the month next preceding each Interest Payment Date. Redevelopment Plan The term "Redevelopment Plan" means the Redevelopment Plan for Redevelopment Project Area No. 1, adopted and approved as the Official Redevelopment Plan for the Project Area by Ordinance No. 340 duly adopted by the City Council of the City on July 27, 1972, as amended on January 8, 1987 by Ordinance No. 592, together with all amendments thereof or supplements thereto hereafter made in accordance with the law. Refunded Bonds The term "Refunded Bonds" means (i) the Series 1987 Notes and (ii) the Series 1991 Bonds. Reserve Account Requirement The term "Reserve Account Requirement" means, as of any calculation date, an amount equal to the least of (i) ten percent (10%) of the amount (within the meaning of Section 148 of the Code), as certified by the Agency to the Trustee, of that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125 % of Average Annual Debt Service of such Bonds or (iii) Maximum Annual Debt Service of such Bonds; LA1-56146.3 13 provided, that for the purposes of such calculations, there shall be excluded an amount of Bonds or debt service thereon equal to the amount deposited in any escrow fund established pursuant to Section 4.01(c)(ii). S&P The term "S&P" means Standard & Poor's Corporation. Securities Depositories The term "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 277-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496-5058; or to such other addresses and/or such other securities depositories as the Agency may designate to the Trustee in writing. Series The term "Series", when used with reference to the Bonds, means all of the Bonds authenticated and delivered on original issuance and identified pursuant to this Indenture or a Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to this Indenture. Series 1987 Notes The Term "Series 1987 Notes" means the Rosemead Redevelopment Agency Project Area No. 1 Tax Allocation Notes, Series 1987. Series 1991 Bonds The term "Series 1991 Bonds" means the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Subordinate Lien Tax Allocation Bonds, Series 1991. Sinking Account Installment The term "Sinking Account Installment" means the amount of money required by or pursuant to this Indenture to be paid by the Agency on any single date toward the retirement of any particular Term Bonds of any particular Series on or prior to their respective stated maturities. Sinking Account Payment Date The term "Sinking Account Payment Date" means any date on which Sinking Account Installments on any Series of Bonds are scheduled to be paid. LA1-56146.3 14 S=lemental Indenture The term "Supplemental Indenture" means any indenture then in full force and effect which has been entered into by the Agency and the Trustee, amendatory of or supplemental to this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. Tax Certificate The term "Tax Certificate" means the Tax Certificate dated the date of the original delivery of each Series of Bonds (except any Series of Bonds which the Agency shall certify to the Trustee is not intended to meet the requirements for tax exemption under the Code) relating to the requirements of certain provisions of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terms thereof. Trustee The term "Trustee" means such trustee at its corporate trust office in Los Angeles, California, as may be appointed by the Agency and acting as an independent trustee with the duties and powers herein provided, and its successors and assigns, or any other corporation or association which may at any time be substituted in its place, as provided in Section 7.08. Written Request of the Agency The term "Written Request of the Agency" means an instrument in writing signed by the Chair, the Executive Director or Treasurer of the Agency or by any other officer of the Agency duly authorized by the Agency for that purpose. SECTION 1.02. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, the Indenture shall be deemed to be and shall constitute a contract between the Agency and the Trustee for the benefit of Owners from time to time of all Bonds issued hereunder and then Outstanding to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions herein contained; and the agreements and covenants herein set forth to be performed on behalf of the Agency shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any Bonds over any other Bonds. LA1-56146.3 15 ARTICLE II THE BONDS; SERIES 1993 BOND PROVISIONS SECTION 2.01. Authorization. Bonds in unlimited amount may be issued at any time under and subject to the terms of this Indenture. The Agency has reviewed all proceedings heretofore taken relative to the authorization of the Series 1993 Bonds and has found, as a result of such review, and hereby finds and' determines that all acts, conditions and things required by law to exist, happen or be performed precedent to and in connection with the issuance of the Series 1993 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Agency is now duly authorized, pursuant to each and every requirement of law, to issue the Series 1993 Bonds in the manner and form provided in this Indenture. Accordingly, the Agency hereby authorizes the issuance of the Series 1993 Bonds for the purpose of providing funds to aid in financing and refinancing the Project. SECTION 2.02. Terms of Series 1993 Bonds. (a)(1) The Series 1993A Bonds authorized to be issued by the Agency under and subject to the terms of this Indenture and the Law shall be designated the "Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A" and shall be in the aggregate principal amount of thirty-four million two hundred seventy-five thousand dollars ($34,275,000). The Series 1993A Bonds shall be dated as of the Dated Date and shall bear interest, at such rate or rates (payable on April 1 and October 1 in each year, commencing April 1, 1994), and shall mature and become payable on October 1 in each of the years as to principal in the amounts set forth below: Maturity Date Principal Interest (October Amount Rate 2001 $ 20,000 4.60% 2002 425,000 4.80 2003 445,000 5.00 2004 465,000 5.10 2005 490,000 5.20 2006 515,000 5.25 2007 545,000 5.30 2008 570,000 5.30 2009 600,000 5.30 2010 635,000 5.30 2011 665,000 5.30 2018 5,805,000 5.50 2033 23,095,000 5.60 (a)(2) The Series 1993B Bonds authorized to be issued by the Agency under and subject to the terms of this Indenture and the Law shall be designated the "Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B" and shall be in the aggregate principal amount of two million four hundred thirty-five thousand dollars ($2,435,000). The Series 1993B Bonds shall be dated as of the Dated Date and shall bear interest, at such rate or rates (payable on April 1 and October 1 in each year, commencing April 1, 1994), and shall mature and become payable on October 1 in each of the years as to principal in the amounts set forth below: LA1-56146.3 16 Maturity Date Principal Interest (October 1) Amount Rate 1994 $ 260,000 5.20% 1995 265,000 5.20 1996 280,000 5.20 1997 295,000 5.20 1998 310,000 5.50 1999 330,000 5.70 2000 345,000 5.80 2001 350,000 5.90 (b) Interest on the Series 1993 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The Series 1993 Bonds shall be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof (not exceeding the principal amount of Series 1993A Bonds maturing at any one time). The Series 1993 Bonds shall be numbered as determined by the Trustee. The Series 1993 Bonds shall bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from the 16th day of the month next preceding an Interest Payment Date to and including such Interest Payment Date, in which event they shall bear interest from such Interest Payment Date, or unless such date of registration is on or before the fifteenth day of the month next preceding the first Interest Payment Date, in which event they shall bear interest from their Dated Date; provided, however, that if, at the time of registration of any Series 1993 Bond, interest is then in default on the Outstanding Series 1993 Bonds, such Series 1993 Bond shall bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the Outstanding Series 1993 Bonds. Payment of interest on the Series 1993 Bonds due on or before the maturity or prior redemption of such Series 1993 Bonds shall be made to the person whose name appears on the bond registration books of the Trustee as the registered owner thereof, as of the close of business on the 15th day of the month next preceding the Interest Payment Date, such interest to be paid by check mailed on each Interest Payment Date by first-class mail to such registered owner at his address as it appears on such books, or, upon written request received by the Trustee prior to the fifteenth day of the month preceding an Interest Payment Date, of an Owner of at least $1,000,000 in aggregate principal amount of Series 1993 Bonds, by wire transfer in immediately available funds to an account within the United States designated by such Owner. Principal of and redemption premiums, if any, on the Series 1993 Bonds shall be payable upon the surrender thereof at maturity or the earlier redemption thereof at the corporate trust office of the Trustee. Principal of and redemption premiums, if any, and interest on the Series 1993 Bonds shall be paid in lawful money of the United States of .America. SECTION 2.03. Form of Series 1993 Bonds. The Series 1993A Bonds, the authentication and registration endorsement and the assignment to appear thereon shall be substantially in the forms attached hereto as Appendix "A", with necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture or as required to distinguish the Series 1993A Bonds from any other Series of Bonds. LA 1-56146.3 17 The Series 1993B Bonds, the authentication and registration endorsement and the assignment to appear thereon shall be substantially in the forms attached hereto as Appendix "B", with necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture or as required to distinguish the Series 1993B Bonds from any other Series of Bonds. SECTION 2.04. Redemption of Series 1993 Bonds; Selection of Bonds, Purchase in Lieu of Redemption; Notice. (a) Optional Redemption. The Series 1993B Bonds are not subject to optional redemption prior to their maturity. The Series 1993A Serial Bonds maturing on or before October 1, 2003 are not subject to optional redemption prior to their maturities. The Series 1993A Bonds maturing on and after October 1, 2004, shall be subject to redemption prior to their respective maturities at the option of the Agency on or after October 1, 2003, as a whole on any date, or in part (in such amounts and maturities as are designated to the Trustee by the Agency no later than 60 days prior to the redemption date or, if the Agency fails to designate such maturities, on a proportional basis among maturities) on any date, from funds derived by the Agency from any source, at the following redemption prices (expressed as percentages of the principal amount of Series 1993A Bonds called for redemption), together with interest accrued thereon to the date fixed for redemption: Redemption Date Redemption Price October 1, 2003 through September 30, 2004 102% October 1, 2004 through September 30, 2005 101 October 1, 2005 and thereafter 100 (b) Mandatory Sinking Fund Redemption. The Series 1993A Term Bonds maturing on October 1, 2018 shall also be subject to mandatory redemption in part by lot on October 1 in each year, commencing October 1, 2012, and the Series 1993A Term Bonds maturing on October 1, 2033 shall be subject to mandatory redemption in part by lot in each year, commencing October 1, 2019, from Sinking Account Installments deposited in the Sinking Account, at the principal amount thereof plus interest accrued thereon to the date fixed for redemption, without premium, in the aggregate respective principal amounts and in the respective years as set forth in the following tables: LA1-56146.3 18 Series 1993A Term Bonds Maturing October 1, 2018 Sinking Fund Redemption Date (October 1) 2012 2013 2014 2015 2016 2017 Principal Amount of Term Bonds to Be Redeemed 2018 (maturity) $700,000 740,000 780,000 825,000 870,000 920,000 970,000 Series 1993A Term Bonds Maturing October 1, 2033 Sinking Fund Redemption Date Principal Amount of (October 1) Term Bonds to Be Redeemed 2019 $1,020,000 2020 1,080,000 2021 1,140, 000 2022 1,205,000 2023 1,270,000 2024 1,340,000 2025 1,415,000 2026 1,495,000 2027 1,580,000 2028 1,675,000 2029 1,765,000 2030 1,865,000 2031 1,970,000 2032 2,080,000 2033 (maturity) 2,195,000 (c) General Redemption Provisions. (1) Selection of Bonds. Whenever less than all the Outstanding Bonds of a Series maturing on any one date are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed from the Outstanding Bonds of such Series maturing on such date not previously selected for redemption, by lot in any manner which the Trustee deems fair; LA1-56146.3 19 provided, however, that if less than all the Outstanding Term Bonds of a Series of any maturity are called for redemption at any one time, upon the written direction from the Agency, the Trustee shall specify a reduction in any Sinking Account Installment payments required to be made with respect to such Bonds (in an amount equal to the amount of Outstanding Term Bonds to be redeemed) which, to the extent practicable, results in approximately equal Annual Debt Service on the Bonds Outstanding following such redemption. (2) Purchase in Lieu of Redemption. In lieu of redemption of any Term Bond, amounts on deposit in the Debt Service Fund or in the Sinking Account therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Agency received by the Trustee prior to the selection of Bonds for redemption, for the purchase of such Term Bonds 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 Agency may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date; provided, however, that no Bonds shall be purchased by the Trustee under this subsection (2) with a settlement date more than 90 days prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in any twelve-month period ending 60 days prior to any Principal Payment Date in any year shall be credited towards and shall reduce the principal amount of such Term Bonds required to be redeemed on such Principal Payment Date in such year. (3) Notice. Notice of redemption shall be mailed by first class mail by the Trustee, on behalf and at the expense of the Agency, not less than 30 nor more than 60 days prior to the redemption date to (i) the respective Owners of Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (ii) one or more Information Services designated in writing to the Trustee by the Agency and (iii) the Securities Depositories. Each notice of redemption shall state the date of such notice, the Bonds to be redeemed, the Series and date of issue of such Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that such redemption may be rescinded by the Agency and that, unless such redemption is so rescinded, on said date there will become due and payable on each of such Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Failure by the Trustee to give notice pursuant to this Section to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice shall not affect the sufficiency of the proceedings for redemption. The failure of any Owner to LA 1-56146.3 20 receive any redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the sufficiency of the proceedings for redemption. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default hereunder. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. (4) Partial Redemption. Upon surrender of any Bond redeemed in part only, the Agency shall execute (manually or by facsimile) and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered and of the same Series and interest rate and the same maturity. (5) Effect of Redemption. From and after the date fixed for redemption, if notice of such redemption shall have been duly given and funds available for the payment of such redemption price of the Bonds so called for redemption shall have been duly provided, no interest shall accrue on such Bonds from and after the redemption date specified in such notice. All Bonds redeemed pursuant to the provisions of this Section shall be destroyed by the Trustee and the Trustee shall deliver a certificate of destruction to the Agency. SECTION 2.05. Execution of Bonds. The Chair of the Agency is hereby authorized and directed to execute each of the Bonds on behalf of the Agency and the Secretary of the Agency is hereby authorized and directed to attest each of the Bonds on behalf of the Agency. Any of the signatures of said Chair or said Secretary may be by printed, lithographed or engraved facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes the same as though such officer had remained in office until such delivery of the Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication and registration in the form hereinbefore recited, executed and dated by the Trustee, shall be entitled to any benefits under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so registered have been duly issued and delivered hereunder and are entitled to the benefits of the Indenture. SECTION 2.06. Transfer and Registration of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant 'to the provisions of Section 2.08, by the person in whose name it is registered, in person or by his LA1-56146.3 21 duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for transfer, the Agency shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds 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. The Agency shall not be required to register the transfer of or exchange any Bond during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have been selected for redemption. SECTION 2.07. Exchange of Bonds. The Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds of the same maturity 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. No such exchange shall be required to be made during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or of any Bonds which have been selected for redemption. SECTION 2.08. Bond Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Agency during regular business hours with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds on said books as hereinbefore provided. SECTION 2.09. Mutilated. Destroyed, Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of the body of such Bond, or shall be believed by the Agency to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of such mutilated Bond at the office of the Trustee, or upon the receipt of evidence satisfactory to the Trustee of such destruction, theft or loss, and upon receipt also of indemnity satisfactory to the Agency and the Trustee, and upon payment of all expenses incurred by the Agency and the Trustee in the premises, the Agency shall execute (manually or by facsimile) and the Trustee shall authenticate and deliver at said office a new Bond or Bonds of the same maturity and for the same aggregate principal amount, of like Series, tenor and date, with such notations as the Agency shall determine, in exchange and substitution for and upon cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the Trustee and the Agency of like proof, indemnity and payment of expenses. LAt-56146.3 22 Any such replacement Bonds issued pursuant to this Section shall be entitled to equal and proportionate benefits with all other Bonds issued hereunder. The Agency and the Trustee shall not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. SECTION 2.10. Temporary Bonds. Until definitive Bonds shall be prepared, the Agency may cause to be executed and delivered in lieu of such definitive Bonds and subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the Agency, one or more temporary typed, printed, lithographed or engraved Bonds in fully registered form, as may be authorized by the Agency, substantially of the same tenor and, until exchange for definitive Bonds, entitled and subject to the same benefits and provisions of the Indenture as definitive Bonds. If the Agency issues temporary Bonds, it will execute and furnish definitive Bonds without unnecessary delay and thereupon the temporary Bonds may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for such definitive Bonds. All temporary Bonds so surrendered shall be canceled by the Trustee and shall not be reissued. SECTION 2.11. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken by the Agency for the financing or refinancing of the. Project, or by any contracts made by the Agency in connection therewith, and shall not be dependent upon the completion of the financing or refinancing of the Project or upon the performance by any person of his obligation with respect to the Project, and the recital contained in the Bonds that the same are issued pursuant to the Law shall be conclusive evidence of their validity and of the regularity of their issuance. SECTION 2.12. Book Entry System. Prior to the issuance of any Series of Bonds issued hereunder, the Agency may provide that such Series of Bonds shall be initially issued as Book-Entry Bonds, and in such event, each maturity of such Series shall be in the form of a separate single fully registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond shall be registered in the bond register in the name of the Nominee, as nominee of the Depository. With respect to Book-Entry Bonds, the Agency and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such Book-Entry Bonds. Without limiting the immediately preceding sentence, the Agency and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in Book-Entry Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the bond register, of any notice with respect to Book-Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds to be redeemed in the event the Agency redeems such in part, or (iv) the payment to any Participant or any other person, other LA1-56146.3 23 than an Owner as shown in the bond register, of any amount with respect to principal of, premium, if any, or interest on Book-Entry Bonds. The Agency and the Trustee may treat and consider the person in whose name each Book-Entry Bond is registered in the bond register as the absolute Owner of such Book-Entry Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owner, as shown in the bond register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Agency's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the bond register, shall receive a Bond evidencing the obligation of the Agency to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and Agency of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to record dates, the word Nominee in this Indenture shall refer to such nominee of the Depository. In order to qualify the Book-Entry Bonds for the Depository's book-entry system, the Agency and the Trustee shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Agency or the Trustee any obligation whatsoever with respect to persons having interests in such Book-Entry Bonds other than the Owners, as shown on the bond register. In addition to the execution and delivery of a Letter of Representations, the Agency and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify Book-Entry Bonds for the Depository's book-entry program. In the event (i) the Depository determines not to continue to act as securities depository for any Series of Book-Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Agency will discontinue the book-entry system with the Depository. If the Agency determines to replace the Depository with another qualified securities depository, the Agency shall prepare or direct the preparation of a new single, separate, fully registered Bond for each of the maturities of such Book-Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the Agency fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in such bond register in the name of the Nominee, but shall be registered in whatever name or names Owners transferring or exchanging such Bonds shall designate, in accordance with provisions of Sections 2.06 and 2.07 hereof. Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Bond is registered in the name of the Nominee, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such LA1-56146.3 24 Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. ARTICLE III ISSUANCE OF SERIES 1993 BONDS; APPLICATION OF PROCEEDS OF SALE SECTION 3.01. Issuance of Series 1993 Bonds. The Agency may at any time execute and deliver the Series 1993 Bonds authorized to be issued hereunder and upon the Written Request of the Agency, the Trustee shall authenticate and deliver the Series 1993 Bonds. SECTION 3.02. Application of Proceeds of Sale of Series 1993 Bonds and Amounts Held Under the 1991 Prior Indenture and the 1987 Prior Resolution Allocation Among Funds and Accounts. (a) Upon receipt of payment for the Series 1993 Bonds, the Trustee shall set aside and deposit the proceeds received from such sale and delivery, together with amounts held under the 1991 Prior Indenture, in the following respective funds and accounts: (1) The Trustee shall deposit in the Interest Account a sum equal to $174,453.58, the amount of accrued interest received on the Series 1993 Bonds. (2) The Trustee shall transfer to the Agency for deposit in the Series 1993A Project Account within the Redevelopment Fund an amount equal to $16,914,219.01. (3) The Trustee shall transfer to the Reserve Account the sum of $1,231,982.76 received from the Reserve Fund under the 1991 Prior Indenture and deposit in the Reserve Account the sum of $1,089,817.24 received from payment for the Series 1993 A Bonds. (4) The Trustee shall deposit in the Series 1993 Expense Account within the Expense Fund an amount equal to $250,000.00 to pay the costs incurred or to be incurred by the Agency in connection with the issuance of the Series 1993 Bonds. (5) The Trustee shall transfer to State Street Bank and Trust Company of California, N.A., as escrow agent, for deposit in the refunding escrow established under the Escrow Agreement, Series 1991, the amount of $14,652,398.25. (b) Record Ming for Series 1993 Bonds. For record-keeping purposes, the Trustee may establish such additional accounts as may be necessary to reflect such transfer of proceeds. LA1-56146.3 25 ARTICLE IV ISSUANCE OF ADDITIONAL BONDS SECTION 4.01. Conditions for the Issuance of Additional Bonds. The Agency may at any time after the issuance and delivery of the Series 1993 Bonds hereunder issue Additional Bonds payable from the Pledged Tax Revenues and secured by a lien and charge upon the Pledged Tax Revenues equal to 'and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under this Indenture, but only subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Additional Bonds: (a) The Agency shall be in compliance with all covenants set forth in this Indenture and any Supplemental Indentures, and a Certificate of the Agency to that effect shall have been filed with the Trustee. (b) The issuance of such Additional Bonds shall have been duly authorized pursuant to the law and all applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Indenture duly adopted by the Agency which shall specify the following: (1) The purpose for which such Additional Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing the Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the purpose of refunding any Bonds or other indebtedness related to the Project, including payment of all costs incidental to or connected with such refunding; (2) The authorized principal amount of such Additional Bonds; (3) The date and the maturity date or dates of such Additional Bonds; provided that (i) Principal and Sinldng Account Payment Dates may occur only on Interest Payment Dates, (ii) all such Additional Bonds of like maturity and Series shall be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory Sinking Account Installments, or any combination thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their respective maturity dates; (4) The Interest Payment Dates, which shall be on the same semiannual dates as the Interest Payment Dates for the Series 1993 Bonds; provided, that such Additional Bonds may provide for compounding of interest in lieu of payment of interest on such dates; LA1-56146.3 26 (5) The denomination and method of numbering of such Additional Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds; (7) The amount and due date of each mandatory Sinking Account Installment, if any, for such Additional Bonds; (8) The amount, if any, to be deposited from the proceeds of such Additional Bonds in the Interest Account; (9) The amount, if any, to be deposited from the proceeds of such Additional Bonds into the Reserve Account; provided that the amount on deposit in the Reserve Account shall be increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, which amount shall be maintained in the Reserve Account; (10) The form of such Additional Bonds; and (11) Such other provisions as may be necessary or appropriate and not inconsistent with this Indenture. (c) (i) The Pledged Tax Revenues based upon the assessed valuation of taxable property in the Project Area as shown on the most recently equalized assessment roll and the most recently established tax rates preceding the date of the Agency's adoption of the Supplemental Indenture providing for the issuance of such Additional Bonds shall be in an amount equal to at least one hundred twenty-five percent (125 of Maximum Annual Debt Service on all then Outstanding Bonds after giving effect to the issuance of such Additional Bonds, and any unsubordinated loans, advances or indebtedness payable from Pledged Tax Revenues pursuant to the Law. (ii) For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not include any Bonds the proceeds of which are deposited in an escrow fund held by an escrow agent, provided that the Supplemental Indenture authorizing issuance of such Additional Bonds shall provide that: (A) such proceeds shall be deposited or invested with or secured by an institution rated "AAA" by S&P and "Aaa" by Moody's at a rate of interest which, together with amounts made available by the Agency from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds; (B) moneys may be transferred from said escrow fund only if Pledged Tax Revenues for the next preceding fiscal year will be at least equal to one hundred twenty-five percent (125 of Maximum Annual Debt Service on all Outstanding Bonds (exclusive of disqualified Bonds described in Section 8.02) less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each LA1-56146.3 27 such transfer; and (C) Additional Bonds shall be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow period in such manner as may be determined by the Agency. (iii) For purposes of calculation of Pledged Tax Revenues pursuant to subsections (i) and (ii) above, the property tax rate shall be assumed to be the actual tax rate the year in which the calculation is made. (iv) Nothing contained in this Indenture shall limit the issuance of any tax allocation bonds of the Agency payable from the Pledged Tax Revenues and secured by a lien and charge on the Pledged Tax Revenues if, after the issuance and delivery of such tax allocation bonds, none of the Bonds theretofore issued hereunder will be Outstanding nor shall anything contained in this Indenture prohibit the issuance of any tax allocation bonds or other indebtedness by the Agency secured by a pledge of tax increment revenues (including Pledged Tax Revenues) subordinate to the pledge of Pledged Tax Revenues securing the Bonds. The Series 1993 Bonds shall not be considered Additional Bonds hereunder and the issuance of the Series 1993 Bonds are not subject to the provisions of this Article. SECTION 4.02. Procedure for the Issuance of Additional Bonds. All of the Additional Bonds shall be executed by the Agency for issuance under this Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee upon the Written Request of the Agency, but only upon receipt by the Trustee of the following documents or money or securities: (1) A certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds; (2) A Written Request of the Agency as to the delivery of such Additional Bonds; (3) An opinion of counsel of recognized standing in the field of law relating to municipal bonds substantially to the effect that (a) the Agency has the right and power under the Law to execute and deliver the Supplemental Indenture thereto, and the Indenture and all such Supplemental Indentures have been duly executed and delivered by the Agency, are in full force and effect and are valid and binding upon the Agency in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights and similar qualifications); and (b) such Additional Bonds are valid and binding special obligations of the Agency, in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and are subject to the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures and the Law, and such Additional Bonds have been duly and validly issued in accordance with the Law and the Indenture and all such Supplemental Indentures; LA1-56146.3 28 (4) A Certificate of the Agency containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; and (5) Such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds. SECTION 4.03. Limit on Indebtedness. The Agency covenants with the Owners of all of the Bonds at any time Outstanding that it will not enter into any obligation or make any expenditure payable from taxes allocated to the Agency under the Law, the payments with respect to which, together with payments theretofore made or to be made with respect to other obligations (including, but not limited to the Bonds) previously entered into by the Agency, would exceed the then-effective limit on the amount of taxes which can be allocated to the Agency pursuant to either Section 33333.4 or 33333.2(1) of the Law, whichever is applicable, and the Redevelopment Plan. ARTICLE V PLEDGED TAX REVENUES; CREATION OF FUNDS SECTION 5.01. Pledge of Pledged Tax Revenues. All the Pledged Tax Revenues in the Special Fund, and all money in the Debt Service Fund and in the funds or accounts so specified and provided for in this Indenture, whether held by the Agency or the Trustee (except the Redevelopment Fund and the Rebate Fund), are hereby irrevocably pledged to the punctual payment of the interest on and principal of the Bonds, and the Pledged Tax Revenues and such other money shall not be used for any other purpose while any of the Bonds remain Outstanding; subject to the provisions of this Indenture permitting application thereof for the purposes and on the terms and conditions set forth herein. This pledge shall constitute a first lien on the Pledged Tax Revenues and such other money for the payment of the Bonds in accordance with the terms thereof. SECTION 5.02. -Special -Fund: Debt Service Fund• Receipt and Deposit of Pledged Tax Revenues. There is hereby established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Special Fund" (herein the "Special Fund") which shall be held by the Agency. The Agency shall promptly deposit all of the Pledged Tax Revenues received in any Bond Year in the Special Fund, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into Debt Service Fund in such Bond Year pursuant to this Section 5.02. All Pledged Tax Revenues received by the Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding sentence shall be released from the pledge and lien hereunder and may be applied by the Agency for any lawful purposes of the Agency. So long as any Bonds remain Outstanding hereunder, LA1-56146.3 29 the Agency shall not have any beneficial interest in or right to the moneys on deposit in the Special Fund, except as may be provided in this Indenture. There is hereby established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Debt Service Fund" (herein the "Debt Service Fund") which shall be held by the Trustee. On or before five (5) days preceding each Interest Payment Date, the Agency shall transfer from the Special Fund to the Trustee for deposit in the Debt Service Fund an amount equal to the amount required to be transferred by the Trustee from the Debt Service Fund to the Interest Account, Principal Account, Sinking Account(s) and Reserve Account pursuant to Section 5.07; provided, that the Agency shall not be obligated to transfer to the Trustee in any Bond Year an amount of Pledged Tax Revenues which, together with other available amounts then in the Debt Service Fund, exceeds the amounts required to be transferred to the Trustee for deposit in the Interest Account, the Principal Account, the Sinking Account and the Reserve Account in such Bond Year, pursuant to Section 5.07 hereof. There shall not be deposited with the Trustee any taxes eligible for allocation to the Agency for deposit in the Debt Service Fund in an amount in excess of that amount which, together with all money then on deposit with the Trustee in the Debt Service Fund and the accounts therein, shall be sufficient to discharge all Outstanding Bonds as provided in Section 10.01. All such Pledged Tax Revenues deposited in the Special Fund shall be disbursed, allocated and applied solely to the uses and purposes herein set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Agency. SECTION 5.03. Establishment of Funds. In addition to the Special Fund and the Debt Service Fund, there are further created a special trust fund to be held by the Agency called the "Rosemead Redevelopment Project No. 1 Redevelopment Fund" (the "Redevelopment Fund"), and a special trust fund to be held by the Trustee called the "Rosemead Redevelopment Project No. 1 Expense Fund" (the "Expense Fund"). So long as any of the Bonds herein authorized, or any interest thereon, remain unpaid, the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by this Indenture and the Law. Pursuant to the Tax Certificate, the funds and accounts established herein may be divided into sub-accounts for each Series of Bonds issued hereunder, by the Agency or by the Trustee at the Agency's direction, in order to perform the necessary rebate calculations. SECTION 5.04. Redevelopment Fund. Moneys in the Redevelopment Fund shall be used and disbursed in the manner provided by law for the purpose of aiding in financing or refinancing the Project (or for making reimbursements to the Agency for such costs theretofore paid by it), including payment of all costs incidental to or connected with such financing or refinancing. Any balance of money remaining in the Redevelopment Fund after the date of completion of the financing or refinancing of the Project may be used for any lawful purpose of the Agency. LA1-56146.3 30 The Agency shall pay moneys from the Redevelopment Fund upon receipt of requisitions drawn thereon and signed by at least one duly authorized officer or member of the Agency. The Agency warrants that each withdrawal from the Redevelopment Fund shall be made in the manner provided by law for the purpose of aiding in financing or refinancing the Project or for making reimbursements to the Agency for such costs theretofore paid by the Agency. The Treasurer of the Agency shall establish and maintain an account within the Redevelopment Fund for each Series of Bonds issued hereunder known as the "Series Project Account" and all proceeds of each such Series of Bonds deposited in the Redevelopment Fund shall be held in the account established for such Series and shall be accounted for separately from all other amounts in the Redevelopment Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Redevelopment Fund. SECTION 5.05. Expense Fund. All moneys in the Expense Fund shall be applied to the payment of costs and expenses incurred by the Agency in connection with the authorization, issuance and sale of the Bonds, including, without limitation, Trustee's fees and expenses and Trustee's legal fees and expenses, and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition executed by an Authorized Representative. Each such requisition shall be sequentially numbered and state the name and address of the person, firm or corporation to whom payment is due, the amount to be disbursed, the purposes for such disbursement and that such obligation has been properly incurred, is a proper charge against the Expense Fund and has not been the subject of any previous requisition. Upon the earlier of the payment in full of such costs and expenses or the making of adequate provision for the payment thereof, evidenced by a Certificate of the Agency to the Trustee or 180 days from the initial delivery of the Bonds to the original purchaser thereof, any balance remaining in such Fund shall be transferred to the Agency and deposited by the Agency in the Redevelopment Fund established pursuant to Section 5.03 hereof, and pending such transfer and application, the moneys in such Fund may be invested as permitted by Section 5.08 hereof; provided, however, that investment income resulting from any such investment shall be retained in the Expense Fund. The Trustee shall establish and maintain an account within the Expense Fund for each series of Bonds issued hereunder known as the "Series Expense Account" and all proceeds of each such Series of Bonds deposited in the Expense Fund shall be held in the account established for such Series and shall be accounted for separately from all other amounts in the Expense Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Expense Fund. SECTION 5.06. [Intentionally left blank.] SECTION 5.07. Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund. All moneys in the Debt Service Fund shall be set aside by the Trustee in each Bond Year when and as received in the following respective special accounts within the Debt Service Fund (each of which is hereby created and each of which the Trustee hereby covenants and agrees to cause to be maintained), in the following order of priority (except as otherwise provided in subsection (2) below): LA1-56146.3 31 (1) Interest Account; (2) Principal Account; (3) Sinking Account; and (4) Reserve Account. All moneys 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 5.07. (1) Interest Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Interest Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (2) Principal Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Principal Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on the Principal Payment Date in such Bond Year. In the event that there shall be insufficient money in the Debt Service Fund to make in full all such principal payments and Sinking Account Installments required to be made pursuant to Section 5.07(3) hereof in such Bond Year, then the money available in the Debt Service Fund shall be applied pro rata to the making of such principal payments and such Sinking Account Installments in the proportion which all such principal payments and Sinking Account Installments bear to each other. No deposit need be made into the Principal Account if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds becoming due and payable on the Principal Payment Date in such Bond Year. All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds as they shall become due and payable. (3) Sinking Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to the Sinking Account Installment payable on the Sinking Account Payment Date in such Bond Year. All moneys in LA1-56146.3 32 the Sinking Account shall be used by the Trustee to redeem the Term Bonds in accordance with subsection (b) of Section 2.04. (4) Reserve Account. (a) The Trustee shall set aside from the Debt Service Fund and deposit in the Reserve Account an amount of money (or other authorized deposit of security, as contemplated by the following paragraphs) equal to the Reserve Account Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the Agency is lawfully available therefor, or for the retirement of all Bonds then Outstanding, except that for so long as the Agency is not in default hereunder, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon Written Request of the Agency, be withdrawn from the Reserve Account by the Trustee and transferred to the Agency. (b) In lieu of making the Reserve Account Requirement deposit in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Agency upon delivery of a letter of credit satisfying the requirements stated below), the Agency, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P and Moody's, in an amount, together with moneys, Authorized Investments or insurance policies (as described in Section 5.07(4)(c)) on deposit in the Reserve Account, equal to the Reserve Account Requirement. Draws on such letter of credit must be payable no later than two (2) Business Days after presentation of a sight draft thereunder. Such letter of credit shall have a term of no less than three (3) years. The issuer of such letter of credit shall be required to notify the Trustee and the Agency whether or not the letter of credit will be extended no later than 13 months prior to the stated expiration date thereof. At least one year prior to the stated expiration of such letter of credit, the Agency shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year, or (iii) deliver to the Trustee an insurance policy satisfying the requirements of Section 5.07(4)(c). Upon delivery of such replacement letter of credit, extended letter of credit, or insurance policy, the Trustee shall deliver the then-effective letter of credit to or upon the order of the Agency. If the Agency shall fail to deposit a replacement letter of credit, extended letter of credit or insurance policy with the Trustee, the Agency shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Reserve Account Requirement is on deposit in the Reserve Account no later than the stated expiration date of the letter of credit. If the Agency shall fail to make such deposits, the Trustee shall draw on such letter of credit on or before 10 days prior to its stated expiration date in an amount necessary to replenish the Reserve Account to the Reserve Account Requirement. If a drawing is made LA1-56146.3 33 on the letter of credit, the Agency shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of an insurance policy satisfying the requirements of Section 5.07(4)(c) or the deposit in the Reserve Account of an amount sufficient to increase the balance in the Reserve Account to the Reserve Account Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing. (c) In lieu of making the Reserve Account Requirement in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Agency upon delivery of an insurance policy satisfying the requirements stated below), the Agency, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may also deliver to the Trustee an insurance policy securing an amount, together with moneys, Authorized Investments or letters of credit (as described in Section 5.07(4)(b)) on deposit in the Reserve Account, no less than the Reserve Account Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of debt service on the Bonds and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies), at the time of such delivery, are rated in the highest rating category (without respect to any modifier) of A.M. Best & Company, S&P and Moody's. (d) If and to the extent that the Reserve Account has been funded with a combination of cash (or Authorized Investments) and a Qualified Reserve Instrument, then all such cash (or Authorized 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 Authorized Investments). If the Reserve Account 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. (5) Surplus. If during any Bond Year (i) Pledged Tax Revenues remain in the Debt Service Fund after providing (or otherwise reserving) for all deposits required by paragraphs (1) through (3) above during such Bond Year, (ii) the amounts on deposit in the Reserve Account equal the Reserve Account Requirement, (iii) Qualified Reserve Instruments, if any, used to fund the Reserve Account are fully replenished and all interest on amounts advanced under such Qualified Reserve Instruments has been paid to the provider thereof, and (iv) the Agency is not in default hereunder, then the Agency shall provide to the Trustee written certification thereof and the Trustee shall thereafter transfer any amount remaining on deposit in the Debt Service Fund to the Agency to be used for any lawful purpose of the Agency. SECTION 5.08. Investment of Moneys in Funds and Accounts. Upon the Written Request of the Agency received by the Trustee at least two (2) Business Days prior to the date of such investment, moneys in the Debt Service Fund, the Interest Account, the Principal Account, any Sinking Account, the Expense Fund, the Rebate Fund or the Reserve Account shall be invested by the Trustee in Authorized Investments. In the absence of such LA1-56146.3 34 instructions, the Trustee shall invest in the investments described in paragraph (D) of the definition of Authorized Investments, except as otherwise provided in this Section 5.08. The obligations in which moneys in the Debt Service Fund, the Interest Account, the Principal Account or any Sinking Account are so invested shall mature prior to the date on which such moneys are estimated to be required to be paid out hereunder. The obligations in which moneys in the Reserve Account are so invested shall be in obligations maturing no more than five years from the date of purchase by the Trustee or on the final maturity date of the Bonds, whichever date -is earlier; provided, however, that if an obligation may be redeemed by the Trustee at par on the Business Day prior to each Interest Payment Date during which such obligation is outstanding., such obligation may have any maturity. Any interest, income or profits from the deposits or investments of all funds (except the Special Fund, Redevelopment Fund, Expense Fund and Rebate Fund) and accounts shall be deposited in the Debt Service Fund. For purposes of determining the amount on deposit in any fund or account held hereunder, all Authorized Investments credited to such fund or account shall be valued monthly at the lower of cost or market (excluding accrued interest and brokerage commissions, if any). Except as otherwise provided in this Section, Authorized Investments representing an investment of moneys attributable to any fund or account and all investment profits or losses thereon shall be deemed at all times to be a part of said fund or account. Absent negligence, bad faith or willful misconduct by the Trustee, the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this Section. Amounts deposited in the Special Fund and the Redevelopment Fund may be invested in any investment permitted by law for Agency funds. All earnings on amounts in the Special Fund, Expense Fund and the Redevelopment Fund shall remain in such funds. The Trustee may act as principal or agent in the acquisition or disposition of investments hereunder. The Trustee may commingle moneys in any of the funds or accounts created hereunder for purposes of investment. ARTICLE VI COVENANTS OF THE AGENCY SECTION 6.01. Punctual Payment. The Agency will punctually pay the interest on and principal of and redemption premiums, if any, to become due with respect to the Bonds, but only from Pledged Tax Revenues, in strict conformity with the terms of the Bonds and of this Indenture and will faithfully satisfy, observe and perform all conditions, covenants and requirements of the Bonds and of this Indenture. SECTION 6.02. Against Encumbrances. The Agency will not mortgage or otherwise encumber, pledge or place any charge upon any of the Pledged Tax Revenues, except as provided in the Indenture, and will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or in part from the Pledged Tax Revenues (other than Additional Bonds). LA1-56146.3 35 SECTION 6.03. Extension or Funding of Claims for Interest. In order to prevent any claims for interest after maturity, the Agency will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any Bonds and will not, directly or indirectly, be a parry to or approve any such arrangements by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the Agency, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. SECTION 6.04. Management and Operation of Properties. The Agency will manage and operate all properties owned by the Agency and comprising any part of the Project in a sound and business-like manner and in conformity with all valid requirements of any governmental authority relative to the Project or any part thereof, and will keep such properties insured at all times in conformity with sound business practice. SECTION 6.05. Payment of Claims. The Agency will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Pledged Tax Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds; provided that nothing herein contained shall require the Agency to make any such payments so long as the Agency in good faith shall contest the validity of any such claims. SECTION 6.06. Books and Accounts: Financial and Project Statements. The Agency will keep proper books of record and accounts, separate from all other records and accounts of the Agency, in which complete and correct entries shall be made of all transactions relating to the Project. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Bond Insurer or of the Owners of not less than ten per cent (10 of the aggregate principal amount of the Bonds then Outstanding or their representatives authorized in writing. The Agency will prepare and file with the Trustee and the Bond Insurer annually as soon as practicable, but in any event not later than one hundred eighty (180) days after the close of each Fiscal Year, so long as any Bonds are Outstanding, an audited financial statement relating to the Pledged Tax Revenues and all other funds or accounts established pursuant to the Indenture for the preceding Fiscal Year prepared by an Independent Certified Public Accountant, showing the balances in each such fund as of the beginning of such Fiscal Year and all deposits in and withdrawals from each such fund during such Fiscal Year and the balances in each such fund as of the end of such Fiscal Year, which audited financial statement shall include a statement as to the manner and extent to which the Agency and the Trustee have complied with the provisions of this Indenture as it relates to such funds. The Trustee, at the expense of the Agency, will furnish a copy of such audited financial statement to any Owner upon written request. The Trustee shall provide such statements with regard to any funds held by the Trustee LA1-56146.3 36 hereunder to the Agency as the Agency may reasonably require to comply with the terms of this Section 6.06. The Agency will permit the Bond Insurer to discuss the affairs, finances and accounts of the Agency or any other subject the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Agency. The Agency will permit the Bond Insurer to have access to and to make copies of all books and records relating to the Bonds at any reasonable time. The Bond Insurer shall have the right to direct an accounting at the Agency's expense, and the Agency's failure to comply with such direction within thirty (30) days after receipt of written notice of such direction from the Bond Insurer shall be deemed an Event of Default; provided, however, that if compliance cannot occur within such period, then such period shall be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any Owner. SECTION 6.07. Protection of Security and Rights of Owners. The Agency will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any Bonds by the Agency, such Bonds shall be incontestable by the Agency. SECTION 6.08. Payment of Taxes and Other Charges. Subject to the provisions of Section 6.10 hereof, the Agency will pay and discharge all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or any properties owned by the Agency in the Project Area, or upon the revenues therefrom, when the same shall become due; provided that nothing herein contained shall require the Agency to make any such payments so long as the Agency in good faith shall contest the validity of any such taxes, service charges, assessments or other governmental charges. SECTION 6.09. Financing the Project. The Agency will commence the financing or refinancing of the Project to be aided with the proceeds of the Bonds with all practicable dispatch, and such financing will be accomplished and completed in a sound, economical and expeditious manner and in conformity with the Redevelopment Plan and the Law so as to complete or refinance the Project as soon as possible. SECTION 6.10. Taxation of Leased Pronertv. Whenever any property in the Project is redeveloped by the Agency and thereafter is leased by the Agency to any person or persons, or whenever the Agency leases any real property in the Project to any person or persons for redevelopment, each property shall be assessed and taxed in the same manner as privately-owned property (in accordance with the law), and the lease or contract shall provide (1) that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of the leasehold interest, and (2) that if for any reason the taxes paid by the lessee on such property in any year during the term of the lease shall be less than the taxes that would have been payable upon the entire property if the property were assessed and taxed in the same manner as privately-owned property, the lessee shall pay such difference to LA1-56146.3 37 the Agency within thirty (30) days after the taxes for such year become payable, and in any event prior to the delinquency date of such taxes established by law, which such payments shall be treated as Pledged Tax Revenues and shall be deposited by the Agency in the Special Fund. SECTION 6.11. Disposition of Property in Project Area. Except as provided below, the Agency will not authorize the disposition of any real property in the Project Area to anyone which will result in such property's becoming exempt from taxation because of public ownership or use or otherwise (except for public ownership or use contemplated by the Redevelopment Plan in effect on the date of execution and delivery of the Indenture, or property to be used for public streets or public off-street parking facilities or easements or rights of way for public utilities, or other similar uses) if such dispositions, together with all similar prior dispositions on or subsequent to the effective date of this Indenture, shall comprise more than ten per cent (10%) of the land area in the Project Area. If the Agency proposes to make any such disposition which, together with all similar dispositions on or subsequent to the effective date of the Indenture, shall comprise more than ten per cent (10 of the land area in the Project Area, it shall cause to be filed with the Trustee (i) written evidence of the consent of the Bond Insurer to such disposition and (ii) a Consultant's Report on the effect of such proposed disposition. If the Consultant's Report concludes that the Pledged Tax Revenues will not be materially reduced by such proposed disposition, the Agency may proceed with such proposed disposition. If the Consultant's Report concludes that Pledged Tax Revenues will be materially reduced by such proposed disposition, the Agency shall not proceed with such proposed disposition unless, as a condition precedent to such proposed disposition, the Agency shall require that such new owner or owners either: (1) Pay to the Agency, so long as any of the Bonds are Outstanding, an amount equal to the amount that would have been received by the Agency as Pledged Tax Revenues if such property were assessed and taxed in the same manner as privately-owned non-exempt property, which payment shall be made within thirty (30) days after taxes for each year would become payable to the taxing agencies for non-exempt property and in any event prior to the delinquency date of such taxes established by law; or (2) Pay to the Agency a single sum equal to the amount estimated and certified to the Agency by an Independent Redevelopment Consultant to be receivable from taxes on such property from the date of such payment to the last maturity date of all Outstanding Bonds, less a reasonable discount value. All such payments to the Agency in lieu of taxes shall be treated as Pledged Tax Revenues and shall be applied by the Agency as required by Section 5.02. SECTION 6.12. Amendment of Redevelopment Plan. If the Agency proposes to amend the Redevelopment Plan, it shall cause to be filed with the Trustee a Consultant's Report on the effect of such proposed amendment. If the Consultant's Report concludes that Pledged Tax Revenues will not be materially reduced by such proposed amendment, the Agency may adopt such amendment. If the Consultant's Report concludes that Pledged Tax Revenues LA1-56146.3 38 will be materially reduced by such proposed amendment, the Agency shall not adopt such proposed amendment. The Trustee shall be entitled to rely upon any said report and shall have no duty to verify the information or statements set forth therein. SECTION 6.13. Pledged Tax Revenues. The Agency shall comply with all requirements of the Law to insure the allocation and payment to it of the Pledged Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of Los Angeles County. SECTION 6.14. Further Assurances. The Agency shall adopt, make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided herein. SECTION 6.15. Tax Covenants: Rebate Fund. (a) In addition to the accounts created pursuant to Article V, the Trustee shall establish and maintain with respect to each Series of Bonds issued hereunder (other than any Series of Bonds which the Agency shall certify to the Trustee is exempt from the requirements of Section 148 of the Code related to rebate of arbitrage earnings) a fund separate from any other fund or account established and maintained hereunder designated as the "Series Rebate Fund" hereinafter in this Section referred to as the "Rebate Fund." The provisions of this Section shall apply separately to each Rebate Fund established for each Series of Bonds. Upon the written direction of the Agency, there shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Sections 5.01, 5.02, 5.08 and 10.01 relating to the pledge of Pledged Tax Revenues, the allocation of money in the Special Fund, the investments of money in any fund or account and the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section 6.15 and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the Written Request of the Agency, and shall have no liability or responsibility to enforce compliance by the Agency with the terms of the Tax Certificate. (b) The Agency shall not use or permit the use of any proceeds of Bonds or any funds of the Agency, directly or indirectly, to acquire any securities or obligations, and shall not take or permit to be taken any other action or actions, which would cause any Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements promulgated from time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as amended. The Agency shall observe and not violate the requirements of LA1-56146.3 39 Section 148 of the Code and any such applicable regulations. The Agency shall comply with all requirements of Sections 148 and 149(d) of the Code to the extent applicable to the Bonds. In the event that at any time the Agency is of the opinion that for purposes of this Section 6.15(b) it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under this Indenture, the Agency shall so instruct the Trustee under this Indenture in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. The Agency shall not use or permit the use of any proceeds of the Bonds or any funds of the Agency, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. (c) Notwithstanding any provisions of this Section 6.15, if the Agency shall provide to the Trustee an opinion of nationally recognized bond counsel that any specified action required under this Section 6.15 is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest with respect to the Bonds, the Trustee and the Agency may conclusively rely on such opinion in complying with the requirements of this Section, and, notwithstanding Article VIII hereof, the covenants hereunder shall be deemed to be modified to that extent. (d) The provisions of this Section 6.15 shall not apply to any Series of Bonds which the Agency shall certify to the Trustee is not intended to comply with the requirements of the Code necessary to make interest on such Series of Bonds excludable from gross income for federal tax purposes. SECTION 6.16. Agreements with Other Taxing _Agencies. So long as any Bonds are Outstanding, the Agency shall not enter into any agreement or amend any existing agreement with any other taxing agency entered into (i) pursuant to Section 33401 of the law or (ii) which operates as a waiver of the Agency's right to receive Pledged Tax Revenues under the Redevelopment Plan, unless the Agency's obligations under such agreement are made expressly subordinate and junior to the Agency's obligations under this Indenture and the Bonds. SECTION 6.17. Annual Review of Pledged Tax Revenues. The Agency hereby covenants that it will annually review the total amount of Pledged Tax Revenues remaining available to be received by the Agency under the Redevelopment Plan's cumulative tax increment limitation, as well as future cumulative Annual Debt Service and estimated future fees and expenses of the Trustee. The Agency will not accept Pledged Tax Revenues greater than Annual Debt Service and estimated future fees and expenses, in any year, if such acceptance will cause the amount remaining under the tax increment limit to fall below remaining cumulative Annual Debt Service and estimated future fees and expenses of the Trustee, except for the purpose of depositing such revenues in escrow for the payment of interest on and principal of and redemption premiums, if any, on the Bonds. LA1-56146.3 40 ARTICLE VII THE TRUSTEE SECTION 7.01. Appointment of Trustee. State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Agency for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Agency agrees that it will maintain a Trustee having a corporate trust office in the State, with a combined capital and surplus, or a member of a bank holding company system the lead bank of which shall have a combined capital and surplus, of at least $50,000,000, and subject to supervision or examination by Federal or State authority, so long as any Bonds are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 7.01 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee is hereby authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered by it and of all Bonds paid and discharged. SECTION 7.02. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (b) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, rely upon a Certificate of the Agency. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners pursuant to this Indenture, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. LA1-56146.3 41 (d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (e) The Trustee, prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all such Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no covenants of or against the Trustee shall be implied in this Indenture. In case an Event of Default hereunder has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (f) The Trustee may execute any of the trusts or powers hereunder and perform the duties required of it hereunder either directly or by or through attorneys or agents, shall not be liable for the acts or omissions of such attorneys or agents appointed with due care, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder. The Trustee may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it hereunder. (g) The Trustee shall not be responsible for any recital herein or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and makes no representation as to the validity or sufficiency of the Bonds or this Indenture. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Agency hereunder. The Trustee shall not be responsible for the application by the Agency of the proceeds of the Bonds. (h) The Trustee may become the Owner or pledgee of Bonds secured hereby with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Agency with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in the capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (i) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, LA1-56146.3 42 report, direction, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of Bond by such person shall be reflected on the Registration Books. 0) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (k) The Trustee shall not be required to take notice or to be deemed to have notice of any Event of Default hereunder except failure by the Agency to make any of the payments to the Trustee required to be made by the Agency pursuant hereto or failure by the Agency to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default by the Agency or by the Owners of at least 25 % in aggregate principal amount of the Bonds then Outstanding and all notice or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. (1) At any and all reasonable tunes the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers and records of the Agency pertaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (m) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises hereof. (n) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Agency to the execution LA1-56146.3 43 of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee. (o) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (p) Whether or not expressly provided therein, every provision of this Indenture relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this Section 7.02. (q) No implied covenants or obligations shall be read into this Indenture against the Trustee. (r) Notwithstanding any other provision hereof, in determining whether the rights of the Owners will be adversely affected by and action taken or omitted hereunder, the Trustee shall consider the effect on the Owners as if there were no Bond Insurance Policy. SECTION 7.03. Fees. Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon any Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it. SECTION 7.04. Notice to Bond Owners of Default. If an Event of Default hereunder occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in Section 7.02(k) hereof, then the Trustee shall, in addition to any notice required under Section 11.08 hereof, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Bond and to the Bond Insurer, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Agency to make any payment. when due, the Trustee may elect not to give such notice to the Owners (but shall give such notice to the Bond Insurer) if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice. SECTION 7.05. Intervention by Trustee. In any judicial proceeding to which the Agency is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 7.02(c), shall do so if requested in writing by the Owners of at least 25 % in aggregate principal amount of such Bonds then Outstanding. LA1-56146.3 44 SECTION 7.06. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and the Bond Insurer or, in the case of breach by the Trustee of its obligations hereunder, by the Bond Insurer alone. The Agency may also remove the Trustee at any time, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth herein. SECTION 7.07. Resignation by Trustee. The Trustee and any successor Trustee may at any time give prior written notice of its intention to resign as Trustee hereunder, such notice to be given to the Agency and the Bond Insurer by registered or certified mail. Upon receiving such notice of resignation, the Agency shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Agency shall cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books. SECTION 7.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 7.06 or 7.07, respectively, with the prior written consent of the Bond Insurer, the Agency shall promptly appoint a successor Trustee. In the event the Agency shall for any reason whatsoever fail to appoint a successor Trustee within 90 days following the delivery to the Trustee of.the instrument described in Section 7.06 or within 90 days following the receipt of notice by the Agency pursuant to Section 7.07, the Trustee may, at the expense of the Agency, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 7.01. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the Agency purporting to appoint a successor Trustee following the expiration of such 90-day period. SECTION 7.09. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in Section 7.01, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. SECTION 7.10. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Agency an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such LA1-56146.3 45 predecessor shall, nevertheless, on the Written Request of the Agency, or of the Trustee's successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Agency be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to' be vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Agency. SECTION 7.11. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action that may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Agency appoint an additional individual or institution as a separate trustee or co-trustee. The following provisions of this Section 7.11 are adopted to these ends. In the event.that the Trustee or the Agency appoints an additional individual or institution as a separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co-trustee but only to the extent necessary to enable such separate trustee or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co-trustee shall run to and be enforceable by either of them. Should any instrument in writing from the Agency be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Agency. In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, shall resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee. SECTION 7.12. Limited Liability of Trustee. No provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder if it shall have reasonable grounds for believing repayment of such funds or adequate LA1-56146.3 46 indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Bond Insurer or of the Owners of at least 25 % in aggregate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture or exercising any power conferred upon the Trustee under this Indenture. The Agency hereby agrees to indemnify and hold harmless the Trustee for any loss or liability incurred by the Trustee not relating to its own negligence or wilful misconduct. The obligations of the Agency under this Section shall survive the resignation or removal of the Trustee under this Indenture. ARTICLE VIII AMENDMENT OF THE INDENTURE SECTION 8.01. Amendment Requirements The Indenture and the rights and obligations of the Agency and of the Owners may be amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.02, and the written consent of the Bond Insurer, if any, are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce the interest rate on, or otherwise alter or impair the obligation of the Agency to pay the interest or principal or redemption premium, if any, at the time and place and at the rate and in the currency provided herein of any Bond, without the express written consent of the Owner of such Bond, or (2) permit the creation by the Agency of any mortgage, pledge or lien upon the Pledged Tax Revenues superior to or on a parity with the pledge and lien created in the Indenture for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations of the Trustee without its prior written assent thereto. The Indenture and the rights and obligations of the Agency and of the Owners may also be amended at any time by a Supplemental Indenture which shall become binding upon execution, without the consent of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) To add to the covenants and agreements of the Agency in the Indenture contained, other covenants and agreements thereafter to be observed, or to surrender any right or power herein reserved to or conferred upon the Agency; (b) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in regard to questions arising under the Indenture, as the Agency may deem necessary or desirable and not inconsistent with the Indenture, and which shall not materially adversely affect the interest of the Owners; LA1-56146.3 47 (c) To provide for the issuance of any Additional Bonds, and to provide the terms and conditions under which such Additional Bonds may be issued, subject to and in accordance with the provisions of Article IV; (d) To modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds; (e) To maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes (except with respect to any Bonds which the Agency certifies to the Trustee are not intended to qualify for such exclusion); (f) To the extent necessary rating on the Bonds or in connection Account Requirement by crediting a Account; or to obtain a Bond Insurance Policy, to obtain a with satisfying all or a portion of the Reserve Qualified Reserve Instrument to the Reserve (g) With the consent of the Bond Insurer, for any other purpose that does not materially adversely affect the interests of the Owners. Notwithstanding any other provision hereof, any provision of this Indenture expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer hereunder without the prior written consent of the Bond Insurer. A copy of any amendment of this Indenture which is consented to by the Bond Insurer shall be delivered by the Trustee to S&P as soon as practicable after the execution and delivery of such amendment. SECTION 8.02. Disqualified Bonds. Bonds owned or held by or for the account of the Agency or the City shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds for such purposes in this Indenture provided for, and shall not be entitled to consent to, or take any other action in this Indenture provided for; provided, however, that for purposes of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held will be disregarded. SECTION 8.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Agency may determine that the Bonds may bear a notation, by endorsement in form approved by the Agency, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for such purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bond. If the Agency shall so determine, new Bonds so LA1-56146.3 48 modified as, in the opinion of the Agency, shall be necessary to conform to such action shall be prepared and executed by the Trustee at the expense of the Agency, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the -office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. SECTION 8.04. Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. SECTION 8.05. Opinion of Counsel. The Trustee may conclusively accept an opinion of nationally recognized bond counsel to the Agency that an amendment of the Indenture is in conformity with the provisions of this Article. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF OWNERS SECTION 9.01. Events of Default and Acceleration of Maturities. If one or more of the following events (herein called "Events of Default") shall happen, that is to say: (a) If default shall be made in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) If default shall be made in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (c) If default shall be made by the Agency in the observance of any of the other agreements, conditions or covenants on its part herein or in the Bonds contained, and such default shall have continued for a period of 60 days after the Agency shall have been given notice in writing of such default by the Trustee; provided, however, that such default shall not constitute an Event of Default hereunder if the Agency shall commence to cure such default within said 60-day period and thereafter diligently and in good faith proceed to cure such default within a reasonable period of time; or (d) If the Agency shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent LA 1-56146.3 49 jurisdiction shall assume custody or control of the 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, the Trustee may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, shall, by notice in writing to the Agency, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything herein or in the Bonds contained to the contrary notwithstanding; provided, however, that any such declaration shall be subject to the prior written consent of the Bond Insurer, if any. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds 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 Agency shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest at the rate of interest which would have been paid on such overdue principal on such overdue installments of principal and interest, and the expenses of the Trustee, including attorneys fees, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds 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 Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences; provided, however, that no such rescission or annulment shall occur without the prior written consent of the Bond Insurer, if any. 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. SECTION 9.02. Application of Funds Upon Acceleration. All money in the funds and accounts provided for herein upon the date of the declaration of acceleration by the Trustee as provided in Section 9.01, and all Pledged Tax Revenues thereafter received by the Agency hereunder, shall be transmitted to the Trustee and shall be applied by the Trustee in the following order: First, to the payment of the costs, fees and expenses of the Trustee, if any, in carrying out the provisions of this Article, including reasonable compensation to its agents and counsel, to the payment of any other amounts then due and payable to the Trustee, including any predecessor trustee, with respect to or in connection with this Indenture, whether as compensation, reimbursement, indemnification or otherwise, and to the payment of the costs and expenses of the Owners in providing for the declaration of such Event of Default, including reasonable compensation to their agents and counsel; LA1-56146.3 50 Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on the overdue interest and principal at the rate of interest which would have been paid on such overdue principal, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal, ratably to the aggregate of such interest, principal and interest on overdue interest and principal; provided that the amounts in each subaccount of the Reserve Account shall be applied only to the payment of the Series of Bonds to which such subaccount relates. SECTION 9.03. Other Remedies of Owners. Any Owner, subject to the conditions set forth in Section 9.08, shall have the right for the equal benefit and protection of all Owners similarly situated: (a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the Agency and any of the members, officers and employees of the Agency, and to compel the Agency or any such members, officers or employees to perform and carry out their duties under the Law and their agreements with the Owners as provided herein; (b) By suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owners; or (c) Upon the happening of an Event of Default (as deemed in Section 9.01), by a suit in equity to require the Agency and its members, officers and employees to account as the trustee of an express trust. SECTION 9.04. Non-Waiver. Nothing in this Article or in any other provision of the Indenture, or in the Bonds, shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as herein provided, out of the Pledged Tax Revenues pledged for such payment, or affect or impair the right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in the Indenture. A waiver of any default or breach of duty or contract by any Owner 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. No delay or omission by any Owner or the Trustee to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Law or by this Article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. LA1-56146.3 51 If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the Trustee, the Agency and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. SECTION 9.05. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner shallhave 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, and the Trustee is hereby appointed (and the successive respective Owners of the Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact; provided, however, the Trustee shall have no duty or obligation to enforce any right or remedy unless it has been indemnified by the Owners from any liability or expense including without limitation fees and expenses of its attorneys. SECTION 9.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law. SECTION 9.07. Owners' Direction of Proceedings. Except as provided in Section 9.09, anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, with the written consent of the Bond Insurer, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction. SECTION 9.08. Limitation on Owners' Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Law or any other applicable law with respect to such Bond, unless (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty-five percent (25 in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Owner or said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to LA1-56146.3 52 be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary directions from the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under this Indenture, the Law or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Indenture. SECTION 9.09. Bond Insurer's Direction of Proceedings. Notwithstanding any other provision hereof, so long as a Bond Insurance Policy is in effect with respect to any Series of Bonds, upon the occurrence and continuance of an Event of Default hereunder, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the Owners hereunder, including, without limitation: (i) the right to accelerate the principal of the Bonds and (ii) the right to annul any declaration of acceleration, and the Bond Insurer shall also be entitled to approve all waivers of Events of Default. ARTICLE X DEFEASANCE SECTION 10.01. Discharge of Indebtedness. If the Agency shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, investments described in paragraphs A (except CATS and TGRS) or B (except LA1-56146.3 53 items B(4) and B(6)) of the definition of Authorized Investments, in such amount as an Independent Certified Public Accountant or other qualified firm shall determine in a written report filed with the Trustee (upon which report the Trustee may conclusively rely) will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to Section 2.04(d)(3) or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Written Request of the Agency, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary obligations of the Agency under this Indenture with respect to all such Bonds, shall cease and terminate, except only (i) the obligation of the Agency to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, (ii) the obligation of the Agency to pay all expenses and costs of the Trustee and (iii) the obligations of the Agency to indemnify the Trustee pursuant to Section 7.12. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to this Section 10.01, which are not required for said purposes, shall be paid over to the Agency; provided, however, that (a) the Agency shall have delivered to the Trustee a Certificate of the Agency to the effect that: (i) the Agency is then in compliance with Section 6.15; (ii) the Agency has irrevocably deposited with the Trustee such moneys, securities, documents and other things and issued such irrevocable instructions to the Trustee so that any remaining and continuing applicable requirements of the Code, with respect to the Bonds, from compliance with which the Agency has not theretofore been relieved under the provisions of this Section 10.01 are ministerial and reportorial in nature; and (iii) the Agency has irrevocably authorized the Trustee and/or another agent satisfactory to the Trustee, and delegated to the Trustee or such agent the authority, to perform such remaining and continuing applicable requirements on the Agency's behalf, and such Trustee has undertaken to do so; and provided, further, that (b) there shall have been delivered to the Trustee an opinion of nationally recognized bond counsel to the effect that, based upon the matters set forth in the Certificate of the Agency described in (a) above and assuming compliance by the LA1-56146.3 54 Trustee or such agent with its undertaking described in (a)(iii) above, no further action by or on the part of the Agency will be required under the applicable requirements of the Code to maintain the Federal income tax exclusion from gross income of the interest on the Bonds. Notwithstanding any other provision hereof, in the event that the principal of and/or interest on the Bonds shall be, paid by the Bond Insurer pursuant to the Bond Insurance Policy, the Bonds shall remain Outstanding for all purposes, shall not be defeased or discharged hereunder and shall not be considered paid by the Agency, and the pledge of the Pledged Tax Revenues and all covenants, agreements and other obligations of the Agency to the Owners shall continue to exist and shall run to the benefit of the Bond Insurer and the Bond Insurer shall be subrogated to the rights of such Owners. SECTION 10.02. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Agency, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Agency for the payment of such Bonds; provided, however, that before being required to make any such payment to the Agency, the Trustee shall, at the expense and upon the written Request of the Agency, cause to be mailed to the Owner of all such Bonds, at their respective addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Agency. ARTICLE M MISCELLANEOUS SECTION 11.01. Liability of Agency Limited to Pledged Tax Revenues. Notwithstanding anything herein contained, the Agency shall not be required to advance any money derived from any source of income other than the Pledged Tax Revenues for the payment of the interest on or the principal of the Bonds or for the performance of any covenants herein contained, other than the covenants contained in Section 6.15 hereof. The Agency may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. The Agency's obligation to pay the Rebate Requirement to the United States of America pursuant to Section 6.15 hereof shall be considered the general obligation of the Agency and shall be payable from any available funds of the Agency. LA1-56146.3 55 The Bonds are limited obligations of the Agency and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Agency is not obligated to pay them except from the Pledged Tax Revenues. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal and redemption premium, if any, of the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City; said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Agency nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. SECTION 11.02. Benefits of Indenture Limited to Parties. Nothing herein, expressed or implied, is intended to give to any person other than the Agency, the Trustee, the Bond Insurer and the Owners any right, remedy or claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements herein contained by and on behalf of the Agency or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Owners. SECTION 11.03. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Agency or any member, officer or employee thereof is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Agency, that are presently vested in the Agency or such member, officer or employee, and all the agreements, covenants and provisions contained in this Indenture by or on behalf of the Agency or any member, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 11.04. Execution of Documents by Owners. Any request, declaration or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act, that the person signing such request, declaration 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. Except as otherwise herein expressly provided, the amount of Bonds transferable by delivery held by any person executing such request, declaration or other instrument or writing LA 1-56146.3 56 as a Owner, and the numbers thereof, and the date of his holding such Bonds, may be proved by a certificate, which need not be acknowledged or verified, satisfactory to the Trustee, executed by a trust company, bank or other depositary wherever situated, showing that at the date therein mentioned such person had on deposit with such depositary the Bonds described in such certificate. The Trustee may nevertheless in its discretion require further or other proof in cases where it deems the same desirable. The ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books provided for in Section 2.08. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Agency in good faith and in accordance therewith. SECTION 11.05. Waiver of Personal Liability. No member, officer or employee of the Agency shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing herein contained shall relieve any member, officer or employee of the Agency from the performance of any official duty provided by law. SECTION 11.06. Acquisition of Bonds by Agency. All Bonds acquired by the Agency, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. SECTION 11.07. Content of Certificates and Reports. Every certificate or report of the Agency with respect to compliance with a condition or covenant provided for in the Indenture shall include (a) a statement that the person or persons making or giving such certificate or report have read such covenant or condition 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 or opinions contained in such certificate or report are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or o investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with. Any such certificate made or given by an officer of the Agency may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, upon information that is in the possession of the Agency, upon the certificate or opinion of or representations by an officer or officers of the Agency, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in exercise of reasonable care should have known that the same were erroneous. LA1-56146.3 57 SECTION 11.08. Notice to Bond Insurer. Whenever any notice, authorization, request, certificate or demand is required or permitted to be given to any party or to any owner pursuant to this Indenture, such notice, authorization, request, certificate or demand shall also be given in writing to the Bond Insurer, if any, by first class mail at the address specified by such Bond Insurer. The Trustee shall notify the Bond Insurer of any known failure of the Agency to provide to the Trustee relevant notices, certificates, reports or other documents hereunder.. Notwithstanding any other provision hereof, the Trustee shall notify the Bond Insurer immediately if at any time there are insufficient moneys to make any payments of principal or interest as required hereunder and immediately upon the Trustee having actual knowledge of the occurrence of any Event of Default or any event, which with the passage of time could become an Event of Default. The Agency and the Trustee agree to provide the Bond Insurer with any additional information concerning the Bonds as the Bond Insurer may reasonably request. SECTION 11.09. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Agency or the Trustee may be established and maintained in the accounting records of the Agency or the Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts held by the Agency shall at all times be maintained in accordance with sound accounting practices and all funds and accounts held by the Trustee shall at all times be maintained in accordance with trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Owners. SECTION 11.10. Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and the table of contents appended hereto, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding articles, sections or subdivisions of this Indenture; and the words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. SECTION 11.11. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof provided in this Indenture to be performed on the part of the Agency (or of the Trustee) should 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 of this Indenture or of the Bonds; but the Owners shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The Agency hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more Sections, LA1-56146.3 58 paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 11.12. Execution in Several Coun=arts. This Indenture 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 Agency and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 11.13. Business Days. When any action is provided for herein to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day other than a day which is not a Saturday, a Sunday, or a day on which banks located in the city where the corporate trust office of the Trustee is located are required or authorized to remain closed (a "Business Day"), such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the specified period. SECTION 11.14. Governing Law. This Indenture shall be governed and construed in accordance with the laws of the State of California. SECTION 11.15. Notices. Whenever any notice is required to be given hereunder, such notice shall be mailed, first-class mail, postage prepaid, to the following parties at the following addresses: If to the Agency: Rosemead Redevelopment Agency 8838 E. Valley Boulevard Rosemead, California 91770 If to the Trustee: State Street Bank and Trust Company of California, N.A. 725 South Figueroa Street, Suite 3100 Los Angeles, California 90017 Attention: Corporate Trust Department LA1-56146.3 59 IN WITNESS WHEREOF, the ROSEMEAD REDEVELOPMENT AGENCY, has caused this Indenture to be signed in its name by its Chairman and attested by its Secretaryand STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written. ROSEMEAD REDEVELOPMENT AGENCY By Attest: Secretary STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By Autho ' Representative LA1-56146.2 APPENDIX A No. [ ROSEMEAD REDEVELOPMENT AGENCY REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BOND, SERIES 1993A RATE OF MATURITY INTEREST: DATE: DATED DATE: CUSIP: Registered Owner: Principal Amount: DOLLARS THE ROSEMEAD REDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Agency"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before the fifteenth day of the month next preceding the first interest payment date, in which event it shall bear interest from the dated date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on April 1, 1994, and semiannually thereafter on October 1 and April 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the corporate trust office of State Street Bank and Trust Company of California, N.A., in Los Angeles, California. Interest hereon is payable by check mailed on each interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next preceding the applicable interest payment date at such person's address as it appears on the registration books of the Trustee, or upon written request received by the Trustee prior to the fifteenth day of the month preceding an Interest Payment Date of an Owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account within the United States designated by such Owner. LA1-56146.3 A-1 This Bond is one of a duly authorized issue of the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Bonds"), limited in aggregate principal amount to Thirty-four Million Two Hundred Seventy-five Thousand Dollars ($34,275,000), all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, series, maturities, interest rates or redemption provisions), all issued under the provisions of the Community Redevelopment Law of the State of California, as supplemented and amended (the "Law"), and pursuant to the provisions of an Indenture, dated as of October 1, 1993 (the "Indenture"), between the Agency and the Trustee. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto and to the Law for a description of the terms on which the Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Agency and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner of this Bond, by his acceptance hereof, consents and agrees. Each registered owner hereof shall have recourse to all the provisions of the Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are issued to provide funds to aid in the financing or refinancing of the Rosemead Redevelopment Project Area No. 1, a duly adopted redevelopment project in Rosemead, California, as more particularly described in the Indenture. The Bonds are special obligations of the Agency and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Pledged Tax Revenues (as that term is defined in the Indenture and herein called the "Pledged Tax Revenues"), and the Agency is not obligated to pay them except from the Pledged Tax Revenues. The Bonds are equally secured by a pledge of, and charge and lien upon, the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Concurrently with the issuance of the Bonds, the Agency is issuing its Redevelopment Project No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B in the aggregate principal amount of $2,435,000. These bonds are issued on a parity with the Bonds, and are equally and ratably secured by Pledged Tax Revenues. Additional tax allocation bonds payable from the Pledged Tax Revenues may be issued which will rank equally as to security with the Bonds, but only subject to terms and conditions set forth in the Indenture. The Agency hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Trustee a special fund into which all Pledged Tax Revenues shall be deposited, and as an irrevocable charge the Agency has allocated the Pledged Tax Revenues solely to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Agency will pay promptly when due the interest on and principal of and redemption premium, if any, on this LA1-56146.3 A-2 Bond and all other Bonds of this issue and all additional tax allocation bonds authorized by the Indenture out of said special fund, all in accordance with the terms and provisions set forth in the Indenture. Bonds maturing on or after October 1, 2004 shall be subject to redemption, prior to their respective maturity dates, at the option of the Agency, on or after October 1, 2003, as a whole on any date, or in part (in such maturities as are designated by the Agency or, if the Agency fails to designate maturities, on a proportional basis among maturities) on any Interest Payment Date from funds derived by the Agency from any source, at a redemption price (expressed as a percentage of the principal amount of Bonds called for redemption), together with interest accrued thereon to the date fixed for redemption: Redemption Date Redemption Price October 1, 2003 through September 30, 2004 102% October 1, 2004 through September 30, 2005 101 October 1, 2005 and thereafter 100 Bonds maturing on October 1, 2018 shall be subject to redemption in part by lot, prior to their maturity from Sinking Account Installments deposited in the Sinking Account, on any October 1 on or after October 1, 2012, at a redemption price equal to the principal amount of the Bonds called for redemption, together with interest accrued thereon to the date of redemption, without premium. Bonds maturing on October 1, 2033 shall be subject to redemption in part by lot, prior to their maturity from Sinking Account Installments deposited in the Sinking Account, on any October 1, on or after October 1, 2019, at a redemption price equal to the principal amount of the Bonds called from redemption, together with interest accrued thereon to the date of redemption, without premium. As provided in the Indenture, notice of redemption of this Bond shall be mailed by first class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof, but failure to receive such notice or any defect therein shall not affect the sufficiency of such proceedings for redemption. If notice of redemption has been duly given as aforesaid and money for payment of the above-described redemption price is held by the Trustee, then such Bonds shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and from and after the date so designated interest on the Bonds so called for redemption shall cease to accrue and registered owners of such Bonds shall have no rights in respect thereof except to receive payment of such redemption price thereof. Any redemption of Bonds may be rescinded despite notice thereof having been given at the option of the Agency at any time up to and including the redemption date as provided in the Indenture. If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture; except that the Indenture provides that in certain events such LA1-56146.3 A-3 declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only in the form of fully registered Bonds in the denomination of $5,000 or any integral multiple thereof (not exceeding the principal amount of Bonds maturing at any one time). The Owner of any Bond or Bonds may surrender the same at the above-mentioned office of the Trustee in exchange for an equal aggregate principal amount of fully registered Bonds of any other authorized denominations, in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture. This Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Agency and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. The Trustee shall not be required to register the transfer or exchange of any Bond during the period the Trustee is selecting Bonds for redemption or of any Bond selected for redemption. The rights and obligations of the Agency and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. This Bond is not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, and State nor any of its political subdivisions is liable hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the members of the Agency nor any persons executing the Bonds shall be personally liable on the Bonds by reason of their issuance. ' This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Bond, together with all other indebtedness of the Agency, does not LA1-56146.3 A-4 exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. LA1-56146.3 A-5 IN WITNESS WHEREOF, the Rosemead Redevelopment Agency has caused this Bond to be executed in its name and on its behalf by its Chair and attested by its Secretary, and has caused its seal to be reproduced hereon, and has caused this Bond to be dated as of the Dated Date above stated. (Seal) Attest: Secretary ROSEMEAD REDEVELOPMENT AGENCY By Chair This is one of the Bonds described in the within-mentioned Indenture. Dated: By, STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee Authorized Signatory For value received the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned registered Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond 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 registered Bond in every particular, without alteration or enlargement or any change whatsoever. LA1-56146.3 A-6 SIGNATURE GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution. LA1-56146.3 A_7 APPENDIX B No. [ ] $ ROSEMI?AD REDEVELOPMENT AGENCY REDEVELOPMENT PROJECT AREA NO. 1 TAXABLE TAX ALLOCATION REFUNDING BOND, SERIES 1993B RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP: Registered Owner: Principal Amount: DOLLARS THE ROSEMEAD REDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Agency"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before the fifteenth day of the month next preceding the first interest payment date, in which event it shall bear interest from the dated date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on April 1, 1994, and semiannually thereafter on October 1 and April 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the corporate trust office of State Street Bank and Trust Company of California, N.A., in Los Angeles, California. Interest hereon is payable by check mailed on each interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next preceding the applicable interest payment date at such person's address as it appears on the registration books of the Trustee, or upon written request received by the Trustee prior to the fifteenth day of the month preceding an Interest Payment Date of an Owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account within the United States designated by such Owner. LA1-56146.3 B-1 This Bond is one of a duly authorized issue of the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Taxable Tax Allocation Refunding Bonds, Series 1993B (the "Bonds"), limited in aggregate principal amount to Two Million Four Hundred Thirty-five Thousand Dollars ($2,435,000), all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, series, maturities, interest rates or redemption provisions), all issued under the provisions of the Community Redevelopment Law of the State of California., as supplemented and amended (the "Law"), and pursuant to the provisions of an Indenture, dated as of October 1, 1993 (the "Indenture"), between the Agency and the Trustee. All Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto and to the Law for a description of the terms on which the Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Agency and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner of this Bond, by his acceptance hereof, consents and agrees. Each registered owner hereof shall have recourse to all the provisions of the Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are issued to provide funds to aid in the financing or refinancing of the Rosemead Redevelopment Project Area No. 1, a duly adopted redevelopment project in Rosemead, California, as more particularly described in the Indenture. The Bonds are special obligations of the Agency and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Pledged Tax Revenues (as that term is defined in the Indenture and herein called the "Pledged Tax Revenues"), and the Agency is not obligated to pay them except from the Pledged Tax Revenues. The Bonds are equally secured by a pledge of, and charge and lien upon, the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Concurrently with the issuance of the Bonds, the Agency is issuing its Redevelopment Project No. 1 Tax Allocation Bonds, Series 1993A in the aggregate principal amount of $34,275,000. These bonds are issued on a parity with the Bonds, and are equally and ratably secured by Pledged Tax Revenues. Additional tax allocation bonds payable from the Pledged Tax Revenues may be issued which will rank equally as to security with the Bonds, but only subject to terms and conditions set forth in the Indenture. The Agency hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Trustee a special fund into which all Pledged Tax Revenues shall be deposited, and as an irrevocable charge the Agency has allocated the Pledged Tax Revenues solely to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Agency will pay promptly when due the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds of this issue and all additional tax allocation bonds authorized by the LA1-56146.3 B-2 Indenture out of said special fund, all in accordance with the terms and provisions set forth in the Indenture. The Series 1993B Bonds are not subject to optional redemption prior to their maturing. If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture; except that the Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least a majority in aggregate principal amount of the Bonds then Outstanding. The Bonds are issuable only in the form of fully registered Bonds in the denomination of $5,000 or any integral multiple thereof (not exceeding the principal amount of Bonds maturing at any one time). The Owner of any Bond or Bonds may surrender the same at the above-mentioned office of the Trustee in exchange for an equal aggregate principal amount of fully registered Bonds of any other authorized denominations, in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture. This Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Agency and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. The Trustee shall not be required to register the transfer or exchange of any Bond during the period the Trustee is selecting Bonds for redemption or of any Bond selected for redemption. The rights and obligations of the Agency and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. This Bond is not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, and State nor any of its political subdivisions is liable hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be payable out of any funds or properties other than those of the Agency. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the members of the Agency nor any persons executing the Bonds shall be personally liable on the Bonds by reason of their issuance. LAI-56146.3 B-3 This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.. LA 1-56146.3 B-4 IN WITNESS WHEREOF, the Rosemead Redevelopment Agency has caused this Bond to be executed in its name and on its behalf by its Chair and attested by its Secretary, and has caused its seal to be reproduced hereon, and has caused this Bond to be dated as of the Dated Date above stated. ROSEMEAD REDEVELOPMENT AGENCY By Chair (Seal) Attest: Secretary Dated: STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Trustee By Authorized Signatory For value received the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned registered Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond 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 registered Bond in every particular, without alteration or enlargement or any change whatsoever. This is one of the Bonds described in the within-mentioned Indenture. LA1-56146.3 B-5 SIGNATURE GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution. LA1-56146.3 B-6 FIRST SUPPLEMENT TO INDENTURE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION TO U.S. BANK NATIONAL ASSOCIATION as Trustee Dated as of March 1, 2006 Relating to $14,005,000 Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A DOCSLA1:509332.7 41555-8 WWB/WWB FIRST SUPPLEMENT TO INDENTURE THIS FIRST SUPPLEMENT TO INDENTURE (this "First Supplement") is dated as of March 1, 2006, by and between the Rosemead Community Development Commission, a public body, corporate and politic, organized and existing under, and by virtue of the laws of the State of California (the "Commission"), and U.S. Bank National Association, as successor trustee to State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under the laws of the United States and authorized to accept and execute trusts of the character herein set out with a corporate trust office located in Los Angeles, California, as trustee (the "Trustee"); WITNESSETH: WHEREAS, the Commission is a redevelopment agency, a public body, corporate and politic duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California and referred to herein as the "Law"), and the powers of such agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, a redevelopment plan for a redevelopment project known and designated as the "Redevelopment Project Area No. 1" has been adopted and approved and all requirements of law for, and precedent to, the adoption and approval of said plan have been duly complied with; and WHEREAS, the plan contemplates that the Commission will issue its bonds to finance and/or refinance a portion of the cost of such redevelopment; and WHEREAS, the Commission, has heretofore issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds") in the original principal amount of $34,275,000 for the purpose of financing portions of the Redevelopment Project Area No. 1, which Series 1993A Bonds were issued pursuant to the terms of an Indenture, dated as of October 1, 1993 (the "Original Indenture"), between the Trustee and the Commission; and WHEREAS, the Commission, by Resolution No. 2006-02, adopted on February 14, 2006 (the "Resolution"), authorized the issuance of not to exceed $16,000,000 aggregate principal amount of its Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds") for the purpose of financing and refinancing the redevelopment project; and WHEREAS, the Commission has determined to issue the Series 2006A Bonds pursuant to the Original Indenture and this First Supplement, which Original Indenture, as supplemented by this First Supplement, and as hereinafter supplemented, is referred to as the "Indenture"; and DOCSLA1:509332.7 41555-8 WWB/WWB WHEREAS, the Indenture provides that the Commission may issue subsequent Series of Additional Bonds from time to time by a Supplemental Indenture, subject to the conditions and limitations contained in. the Law and in Section 4.01 of the Indenture; and WHEREAS, the conditions and limitations contained in the Law and in Section 4.01 of the Indenture have been satisfied or will be satisfied at the time of the issuance of the Series 2006A Bonds; and WHEREAS, the Commission has further determined that the amendments and supplements to the Indenture herein contained are necessary and desirable and can be made pursuant to Section 8.01 of the Indenture without the consent of any Bondholders; and WHEREAS, all things necessary to cause the Series 2006A Bonds, when authenticated by the Trustee and issued as in this First Supplement and the Original Indenture provided, to be legal, special obligations of the Commission, enforceable in accordance with their terms, and to constitute this First Supplement and the Original Indenture a valid agreement for the uses and purposes herein set forth in accordance with their terms, have been done and taken, and the creation, execution and delivery of this First Supplement and the creation, execution and issuance of the Series 2006A Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW THEREFORE, THIS FIRST SUPPLEMENT TO INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Bonds at any time issued and outstanding under the Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Commission does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE XII SERIES 2006A BONDS; AMENDMENTS; MISCELLANEOUS SECTION 12.01 Authorization and Terms of Series 2006A Bonds. A Series of Bonds to be issued under the Indenture is hereby created and such Series of Bonds are designated as the "Rosemead Community Development Commission, Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A" (herein called the "Series 2006A Bonds"). The aggregate principal amount of Series 2006A Bonds which may be issued and outstanding under this Indenture shall not exceed $14,005,000. The Series 2006A Bonds shall be dated the Dated Date, shall bear interest, at the rates per annum (payable on April 1 and October 1 in each year, commencing October 1, 2006), and shall mature and become payable on October 1 in each of the years as to principal in the amounts set forth below: DOCSLAI :509332.7 41555-8 WWB/WWB -2- Maturity Date Principal Interest (October 1) Amount Rate 2006 $ 780,000 4.000% 2007 810,000 4.000 2008 845,000 - 3.250 2009 870,000 3.250 2010 900,000 3.375 2011 930,000 3.500 2012 965,000 3.500 2013 1,000,000 4.000 2014 1,035,000 5.000 2015 1,090,000 5.000 2016 1,145,000 5.000 2017 1,200,000 4.000 2018 1;250,000 4.250 2019 280,000 4.000 2020 290,000 4.125 2021 300,000 4.125 2022 315,000 4.125 Interest on the Series 2006A Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The Series 2006A Bonds shall be issued as fully registered bonds in Authorized Denomination. The Series 2006A Bonds shall be numbered as determined by the Trustee. The Series 2006A Bonds shall bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from the 16th day of the month next preceding an Interest Payment Date to and including such Interest Payment Date, in which event they shall bear interest from such Interest Payment Date, or unless such date of registration is on or before September 15, 2006, in which event they shall bear interest from their Dated Date; provided, however, that if, at the time of registration of any Series 2006A Bond, interest is then in default on the Outstanding Series 2006A Bonds, such Series 2006A Bond shall bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the Outstanding Series 2006A Bonds. Payment of interest on the Series 2006A Bonds due on or before the maturity or prior redemption of such Series 2006A Bonds shall be made to the person whose name appears on the bond registration books of the Trustee as the registered owner thereof, as of the close of business on the 15th day of the month next preceding the Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such registered owner at his address as it appears on such books or, upon written request received prior to the 15th day of the month preceding an Interest Payment Date of an Owner of at least $1,000,000 in aggregate principal amount of Series 2006A Bonds, by wire transfer in immediately available funds to an account within the continental United States designated by such Owner. Principal and redemption premiums, if any, on the Series 2006A Bonds shall be payable upon the surrender thereof at maturity or the earlier redemption thereof at the principal corporate trust office of the Trustee and shall be paid in lawful money of the United States of America. DOCSLA1:509332.7 41555-8 WWB/WWB -3- The Commission may at any time execute and deliver the Series 2006A Bonds authorized to be issued hereunder and upon the Written Request of the Commission, the Trustee shall authenticate and deliver the Series 2006A Bonds. SECTION 12.02 Form of Series 2006A Bonds. The Series 2006A Bonds, the Trustee's certificate of authentication, and the form of assignment to appear thereon shall be in substantially the forms, respectively, attached hereto as Appendix A with necessary or appropriate variations, omissions and insertions as permitted or required by the Indenture. SECTION 12.03 Terms of Redemption of Series 2006A Bonds. (a) Optional Redemption. Series 2006A Bonds due on or before October 1, 2016 shall not be subject to redemption before their respective stated maturities. Series 2006A Bonds maturing on or after October 1, 2017 shall be subject to redemption, as a whole or in part, as designated by the Commission, or, absent such designation, pro rata among maturities, and by lot within any one maturity if less than all of the Series 2006A Bonds of such maturity are to be redeemed, prior to their respective maturity dates, at the option of the Commission, on any date on or after October 1, 2016, from funds derived by the Commission from any source, at the redemption price of the principal amount of Series 2006A Bonds called for redemption, together with interest accrued thereon to the date fixed for redemption. (b) Sinking Account Redemption. SECTION 12.04 Application of Proceeds of Series 2006A Bonds. Upon receipt of payment for the Series 2006A Bonds, the Trustee shall set aside and deposit the proceeds received from such sale and delivery in the following respective funds and accounts: (i) The Trustee shall deposit in the Series 2006A Expense Account in the Expense Fund an amount equal to $218,550.00 to pay costs incurred in connection with the issuance of the Series 2006A Bonds. (ii) The Trustee shall transfer $5,454,094.94 of the proceeds of the Series 2006A Bonds to the Commission for deposit into the Redevelopment Fund. (iii) The Trustee shall deposit the amount of $8,317,412.37 in the refunding escrow established under the Escrow Agreement. In addition, simultaneously with the receipt of payment for the Series 2006A Bonds, the Trustee shall release $998,561.87 on deposit in the Reserve Account and $253,053.75 on deposit in the Debt Service Fund under the Original Indenture and transfer the aggregate $1,251,615.62 to the refunding escrow established under the Escrow Agreement. For record-keeping purposes, the Trustee may establish such additional accounts as may be necessary to reflect such transfer of proceeds. DOCSLA1:509332.7 41555-8 WWB/WWB -4- In order to verify. the use of and the remaining available amount of the Series 2006A Bond proceeds, the Commission shall create such accounts and otherwise take such steps as may be required to be able to separately account for the proceeds of the Series 2006A Bonds. SECTION 12.05 Series 2006A Sinking Account. On or before five (5) days preceding each Sinking Account Payment Date for the Series 2006A Bonds, the Trustee shall set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to the amount required to redeem Series 2006A Bonds on the next succeeding October 1, pursuant to Section 12.03(b) hereof. All such moneys in the Term Bond Sinking Account shall be used by the Trustee to redeem the Series 2006A Bonds in accordance with Section 12.03(b) hereof. SECTION 12.06 Amendments to Indenture. (a) The following defined terms are added to Section 1.01 hereof: Ambac Assurance The term "Ambac Assurance" means Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company. Bond Insurer The term "Bond Insurer" means with respect to Series 2006A Bonds, Ambac Assurance. Commission The term "Commission" means the Rosemead Community Development Commission, formerly known as the Rosemead Redevelopment Agency, a pubic body, corporate and politic, duly organized and existing under and pursuant to the Law. References to the Agency in the Original Indenture shall mean the Commission. Commission Indebtedness The term "Commission Indebtedness" means any obligation the payment of which is to be made in whole or in part (but if in part, only to the extent of that part) out of taxes allocated to the Commission pursuant to Section 33670 of the Law. For purposes of determining compliance with the covenant contained in Section 4.03 hereof the following assumptions shall apply: (i) the principal and interest remaining to be paid on Commission Indebtedness shall include only such amounts as are scheduled to be paid by the Commission pursuant to the terms of the loan or other form of agreement under which such Commission Indebtedness was incurred. Commission Indebtedness without a stated maturity shall be deemed to mature on the final maturity date of the Bonds. (ii) Amounts scheduled to be paid by the Commission shall include regularly scheduled principal and interest payments, including, amounts payable pursuant to any mandatory redemption provision. (iii) Commission Indebtedness bearing interest at a variable rate of interest shall be deemed to accrue interest at the lesser of the maximum rate specified or 12% per annum. DOCSLA 1 :509332.7 41555-8 WWB/WWB -5- Dated Date The term "Dated Date" means with respect to Series 2006A Bonds the date of initial issuance and delivery thereof. Escrow Agreement The term "Escrow Agreement" means the Escrow Agreement, dated as of March 1, 2006 Between the Commission and U.S. Bank National Association, as escrow agent thereunder. Financial Guaranty Insurance Policy The term "Financial Guaranty Insurance Policy" means the financial guaranty insurance policy issued by Ambac Assurance insuring the payment when due of the principal of and interest on the Obligations as provided therein. Series 2006A Bonds The term "Series 2006A Bonds" means the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A. Surety Bond The term "Surety Bond" means the surety bond issued by Ambac Assurance guaranteeing certain payments into the Reserve Account with respect to the Bonds as provided therein and subject to the limitations set forth therein. (b) The following definitions are amended in the following manner: The definition of Bonds contained in Section 1.01 of the Indenture is amended to read as follows: The term "Bonds" means the Series 1993 Bonds, Series 2006A Bonds and all Additional Bonds. The definition of Bond Insurance Policy contained in Section 1.01 of the Indenture is amended to read as follows: The term "Bond Insurance Policy" means, the municipal bond insurance policy, if any, issued by the applicable Bond Insurer and guaranteeing, in whole or in part, the payment of principal of and interest on a Series of Bonds, and means with respect to the Series 2006A Bonds, the Financial Guaranty Insurance Policy. The definition of Authorized Investments contained in Section 1.01 of the Indenture is amended to revise subparagraphs F, J and K to read as follows: F. Certificates of deposit, savings accounts, deposit accounts or money market deposits, with a maximum term of one year, issued by any United States bank or trust company whose long-term obligations are rated "A+" or better by S&P or "A-1" or better by Moody's and whose short-term. obligations are rated "Al" or better by S&P or "P-1" or better by Moody's. J. Federal funds or banks acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" and "A3" or better by Moody's and "A1" and "A" or better by S&P. DOCSLA1:509332.7 41555-8 WWB/WWB -6- K. Repurchase agreements, acceptable to the Bond Insurer, providing for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee 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 Trustee in exchange for the securities at a specified date. The definition of Pledged Tax Revenues contained in Section 1.01 of the Indenture is amended to read as follows: The term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. (c) Section 4.03 of the Indenture is amended to read as follows: The Commission covenants with the Owners of all of the Bonds at any time Outstanding that it will not enter into any Commission Indebtedness or make any expenditure payable from taxes allocated to the Commission under the Law the payments of which, together with payments theretofore made or to be made with respect to other Commission Indebtedness (including, but not limited to the Bonds) previously entered into by the Commission, would exceed the then effective limit on the amount of taxes which can be allocated to the Commission pursuant to the Law and the Redevelopment Plan. In furtherance of the covenant set forth in this Section 4.03, the Commission will cause to be prepared and filed with the Trustee annually, within 180 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Gross Tax Increment (defined herein as, all monies allocated to the Commission pursuant to Section 33670 of the Law and the Redevelopment Plan, including amounts required to be deposited into the Low and Moderate Income Housing Fund, payments due under any tax sharing agreements (unless excluded from the Tax Increment Limitation, herein defined) and payments received as subventions or payments in lieu of taxes) as of the end of such Fiscal Year. Based upon such audited financial statements, the Commission will prepare or cause to be prepared and filed with the Trustee and the Bond Insurer a pro forma statement demonstrating the future availability of sufficient tax increment revenues DOCSLA1:509332.7 41555-8 WWB/WWB -7- (within the existing limitation on the amount of Gross Tax Increment allocable and payable to the Commission under the Redevelopment Plan (the "Tax Increment Limitation")) to pay when due (i) Commission Indebtedness, (ii) the amount payable in the then current Fiscal Year included within the Tax Increment Limitation which are required by Section 33334.2 of the Redevelopment Law to be deposited in the Commission's Low and Moderate Income Housing Fund (the "Set-Aside Requirement"), and (iii) all amounts included within the Tax Increment Limitation which are payable pursuant to the pass-through agreements until the final maturity of the Bonds (the "Pass- Through Payments"). The audited financial statements and the pro forma statement shall be accompanied by a written certificate of the Commission stating that the Commission is in compliance with its obligations hereunder. The Trustee shall not be responsible for the review of such financial statements. The pro forma statement shall be prepared on or before March 1 of each year or as soon thereafter as practicable, commencing March 1, 2007, and shall set forth: (1) The difference between the Tax Increment Limitation less the total amount of Gross Tax Increment theretofore allocated to the Commission (the "Remaining Limitation Amount"); and (2) The principal and interest remaining to be paid on Commission Indebtedness, plus the Set-Aside Requirement and the Pass-Through Payments (collectively, the "Total Debt Service"). To the extent the Remaining Limitation Amount is less than 105% of the Total Debt Service, the pro forma statement shall set forth the principal amount of the Bonds (to the nearest integral multiple of $5,000) that must be retired in order for the Remaining Limitation Amount to be at least equal to 105% of the Total Debt Service (the "Prepayment Amount"). At the time the Remaining Limitation Amount is determined to be less than 105% of the Total Debt Service, the Commission shall notify the Trustee of the Prepayment Amount and transfer such Prepayment Amount to the Trustee for deposit in the Debt Service Fund. Such monies shall be used to redeem, prepay or defease the Bonds. Notwithstanding the above, if prior to any such redemption, prepayment or defeasance, a subsequent annual pro forma statement indicates that future Gross Tax Increment will be 105% or more of the Total Debt Service in each year such debt service is payable, the Commission may authorize the Trustee to transfer such Pledged Tax Revenues from the Debt Service Fund to the Special Fund. (d) Section 5.08 of the Indenture is amended to add the following as an additional and fourth paragraph as follows: The Commission acknowledges that notwithstanding regulations of the Comptroller of the Currency or other applicable regulatory authority having jurisdiction over the Trustee granting the Commission the right to receive brokerage confirmations of security transactions as they occur, the City agrees that the Trustee shall not send such confirmations to the Commission to the extent permitted by law. The Trustee shall furnish the Commission periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. DOCSLA 1:504332.7 41555-8 WWB/WWB (e) Section 10.01 of -the Indenture is amended to correct the reference therein to Section 2.04(d)(3) and to substitute Section 2.04(c)(3) in place thereof. (f) Section 11.15 of the Indenture is amended to update and correct the following notice address as follows: If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Attention: Corporate Trust Services Reference: Rosemead Development Commission ARTICLE XIII ADDITIONAL PROVISIONS RELATING TO BOND INSURER AND SURETY BOND SECTION 13.01 Additional Notice Requirements. The following notices shall be given to Ambac Assurance as Bond Insurer for the Series 2006A Bonds: Notices to be sent to the attention of the SURVEILLANCE DEPARTMENT: (a) While the Financial Guaranty Insurance Policy is in effect, the Commission or the Trustee, as appropriate, shall furnish to Ambac Assurance, upon request, the following: (i) a copy of any financial statement, audit and/or annual report of the Commission; and (ii) such additional information it may reasonably request. Upon request, such information shall be delivered at the Commission's expense to the attention of the Surveillance Department, unless otherwise indicated. (b) a copy of any notice to be given to the registered owners of the Bonds, including, without limitation, notice of any redemption of or defeasance of Bonds, and any certificate rendered pursuant to this Indenture relating to the security for the Bonds. (c) To the extent that the Obligor has entered into a continuing disclosure agreement with respect to the Bonds, Ambac Assurance shall be included as party to be notified. Notices to be sent to the attention of the GENERAL COUNSEL OFFICE: (d) The Trustee or Commission, as appropriate, shall notify Ambac Assurance of any failure of the Commission to provide relevant notices, certificates, etc. (e) Notwithstanding any other provision of this Indenture, the Trustee or Commission, as appropriate, shall immediately notify Ambac Assurance if at any time there are DOCSLA1:509332.7 41555-8 WWB/WWB -9- insufficient moneys to make any payments of principal and/or interest as required and immediately upon the occurrence of any event of default hereunder. SECTION 13.02 Additional Information to be Provided Ambac Assurance. The Commission will permit Ambac Assurance to discuss the affairs, finances and accounts of the Commission or any information Ambac Assurance may reasonably request regarding the security for the Bonds with appropriate officers of the Commission. The Trustee or Commission, as appropriate, will permit Ambac Assurance to have access to and to make copies of all books and records relating to the Bonds at any reasonable time. Ambac Assurance shall have the right. to direct an accounting at the Commission's expense, and the Commission's failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from Ambac Assurance shall be deemed a default hereunder; provided, however, that if compliance cannot occur within such period, then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any registered owner of the Bonds. SECTION 13.03 No Defeasance if Series 2006A Bonds Paid By Bond Insurer. Notwithstanding anything in Article X to the contrary, in the event that the principal and/or interest due on the Series 2006A Bonds shall be paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy, the Series 2006A Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Commission, and the assignment and pledge created by this Indenture and all covenants, agreements and other obligations of the Commission to the registered owners shall continue to exist and shall run to the benefit of Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such registered owners, in each case to the extent of such payment. . SECTION 13.04 Payment Procedure Pursuant to the Financial Guaranty insurance Policy. As long as the Financial Guaranty Insurance Policy shall be in full force and effect, the Commission, the Trustee agrees to comply with the following provisions: (a) At least one (1) business day prior to all Interest Payment Dates the Trustee will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Bonds on such Interest Payment Date. If the Trustee determines that there will be insufficient funds in such Funds or Accounts, the Trustee shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee has not so notified Ambac Assurance at least one (1) business day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Series 2006A Bonds on or before the first (Ist) business day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee. (b) the Trustee shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The- Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), the registration books of the Commission maintained by the Trustee and all records relating to the Funds and Accounts maintained under this Indenture. DOCSLAI :509332.7 41555-8 WWB/WWB -10- (c) the Trustee shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Series 2006A Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Series 2006A Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Series 2006A Bonds surrendered to the Insurance Trustee by the registered owners of Series 2006A Bonds entitled to receive full or partial principal payments from Ambac Assurance. (d) the Trustee shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Series 2006A Bonds entitled to receive the payment of principal or interest thereon. from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Series 2006A Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds for payment thereon first to the Trustee who shall note on such Series 2006A Bonds the portion of the principal paid by the Trustee and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (e) in the event that the Trustee has notice that any payment of principal of or interest on an Series 2006A Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Commission has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Series 2006A Bonds which have been made by the Trustee and subsequently recovered from registered owners and the dates on which such payments were made. (f) in addition to those rights granted Ambac Assurance under this Indenture, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Series 2006A Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Series 2006A Bonds, and (ii) in the case of subrogation as to claims for DOCSLA1:509332.7 41555-8 WWB/WW]3 -11- past due principal, the Trustee. shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon surrender of the Series 2006A Bonds by the registered owners thereof together with proof of the payment of principal thereof. SECTION 13.05 Payment Procedure Pursuant to the Surety Bond. As long as the Surety Bond shall be in full force and effect, the Commission and the Trustee, as appropriate, agree to comply with the following provisions: (a) In the event and to the extent that moneys on deposit in the Interest Account and the Principal Account or the Sinking Account, plus all amounts on deposit in and credited to the Reserve Account in excess of the amount of the Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the later of (i) one (1) day after receipt by the General Counsel of Ambac Assurance of a demand for payment in the form attached to the Surety Bond as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment due under the Indenture has not been made to the Trustee; or (ii) the payment date of the Bonds as specified in the Demand for Payment presented by the Trustee to the General Counsel of Ambac Assurance, Ambac Assurance will make a deposit of funds in an account with the Trustee or its successor, in Los Angeles, California, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee under the Indenture (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Surety Bond; provided, however, that in the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. (b) the Trustee shall, after submitting to Ambac Assurance the Demand for Payment as provided in (a) above, make available to Ambac Assurance all records relating to the Funds and Accounts maintained under this Indenture. (c) the Trustee shall, upon receipt of moneys received from the draw on the Surety Bond, as specified in the Demand for Payment, credit the Reserve Account to the extent of moneys received pursuant to such Demand. (d) the Reserve Account shall be replenished in the following priority: (i) principal and interest on the Surety Bond and on any Additional Funding Instrument shall be paid from first available Pledged Tax Revenues on a pro rata basis; (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the Surety Bond and any Additional Funding Instrument shall be deposited from next available Pledged Tax Revenues. DOCSLA 1:509332.7 41555-8 WWB/WWB -12- SECTION 13.06 Third Party Beneficiary. To the extent that this Indenture confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this Indenture, the bond Insurer is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. ARTICLE MV MISCELLANEOUS SECTION 14.01 Continuing Disclosure. The Commission hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement executed by the Commission in connection with the issuance of the Series 2006A Bonds (the "Continuing Disclosure Agreement'). Notwithstanding any other provision of this Indenture, failure of the Commission to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; provided, however, that the Trustee at the written direction of any underwriter or the Owners of at least 25% aggregate principal amount of Series 2006A Bonds, shall (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any Owner or beneficial owner of the Series 2006A Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. SECTION 14.02 Terms of Series 2006A Bonds Subject to the Indenture. Except as in this First Supplement expressly provided, every term and condition contained in the Indenture shall apply to this First Supplement and to the Series 2006A Bonds with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this First Supplement. This First Supplement and all of the terms and provisions herein contained shall form part of the Indenture as fully and with the same effect as if all such terms and provisions had been set forth in the Indenture. The Indenture is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as heretofore amended and supplemented, and as amended and supplemented hereby. SECTION 14.03 Due Authorization. The Commission has reviewed all proceedings heretofore taken relative to the authorization of the Series 2006A Bonds and has found, as a result of such review, and does hereby find and determine, that the Commission has duly and regularly complied with all applicable provisions of law and is duly authorized by law to issue the Series 2006A Bonds in the manner and upon the terms in the Indenture and this First Supplement provided and that all acts, conditions and things required by law to exist, happen and be performed precedent to and in connection with the issuance of the Series 2006A Bonds exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Commission is now duly empowered to issue the Series 2006A Bonds. DOCSLAI :509332.7 41555-8 WWB/WW3 -13- SECTION 14.04 Execution in Several Counterparts. This Indenture 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 Commission and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 14.05 Governing Law. This First Supplement shall be governed and construed in accordance with the laws of the State of California. DOCSLA1:509332.7 41555-8 WWB/WWB -14- IN WITNESS WHEREOF, the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION has caused this First Supplement to be signed in its name by its Authorized Officer, and U.S. Bank NationaL.Association, in token of its acceptance of the trusts created hereunder, has caused this First Supplement to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By Authoriz Officer Attest: Cow Tw Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Officer DOCSLA1:509332.7 41555-8 wwB/WWB -15- IN WITNESS WHEREOF, the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION has caused this First Supplement to be signed in its name by its Authorized Officer, and U.S. Bank National Association, in token of its acceptance of the trusts created hereunder, has caused this First Supplement to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By Authorized Officer Attest: Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By so z,. try Authorized Officer DOCSLA1:509332.7 41555-8 WWB/WWB -15- APPENDIX A No. A-1 [Form of Series 2006A Bond] ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BOND, SERIES 2006A RATE OF INTEREST: MATURITY DATE: DATED DATE: % October 1, March 2006 Registered Owner: CEDE & Co. Principal Amount: DOLLARS CUSIP: THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission'), for value received hereby promises to pay to the registered owner specified above, or registered assigns,, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October .1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next preceding the applicable interest payment date at such person's address as it appears on the registration books of the Trustee, or upon written request received prior to the 15th day of the month preceding an interest payment date of an owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account designated by such owner within the continental United States. This Bond is one of a duly authorized issue of Rosemead Community Development Commission, Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A (the "Bonds"), limited in aggregate principal amount to $14,005,000, all of like DOCSLA1:509332.7 41555-8 WWB/WW3 A-1 tenor and date (except for such, variations, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions), all issued under the provisions of the Community Redevelopment Law of the State of California, as supplemented and amended (the "Law"), and pursuant to the provisions of an Indenture, dated as of October 1, 1993, as supplemented and amended by a First Supplement to Indenture, dated as of March 1, 2006, between the Commission and the Trustee (collectively, the "Indenture"). All Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture, and reference is hereby made to the Indenture, to any indentures supplemental thereto and to the Law for a description of the terms on which the Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the Bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture and the Law are hereby incorporated herein and constitute a contract between the Commission and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner of this Bond, by his acceptance hereof, consents and agrees. Each registered owner hereof shall have recourse to all the provisions of the Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are issued to provide funds to aid in the financing and refinancing of the Redevelopment Project Area No. 1 Area of the Commission, a duly adopted redevelopment project in the city of Rosemead, California, as more particularly described in the Indenture. The Bonds are special obligations of the Commission and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Pledged Tax Revenues (as that term is defined in the Indenture and herein called the "Pledged Tax Revenues"), and the Commission is not obligated to pay them except from the Pledged Tax Revenues. The Bonds are equally secured by a pledge of, and charge and lien upon, the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Additional tax allocation bonds payable from the Pledged Tax Revenues may be issued which will rank equally as to security with the Bonds, but only subject to terms and conditions set forth in the Indenture. The Commission hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Trustee a special fund into which all Pledged Tax Revenues shall be deposited, and as an irrevocable charge the Commission has allocated the Pledged Tax Revenues solely to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Commission will pay promptly when due the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds of this issue and all additional tax allocation bonds authorized by the_ Indenture out of said special fund, all in accordance with the terms and provisions set forth in the Indenture. The Bonds are subject to optional and mandatory sinking fund redemption has provided in the Indenture. DOCSLA1:509332.7 41555-8 WWB/WWB A-2 As provided in the Indenture, notice of redemption of this Bond shall be mailed not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof, but failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice of redemption has been duly given as aforesaid and money for payment of the above-described redemption price is held by the Trustee, then such Bonds shall, on the redemption date designated in such notice, become due and payable at the above- described redemption price; and from and after the date so designated interest on the Bonds so called for redemption shall cease to accrue and registered owners of such Bonds shall have no rights in respect thereof except to receive payment of such redemption price thereof. If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture; except that the Indenture provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least twenty- five per cent (25%) in aggregate principal amount of the Bonds then outstanding. The Bonds are issuable only in the form of fully registered Bonds in the denomination of $5,000 or any integral multiple of $5,000 (not exceeding the principal amount of Bonds maturing at any one time). The owner of any Bond or Bonds may surrender the same at the above-mentioned office of the Trustee in exchange for an equal aggregate principal amount of fully registered Bonds of any other authorized denominations, in the manner, subject to the conditions and upon the payment of the charges provided in the Indenture. This Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Commission and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. The rights and obligations of the Commission and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. This Bond is not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, and State nor any of its political subdivisions is liable hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be payable out of any funds or properties other than those of the Commission. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the members of the Commission nor any persons executing the Bonds shall be personally liable on the Bonds by reason of their issuance. DOCSLA1:509332.7 41555-8 WWB/WWB A-3 This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Bond, together with all other indebtedness of the Commission, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the Rosemead Community Development Commission has caused this Bond to be executed in its name and on its behalf by its Chairperson and attested by its Secretary, and has caused this Bond to be dated as of the date above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Attest: Secretary By Chairperson DOCSLAI :509332.7 41555-8 V WB/WWB A-4 This is one of the,Bonds described in the within- mentioned Indenture which has been authenticated and registered on , 2006. U.S. BANK NATIONAL ASSOCIATION, as Trustee By Authorized Signatory DOCSLA1:509332.7 41555-8 WWB/WWB A-5 BOND INSURANCE Financial Guaranty Insurance Policy No. 25000BE (the "Policy") with respect to payments due for principal of and interest on this Bond has been issued by Ambac Assurance Corporation ("Ambac Assurance"). The Policy has been delivered to The Bank of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from Ambac DOCSLA1:509332.7 41555-8 WWB/WWB A_( For value received the undersigned do(es) hereby sell, assign and transfer unto (Social Security or other identifying Number of Assignee ) the within-mentioned registered Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Trustee, with full power of substitution in the premises. Dated: Signature guaranteed: Notice: Signature(s) must be guaranteed by an eligible guarantor institution. Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within registered Bond in every particular, without alteration or enlargement or any change whatsoever. DOCSLA1:509332.7 41555-8 WWB/WWB A_7 CONTINUING DISCLOSURE AGREEMENT RELATING TO THE SERIES 2006A BONDS THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), is executed and entered into as of March 1, 2006, by and among the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, organized and existing under, and by virtue of the laws of the State of California (the "Commission" U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as trustee (the "Trustee"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as Dissemination Agent (the "Dissemination Agent"). WITNESSETH: WHEREAS, the Commission, has heretofore issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds") in the original principal amount of $34,275,000 for the purpose of financing portions of the Redevelopment Project Area No. 1, which Series 1993A Bonds were issued pursuant to the terms of an Indenture, dated as of October 1, 1993 (the "Original Indenture"), between the Trustee and the Commission; and WHEREAS, pursuant to the First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement" and the Original Indenture as supplemented by the First Supplement, and as hereinafter supplemented, referred to herein as the "Indenture"), by and between the Commission and the Trustee, the Commission has issued the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the `Bonds"), in the aggregate principal amount of $14,005,000; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent, for the benefit of the holders and beneficial owners of the Bonds and in order to assist the underwriters of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, for and in consideration of the mutual premises and covenants herein contained, the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Commission pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means not later than 270 days following the end of the Commission's fiscal year (which is currently June 30), commencing March 31, 2007. "Commission" means the Rosemead Community Development Commission. DOCSLA1:515202.4 41555-8 WWB/WWB "Disclosure Representative" means the Executive Director of the Commission, or his or her designee, or such other person as the Commission shall designate in writing to the Trustee from time to time. "Dissemination Agent" means U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Commission and which has filed with the Trustee a written acceptance of such designation. "Listed Events" means any of the events listed in Section 4(a) hereof. "National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Official Statement" means the Official Statement, dated February 23, 2006, relating to the Bonds. "Participating Underwriter" means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" means each National Repository and each State Repository. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. Section 2. Provision of Annual Reports. (a) The Commission shall, or, upon furnishing the Annual Report to the Dissemination Agent, shall cause the Dissemination Agent to, provide to each Repository and to Ambac Assurance an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2005-06 fiscal year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 hereof, provided, however, that the audited financial statements of the Commission, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Commission's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 4(f) hereof. (b) Not later than 15 business days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Commission shall provide the Annual Report (in a form suitable for reporting to the Repositories) to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall notify the Disclosure Representative of such failure to receive the Annual Report. DOCSLA 1:515202.4 41555-8 WWB/WWB 2 (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to the Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; (ii) provide any Annual Report received by it to each Repository, as provided herein; and (iii) provided the Dissemination Agent has received the Annual Report pursuant to Section 2(b) hereof, file a report with the Commission and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. Section 3. Content of Annual Reports. The Commission's Annual Report shall contain or incorporate by reference the following: (a) The Commission's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements, if any, are nofavailable by the time the Annual Report is required to be filed pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to that used for the Commission's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available. (b) The following information: (i) An update of the information contained in Table 2 of the Official Statement for the most recently completed fiscal year. (ii) An update of the information contained in Table 3 of the Official Statement for the most recently completed fiscal year. (iii) An update of the information contained in Table 4 of the Official Statement based upon the most recently completed fiscal year. (iv) An update of the information contained in Table 7 of the Official Statement for the most recently completed fiscal year. (v) The amount of any payments by the Commission during the most recently completed Fiscal Year of the type described in "RISK FACTORS - State Budget Deficit and Its Impact on Pledged Tax Revenues" in the Official Statement. DOCSLA1:515202.4 41555-8 WWB/WWB 3 (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Commission shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. 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 Commission or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Commission shall clearly identify each such other document so included by reference. Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) Principal and interest payment delinquencies. (ii) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax-exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) The Trustee shall, within five business days of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the Commission promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f); provided, however, that the Dissemination Agent shall have no liability to Bond owners for any failure to provide such notice. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of the DOCSLA1:515202.4 41555-8 WWB/WWB 4 Listed Events described under clauses (ii), (iii), (vi), (x) and (xi) above shall mean actual knowledge by an officer at the corporate trust office of the Trustee. The Trustee shall have no responsibility for determining the materiality of any of the Listed Events. (c) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the Commission shall as soon as possible determine if such event would be material under applicable Federal securities law. (d) If the Commission determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). The Commission shall provide the Dissemination Agent with a form of notice of such event in a format suitable for reporting to the Municipal Securities Rulemaking Board and each State Repository, if any. (e) If in response to a request under subsection (b), the Commission determines that the Listed Event would not be material under applicable Federal securities law, the Commission shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository and Ambac Assurance. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Indenture. Section 5. Termination of Reporting ObliLyation. The Commission's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under Section 4(f) hereof. Section 6. Electronic Filing. Submission of Annual Reports and notices of Listed Events to DisclosureUSA.org or another "Central Post Office" designated and accepted by the Securities and Exchange Commission shall constitute compliance with the requirement of filing such reports and notices with each Repository hereunder; and the Commission may satisfy its obligations hereunder to file any notice, document or information with a Repository by filing the same with any dissemination agent or conduit, including DisclosureUSA.org or another "Central Post Office" or similar entity, assuming or charged with responsibility for accepting notices, documents or information for transmission to such Repository, to the extent permitted by the Securities and Exchange Commission or Securities and Exchange Commission staff or required by the Securities and Exchange Commission. For this purpose, permission shall be deemed to have been granted by the Securities and Exchange Commission staff if and to the extent the agent or conduit has received an interpretive letter, which has not been revoked, from the Securities and Exchange Commission staff to the effect that using the agent or conduit to DOCSLA1:515202.4 41555-8 WWB/WWB 5 transmit information to the Repository will be treated for purposes of the Rule as if such information were transmitted directly to the Repository. Section 7. Dissemination Agent. The Commission 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. The Dissemination Agent may resign by providing thirty days' written notice to the Commission and the Trustee. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Commission in a timely manner and in a form suitable for filing. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Commission, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the Commission, so long as such amendment does not adversely affect the rights or obligations of the Trustee or the Dissemination Agent), 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 Sections 2(a), 3 or 4(a) hereof it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or 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 Bonds, 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 sixty percent of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of holders. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first 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 DOCSLA1:515202.4 41555-8 WWB/WWB 6 on the presentation of the financial statements or information, in order to provide information to investors to enable them to evaluate the ability of the Commission to meet its obligations, including its obligation to pay debt service on the Bonds. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 4(f) hereof. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Commission 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 Commission 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 Commission 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 Commission to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Commission or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture, and the Trustee and the Dissemination Agent shall be entitled to the protections, limitations from liability and indemnities afforded to the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties hereunder as are specifically set forth in this Disclosure Agreement. The Commission agrees to indemnify and save the Dissemination Agent, the Trustee, their officers, directors, employees and agent, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to this Disclosure Agreement or arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. This Disclosure Agreement does not apply to any other securities issued or to be issued by the Commission. The Dissemination Agent shall have no obligation to make any disclosure concerning the Bonds, the Commission or any other matter except as expressly set out herein, provided that no provision of this Disclosure Agreement shall limit the duties or obligations of the Trustee under the Indenture. The Dissemination Agent shall have no responsibility for the preparation, review, form or content of any Annual Report or any notice of a Listed Event. The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the Commission as constituting the Annual Report required of the Commission in accordance with DOCSLA1:515202.4 41555-8 WWB/WWB 7 the Disclosure Agreement. The fact that the Trustee has or may have any banking, fiduciary or other relationship with the Commission or any other party, apart from the relationship created by the Indenture and this Disclosure Agreement, shall not be construed to mean that the Trustee has knowledge or notice of any event or condition relating to the Bonds or the Commission except in its respective capacities under such agreements. No provision of this Disclosure Agreement shall require or be construed to require the Dissemination Agent to interpret or provide an opinion concerning any information disclosed hereunder. Information disclosed hereunder by the Dissemination Agent may contain such disclaimer language concerning the Dissemination Agent's responsibilities hereunder with respect thereto as the Dissemination Agent may deem appropriate. The Dissemination Agent may conclusively rely on the determination of the Commission as to the materiality of any event for purposes of Section 4 hereof. Neither the Trustee nor the Dissemination Agent make any representation as to the sufficiency of this Disclosure Agreement for purposes of the Rule. The Dissemination Agent shall be paid compensation by the Commission for its services provided hereunder in accordance with its schedule of fees, as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination in the performance of its duties hereunder. The Commission's obligations under this Section shall survive the termination of this Disclosure Agreement. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Commission, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without the filing of any paper or any further act. DOCSLA 1:515202.4 41555-8 WWB/WWB IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. ATTEST: By: C Secretary ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By: Authorized Officer DOCSLA1:515202.4 41555-8 WWB/WWB 9 IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer ATTEST: By: Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authori ed Officer U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By: Authoriz d Officer DOCSLA1:515202.4 41555-8 WWB/WWB 9 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Rosemead Community Development Commission Name of Bond Issue: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Date of Issuance: March 9, 2006 NOTICE IS HEREBY GIVEN that the Rosemead Community Development Commission (the "Commission") has not provided an Annual Report with respect to the above- named Bonds as required by the Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent. [The Commission anticipates that the Annual Report will be filed by Dated: By: U.S. Bank National Association, as Trustee, on behalf of the Rosemead Community Development Commission cc: Rosemead Community Development Commission DOCSLA1:515202.4 41555-8 WW]3/WWB A-1 Tag Certificate This Tax Certificate is executed and delivered by the Rosemead Community Development Commission (the "Issuer") in connection with the issuance of $14,005,000 aggregate principal amount of its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"). The Bonds are being issued pursuant to an Indenture, originally dated as of October 1, 1993, now as supplemented by the First Supplement to Indenture, dated as of March 1, 2006 (as so supplemented, the "Indenture"), by and between the Issuer and U.S. Bank National Association (or its predecessor), as trustee (the "Trustee"). Pursuant to Section 6.15 of the Indenture, and in part pursuant to Treasury Regulations Section 1.148- 2(b)(2), the Issuer certifies, covenants, warrants and represents as follows: ARTICLE I IN GENERAL 1.1 The Issuer. The Issuer is a redevelopment agency duly organized and existing under and by virtue of the laws of the State of California. The Issuer has the general authority to exercise the power of eminent domain in furtherance of its governmental purposes. 1.2 Delivery of the Bonds. The Bonds are being sold to the Rosemead Financing Authority, for immediate resale and delivery to Piper Jaffray & Co. as the underwriter (the "Underwriter") on the date hereof in exchange for good funds. 1.3 Purpose of Tax Certificate. The Issuer is delivering this Tax Certificate to Orrick, Herrington & Sutcliffe LLP, as bond counsel, with the understanding that Orrick, Herrington & Sutcliffe LLP will rely in part upon this Tax Certificate in rendering its opinion that interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. 1.4 Purpose of Financing. The proceeds of the Bonds will be used to provide funds to (i) refund, on a current basis, a portion of the Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A, which were originally issued by Rosemead Redevelopment Agency (which is the predecessor to the Issuer), on November 2, 1993 in the original amount of $34,275,000 (the entire issue, the "1993 Bonds" and the portion thereof to be refunded now, the "Refunded Bonds"); (ii) finance certain public improvements, including improvements to public facilities such as City Hall remodeling and park gym expansion, to public parks, and to other public infrastructure, such as storm drain, street and sewer improvements (the "New Money Project"); and (iii) pay certain costs of issuing the Bonds, including the premium for a policy of bond insurance (the "Insurance") to be issued by Ambac Assurance Corporation (the "Insurer"), and fees for the Surety (as described in Section 1.6 herein). Proceeds of the 1993 Bonds were used to (i) fund certain capital improvements within Project Area No. 1 (the "1993 Project"), as set forth in more detail in the Tax Certificate that was executed in connection with the issuance of the 1993 Bonds (the "1993 Tax Certificate"), and (ii) refund, on an advance basis, the Redevelopment Project Area No. 1 DOCSLA1:517506.2 41555-8 Subordinate Lien Tax Allocation.Bonds, Series 1991 (Capital Appreciation), which were originally issued by Rosemead Redevelopment Agency on October 9, 1991 (the "1991 Bonds"). Proceeds of the 1991 Bonds were used to finance the improvements (the "1991 Project") also described in the 1993 Tax Certificate. The 1993 Project and the 1991 Project shall be collectively known as the "Prior Project." The Prior Project and the New Money Project shall be collectively known as the "Project." 1.5 Single Issue. All the Bonds have been sold the Underwriter on February 23, 2006 (the "Sale Date") pursuant to the same plan of financing, and are expected to be paid out of substantially the same source of funds. Except as described below, no other governmental obligations which are expected to be paid out of substantially the same source of funds as the Bonds have been or will be sold within the 31-day period beginning 15 days before the Sale Date pursuant to the same plan of financing as the Bonds. The dates on which the 1991 Bonds and the 1993 Bonds, each as a group of obligations, were sold were at least 15 days apart. For each such group, all of the obligations within each group were executed and delivered at the same time, pursuant to the same plan of financing, and were paid out of substantially the same source of funds. In addition, no other governmental obligations were issued or reissued at substantially the same time, pursuant to the same plan of financing, and were paid out of substantially the same source of funds as each group of the 1991 Bonds and the 1993 Bonds, respectively. 1.6 Definitions. Capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Indenture. Unless the context otherwise requires, the following capitalized terms have the following meanings: "Adjusted Gross Proceeds" means Gross Proceeds, adjusted as set forth in Treasury Regulations Section 1.148-7(c)(3). Thus, Adjusted Gross Proceeds generally means Gross Proceeds, less Gross Proceeds held in (i) the Bona Fide Debt Service Funds and (ii) the Reserve Account, if any, as described in Section 3.5 of this Tax Certificate (excluding any Restricted Amount). "Available Construction Proceeds" means the Nonrefunding Portion of the Sale Proceeds (reduced by costs of issuing the Bonds financed from such portion), plus all Investment Proceeds earned or reasonably expected to be earned thereon, plus Investment Proceeds earned on any amounts held in the Reserve Account allocable to the Nonrefunding Portion from the Closing Date to the earlier of (i) two years after the Closing Date or (ii) substantial completion of the New Money Project. "Bidding Agent" means PFM Asset Management LLC. "Bona Fide Debt Service Funds" means those funds and accounts (or portions of those funds and accounts) identified in Section 3.4.3 of this Tax Certificate. "Bond Year" means the period beginning on the Closing Date and ending on October 1, 2006 (or on an earlier date selected by the Issuer in accordance with Treasury DOCSLA1:517506.2 41555-8 2 Regulations Section 1.148-1(b)) and each successive one-year period thereafter. The last Bond Year will end on the last day on which any Bond is outstanding for Federal tax purposes. "Closing Date" means the date of this Tax Certificate. "Code" means the Internal. Revenue Code of 1986 (including amendments thereto). "Escrow Agreemene, means the Escrow Agreement, dated as of March 1, 2006, by and between the Issuer and U.S. Bank National Association. "Escrow Fund" means the fund established under the Escrow Agreement. "Governmental Unit" means any State, or political subdivision of a State, but excludes the United States and its agencies or instrumentalities. "Gross Proceeds" has the meaning used in Section 1.148-1(b) of the Treasury. Regulations, and generally means all proceeds derived from or relating to the Bonds, including Sale Proceeds, Investment Proceeds, and other amounts expected to be used to pay debt service on the Bonds. "Investment Proceeds" means earnings received from investing and reinvesting Sale Proceeds and from investing and reinvesting such earnings. "Investment Property" means any security or obligation, any annuity contract, or any other investment-type property, but does not include any Tax-Exempt Bond unless such obligation is a "specified private activity bond" within the meaning of Section 57(a)(5)(C) of the Code. "Net Sale Proceeds" means the Nonrefunding Portion of the Sale Proceeds, minus any such amount invested as part of a "minor portion" as described in Section 148(e) of the Code, and minus any amount of such Sale Proceeds deposited in the Reserve Account (excluding any Restricted Amount described in Section 3.5). "Nongovernmental Person" means any person or entity other than a Governmental Unit. "Nonpurpose Investment" means any Investment Property in which Gross Proceeds are invested. ` Nonrefunding Portion " means the portion of the Bonds allocable to the New Money Project, including a ratable portion of the proceeds of the Bonds used to pay common costs thereof. "Opinion of Counsel" means a written opinion of nationally recognized bond counsel, delivered to the Trustee, to the effect that interest on the Bonds will not be included in gross income for federal income tax purposes. DOCSLA1:517506.2 41555-8 "Preliminary Expenditures" means architectural, engineering, surveying, soil testing, costs of issuing the Nonref ending Portion, and similar costs paid with respect to the Nonrefilnding Portion in an aggregate amount not exceeding 20% of the issue price allocable to the Nonrefunding Portion. However, Preliminary Expenditures do not include land acquisition, site preparation or similar costs incident to the commencement of construction. "Rebate Requirement" means the amount of rebatable arbitrage computed pursuant to Section 1.148-3 of the Treasury Regulations as described in Section 5.3 hereof. "Refunding Portion " means that portion of the Bonds that is allocable to the refunding of the Refunded Bonds, including a ratable portion of the proceeds of the Bonds used to pay common costs thereof. "Restricted Amount" has the meaning set forth in Section 3.5 of this Tax Certificate. "Sale Proceeds" means the amount o€$14,321,830.40, comprising the principal amount of the Bonds ($14,005,000), plus original issue premium thereon ($316,830.40). "Spendable Proceeds " means, (a) for the 1991 Bonds, the proceeds from the sale of the 1991 Bonds, and (b) for the 1993 Bonds, the portion of the 1993 Bonds that financed the 1993 Project, both less any amounts used to (i) pay the costs of issuing each applicable issue (or portion thereof), if any, (ii) fund any part of a reasonably required reserve fund for each such issue (or portion thereof), and (iii) pay debt service on each such issue (or portion thereof) within three years of the date such obligations were issued. "Surety" means the debt service reserve fund surety bond issued by the Surety Provider in satisfaction of the Reserve Requirement for the Bonds. "Surety Provider" means Ambac Assurance Corporation. "Tax-Exempt Bond" means any obligation the interest on which is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code or Section 103 of the Internal Revenue Code of 1954, as amended, and Title XIII of the Tax Reform Act of 1986, as amended, as well as stock in a regulated investment company to the extent at least 95 percent of income to the stockholder is treated as interest that is excludable from gross income under Section 103 of the Code. "Yield" means that discount rate described in Section 4.1 of this Tax Certificate. 1.7 Reliance. With respect to certain matters contained in this Tax Certificate, the Issuer specifically relies upon certifications of (i) the Underwriter outlined in the Underwriter's Certificate attached hereto as Exhibit A, (ii) the Insurer and the Surety Provider collectively outlined in their certificate attached hereto as Exhibit B, and any other Exhibits attached hereto. The Issuer is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representation made in this Tax Certificate or in the Exhibits hereto. DOCSLA1:517506.2 41555-8 4 ARTICLE H GENERAL TAX LIMITATIONS 2.1 Sale Proceeds and Other Amounts. Sale Proceeds are allocated as follows: Escrow Fund $8,317,412.37 Underwriter's Discount 84,030.00 Insurance Premium 204,737.84 Surety Fees 43,005.25 Series 2006A Expense Account 218,550.00 Redevelopment Fund 5,454,094.94 TOTAL 14.321.830.40 A pro rata amount of the reserve fund established for the 1993 Bonds, representing the portion allocable to the Refunded Bonds ($998,561.87), and debt service money allocable to the Refunded Bonds ($253,053.75) will be transferred to the Escrow Fund. Except as described herein, no proceeds allocable to the Refunded Bonds remains on the date hereof. Investment Proceeds earned on moneys in the all funds (except the Special Fund, the Redevelopment Fund, the Expense Fund and the Rebate Fund) and accounts shall be deposited in the Debt Service Fund. 2.2 Expenditure of Gross Proceeds. For purposes of this Tax Certificate, Gross Proceeds will be treated as spent when they are used to pay or reimburse disbursements by the Issuer that are (i) capital expenditures of the New Money Project, (ii) costs of issuing the Bonds, (iii) interest on the Nonrefanding Portion through the later of three years after the Closing Date or one year after each respective component of the New Money Project is placed in service, (iv) initial operating expenses directly associated with the New Money Project (in aggregate amount not exceeding 5% of the Sale Proceeds), (v) debt service on the Refunded Bonds, or (vi) other miscellaneous expenditures described in Treasury Regulations Section 1.148-6(d)(3)(ii). Absent an Opinion of Counsel, all expenditures of Gross Proceeds will be made in respect of (a) Preliminary Expenditures, (b) capital expenditures of the New Money Project on or after the date 60 days prior to the Closing Date, (c) costs of issuing the Bonds, or (d) other payments made by the Issuer on or after the Closing Date. In connection with all expenditures of Gross Proceeds described in (b), the actual reimbursement allocation will be made no later than the later of 18 months after the Closing Date or the date on which the New Money Project incorporating such expenditure is placed in service, but in no event later than three years after the date of expenditure. On the date hereof, the Issuer expects no reimbursements. 2.3 Governmental Bond Status. Except as set forth herein, all proceeds of the Bonds, Refunded Bonds, 1993 Bonds or the Project have been or will be used by the Issuer or a related party, subject to the exceptions set forth in this Section. DOCSLA1:517506.2 41555-8 2.3.1 No Private Loan. Absent an Opinion of Counsel, the Issuer has not loaned and will not loan more than 5% of the proceeds of the Bonds, Refunded Bonds or 1993 Bonds, severally, to one or more Nongovernmental Persons other than in their roles as members of the general public, and have not loaned and will not loan more than 5% of the proceeds of the Bonds, Refunded Bonds or 1993 Bonds, severally, to any Nongovernmental Persons unless such loan enables the Issuer to finance a specific essential governmental function and such loan is paid with the proceeds of a governmental assessment of general application. 2.3.2 No Private Activity Bonds. Absent an Opinion of Counsel, the Issuer has not allowed and will not allow more than 10% of Sale Proceeds and Investment Proceeds of the Bonds, Refunded Bonds or 1993 Bonds, or of the Project to be used directly or indirectly by any Nongovernmental Person in any trade or business, other than as a member of the general public. For purposes of the preceding sentence, "10%" is reduced to "5%" for nongovernmental use of any facilities financed or refinanced from proceeds,-of the Bonds which are disproportionate to or not related to the governmental purposes of the Bonds. Absent an Opinion of Counsel, for purposes of this Section 2.3, a Nongovernmental Person will be treated as "using" proceeds of the Bonds, Refunded Bonds or 1993 Bonds to the extent the Nongovernmental Person (i) borrows Bond proceeds, operator or manager), any. (ii) uses the Project (e.g., as owner, lessee, service provider, (iii) acquires the output (or throughput) of the Project, if any, or (iv) acquires or uses technology developed at the Project, if For purposes of this Section 2.3, the "use" of the proceeds of the Bonds, Refunded Bonds or 1993 Bonds, or the Project includes, without limitation, the lease or rental of the Project, or any portion thereof, to third parties which are not Governmental Units. Such term also includes any contract for the management or operation of any such facilities constituting the Project unless such contract meets the requirements of Revenue Procedure 97-13. In addition, Section 1.145-2 of the Treasury Regulations, together with Sections 1.141-3(c) and (d), provide that use of the Project on a nondiscriminatory basis by the general public and certain short-term uses and incidental uses will not be considered use of the Project. 2.4 Change in Use. The Issuer reasonably expects to use all Bond proceeds and all facilities that are financed and refinanced from Bond proceeds as set forth in Section 2.3 of this Tax Certificate for the entire stated term to maturity of the Bonds. Absent an Opinion of Counsel, the Issuer in fact will use all Bond proceeds and each facility financed and refinanced from Bond proceeds as set forth in Section 2.3 of this Tax Certificate. 2.5 Registered Form. The Bonds are being issued in registered form. 2.6 Federal Guarantee. The Issuer will not directly or indirectly use or permit the use of any Bond proceeds or any other funds of the Issuer or any related party or take or omit to take any action that would cause the Bonds to be obligations that are "federally guaranteed" DOCSLA1:517506.2 41555-8 6 within the meaning of Section 149(b) of the Code. In furtherance of this covenant, the Issuer will not allow the payment of principal or interest with respect to the Bonds to be guaranteed (directly or indirectly) in whole or in part by the United States or any agency or instrumentality thereof. Except as provided in the next sentence, the Issuer will not use 5% or more of the Bond proceeds to make or finance loans the payment of principal or interest with respect to which is guaranteed in whole or in part by the United States or any agency or instrumentality thereof, nor will it invest 5% or more of the proceeds in federally insured deposits or accounts. The preceding sentence shall not apply to: . (a) investments in the Redevelopment Fund or in the Series 2006A Expense Account during the temporary periods described in Section 3.7 and Section 3.8 of this Tax Certificate; (b) investments in Bona Fide Debt Service Funds; (c) investments in the Reserve Account, to the extent amounts therein qualify for unrestricted yield investment pursuant to Section 3.5 of this Tax Certificate; and (d) investments in obligations issued by the United States Department of Treasury (including in the Escrow Fund). 2.7 Information Reporting. The Issuer will cause a properly completed and executed IRS Form 8038-G to be filed with respect to the Bonds no later than May 15, 2006. 2.8 Partial Current Refunding. The Refunding Portion will be used to pay off the Refunded Bonds. The Refunded Bonds will be paid in full on April 10, 2006, which is not more than 90 days after the date hereof. The Bonds will be used to provide debt service on no other obligations except the Bonds and the Refunded Bonds. 2.9 No Pooling. The Issuer will not use any Bond proceeds directly or indirectly to make or finance loans to two or more ultimate borrowers. 2.10 No Hedge Bonds. The Issuer reasonably expects that more than 85% of Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 9, 2009. The Issuer also reasonably expects that at least 10% of the Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 9, 2007, and that at least 30% of the Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 9, 2008. Not more than 50% of Bond proceeds will be invested in Nonpurpose Investments having a substantially guaranteed yield for four years or more. The payment of legal, placement and underwriting costs associated with issuance of the Bonds is not contingent, and at least 95% of all legal, placement and underwriting costs associated with issuance of the Bonds will be paid no later than 180 days from the Closing Date. In addition, on the dates the 1993 Bonds and the 1991 Bonds were issued, the Issuer reasonably expected to spend 85% of the Spendable Proceeds of each such issue within three years. Less than 50% of the proceeds of the 1993 Bonds and the 1991 Bonds was invested in Nonpurpose Investments with a substantially guaranteed yield for four years or more. DOCSLA1:517506.2 41555-8 7 2.11 Retention of Records. The Issuer covenants to maintain all records relating to the requirements of the Code and the representations, certifications and covenants set forth in this Tax Certificate until the date three years after the last outstanding Bonds has been retired. If any of the Bonds are refunded or prepaid by other Tax-Exempt Bonds (the "Refunding Obligations"), the Issuer covenants to maintain all records required to be retained by this Section until the later of the date three years after the last outstanding Bonds have been retired or the date three years after the last Refunding Obligations have been retired. The records that must be retained include, but are not limited to: (i) Basic records and documents relating to the Bonds (including the Indenture, this Tax Certificate and the opinion of Bond Counsel); (ii) Documentation evidencing the expenditure of Bond proceeds; (iii) Documentation evidencing the use of the Project by public and private sources (i.e., copies of management contracts, research agreements, leases, etc.); (iv) Documentation evidencing all sources of payment or security for the Bonds; and (v) Documentation pertaining to any investment of Bond proceeds (including the purchase and sale of securities, SLGs subscriptions, yield calculations for each class of investments, actual investment income received from the investment of proceeds, guaranteed investment contracts, and rebate calculations). 2.12 Prior Tax Covenants. In connection with the issuance of the 1993 Bonds and the 1991 Bonds, the Issuer and other parties related to the Issuer executed Tax Certificates, IRS Forms 8038-G and other documents representing certain facts and containing certain covenants relating to the use of the proceeds of the Refunded Bonds and the facilities financed and refinanced with such proceeds. The Issuer hereby reaffirms that such representations continue to be true in all material respects and that it will continue to observe such covenants. In addition, the Issuer certifies that it (and all related parties thereto) has complied with all covenants, certifications, warranties and representations set forth in the legal and closing documents for the Refunded Bonds and relating to the exclusion of interest on the Refunded Bonds from gross income for federal tax purposes. The Issuer has not taken or omitted to take any action reasonably within its control since the date of issuance of the Refunded Bonds that would cause interest on the Refunded Bonds to be included in gross income for purposes of federal income taxation. ARTICLE III ARBITRAGE - GENERAL 3.1 Reasonable Expectations. This Article III states the Issuer's reasonable expectations with respect to the amounts and uses of Bond proceeds and certain other moneys. DOCSLAI :517506.2 41555-8 $ 3.2 Reoffering Price. The Issuer is delivering the Bonds to the Underwriter on the date hereof in exchange for payment of $14,237,800.40, which represents the total amount of Sale Proceeds, less underwriter's discount in the amount of $84,030.00. Based upon advice of the Underwriter, the Bonds have been reoffered to the public (excluding any bond house, broker or other intermediary) at the prices set forth in the schedule attached to Exhibit A. Based upon advice of the Underwriter, the initial, reoffering prices were reasonable under customary standards in the applicable tax-exempt market as of the Sale Date. 3.3 Funds and Accounts. Pursuant to the Indenture, the Issuer will cause the following funds and accounts to be established and maintained relating to the Bonds: Expense Fund Series 2006A Expense Account Redevelopment Fund Special Fund Debt Service Fund Interest Account Principal Account Sinking Account Reserve Account Series 2006A Rebate Fund In addition, an Escrow Fund has been established pursuant to the Escrow Agreement. The Issuer does not expect that either it or any other person benefitting from the issuance of the Bonds will use any moneys in any find or account other than the Bona Fide Debt Service Funds to pay principal of, redemption premium, or interest on the Bonds; nor is any other fund or account, however established, other than the Reserve Account, so pledged as security for the Bonds that there is a reasonable assurance that amounts held in such other fund or account will be available if needed to pay debt service on the Bonds. 3.4 Debt Service Funds. 3.4.1 Payment of the Bonds. The Bonds are limited obligations of the Issuer payable from the Pledged Tax Revenues (the "Tax Revenues") and from earnings from the investment and reinvestment of Sale Proceeds, and certain other moneys held by the Trustee. 3.4.2 Revenues. All Tax Revenues are to be collected and deposited to the Special Fund and applied as provided in the Indenture. Payments of debt service on the Bonds are expected to be derived from current revenues of the Issuer in each year, and current revenues are expected to equal or exceed debt service on the Bonds during each payment period. Therefore, all amounts transferred to and from the Special Fund are expected to be derived from current revenues. 3.4.3 Match Between Revenues and Debt Service. The Debt Service Fund (and all accounts therein excluding the Reserve Account) and the portion of the Special Fund used to make transfers to the Debt Service Fund (collectively, the "Bona Fide Debt Service DOCSLA1:517506.2 41555-8 9 Funds") will be used primarily to achieve a proper matching of revenues and debt service within each Bond Year. Such Bona Fide Debt Service Funds in the aggregate will be depleted at least once a year except for a carryover amount not to exceed the greater of the prior Bond Year's earnings on such Fund or 1/12th of the prior Bond Year's debt service in respect of the Bonds. Amounts contributed to any such Bona Fide Debt Service Funds will be spent within thirteen months after the date of such contribution, and any amounts received from the investment or reinvestment of monies held in such funds will be expended within one year after the date of accumulation thereof in any such funds. Amounts in the Bona Fide Debt Service Funds shall be invested without regard to yield. 3.5 Reserve Account. The Indenture establishes a Reserve Account as a reserve fund for the Bonds. The Trustee may withdraw amounts from the Reserve Account from time to time solely for the purpose of making up any deficiency in the payment or redemption of the Bonds. On the date hereof, the Surety is credited to the Reserve Account in satisfaction of the Reserve Requirement allocable to the Bonds. The Reserve Account is reasonably required in that it was a material factor in selling the Bonds at the lowest possible yield (given other characteristics of the Bonds) without regard to any benefit from positive net investment earnings on amounts held in the Reserve Account, and that it is reasonable and customary in marketing similar issues of governmental obligations. See Exhibit A. As of the Closing Date, the amount represented by the Surety does not exceed the least of (i) 10% of the stated principal amount of the Bonds, (ii) maximum annual debt service on the Bonds, or (iii) 125% of average annual debt service on the Bonds. Amounts in the Reserve Account that do not exceed the least of (i) through (iii) above will be invested without regard to yield. Absent an Opinion of Counsel, any amount in the Reserve Account that exceeds the least of (i) through (iii) above (the "Restricted Amount") will be invested as set forth in Section 4.4 of this Tax Certificate. 3.6 Rebate Fund. The Issuer has covenanted in the Indenture to take all actions not to cause the Bonds to be "arbitrage bonds" within the meaning of the Code. Accordingly, a special fund designated the Series 2006A Rebate Fund (the "Rebate Fund") has been established. The Issuer shall keep the Rebate Fund separate and apart from all other funds and moneys held by it or any related person. The amount required to be held in the Rebate Fund at any point in time is determined pursuant to the requirements of the Code, including particularly Section 148(f) of the Code and Treasury Regulations applicable thereto. Moneys in the Rebate Fund are neither pledged to nor expected to be used to pay debt service in respect of the Bonds. Sale Proceeds and Investment Proceeds held in the Rebate Fund shall be invested as set forth in Section 4.4 of this Tax Certificate. All other amounts in the Rebate Fund will be invested without regard to yield. 3.7 Three-Year Temporary Period. On the date hereof, Sale Proceeds are being deposited in the Redevelopment Fund for the purpose of paying costs of the New Money Project. The Issuer reasonably expects that not less than 85% of the Net Sale Proceeds will be spent to pay costs of issuing the Bonds and costs of the New Money Project before March 9, 2009. The Issuer heretofore has incurred a binding obligation to one or more unrelated parties involving an expenditure of not less than 5% of Net Sale Proceeds. Allocations of Net Sale Proceeds and Investment Proceeds to costs of issuing the Bonds and costs of the New Money Project will proceed with due diligence. Amounts deposited into the Redevelopment Fund and amounts in DOCSLA1:517506.2 41555-8 10 the Series 2006A Expense Account allocable to the Nonrefunding Portion, and Investment Proceeds earned thereon, will be invested without regard to yield until March 9, 2009. The Issuer expects to expend all Sale Proceeds and Investment Proceeds allocable to the Nonrefunding Portion on the New Money Project within two years from the Closing Date. 3.8 Series 2006A Expense Account. Sale Proceeds deposited in the Series 2006A Expense Account are allocable to both the Refunding Portion and the Nonrefunding Portion. The amount allocable to the Refunding Portion may be invested without regard to yield through 13 months after the Closing Date. The amount allocable to the Nonrefunding Portion may be invested without regard to yield for the same three-year period described in Section 3.7 herein. 3.9 Escrow Fund. Sale Proceeds and other amounts allocable to the Refunded Bonds are used to pay the principal of and premium (if any) and interest on the Refunded Bonds no later than April 10, 2006. Amounts therein will be invested in open-market United States Treasury Securities (the "Escrow Securities"), obtained through a bidding process conducted by the Biding Agent. As of the date the Bonds were sold, United States Treasury Securities - State and Local Government Series were not available to be purchased. Sale Proceeds used to purchase the Escrow Securities may be invested without regard to yield for 90 days from the Closing Date. Materials distributed by the Bidding Agent to potential bidders of the Escrow Securities are attached hereto as Exhibit C. 3.10 Transferred Proceeds. On the date that Sale Proceeds and. Investment Proceeds are used to pay principal of the Refunded Bonds, unexpended proceeds from the sale of the Refunded Bonds and investment earnings thereon will become transferred proceeds of the Bonds (the "Transferred Proceeds'). Transferred Proceeds are treated as proceeds of the Bonds and not as proceeds of the 1993 Bonds. On the date hereof, the Issuer does not expect to have any Transferred Proceeds. 3.11 No Other Replacement Proceeds. Neither the Issuer nor any related person will use any Gross Proceeds of the Bonds directly or indirectly to replace funds of the Issuer or any related person, which funds are or will be used directly or indirectly to acquire Investment Property reasonably expected to produce a yield that is materially higher than the yield on the Bonds. The Issuer expects such improvements and all improvements relating to the New Money Project to have an average reasonably expected economic life as of the Closing Date of at least 30 years. Accordingly, the weighted average maturity of the Bonds does not exceed 120% of the expected weighted average economic useful life of the Project. 3.12 No Overissuance. Taking into account anticipated investment earnings, the amount of Sale Proceeds does not exceed the amount necessary to refund the Refunded Bonds, to pay the costs of the New Money Project, and to pay costs of issuing the Bonds, including to pay the premium on the Insurance and the fees for the Surety. 3.13 No Abusive Arbitrage Device. The Bonds are not and will not be part of a transaction or series of transactions that (a) enables the Issuer or any related person to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (b) overburdens the market for tax-exempt obligations in any manner, including, without DOCSLA1:517506.2 41555-s 11 limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be necessary. 3.14 No Expected Sale. It is not expected that the Project or any part thereof financed or refinanced in whole or in part by the Bonds will be sold or otherwise disposed of before October 1, 2022, the last scheduled maturity date of the Bonds. ARTICLE IV ARBITRAGE - YIELD AND YIELD RESTRICTION 4.1 Yield. For purposes of this Tax Certificate, yield is calculated as set forth in Section 148(b) of the Code and Treasury Regulations Sections 1.148-4 and 1.148-5. Thus, yield on the Bonds or yield on Investment Property generally means that discount rate which, when used in computing the present value of all unconditionally payable payments representing principal adjusted, as required, for any substantial discounts or premiums, interest and costs of qualified guarantees produces an amount equal to the issue price of the Bonds or the purchase price of the Investment Property, as appropriate. The aggregate issue price of the Bonds is $14,321,830.40, which represents the price at which the Bonds were offered to the ultimate purchaser(s), as represented by the Underwriter in Exhibit A hereto. The yield on the Bonds has been calculated to be at least 4.13545%. 4.2 No Qualified Hedges. No contract has been, and (absent an Opinion of Counsel) no contract will be entered into such that failure to take the contract into account would distort the yield on the Bonds or otherwise would fail clearly to reflect the economic substance of the transaction. 4.3 Qualified Guarantee. In calculating the yield on the Bonds, the premium paid for the Insurance and the fees for the Surety have been treated as a qualified guarantee payment, as provided in Treasury Regulations Section 1.148-4(f). This is based upon (i) representations of the Insurer and the Surety Provider (collectively set forth in the certificates attached hereto as Exhibit B that the premium for the Insurance and the fees for the Surety were negotiated at arm's length and are within the normal range of charges charged by the Insurer and the Surety Provider for the transfer of credit risk with respect to similar tax-exempt bonds, and that the premium paid for the Insurance and the fees for the Surety do not include any direct or indirect payment for a cost, risk or other element that is not customarily borne by guarantors of tax- exempt bonds in transactions in which the guarantor has no involvement other than as guarantor and (ii) representations of the Underwriter (set forth in the certificate attached hereto as Exhibit A) that the present value of interest saved as a consequence of the Insurance and the Surety exceeds the present value of the premium paid for the Insurance and the fees for the Surety, and that the premium paid for the Insurance and the fees for the Surety each represent a reasonable charge for the transfer of credit risk. 4.4 Yield Restriction. Absent an Opinion of Counsel, if (A) after March 9, 2009, all unspent Sale Proceeds of the Nonrefunding Portion (excluding amounts held in the Reserve Account), plus (B) all Investment Proceeds remaining unspent after a one-year period beginning DOCSLA1:517506.2 41555-8 12 on the date of receipt of such Investment Proceeds, plus (C) any Restricted Amount held in the Reserve Account, plus (D) any amounts held in the Series 2006A Expense Account allocable to the Refunding Portion 13 months after the Closing Date, plus (E) any amounts held in Bona Fide Debt Service Funds and remaining unexpended after 13 months from the date of accumulation in any such funds, at any time in the aggregate exceeds $100,000, the excess will be invested either (i) in Investment Property with a yield not exceeding the yield on the Bonds, (ii) in assets that are not treated as Investment Property (e.g., Tax-Exempt Bonds), or (iii) in assets that satisfy the requirements for qualified yield reduction payments set forth in Treasury Regulations Section 1.148-5(c), subject to the limitation set forth in Section 1.148-10(b)(1)(ii). ARTICLE V REBATE 5.1 Undertakings. Pursuant to the Indenture, the Issuer has covenanted to comply with certain requirements of the Code. The Issuer acknowledges that the United States Department of the Treasury has issued regulations with respect to certain of these undertakings, including the proper method for computing whether any rebate amount is due the federal government under Section 148(f) of the Code. (Treas. Reg. Sections 1.148-1 through 1.148-11, 1.150-1 and 1.150-2.) The Issuer further acknowledges that the United States Department of the Treasury may yet issue additional regulations with respect to certain other of these undertakings. The Issuer covenants that it will undertake to determine what is required with respect to the rebate provisions contained in Section 148(f) of the Code and said regulations from time to time and will comply with any requirements that may apply to the Bonds. Except to the extent inconsistent with any requirements of the Code or future regulations, the Issuer will undertake the methodology described in this Tax Certificate. 5.2 Recordkeeping. The Issuer shall maintain or cause to be maintained detailed records with respect to each Nonpurpose Investment attributable to Gross Proceeds, including: (a) purchase date; (b) purchase price; (c) information establishing fair market value on the date such investment became a Nonpurpose Investment; (d) any accrued interest paid; (e) face amount; (f) coupon rate; (g) periodicity of interest payments; (h) disposition price; (i) any accrued interest received; and 0) disposition date. Such detailed recordkeeping is required to facilitate the calculation of the Rebate Requirement. 5.3 Rebate Requirement Calculation and Payment. (a) Subject to the exceptions described in Section 5.4, the Issuer will prepare or cause to be prepared a calculation of the Rebate Requirement consistent with the rules described in this Section 5.3 at least every fifth Bond Year. The Issuer will complete the calculation of the Rebate Requirement within 55 days after the close of each fifth Bond Year and within 55 days after the first date on which there are no outstanding Bonds. (b) For purposes of calculating the Rebate Requirement (i) the aggregate amount earned with respect to a Nonpurpose Investment shall be determined by assuming that the Nonpurpose Investment was acquired for an amount equal to its fair market value (determined as provided in Section 1.148-5(d)(6) of the Treasury Regulations, as DOCSLA1:517506.2 41555-s 13 applicable) at the time it becomes a Nonpurpose Investment, and (ii) the aggregate amount earned with respect to any Nonpurpose Investment shall include any unrealized gain or loss with respect to the Nonpurpose Investment (based on the assumed purchase price at fair market value and adjusted to take into account amounts received with respect to the Nonpurpose Investment and earned original issue discount or premium) on the first date when there are no outstanding Bonds or when the investment ceases to be a Nonpurpose Investment. (c) The Issuer shall pay to the United States Department of the Treasury not later than 60 days after the end of the fifth Bond Year and each succeeding fifth Bond Year, an amount equal to 90% and, not later than 60 days after the first date when there are no outstanding Bonds, an amount equal to 100% of the Rebate Requirement (determined as of the end of the immediately preceding Bond Year), all as set forth in Section 1.148-3 of the Treasury Regulations. (d) Each payment required to be made pursuant hereto shall be filed with the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date such payment is due, and shall be accompanied by Form 8038-T. The Issuer shall retain records of the calculations required by this Section 5.3 until three years after the retirement of the last of the Bonds. 5.4 Exceptions from Rebate Requirement. (a) Bona Fide Debt Service Funds Exception. Bona Fide Debt Service Funds are exempted from the Rebate Requirement to the extent requirements in Section 3.4 herein are met. (b) Six Month Expenditure Exception. In general, no rebate calculations will be required with respect to the Refunding Portion or the Nonrefunding Portion, severally, if all of each such portion of the Adjusted Gross Proceeds actually are spent within six months after the Closing Date. The Issuer expects the Refunding Portion to meet this exception. (c) Eighteen-Month Expenditure Exception. In general, no rebate calculations will be required with respect to Sale Proceeds or Investment Proceeds if at least 15% of expected Adjusted Gross Proceeds actually are spent within six months after the Closing Date, at least 60% of such Adjusted Gross Proceeds actually are spent within twelve months after the Closing Date, and 100% of actual Adjusted Gross Proceeds actually are spent within eighteen months after the Closing Date. For purposes of the 15% and the 60% expenditure requirements in the previous sentence, the amount of Investment Proceeds included in the Adjusted Gross Proceeds is determined based only on the Issuer's reasonable expectations as of the Closing Date. The requirement that 100% of actual Adjusted Gross Proceeds be spent within eighteen months after the Closing Date will be met if at least 95% of such Adjusted Gross Proceeds is spent within eighteen months and the remainder is held as a reasonable retainage, as permitted by contracts with the Issuer's contractors, and such remainder is spent within thirty months after the Closing Date. (d) Two-Year Construction Exception. In determining the amount of Available Construction Proceeds as of (i) the first three dates set forth below, the aggregate DOCSLA1:517506.2 41555-a 14 reasonably expected amount of investment earnings that are Available Construction Proceeds are used and (ii) the last date set forth below, the actual investment earnings that are Available Construction Proceeds are used. See Section 1.6 of this Tax Certificate, defining "Available Construction Proceeds." The Issuer reasonably expects that at least 75% of Available Construction Proceeds will be expended for construction expenditures with respect to the New Money Project. For this purpose, construction expenditures include costs of reconstruction and rehabilitation, but do not include costs of acquiring any interest in land or other existing real or personal property. In general, no rebate calculations will be required in respect of Available Construction Proceeds if Available Construction Proceeds in fact are spent at least as quickly as follows: 10% within six months after the Closing Date 45% within twelve months after the Closing Date 75% within eighteen months after the Closing Date 100% within twenty-four months after the Closing Date The requirement that 100% of Available Construction Proceeds be spent within twenty-four months after the Closing Date will be met if at least 95% of Available Construction Proceeds is spent within twenty-four months and the remainder is held as a reasonable retainage, as permitted by contracts with the Issuer's contractors, and such remainder is spent within thirty-six months after the Closing Date. The Issuer does not expect to have earn any Investment Proceeds allocable to the New Money Project that will result in any rebate payment. 5.5 Investments and Dispositions. (a) General Rule. No Investment Property may be acquired with Gross Proceeds for an amount (including transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations) in excess of the fair market value of such Investment Property. No Investment Property may be sold or otherwise disposed of for an amount (including transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations) less than the fair market value of the Investment Property. (b) Fair Market Value. In general, the fair market value of any Investment Property is the price a willing buyer would pay to a willing seller to acquire the Investment Property, with no amount paid artificially to reduce or increase the yield on such Investment Property. This Section 5.5 describes various safe harbors for determining fair market value. With an Opinion of Counsel, other methods may be used to establish fair market value, provided, however, that such methods comply with the requirements of Section 1.148-5(d)(6) of the Treasury Regulations. (c) Arm's-length Purchases and Sales. If Investment Property is acquired pursuant to an arm's length transaction without regard to any amount paid to reduce the yield on the Investment Property, the fair market value of the Investment Property shall be the amount paid for the Investment Property (without increase for transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations). If Investment Property is sold or otherwise disposed of in an arm's length transaction without regard to any reduction in DOCSLA1:517506.2 41555-8 15 the disposition price to reduce the Rebate Requirement, the fair market value of the Investment Property shall be the amount realized from the sale or other disposition of the Investment Property (without reduction for transaction costs, except as otherwise provided in Section 1.148- 5(e) of the Treasury Regulations). (d) SLGS. If a United States Treasury obligation is acquired directly from or disposed of directly to the United States Department of the Treasury (as in the case of the United States Treasury Securities - State and Local Government Series), such acquisition or disposition shall be treated as establishing a market for the obligation and as establishing the fair market value of the obligation. (e) Investment Contracts. The purchase price of any Investment Property acquired pursuant to a guaranteed investment contract (within the meaning of Section 1.148-1(b) of the Treasury Regulations) shall be determined as provided in Section 1.148-5 of the Treasury Regulations. No investment contract shall be acquired with Gross Proceeds unless the requirements of Section 1.148-5 of the Treasury Regulations and this Section 5.5(e) are satisfied. With respect to any investment contract, the Issuer will obtain from the provider of the investment contract, broker thereof or other party, such information, certification or. representation as will enable the Issuer to determine that these requirements are satisfied. The purchase price of an investment contract will be considered to be fair market value if: (1) the Issuer has made (or has had made on its behalf) a bona fide solicitation for the investment contract; the solicitation must have specified the material terms of the investment contract (i.e., all the terms that could directly or indirectly affect the yield or the cost of the investment including the collateral security requirements for the investment contract) and, unless the moneys invested pursuant to such investment contract will be held in a reasonably required reserve fund or the Bona Fide Debt Service Funds, the Issuer's reasonably expected drawdown schedule for the moneys to be invested; the solicitation has a legitimate business purpose (i.e., a purpose other than to increase the purchase price or reduce the yield) for every term of the bid specification; (2) all bidders have an equal opportunity to bid so that, for example, no bidder is given the opportunity to review other bids (a last look) before bidding; (3) the Issuer solicits bids from at least three (3) investment contract providers with established industry reputations as competitive providers of investment contracts; (4) the Issuer includes in the bid specifications a statement to potential bidders that by submitting a bid, the provider is making certain representations that the bid is bona fide, and specifically that 1) the bidder did not consult with any other potential provider about its bid, 2) the bid was determined without regard to any other formal or informal agreement that the potential provider had with the issuer or any other person, and 3) the bid was not submitted solely as a courtesy to the issuer or any other person for purposes of satisfying the requirements of Section 1.148-5 of the Treasury Regulations; DOCSLA1:517506.2 41555-s 16 (5) at least three bids meeting the qualification requirements of the bid solicitation (as set forth in (1) above) have been received from different providers of investment contracts that have no material financial interest in the Bonds (the following investment contract providers are considered to have a material financial interest in the issue: 1) a lead underwriter in a negotiated underwriting, but only until 15 days after the issue date of the issue, 2) an entity acting as a financial advisor with respect to the purchase of the investment contract at the time the bid specifications were forwarded to potential providers; and 3) any related party to a provider that is disqualified for one of the two preceding reasons); (6) at least one of the bids received by the Issuer that meets the requirements of the preceding paragraph is from an investment contract provider with an established industry reputation as a competitive provider of investment contracts; (7) the investment contract has a yield (net of any broker's fees) at least equal to the highest yielding of the qualifying bids received from the bidders that have no material financial interest in the Bonds; if the investment contract is not the highest-yielding of the qualifying bids, the Issuer must have significant non-tax reasons, such as creditworthiness of the bidder, for failure to purchase the highest-yielding investment contract offered; bid; (8) if an agent for the Issuer conducts the bidding process, the agent does not (9) the provider of the investment contract certifies as to all administrative costs to be paid on behalf of the Issuer, including any fees paid as broker commissions in connection with the investment contract. (f) Deemed Acquisition or Sale. The fair market value of any Investment Property not directly purchased with Gross Proceeds for which there is an established securities market generally is the price at which a willing buyer would purchase Investment Property from a willing seller in a bona fide, arm's length transaction. (g) Certificates of Deposit. The purchase price of a certificate of deposit issued by a commercial bank that has a fixed interest rate, a fixed principal payment schedule, a fixed maturity and a substantial penalty for early withdrawal, will be considered to be fair market value if: (1) the yield on the certificate of deposit is not less than the yield on reasonably comparable direct obligations of the United States; and (2) the yield on the certificate of deposit is not less than the highest published yield of the provider thereof which is currently available on comparable certificates of deposit offered to the public. (h) Broker Compensation. For purposes of computing the Yield on any investment contract acquired through a broker, reasonable compensation received by such broker, whether payable by or on behalf of the obligor or obligee of such investment contract, may be taken into account in determining the cost of the investment contract (as provided in Section 1.148-5(e)(2)(iii) of the Treasury Regulations). For the calendar year 2006, DOCSLA1:517506.2 41555-8 17 compensation is deemed reasonable if does not exceed the lesser of i) $32,000 or ii) 0.2% of the amount reasonably expected, as of the date of acquisition of the investment contract, to be invested under the investment contract over its term, or $3,000 (if 0.2% of such amount reasonably expected to be invested under the investment contract over its term is less than $3,000). In addition, the total fees received by the broker with respect to the investment of any proceeds of the Bonds that are taken into account with respect to all investment contracts, at any time, may not exceed $90,000. All amounts referenced are to be adjusted for inflation after the Closing Date. 5.6 Segregation of Proceeds. In order to perform the calculations required by the Code, it is necessary to track separately all of the Gross Proceeds. To that end, the Issuer shall cause to be established separate accounts or subaccounts, or shall cause the Trustee to take such other accounting measures as are necessary in order to account fully for all Gross Proceeds. 5.7 Filing Requirements. The Issuer will file or cause to be filed such reports or other documents with the Internal Revenue Service as are required by the Code. 5.8 Retention of Firm. The Issuer hereby undertakes to satisfy its obligation to perform the rebate calculations that may be required to be made from time to time with respect to the Bonds as follows: The Issuer initially has retained the firm of Bond Logistix LLC to perform rebate calculations that may be required to be made from time to time with respect to the Bonds. The Issuer initially has retained the firm of to perform rebate calculations that may be required to be made from time to time with respect to the Bonds. The of the Issuer has undertaken full responsibility for performing rebate calculations that may be required to be made from time to time with respect to the Bonds. X The Issuer has decided not, at this time, to designate a party responsible for performing rebate calculations that may be required to be made from time to time with respect to the Bonds and as a result undertakes and assumes full responsibility for rebate compliance and acknowledges that neither bond counsel nor the Trustee has any such responsibility (unless later engaged in writing for such purpose). The Issuer has determined that under no circumstances will it earn any arbitrage subject to rebate with respect to the Bonds. ARTICLE VI OTHER MATTERS 6.1 Expectations. The undersigned is an authorized representative of the Issuer acting for and on behalf of the Issuer in executing this Tax Certificate. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that DOCSLA1:517506.2 41555-5 18 would materially change the expectations as set forth herein, and said expectations are reasonable. 6.2 Amendments. Notwithstanding any other provision of this Tax Certificate, 'the Issuer may amend this Tax Certificate and thereby alter any actions allowed or required by this Tax Certificate if such amendment is signed by an authorized officer and is supported by an Opinion of Counsel. DOCSLA1:517506.2 41555-8 19 6.3 Survival of Defeasance. Notwithstanding any provision in this Tax Certificate or the Indenture to the contrary, the obligation to remit the Rebate Requirement, if any, to the United States Department of the Treasury and to comply with all other requirements contained in this Tax Certificate shall survive defeasance of the Bonds. Dated: March 9, 2006. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By r T. Imperial, Ch ' erson DOCSLA1:517506.2 41555-8 20 EXHIBIT A CERTIFICATE OF THE UNDERWRITER Piper Jaffray & Co. (the "Underwriter") has served as the underwriter to $14,005,000 principal amount of then Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds") issued by the Rosemead Community Development Commission (the "Issuer"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Tax Certificate to which this certificate is attached. The Underwriter hereby certifies and represents the following: A. Issue Price. 1. As of February 23, 2006 (the "Sale Date"), the underwriter had offered or reasonably expected to offer all of the Bonds to the general public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices shown on the attached schedules. 2. The prices shown on the attached schedules represent fair market prices of the Bonds as of the Sale Date. 3. As of the date of this certificate, all of the Bonds have been offered to the general public in a bona fide offering at the prices shown on the attached schedules, and at least 10% of each maturity of the Bonds actually has been sold to the general public at such prices. The Purchaser has no present view towards resale. B. Yield. Using a semiannual compounding convention, the yield on the Bonds has been computed by the Underwriter to be at least 4.13545%. C. Reserve Account. The amount of the Reserve Requirement is reasonably required in that it was a material factor in selling the Bonds at the lowest possible yield (given other characteristics of the Bonds) without regard to any benefit from positive net investment earnings on amounts held in the Reserve Account, and it is reasonable and customary in marketing similar issues of governmental obligations. The amount of the Surety, obtained on the date hereof to satisfy the Reserve Requirement, does not exceed the least of (i) 10% of the stated principal amount of the Bonds, (ii) maximum annual debt service on the Bonds, or (iii) 125% of average annual debt service on the Bonds. DOCSLA1:517506.2 41555-8 D. Qualified Guarantees. Based on calculations performed by the Underwriter, the present value of interest expense saved on the Bonds as a result of the Insurance and the Surety is greater than the present value of the premium for the Insurance and fees for the Surety. The premium paid for the Insurance and the fees paid for the Surety do not, separately, exceed reasonable, arm's length charges for the transfer of credit risk with respect to tax-exempt obligations similar to the Bonds. DOCSLA1:517506.2 41555-5 The undersigned understands and acknowledges that the Issuer and Orrick, Herrington & Sutcliffe LLP, as Bond Counsel, may rely on this certificate, including for the purpose of rendering certain opinions relating to the Bonds. In such connection, the undersigned has personal knowledge or has conducted sufficient inquiry regarding the matters set forth in this certificate to make these representations on behalf of the Underwriter. Dated: March 9, 2006. PIPER JAFFRAY & CO., as underwriter By: Authorized Officer DOCSLA1:517506.2 41555-8 ATTACHMENT TO EXHIBIT A Pricing Information [Attached] DOCSLA1:517506.2 41555-8 $14,005,000 Rosemead Community Development Commission Tax Allocation Bonds, Series 2006A Pricing Summary Type of Maturity Bond Coupon Yield Maturity Value Price Dollar Price 10/01/2006 Serial Coupon 4.000% 3.150% 780,000.00 100.467% 783,642. 60 10/01/2007 Serial Coupon 4.000% 3.200% 810,000.00 101.207% 819,776. 70 10/01/2008 Serial Coupon 3.250% 3.300% 845,000.00 99.876% 843,952. 20 10/01/2009 Serial Coupon 3.250% 3.400% 870,000.00 99.499% 865,641. 30 10/01/2010 Serial Coupon 3.375% 3.480% 900,000.00 99.559% 896,031. 00 10/01/2011 Serial Coupon 3.500% 3.530% 930,000.00 99.848% - 928,586. - 40 10/01/2012 Serial Coupon 3.500% 3.630% 965,000.00 99.245% 957,714. 25 10/01/2013 Serial Coupon 4.000% 3.700% 1,000,000.00 101.961% 1,019,610. 00 10/01/2014 Serial Coupon 5.000% 3.750% 1,035,000.00 109.079% 1,128,967. 65 10/01/2015 - Serial Coupon 5.000% 3.830% 1,090,000.00 . , . 109.290% 1,191,261. - . . 00 10/01/2016 Serial Coupon 5.000% 3.930% . . . 1,145,000.00 109.173% . - 1,250,030. - 85 10/01/2017 Serial Coupon 4.000% 4.020% 1,200,000.00 99.814% 1,197,768. 00 10/01/2018 Serial Coupon 4.250% 4.050% 1,250,000.00 101.702% c 1,271,275. 00 10/01/2019 Serial Coupon 4.000% 4.150% 280,000.00 98.454% 275,671. 20 10/01/2020 Serial Coupon 4.125% 4.200% 290,000.00 . 99.186% . - . 287,639.40 10/01/2021 Serial Coupon 4.125% 4.250% 300,000.00 98.585% 295,755. 00 10/01/2022 Serial Coupon 4.125% 4.300% 315,000.00 97.939% 308,507. 85 Total - - - $14,005,000.00 - - $14,3219830.40 Bid Information Par Amount of Bonds $14,005,000.00 Reoffering Premium or (Discount) 316,830.40 Gross Production $14,321,830.40 Total Underwriter's Discount (0.600%) $(84,030.00) - - Bid (101.662%) 14,237,800.40 Total Purchase Price $14,237,800.40 Bond Year Dollars . $108,988.36 - Average Life - - 7.782 Years Average Coupon 4.2275442% Net Interest Cost (NIC) 4.0139430% True Interest Cost (TIC) 3.9537277% Rosemead Series 2006A I Issue Summary 1 2123/2006 1 3:22 PM EXHIBIT B CERTIFICATE OF THE INSURER AND SURETY PROVIDER [Attached] DOCSLA1:517506.2 41555-8 CERTIFICATE OF BOND INSURER In connection with the issuance of $14,005,000 in aggregate principal amount of the Rosemead Community Development Commission, Los Angeles County, California (the "Obligor"), Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A, dated their date of delivery (the "Obligations"), Ambac Assurance Corporation ("Ambac") is issuing a certain Surety Bond (the "Surety") and a Financial Guaranty Insurance Policy and Endorsement thereto (the "Policy"). The Surety guarantees payment of an amount not to exceed $1,323,238.13 to fund the Reserve Requirement (as defined in the Surety), all as more fully set out in the Surety, and the Policy guarantees the payment of principal of and Ambac interest when due on the Obligations, all as more fully set out in the Policy. On behalf of Ambac, the undersigned hereby certifies that: (i) the Surety is an unconditional and recourse obligation of Ambac to pay the scheduled payments of interest and principal on the Obligations in the event a draw on the Reserve Account is required under the Indenture and the amount credited to such Reserve Account is insufficient to make such payment (up to but not in excess of the Surety Bond Coverage as defined in the Surety); (ii) the Policy is an unconditional and recourse obligation of Ambac (enforceable by or on behalf of the holders of the Obligations) to pay the scheduled payments of interest and principal on the Obligations in the event of a Nonpayment as defined in the Policy; (iii) the premiums of $43,005.24 for the Surety and $204,737.84 for the Policy were determined in arm's length negotiations in accordance with our standard procedures, are required to be paid as a condition to the issuance of the Surety and the Policy, and represent reasonable charges for the transfer of credit risk; (iv) no portion of such premiums represents a payment for any direct or indirect services other than the transfer of credit risk, including costs of underwriting or remarketing the Obligations or the cost of insurance for casualty of Obligation financed property; (v) we are not co-obligors on the Obligations and we do not reasonably expect that we will be called upon to make any payment under the Surety or the Policy; and (vi) the Obligor is not entitled to a refund of any portion of the premiums for the Surety or the Policy in the event that the Obligations are retired prior to their stated maturity. IN WETNESS WHEREOF, Ambac Assurance Corporation has caused this certificate to be executed in its name on this 9th day of March, 2006, by one of its officers duly authorized as of such date. AMBAC ASSURANCE CORPORATION By: 7) 1~, DDwigbi Kwa Vice President and Assistant General Counsel EXHIBIT C MATERIALS RELATING TO BID FOR ESCROW SECURITIES [Attached] DOCSLA1:517506.2 41555-8 PFM' The PFM Group P3blic f"Indr:iai id,nn39ement. Irc. PRO •%^,Set 7ieir;aprn,en_ L LC M-10 Advi;x)I> One Keystone Plaza 717 232-2723 Suite 300 717 232-7837 fax N. Front & Market Streets 717 233-6073 alternate fax Harrisburg, PA 17101 www.pfm.com February 22, 2006 REQUEST FOR OFFERS OF SECURITIES Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A The Rosemead Community Development Commission (the "Issuer'D, through PFM Asset Management LLC ("PFM"), intends to solicit offers for the purchase of a portfolio of securities (the "Escrow Portfolio") to defease a portion of the Issuer's outstanding bonds. The Issuer expects to purchase the Escrow Portfolio pursuant to this Request for Offers of Securities on Thursday, February 23, 2006 (the "Trade Date"), and to settle the purchase of the Escrow Portfolio on Thursday, March 9, 2006 (the "Settlement Date"). Offers shall be subject to the following terms: 1) Responses Due. To be included as an offeror ("Offerer" or "Potential Provider"), you must complete the attached Acknowledgment of Terms of Escrow Offerings and return it by facsimile prior to 10:00 a.m. Eastern Time on the Trade Date. 2) Offering Procedures. The Issuer will purchase each security at the lowest price offered. The Issuer reserves the right to reject any and all offers. Each Offeror will be requested to offer on each security. Awards to the lowest Offeror will be based on the lowest total cost for each individual security. 3) Required IRS Representations. By submitting offers for securities pursuant to this Request for Offers of Securities, the Potential Provider represents that it did not consult with any other Potential Provider about its offers, that the offers were determined without regard to any other formal or informal agreement that the Potential Provider has with the Issuer or any other person (whether or not in connection with the Bonds), and that the bid is not being submitted solely as a courtesy to the Issuer or any other person for the purposes of satisfying the requirements of Treasury Regulations 51.148-5(d)(6)(iii)(B)(1) or (2) (.e., the requirement to receive three bids from providers that do not have a material financial interest in the bonds, at least one of which is from a reasonably competitive provider). Additionally, the Potential Provider represents that it has not and will not provide a payment to any third party with respect to this transaction. 4) Guaranteed Delivery. On the Settlement Date, the successful Offeror (the "Provider") of any security must deliver the purchased security by 11:00 a.m. Eastern Time versus payment in Federal Funds to the Issuer's designated trustee (specific wire instructions to be provided to Provider(s) on the day the offer is accepted). 5) Contingent Settlement. The Issuer's obligation to issue the Tax Allocation Bonds, Series 2006A (the "Bonds") is contingent upon Piper Jaffray (the "Underwriter") accepting the delivery of the Bonds. Prior to accepting offers on the Escrow Portfolio, the Issuer will have received and accepted a proposal from the Underwriter to purchase the Bonds. REQUEST FOR OFFERS OF SECURITIES Rosemead Community Development Commission February 22, 2006 Page 2 However, in the event that the Issuer does not issue the Bonds on the Settlement Date, its obligation to purchase the securities for the Escrow Portfolio shall be null and void. The Issuer or PFM shall not be liable for any costs or losses of the Provider(s) in connection with its offer. 6) Trade Confirmations via Facsimile. The Provider of any security must deliver trade confirmations via Bloomberg to Ken Schiebel or facsimile to (717) 232-3087 or (717) 233-6073 not later than 6:00 p.m. Eastern Time on the Trade Date. 7) Right to Change Par Amounts after Award. PFM reserves the right to adjust par amounts of any security after awarding by up to 10% of the par amount. All efforts will be made to provide such adjustment within 30 minutes of award. 8) Temporary Substitute Securities. (a) Zero Coupon Securities. Temporary substitute securities ("Substitute Securities") for zero coupon securities ("Original Securities") that are sold to the Escrow Portfolio will be permitted to be delivered versus payment for the purchase cost of the Original Securities if the Provider notifies PFM of the substitution no later than 12:00 Noon Eastern Time on the Settlement Date, and further provided that the Substitute - Securities (i) must be a zero coupon securities; (ii) must be direct obligations of the United States with par amounts equal to the par amounts of the Original Securities; (iii) must mature on or before the maturity dates of the Original Securities; and (iv) must meet any applicable yield requirements imposed on the Escrow Portfolio. Alternatively, the Provider must wire Federal Funds in an amount equal to the par amounts of the Original Securities minus the purchase cost of the Original Securities, or a combination of Substitute Securities and Federal Funds meeting the requirements listed above. (b) Coupon-Bearing Securities. Substitute Securities for coupon-bearing Original Securities that are sold to the Escrow Portfolio will be permitted to be delivered versus payment for the purchase cost of the Original Securities if the Provider notifies PFM of the substitution no later than 12:00 Noon Eastern Time on the Settlement Date, and further provided that the Substitute Securities (i) must be direct obligations of the United States; (ii) must produce a cash flow at least equal to that of the Original Securities, which means that the principal and periodic interest payments of the Original Securities must be matched by amount and must be received no later than the receipt dates for principal and interest payments on the Original Securities; and (iii) must meet any applicable yield requirements imposed on the Escrow Portfolio. Alternatively, the Provider must wire Federal Funds in an amount equal to the par amounts plus all interest payments from the Settlement Date to the final maturity date of the Original Securities minus the purchase cost of the of the Original Securities, or a combination of Substitute Securities and Federal Funds meeting the requirements listed above. In addition, substitution of securities may require the preparation of additional cash flow schedules and verification by PFM and the verification agent, and preparation of a REQUEST FOR OFFERS OF SECURITIES Rosemead Community Development Commission February 22, 2006 Page 3 supplemental legal opinion, and the Provider must agree, as a condition of substitution, to bear the additional cost not to exceed $15,000. If such costs are incurred, an itemized invoice detailing the costs the Issuer incurred as a result of the substitution shall be submitted promptly to the Provider, and all such costs shall be reasonable. Any Federal Funds wire or Substitute Securities delivered pursuant this section will be returned "free delivery" to the Provider immediately upon the Provider's free delivery of the of the Original Securities to the Issuer's designated trustee. PFM expects to receive offers for the Escrow Portfolio sometime after L-00 p.m. Eastern Time on the Trade Date. Prior to receiving offers for securities, PFM will contact each Offeror from whom it has received a signed Acknowledgment of Terms of Escrow Offerings to inform the Offeror, in written form, of the Time of Receipt of offers (the "Time of Receipt") and the specific securities to be included in the Escrow Portfolio, including the par amount of each security for which offers will be received. PFM may then elect to divide the Portfolio and request offers in single securities or groups of securities, but will accept offers in all instances on a single security basis. Offers will be received by telephone up until the Time of Receipt and the successful Offerors will be notified immediately after the Time of Receipt. Successful Offerors will be notified based on the total price of each amount of a security. Further information about this Request for Offers may be obtained from Michael Harris or Matthew Eisel at PFM at (717) 232-2723. To be considered an eligible offeror please e-mail or fax the completed Acknowledgment of Terms of Escrow Offerings by the time indicated in 1) above to Michael Harris (harrismnpfm.com) or Matthew Eisel (Eiselm ,pfin.com) at PFM, fax (717) 232-7837 or 233-6073. February 22, 2006 ACKNOWLEDGMENT OF TERMS OF ESCROW OFFERINGS Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (name of offering firm) intends to offer securities for the Escrow Portfolio in accordance with the Request for Offers of Securities dated as shown above. The undersigned is an officer of the Provider and is duly authorized to execute and deliver this Acknowledgement of Terms of Escrow Offerings for the Provider. Authorized Signature Name Title Date Phone Fax Provider Acknowledgement: By submitting offers for securities pursuant to this Request for Offers of Securities, the Potential Rovider represents that it did not consult with any other Potential Provider about its offers, that the offers were determined without regard to any other formal or informal agreement that the Potential Provider has with the Issuer or any other person (whether or not in connection with the Bonds), and that the bid is not being submitted solely as a courtesy to the Issuer or any other person br the purposes of satisfying the requirements of Treasury Regulations 51.148-5(d)(6)(iii)(B)(1) or (2) (i.e., the requirement to receive three bids from providers that do not have a material financial interest in the bonds, at least one of which is from a reasonably competitive provider). Additionally, the Potential Provider represents that it has not and will not provide a payment to any third party with respect to this transaction. Please return this completed Acknowledgment of Terms of Escrow Offerings via electronic mail to Michael Harris (harrismopfm.com) or Matthew Eisel (Eiselmnpfm.com) at PFM, or via facsimile to (717) 232-7837 or (717) 233-6073. Phil Angelides STATE OF CALIFORNIA State Treasurer and Chair CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION 915 CAPITOL MALL, ROOM 400 P.O. BOX 942809 SACRAMENTO, CA 94209-0001 TELEPHONE: (916) 653-3269 FAX: (916) 654-7440 February 24, 2006 TO: Kellie Boles Orrick Herrington & Sutcliffe 777 S Figueroa St Ste 3200 Los Angeles, CA 90017 FROM: Executive Director RE: ACKNOWLEDGEMENT OF REPORT OF PROPOSED DEBT ISSUANCE Section 8855(k) of the California Government Code requires written notice to be given to the California Debt and Investment Advisory Commission (CDIAC) no later than 30 days prior to the proposed sale of any public agency debt issue. The Commission acknowledges your written notice of the following proposed debt issuance: CDIAC Nbr: Issuer: Project: Proposed Amount: Proposed Sale Date: Date Notice Received: 2006-0173 Rosemead Community Development Commission Area No 1 $14,300,000.00 February 23, 2006 February 21, 2006 Please submit the Report of Final Sale and the Official Statement (or offering circular) on this issue within 45 days of sale date. Any questions regarding reporting requirements may be directed to the CDIAC staff at (916) 653-3269. Cc: Karen Ogawa Finance Director REPORT OF PROPOSED DEBT ISSUANCE California Debt and Investment Advisory Commission 915 Capitol Mall, Room 400, Sacramento, CA 95814 P.O. Box 942809, Sacramento, CA 94209-0001 Tel.: (916) 653-3269 FAX: (916) 654-7440 For Office Use Only CDIAC NO.: Completion and timely submittal of this form to the California Debt and Investment Advisory Commission (CDIAC) at the above address will assure your compliance with existing California State law and willassist in the maintenance of a complete database of public debt in California. Thank you for your cooperation.' ISSUER NAME: Rosemead Community Development Commission ISSUE NAME: Rosemead Community Development Commission Redevelopment Project Area No 1 Tax Allocation Bonds Series 2006A Please specify type/name of project: PROPOSED SALE DATE: February 23.2006 PRINCIPAL TO BE SOLD: $14.300.000* IS ANY PORTION OF THE DEBT FOR REFUNDING?2 ❑ No ® Yes, proposed amount for refunding $ 9,335,000 Issuer Contact: Name: Karen Opwa Tide: Finance Director Address: City of Rosemead. 8838 E. Valley Blvd Rosemead California 91770 Phone: (626) 569-2121 Issuer Located In Los Angeles County Filing Contact:: Name of Individual (representing: ® Bond Counsel, ❑ Issuer, ❑ Financial Advisor, or ❑ Lead Underwriter) who completed this form and may be contacted for information: Name: M. Kevin Hale_ Esq. Firm/Agency: Orrick. Herrington & Sutcliffe LLP Address: 777 S. Figveora Street. Suite 3200, Los Angeles California 90017 Phone: 1213) 612-2356 E-mail: khale@orrick.com Send acknowledgement/copies to: _Kellie S. Boles. Project Manager (same address) FINANCING PARTICIPANTS: BOND COUNSEL: Orrick. Herrington & Sutcliffe LLP FINANCIAL ADVISOR: Public Financial Management Inc UNDERWRITER\PURCHASER: Piper Iaffray & Co IS THE INTEREST ON THE DEBT TAXABLE? Under State law: ® NO (tax-exempt) ❑ YES (taxable) Under Federal law: ® NO (tax-exempt) ❑ YES (taxable) If the issue is federally tax-exempt, is interest a specific preference item for the purpose of alternative minimum tax? ❑ Yes, preference item ® No, not a preference item TYPE OF SALE: ❑ Competitive ® Negotiated 1 Section 88550 of the California Government Code requires the issuer of any proposed new public debt issue to give written notice of the proposed sak to the CDIAC no later than 30 days prior to the sale. Under California Government Code Section 88550, `The issuer of any new public debt issue shal4 not later than 45 days after the signing of the bond purrhase contract in a negotiated orprivate financing, or after the acceptance of a bid in a competitive offering, submit a report offinal sak and official statement to the commission. The Commission may require information to be submitted in the report offinal sale that it considered appropriate. " 2 Section 53583(c)(2)(B) of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated basis shall send a written statement, within two weeks after the bonds are sold, to the CDIAC explaining the reasons ivhy the local agent' determined to sell the bonds at private sak or on a negotiated basis instead of at puh& sale. DOCSSF1:497547.1 CDIAC: Report of Proposed Debt Issuance Page 2 TYPE OF DEBT INSTRUMENT NOTE ❑ Bond anticipation (BAN) ❑ Grant obligation (GAN) ❑ Other note (Please specify below.) (OTHN) ❑ Revenue anticipation (RAN) ❑ Tax allocation (TALN) ❑ Tax and revenue anticipation (IRAN) ❑ Tax anticipation (TAN) ❑ Commercial paper (CP) ❑ Certificates of participation/leases (COPT.) ❑ Other (Please specify below.) (OTH) Please specify if "Other note/Other bond/Other" was checked: BOND ❑ Conduit revenue (Private obligor) (CRB) ❑ General obligation (GOB) ❑ Limited tax obligation (LTOB) ❑ Other bond (Please specify below.) (OTHB) ❑ Public lease revenue (PLRB) ❑ Revenue (Pool) (RB) ❑ Revenue (Public enterprise) (PERB) ❑ Sales tax revenue (STAB) ❑ Special assessment (SAB) ® Tax allocation (TAB) SOURCE(S) OF REPAYMENT ❑ Bond proceeds (BDPR) ❑ Property tax revenues (PRTX~ ❑ General fund of issuing jurisdiction (GNFD) ❑ Public enterprise revenues (PER) ❑ Grants (GRNT) ❑ Sales tax revenues (SATR) ❑ Intergovernmental transfers other than grants (ITGV) ❑ Special assessments (SA) ❑ Local obligations (LOB) ❑ Special tax revenues (SPTR) ❑ Private obligor payments (POP) ® Tax-increment (TI) ❑ Other (Please specify.) (OTHS): PURPOSE(S) OF FINANCING ❑ Cash flow, interim financing (CFIF) ❑ Airport (APRT) ❑ Project, interim financing (PIF) ❑ Bridges and highways (BRHI) ❑ Convention center (CCTR) ❑ College/university housing (CUH) ❑ Equipment (EQUP) ❑ Multifamily housing (MFH)3 ❑ Flood control/storm drainage (FLDS) ❑ Single-family housing (SFH)3 ❑ Multiple capital improvements and public works (MCAP) ❑ Other capital improvements and public works (OCAP) ❑ Health care facilities (HCF) ❑ Parking (PRKG) ❑ Hospital (HOSP) ' ❑ Parks/open space (PRKO) ❑ Other/multiple health care purposes (equipment; ❑ Ports and marinas (PATS) etc.)(OMHC) ❑ Power generation/transmission (PWR) ❑ Prisons/jails/correctional facilities (PRSN) ❑ College/university facility (CUF) ❑ Public building (PB) ❑ K-12 school facility (KSCH) ❑ Public transit (PTR) ❑ Other/multiple education uses (equipment, etc.)(OMED) ❑ Recreation and sports facilities (RCSP) ❑ Student loans (SLC) ❑ Seismic safety improvements/repair (SSI) ❑ Solid waste recovery facilities (SWST) ® Redevelopment, multiple uses (RD) ❑ Street construction and improvements (SCI) ❑ Wastewater collection and treatment (WSTW) ❑ Commercial development (CMDV) ❑ Water supply/storage/distribution (WTR) ❑ Industrial development (INDV) ❑ Pollution control (PC) ❑ Insurance/pension funds (IPF) ❑ Other than listed above (OTH)s Plea se Specify type/name of project if different from above: ' Certain local goaernment issuers of housing bonds are required to obtain a certification from the State Treasurer attesting to their compliance with the State housing reporting re quirements prior to issuance of the bonds lo finance single- or mutt family housing. DOCSSF'L:497547.1 PRELINUNARY OFFICIAL STATEMENT DATED FEBRUARY 15, 2006 NEW ISSUE - FULL BOOK-ENTRY Ratings (Insured): S&P: "AAA" Underlying Rating: S&P: "BBB+" (See "RATINGS" herein) In the opinion of Orrick, Herrington Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exemptfrom State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2006A Bonds is not a sped preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series 2006A Bonds. See "TAXMATTERS" herein. s E M E $14,300,000* ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION ° (LOS ANGELES COUNTY, CALIFORNIA) REDEVELOPMENT PROJECT AREA NO.1 * TAX ALLOCATION BONDS SERIES 2006A A Dated: Date of Delivery Due: October 1, as shown on inside cover THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY, IT IS NOT A SUMMARY OF ALL 3 OF THE PROVISIONS OF THE SERIES 2006A BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 2006A Bonds will be issued in denominations of $5,000 or any integral multiple thereof as shown on the inside cover a page of this Official Statement. Interest on the Series 2006A Bonds is payable on April 1 and October 1 of each year, commencing October 1, 2006. The Series 2006A Bonds will be issued in book-entry form, without coupons, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers of the Series 2006A Bonds will not receive physical certificates from the Commission representing their interests in the Series 2006A Bonds purchased. DTC will act as securities depository for the Series 2006A Bonds. The principal of and interest on the Series 2006A Bonds are payable directly to DTC by U.S. Bank National Association, Los Angeles, California, as Trustee. Upon receipt of payments of such principal and interest, DTC is obligated to remit such principal and interest to the participants in DTC for subsequent disbursement to the beneficial owners of the Series 2006A Bonds. The Series 2006A Bonds are being issued by the Rosemead Community Development Commission (the "Commission"): (1) to y refund a portion of the Commission's outstanding Series 1993 Bonds (as defined herein); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined herein) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay costs of issuance related to the Series 2006A Bonds. See "PLAN OF FINANCE" herein. The Series 2006A Bonds are subject to optional and mandatory redemption as described herein. Payment of the principal of and interest on the Series 2006A Bonds when due will be insured by a financial guaranty insurance 'a policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Series 2006A Bonds. y Ambac The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of d the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest b on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the State o of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory y o limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are personally liable the Series 2006A B nds, see "RISK FACTORS" herein. For a discussion of some of the risks associated with the purchase of 3 o Legal matters incident to the issuance and sale of the Series 2006A Bonds are subject to the approving opinion of Orrick, Herrington &Sutcliffe LLP, Los Angeles, California, Bond Counsel. As Bond Counsel, Orrick, Herrington & SutclieLLP undertakes o no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Commission in connection with the Series 2006A Bonds by Wallin, Kress, Reisman & Kranitz LLP, Santa Monica, California, as g counsel to the Commission, and by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel. The Commission anticipates that the Series 2006A Bonds, in book entryform, will be available for delivery to DTC in New York, New York on or about March 9, 2006 PiperJaff ray. 3 ~ j :6 Dated: February 2006 ' Preliminary, subject to change. SERIES 2006A BOND MATURITY SCHEDULE` SERIES 2006A BONDS BASE CUSIPt: $ Serial Series 2006A Bonds Maturity Interest CUSIP Maturity Interest CUSIP (October 1) Amount Rate Yield Numbers (October 1) Amount Rate Yield Numbert Series 2006A Term Bonds due October 1, 2022 - Yield - CUSIP No. Preliminary, subject to change. t CUSIP data, copyright 2006, American Bankers Association. CUSIP data herein are provided for convenience of reference only. Neither the Commission nor the Underwriter shall be responsible for the selection or correctness of the CUSIP numbers set forth above. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Jay T. Imperial, Chairperson Gary A. Taylor, Vice Chairperson Margaret Clark John Tran John H. Nunez CITY/COMMISSION STAFF William Crowe City Manager and Executive Director of the Commission Donald J. Wagner Assistant City Manager and Assistant Executive Director of the Commission Peter L. Wallin City Attorney and General Counsel to the Commission Karen Ogawa Finance Director Nina Castruita City Clerk Special Services U.S. Bank National Association Trustee Orrick, Herrington & Sutcliffe LLP Bond Counsel and Disclosure Counsel Wallin, Kress, Reisman & Krantz LLP Commission's Counsel GRC Associates, Inc. Fiscal Consultant Public Financial Management, Inc. Financial Advisor The Arbitrage Group, Inc. Verification Agent NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OR SALE OF THE SERIES 2006A BONDS, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMMISSION, THE CITY OR THE UNDERWRITER. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE DESCRIBED ON THE INSIDE COVER PAGE OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOR WILL THERE BE ANY SALE OF THE SERIES 2006A BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER, SOLICITATION OR SALE. THE OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE SERIES 2006A BONDS. Statements contained in this Official Statement which involve time estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The information set forth herein has been furnished by the Commission, the City, or other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Commission, the City or the Underwriter. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission or the City 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 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 securities referred to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. IN CONNECTION WITH THE OFFERING OF THE SERIES 2006A BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2006A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER TO SELL THE SERIES 2006A BONDS 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. THE SERIES 2006A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE SERIES 2006A BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT ................................................................................................................1 The Series 2006A Bonds ...................................................................................................................1 The Authority, the Commission and the Redevelopment Project Area No. 1 2 Tax Allocation Financing 2 Bond Insurance 2 Tax Exemption 3 Continuing Disclosure 3 Additional Information 3 PLAN OF FINANCE 4 General 4 Plan of Refunding 4 ES'T'IMATED SOURCES AND USES OF FUNDS 4 THE SERIES 2006A BONDS ........................................................................................................................5 Description of the Series 2006A Bonds 5 DTC and Book-Entry Only System 5 Redemption 5 Notice of Redemption 7 DEBT SERVICE SCHEDULES FOR THE SERIES 2006A BONDS AND THE SERIES 1993 BONDS ..............................................................................................................7 SECURITY FOR THE SERIES 2006A BONDS ...........................................................................................8 Pledge and Allocation of Taxes 8 Reserve Accounts ............................................................................................................................10 Reserve Surety Bond I l Issuance of Additional Bonds ..........................................................................................................12 Series 2006A Bonds Not a Debt of the City or the State .................................................................14 BOND INSURANCE ...................................................................................................................................15 Payment Pursuant to Financial Guaranty Insurance Policy .............................................................15 Ambac Assurance Corporation ........................................................................................................16 Available Information ......................................................................................................................16 Incorporation of Certain Documents by Reference .........................................................................17 RISK FACTORS ..........................................................................................................................................18 Assumptions and Projections ...........................................................................................................18 Real Estate and General Economic Risks ........................................................................................18 Reduction in Assessed Value ...........................................................................................................18 Assessment Appeals ........................................................................................................................19 Reduction in Inflationary Rate .........................................................................................................19 Real Estate and General Economic Risks 20 State Budget Deficit and Its Impact on Pledged Tax Revenues 20 Proposition 1A .................................................................................................................................21 Limited Obligations 22 Hazardous Substances 22 Certain Bankruptcy Risks 22 Secondary Market 22 Loss of Tax Exemption 23 Risk of Earthquake 23 Teeter Plan 23 Concentration of Land Ownership ......................:............................................................................23 TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT......... 24 Introduction 24 Property Tax Rate and Appropriation Limitations 24 Unitary Property 25 Property Tax Administrative Costs 26 TABLE OF CONTENTS (continued) Page Property Tax Collection Procedures 26 Plan Limitations 27 Low and Moderate Income Housing Fund 28 Assembly Bill 1290 29 Pass-Through Arrangements 30 Proposition 218 - 30 Future Initiatives 30 THE COMMISSION 30 Organization 30 Powers 31 THE REDEVELOPMENT PROJECT AREA NO. 1 32 Project Area Description 32 Assessed Values 32 Project Status 33 Controls, Land Use and Building Restrictions 35 Current Plans for the Redevelopment Project Area No. 1 35 Ten Largest Secured Taxpayers 36 TAX INCREMENT REVENUES 36 Projected Tax Revenues 37 Assessment Appeals 40 Debt Service and Estimated Coverage 40 CERTAIN INFORMATION CONCERNING THE CITY 42 CERTAIN LEGAL MATTERS 42 TAX MATTERS 42 LITIGATION 44 RATINGS 44 UNDERWRITING 45 VERIFICATION 45 FINANCIAL ADVISOR 45 FISCAL CONSULTANT 45 MISCELLANEOUS 45 APPENDIX A - FISCAL CONSULTANT'S REPORT .............................................................................A-1 APPENDIX B - FORM OF OPINION OF BOND COUNSEL B-1 APPENDIX C - DTC AND BOOK-ENTRY ONLY SYSTEM C-1 APPENDIX D - DEFINITIONS AND SUMMARY OF INDENTURE ....................................................D-1 APPENDIX E - SUPPLEMENTAL INFORMATION CONCERNING THE CITY OF ROSEMEAD E-1 APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 APPENDIX G - FORM OF BOND INSURANCE POLICY .....................................................................G-1 ii OFFICIAL STATEMENT $14,300,000' ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (LOS ANGELES COUNTY, CALIFORNIA) REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A INTRODUCTORY STATEMENT This Official Statement, including the cover page, the inside cover page and appendices hereto, is provided to furnish information regarding the Commission's $14,300,000" aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). The Series 2006A Bonds are to be issued by the Rosemead Community Development Commission (the "Commission"). The Series 2006A Bonds are payable from and secured by Pledged Tax Revenues, as defined in the Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement to Indenture," together with the Original Indenture, the "Indenture"), by and between the Commission and the Trustee. As used herein, the term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Redevelopment Law (as defined below) in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Redevelopment Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Capitalized terms used in this paragraph and not defined are defined below. See "SECURITY FOR THE SERIES 2006A BONDS" herein. The Series 2006A Bonds are being issued by the Commission: (1) to refund a portion of the Commission's outstanding Series 1993 Bonds (as defined below); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined below) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay costs of issuance related to the Series 2006A Bonds. See "PLAN OF FINANCE" herein. The Series 2006A Bonds The Series 2006A Bonds are being issued for sale to the Rosemead Financing Authority (the "Authority") pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6854) of the California Government Code (the U PA Law"). The Series 2006A Bonds purchased by the Authority will be resold concurrently to the Underwriter. The Series 2006A Bonds are being issued pursuant to the Constitution and the laws of the State of California Preliminary, subject to change. (the "State"), including the California Community Redevelopment Law (Part 1, commencing with Section 33000 of Division 24 of the Health and Safety Code of the State (the "Redevelopment Law"). Additionally, the Series 2006A Bonds are being issued pursuant to a Resolution adopted by the Commission on February 14, 2006, and pursuant to and secured by the Indenture. See "SECURITY FOR THE SERIES 2006A BONDS" herein. The Authority, the Commission and the Redevelopment Project Area No.1 The Authority. The Rosemead Financing Authority was created by a Joint Exercise of Powers Agreement between the City and the Commission. The Agreement was entered into pursuant to the provisions of the JPA Law. The Authority was created for the primary purpose of providing financing or refinancing for purposes which are authorized under the JPA Law. Under the JPA Law, the Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Commission. The Rosemead Community Development Commission, formerly known as the Rosemead Redevelopment Agency, was activated in 1972 by City Ordinance. The City Council Members serve as the Members of the Commission. The Commission is a separate public body which plans and implements projects in accordance with the requirements of the Redevelopment Law. The Commission has two active project areas, Redevelopment Project Area No. 1 and Redevelopment Project No. 2. The Series 2006A Bonds are being issued finance and refinance redevelopment activity for Redevelopment Project Area No. 1. Tax increment generated in Redevelopment Project Area No. 2 is NOT available to pay debt service on the Series 2006A Bonds. The Project Area. The Redevelopment Plan for the Redevelopment Project Area No. 1 ("Redevelopment Project Area No. 1" or the "Project Area" herein) was adopted by Ordinance No. 340 of the City Council on June 27, 1972. The Project Area is a contiguous area of about 511 acres and is roughly triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the major thoroughfares traversing the area. The Project Area is within a few miles of the City's Civic Center and is located between the San Bernardino and Pomona Freeways to the north and south, respectively. Tax Allocation Financing Pursuant to the Redevelopment Law, a portion of all property tax revenues, including certain reimbursements by the State of California, collected by or for each taxing agency on any increase in the taxable value of certain property within each redevelopment project over that shown on the assessment rolls for the base year applicable to each such redevelopment project may be pledged to the repayment of indebtedness incurred by the Commission in connection with project redevelopment. Under the Indenture, the Commission has pledged tax increments to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds. See "SECURITY FOR THE SERIES 2006A BONDS" herein. Certain events, including any future decrease in the taxable valuation in the Project Area or in the applicable tax rates or increased delinquencies in the payment of property taxes within the Project Area may reduce tax increment allocated to and received by the Commission, and correspondingly may adversely impact the ability of the Commission to pay debt service on the Series 2006A Bonds. See "RISK FACTORS" herein. Bond Insurance The scheduled payment of principal of and interest on the Series 2006A Bonds when due will be insured under a financial guaranty insurance policy (the "Policy") to be issued concurrently with the delivery 2 of the Series 2006A Bonds by Ambac Assurance Corporation (the "Bond Insurer" or "Ambac Assurance"). See "BOND INSURANCE" herein. Tax Exemption For a summary of the opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Special Counsel, see "TAX MATTERS" herein. Continuing Disclosure The Commission has covenanted for the benefit of owners of the Series 2006A Bonds to provide, so long as the Series 2006A Bonds are outstanding, certain financial information and operating data relating to the Commission by not later than 270 days following the end of the Commission's fiscal year (which is currently June 30), commencing March 31, 2007, for the 2005-06 fiscal year report (the "Annual Report") and to provide notices of the occurrences of certain enumerated events, if material. These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5). The Commission has never failed to comply in all material respects with any continuing disclosure undertakings with regard to Rule 15c2-12(b)(5) to provide annual reports or notices of material events. The specific nature of the information to be contained in the Annual Report or the notices of material events by the Commission is set forth in APPENDIX F - "FORM OF CONTINUING DISCLOSURE AGREEMENT." Additional Information There follows in this Official Statement brief descriptions of the Series 2006A Bonds, the security for the Series 2006A Bonds, the Indenture, the Commission, the Project Area, and certain other information relevant to the issuance of the Series 2006A Bonds. All references herein to the Indenture are qualified in their entirety by reference to the definitive forms thereof and all references to the Series 2006A Bonds are further qualified by references to the information with respect thereto contained in the appropriate Indenture. The Report of GRC Associates, Inc., the Fiscal Consultant, dated February 7, 2006, regarding tax increment revenues is included in Appendix A (the "Fiscal Consultant's Report"). The proposed form of legal opinion for the Series 2006A Bonds is set forth in Appendix B. Certain information relating to DTC and the book- entry only system is included in Appendix C. Definitions and a summary of certain provisions of the Indenture are included in Appendix D. Selected information regarding the City of Rosemead and the County of Los Angeles is included in Appendix E. The proposed form of Continuing Disclosure Agreement is included in Appendix F. The specimen form of the Policy of the Bond Insurer is included in Appendix G. All capitalized terms used herein and not normally capitalized have the meanings assigned to them in the Indenture, as applicable, unless otherwise stated in this Official Statement. The information set forth herein and in the Appendices hereto has been fixrnished by the Commission and includes information which has been obtained from other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. Copies of the Indenture and the Commission's audited financial statements regarding the Project Area for the Fiscal Year ended June 30, 2004, are available upon request of the Commission. The Commission's address and telephone number for such purpose are as follows: 8838 East Valley Boulevard, P.O. Box 399, Rosemead, California 91770, Attn: Finance Director, Telephone: (626) 569-2100. PLAN OF FINANCE General The Series 2006A Bonds are being issued by the Commission: (1) to refund a portion of the Commission's outstanding Series 1993 Bonds (as defined below); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined below) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay costs of issuance related to the Series 2006A Bonds. A portion of the proceeds of the Series 2006A Bond proceeds will be deposited in an escrow account and used to refinance redevelopment activities through the refunding of a portion of the outstanding principal amount of the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993 Bonds"). See "Plan of Refunding" below. Plan of Refunding $ of the proceeds of the Series 2006A Bonds will be deposited in an escrow fund (the "Escrow Fund") established under an Escrow Agreement between the Commission and the Trustee. The moneys so deposited will be used to purchase certain securities (the " Government Obligations"), the interest and principal of which will be sufficient to pay on April 10, 2006 (the "Redemption Date") the interest and principal of the outstanding Series 1993 Bonds that mature on October 1, 2006 through October 1, 2018 (the "Refunded Bonds") at a redemption price of 100%. (See "VERIFICATION" herein). Upon the issuance of the Series 2006A Bonds, irrevocable instructions will be given to mail a timely notice of redemption of the Refunded Bonds on the Redemption Date. The maturing principal of and the investment income to be derived from the Government Obligations in the Escrow Fund will held in trust solely for the Refunded Bonds and will not be available to pay the principal amount or purchase price of or interest on the Series 2006A Bonds or any obligations other than the Refunded Bonds. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds for the Series 2006A Bonds are as follows: ESTIMATED SOURCES AND USES OF FUNDS Sources of Funds: Principal Amount of Series 2006A Bonds Less: Underwriter's Discount Funds released from Original Indenture TOTAL SOURCES OF FUNDS Uses of Funds: Deposit to Series 2006A Expense Account() Deposit to Redevelopment Fund Deposit to Escrow Fund TOTAL USES OF FUNDS V) Includes the premium for the Financial Guaranty Insurance Policy and the Reserve Surety Bond issued by the Bond Insurer, the fees and expenses of the fiscal consultant, Bond Counsel and Disclosure Counsel, the applicable Trustee (including counsel fees), the rating agencies, the financial advisor, other costs incidental to the issuance of the Series 2006A Bonds, and the costs of printing. 4 THE SERIES 2006A BONDS Description of the Series 2006A Bonds The Series 2006A Bonds will be dated, will bear interest at the annual rates and will mature, subject to prior redemption or acceleration, as shown on the inside cover page of this Official Statement. The Series 2006A Bonds will be issued in denominations of $5,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2006A Bonds will be payable on April 1 and October 1 of each year-(each an "Interest Payment Date"), commencing October 1, 2006. Principal and redemption premiums, if any, on the Series 2006A Bonds will be payable upon the surrender thereof at maturity or the earlier redemption thereof at the principal corporate trust office of the Trustee and will be paid in lawful money of the United States of America. Interest on the Series 2006A Bonds will be computed on the basis of a 360-day year of twelve 30-day months. The Series 2006A Bonds will bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from the 16th day of the month next preceding an Interest Payment Date to and including such Interest Payment Date, in which event they will bear interest from such Interest Payment Date, or unless such date of registration is on or before September 15, 2006, in which event they will bear interest from their Dated Date; provided, however, that if, at the time of registration of any Series 2006A Bond, interest is then in default on the outstanding Series 2006A Bonds, such Series 2006A Bond will bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the outstanding Series 2006A Bonds. Payment of interest on the Series 2006A Bonds due on or before the maturity or prior redemption of such Series 2006A Bonds will be made to the person whose name appears on the bond registration books of the Trustee as the registered owner thereof, as of the close of business on the 15th day of the month next preceding the Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such registered owner at his address as it appears on such books or, upon written request received prior to the 15th day of the month preceding an Interest Payment Date of an Owner of at least $1,000,000 in aggregate principal amount of Series 2006A Bonds, by wire transfer in immediately available funds to an account within the continental United States designated by such Owner. DTC and Book-Entry Only System DTC will act as securities depository for the Series 2006A Bonds. The Series 2006A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered certificate will be issued for each series and for each year in which the Series 2006A Bonds mature in denominations equal to the aggregate principal amount of the Series 2006A Bonds of each series maturing in that year, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Series 2006A Bonds, as nominee of DTC, references herein to the owners of the Series 2006A Bonds or Bondowners means Cede & Co. and does not mean the actual purchasers of the Series 2006A Bonds (the "Beneficial Owners"). See APPENDIX C - "DTC AND BOOK-ENTRY ONLY SYSTEM," herein, for a further description of DTC and its book-entry system. Redemption Optional Redemption.` The Series 2006A Bonds due on or before October 1, 20_ are not subject to redemption prior to their respective stated maturities. Series 2006A Bonds maturing on or after October 1, 20 are subject to redemption, as a whole or in part, as designated by the Commission, or, absent such ' Preliminary, subject to change. designation, pro rata among maturities, and by lot within any one maturity if less than all of the Series 2006A Bonds of such maturity are to be redeemed, prior to their respective maturity dates, at the option of the Commission, on any date on or after October 1, 20_, from funds derived by the Commission from any source, at the redemption prices of the principal amount of the Series 2006A Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption. Mandatory Sinking Fund Redemption. The Series 2006A Bonds will also be subject to mandatory redemption in part by lot prior to their stated maturity dates on any October 1, on or-after October 1, 20_, solely from funds derived by the Commission from the required deposit into the Sinking Account provided for in the Indenture, at the principal amount thereof plus accrued interest thereon to the redemption date, without premium, in the aggregate principal amounts and on the dates set forth below: Year (October 1) Principal Amount 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022` Maturity. In the event that some but not all of such Term Series 2006A Bonds have been redeemed pursuant to other redemption provisions of the Indenture, the total amount of all Sinking Account payments thereafter shall be reduced by the aggregate principal amount of such Term Series 2006A Bonds so redeemed, to be allocated among such Sinking Account payments on a pro rata basis in integral multiples of $5,000 as determined by the Commission. Purchase in Lieu of Redemption. In lieu of redemption of any Term Bond, amounts on deposit in the Debt Service Fund or in the Sinking Account therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Commission received by the Trustee prior to the selection of Bonds for redemption, for the purchase of such Term Bonds 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 Commission may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date; provided, however, that no Bonds shall be purchased by the Trustee under this subsection (2) with a settlement date more than 90 days prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in any twelve month period ending 60 days prior to any Principal Payment Date in any year shall be credited towards and shall reduce the principal amount of such Term Bonds required to be redeemed on such Principal Payment Date in such year. Selection of Bonds. Whenever less than all the Outstanding Bonds of a Series maturing on any one date are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed from the Outstanding Bonds of such Series maturing on such date not previously selected for redemption, by lot in any manner which the Trustee deems fair; provided, however, that if less than all the Outstanding Term Bonds of a Series of any maturity are called for redemption at any one time, upon the written direction from the Commission, the Trustee shall specify a reduction in any Sinking Account Installment payments required to be made with respect to such Bonds (in an amount equal to the amount of Outstanding Term Bonds to be redeemed) which, to the extent practicable, results in approximately equal Annual Debt Service on the Bonds Outstanding following such redemption. Notice of Redemption _ Notice of redemption will be mailed by first class mail by the Trustee, not less than 30 nor more than 60 days prior to the redemption date to (1) the respective Owners of Series 2006A Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (2) to one or more Information Services designated in writing to the Trustee by the Commission and (3) the Securities Depositories. Each notice of redemption will state the date of such notice, the Series 2006A Bonds to be redeemed, the date of issue of such Series 2006A Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed, the distinctive certificate numbers of the Series 2006A Bonds of such maturity to be redeemed and, in the case of Series 2006A Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice will also state that on said date there will become due and payable on each of such Series 2006A Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Series 2006A Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Series 2006A Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Failure by the Trustee to give notice pursuant to above to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice will not affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed to such Owner and any defect in the notice so mailed will not affect the sufficiency of the proceedings for redemption. The Commission will have the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be canceled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Series 2006A Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture. The Commission and the Trustee will have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. From and after the date fixed for redemption, if notice of such redemption shall have been duly given and funds available for the payment of such redemption price of the Bonds so called for redemption shall have been duly provided, no interest shall accrue on such Bonds from and after the redemption date specified in such notice. DEBT SERVICE SCHEDULES FOR THE SERIES 2006A BONDS AND THE SERIES 1993 BONDS Set forth below is the principal and interest on the Series 2006A Bonds and Series 1993 Bonds remaining outstanding as of the date of issuance of the Series 2006A Bonds. DEBT SERVICE ON THE BONDS Series 1993 Series 1993 Series 1993 Series 2006A Series 2006A Series 2006A Total Year Principal' Interest' Total' Principal Interest Total Debt Service 2006 - $ 1,293,320 $ 1,293,320 2007 - 1,293,320 1,293,320 2008 - 1,293,320 1,293,320 2009 - 1,293,320 1,293,320 2010 1,293,320 1,293,320 2011 - 1,293,320 1,293,320 2012 1,293,320 1,293,320 2013 1,293,320 1,293,320 2014 - 1,293,320 1,293,320 2015 - 1,293,320 1,293,320 2016 - 1,293,320 1,293,320 2017 - 1,293,320 1,293,320 2018 - 1,293,320 1,293,320 2019 $ 1,020,000 1,293,320 2,313,320 2020 1,080,000 1,236,200 2,316,200 2021 1,140,000 1,175,720 2,315,720 2022 1,205,000 1,111,880 2,316,880 Total $4,445,000 $21,630,280 $26,075,280 * Assumes the refunding of the Refunded Bonds as described herein. The Series 1993 Bonds mature on October 1, 2033. Debt service owing to the Series 1993 Bonds between 2023 and 2033 are not included in this table. Source: Rosemead Community Development Commission and Piper Jaffiay & Co., as Underwriter of the Series 2006A Bonds. SECURITY FOR THE SERIES 2006A BONDS Pledge and Allocation of Taxes Under provisions of the California Constitution and the Redevelopment Law, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California, any city, county, city and county or other public corporation ("taxing agencies") for Fiscal Years beginning after the effective date of the ordinance approving the redevelopment plan for the Project Area (the 'Effective Date"), are divided as follows: 1. The portion equal to the amount of those taxes which would have been produced by the current tax rate, applied to the assessed value of the taxable property in the Project Area as last equalized prior to the Effective Date is paid (when collected) into the funds of those respective taxing agencies as taxes by or for such taxing agencies; 2. Except as provided in subparagraph (3) below, that portion of such levied taxes each year in excess of such amount is allocated to and when collected paid into a special fund of the Commission, to the extent required to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed or otherwise) incurred by the Commission to finance or refinance, in whole or in part, (1) the Commission's redevelopment projects within the Project Area and (2) under certain circumstances, publicly owned improvements outside of the Project Area; and 3. That portion of the taxes identified in subparagraph (2) above that are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property approved by the voters of the taxing agency on or after January 1, 1989, will be allocated to, and when collected will be paid into, the fund of such taxing agency. Pursuant to the Indenture, "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Redevelopment Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing'Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Redevelopment Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Pursuant to the Indenture, the term "Housing Fund" means the Low and Moderate Income Housing Fund, established pursuant to Section 33334.3 of the Redevelopment Law with respect to the Project Area and held by the Commission. The County of Los Angeles (the "County") and the Commission entered into a certain agreement for reimbursement of tax increment funds with the County, the Consolidated Fire Protection District, and the County Public Library District pertaining to the Project Area. The elements of the County Agreement include the following: (i) the Commission is to provide for a pass-through of a portion of its tax increment revenues received after July 1, 1988 for the Consolidated Fire Protection District; and (ii) the Commission is to allow an additional pass-through of tax increment revenues for the Los Angles County Public Library District at such time that the Commission or the City constructs a replacement facility. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" for the Fiscal Consultant's projections of the pass-through payments to be made to other taxing entities. Such pass-through payments will not be available to the Commission to pay debt service on the Series 2006A Bonds. When the Commission extended the time frame to incur debt pursuant to California State Senate Bill ("SB") 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is approximately 83% of every $1.00 of property tax generated. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Commission makes the finding that the issuance of the debt will not impact the Commission's ability to make the statutory payments. The Commission has made the appropriate findings, and therefore the Fiscal Consultant has assumed that these payments are subordinated to bond indebtedness accordingly. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. These statutory pass-throughs to affected agencies will begin in the year 2004-05 at a rate of 25% of the tax increment growth net of the Housing Set-Aside Requirement with of base year of 2003-04. An additional pass through will begin in the year 2014-15 at a rate of 21% of the tax increment growth net of the Housing Set- Aside Requirement with a base year of 2013-14. The County includes the unitary assessed values in its calculation of SB 211 pass throughs. However, there is no consistent methodology among various counties within the State as to the calculation of SB 211 pass throughs. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. For the purpose of its report and the projections set forth herein, the Fiscal Consultant has calculated the pass throughs based on the County's methodology. The Commission has no power to levy and collect property taxes, and any legislative property tax de- emphasis or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate would, in all likelihood, reduce the amount of Pledged Tax Revenues that would otherwise 9 be available to pay the principal of, interest on and premium, if any, on the Series 2006A Bonds. Likewise, broadened property tax exemptions could have a similar effect. For a further description of factors which may result in decreased Pledged Tax Revenues, see "RISK FACTORS" herein. Reserve Accounts General. To further secure the payment of principal of and interest on the Series 2006A Bonds, the Commission is required, upon delivery of each series of Bonds, to fund a Reserve Account in an amount equal to the respective Reserve Account Requirement for each such series. The Reserve Account is a common reserve for Bonds then Outstanding under the Indenture, in this case including the Series 1993 Bonds to remain Outstanding, the Series 2006A Bonds and any Additional Bonds to be issued in accordance with the Indenture. The following describes the Reserve Account provisions under the Indenture. Reserve Account Requirement. As defined in the Indenture, the Reserve Account Requirement for the Bonds means, as of any calculation date, an amount equal to the least of (i) ten percent (10%) of the amount (within the meaning of Section 148 of the Code), as certified by the Commission to the Trustee, of that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average Annual Debt Service of such Bonds or (iii) Maximum Annual Debt Service of such Bonds; provided, that for the purposes of such calculations, there shall be excluded an amount of Bonds or debt service thereon equal to the amount deposited in any escrow fund established pursuant to the Indenture. The Trustee shall set aside from the Debt Service Fund and deposit in the Reserve Account an amount of money (or other authorized deposit of security, as contemplated by the following paragraphs) equal to the Reserve Account Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the Commission is lawfully available therefor, or for the retirement of all Bonds then Outstanding, except that for so long as the Commission is not in default under the Indenture, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon Written Request of the Commission, be withdrawn from the Reserve Account by the Trustee and transferred to the Commission. In lieu of making the Reserve Account Requirement deposit in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of a letter of credit satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P and Moody's, in an amount, together with moneys, Authorized Investments or insurance policies satisfying the requirements set forth in the Indenture on deposit in the Reserve Account, equal to the Reserve Account Requirement and consistent with the terms specified in the Indenture. Such letter of credit shall have a term of no less than three (3) years. The issuer of such letter of credit shall be required to notify the Trustee and the Commission whether or not the letter of credit will be extended no later than 13 months prior to the stated expiration date thereof. At least one year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year, or (iii) deliver to the Trustee an insurance policy satisfying the requirements set forth in the Indenture. Upon delivery of such replacement letter of credit, extended letter of credit, or insurance policy, the Trustee shall deliver the then effective letter of credit to or upon the order of the Commission. If the Commission shall fail to deposit a replacement letter of credit, extended letter of credit or insurance policy with the Trustee, the Commission shall immediately commence 10 to make monthly deposits with the Trustee so that an amount equal to the Reserve Account Requirement is on deposit in the Reserve Account no later than the stated expiration date of the letter of credit. If the Commission shall fail to make such deposits, the Trustee shall draw on such letter of credit on or before 10 days prior to its stated expiration date in an amount necessary to replenish the Reserve Account to the Reserve Account Requirement. If a drawing is made on the letter of credit, the Commission shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of an insurance policy satisfying the requirements set forth in the Indenture or the deposit in the Reserve Account of an amount sufficient to increase the balance in the Reserve Account to the Reserve Account Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing. In lieu of making the Reserve Account Requirement in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of an insurance policy satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may also deliver to the Trustee an insurance policy securing an amount, together with moneys, Authorized Investments or letters of credit satisfying the requirements set forth in the Indenture on deposit in the Reserve Account, no less than the Reserve Account Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of debt service on the Bonds and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies), at the time of such delivery, are rated in the highest rating category (without respect to any modifier) of A.M. Best & Company, S&P and Moody's. If and to the extent that the Reserve Account has been funded with a combination of cash (or Authorized Investments) and a Qualified Reserve Instrument, then all such cash (or Authorized 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 Authorized Investments). If the Reserve Account 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. Funding of Reserve Account Requirement. A portion of the Reserve Account Requirement is currently funded with cash. Upon issuance of the Series 2006A Bonds, the Reserve Account Requirement will equal $ . Upon issuance of the Series 2006A Bonds, the Commission anticipates that it will fund approximately 50% of the Reserve Account Requirement through the deposit of a Reserve Surety Bond issued by the Bond Insurer. The Reserve Surety Bond is a Qualified Reserve Instrument as defined below. Reserve Surety Bond The Indenture requires the establishment of a Reserve Account in an amount equal to the Reserve Account Requirement. The Indenture authorizes the Commission to obtain a surety bond in place of fully funding the Reserve Account. Accordingly, application has been made to Ambac Assurance for the issuance of the Surety Bond for the purpose of funding the Reserve Account. The Series 2006A Bonds will only be delivered upon the issuance of such Surety Bond with respect to the Series 2006A Bonds. The premium on the Surety Bond is to be fully paid at or prior to the issuance and delivery of the Series 2006A Bonds. The Surety Bond provides that upon the later of (i) one day after receipt by Ambac Assurance of a demand for payment executed by the Trustee certifying that provision for the payment of principal of or interest on the Series 2006A Bonds when due has not been made or (ii) the interest payment date specified in the Demand for Payment submitted to Ambac Assurance, Ambac Assurance will promptly deposit funds with the Trustee sufficient to enable the Trustee to make such payments due on the Series 2006A Bonds, but in no event exceeding the Surety Bond Coverage, as defined in the Surety Bond. 11 Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is automatically reduced to the extent of each payment made by Ambac Assurance under the terms of the Surety Bond and the Commission is required to reimburse Ambac Assurance for any draws under the Surety Bond with interest at a market rate. Upon such reimbursement, the Surety Bond is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the Commission is subordinate to the Commission's obligations with respect to the Series 2006A Bonds. In the event the amount on deposit, or credited to the Reserve Account, exceeds the amount of the Surety Bond, any draw on the Surety Bond shall be made only after all the funds in the Reserve Account have been expended. In the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, surety bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument, if any, shall be made on a pro rata basis to fund the insufficiency. The Indenture provides that the Reserve Account shall be replenished in the following priority: (i) principal and interest on the Surety Bond and on any Additional Funding Instrument shall be paid from first available Pledged Tax Revenues on a pro rata basis, and (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the Surety Bond and any such Additional Funding Instrument, shall be deposited from the next available amounts transferred to the Reserve Account pursuant to the foregoing provision of the Indenture. The Surety Bond does not insure against nonpayment caused by insolvency or negligence of the Trustee. In the event the Surety Provider were to be come insolvent, any claims arising under the Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. See "BOND INSURANCE - Ambac Assurance Corporation," Additional Information" and Incorporation of Certain Documents by Reference" for additional information regarding Ambac Assurance. Issuance of Additional Bonds The Commission may at any time after the issuance and delivery of the Series 2006A Bonds issue Additional Bonds payable from Pledged Tax Revenues and secured by a lien and charge upon Pledged Tax Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture, but only subject to the specific conditions set forth in the Indenture, which are conditions precedent to the issuance of any such Additional Bonds: (1) The Commission will be in compliance with all covenants set forth in the Indenture and any Supplemental Indentures, and a Certificate of the Commission to that effect will have been filed with the Trustee. (2) The issuance of such Additional Bonds have been duly authorized pursuant to the Redevelopment Law and all applicable laws, and the issuance of such Additional Bonds has been provided for by a Supplemental Indenture duly adopted by the Commission which will contain certain matters set forth in the Indenture. (3) The Pledged Tax Revenues based upon the assessed valuation of taxable property in the Project Area as shown on the most recently equalized assessment roll and the most recently established tax rates preceding the date of the Commission's adoption of the Supplemental Indenture providing for the 12 issuance of such Additional Bonds will be in an amount equal to at least 125% of the Maximum Annual Debt Service on all then Outstanding Bonds and such Additional Bonds and any unsubordinated loans, advances or indebtedness payable from Pledged Tax Revenues pursuant to the Redevelopment Law. For the purposes of the issuance of Additional Bonds, Outstanding Bonds will not include any Bonds the proceeds of which are deposited in an escrow fund held by an escrow agent, provided that the Supplemental Indenture authorizing issuance of such Additional Bonds will provide that: (a) such proceeds will be deposited or invested with or secured by an institution rated "AA" by S&P of "Aa" by Moody's (without regard to negative modifiers) at a rate of interest which, together with amounts made available by the Commission from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds; (b) moneys may be transferred from said escrow fund only if Pledged Tax Revenues for the next preceding fiscal year will be at least equal to 125% of Maximum Annual Debt Service on all Outstanding Bonds less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer; and (c) Additional Bonds will be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow period in such manner as may be determined by the Commission. For purposes of calculation of Pledged Tax Revenues as described in this paragraph, the property tax rate shall be assumed to be the actual tax rate the year in which the calculation is made. In the event such Additional Bonds are to be issued solely for the purpose of refunding and retiring any Outstanding Bonds, interest and principal payments on the Outstanding Bonds to be so refunded and retired from the proceeds of such Additional Bonds being issued will be excluded from the foregoing computation of Maximum Annual Debt Service. Nothing contained in the Indenture will limit the issuance of any tax allocation bonds of the Commission payable from Pledged Tax Revenues and secured by a lien and charge on Pledged Tax Revenues if, after the issuance and delivery of such tax allocation bonds, none of the Bonds theretofore issued under the Indenture will be Outstanding nor will anything contained in the Indenture prohibit the issuance of any tax allocation bonds or other indebtedness by the Commission secured by a pledge of tax increment revenues (including Pledged Tax Revenues) subordinate to the pledge of Pledged Tax Revenues securing the Bonds. As used above, the term "Maximum Annual Debt Service" means the largest Annual Debt Service during the period from the date of such determination through the final maturity date of any Outstanding Bonds. The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on the Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year. In addition, under the Indenture, the Commission has covenanted with the Owners of all of the Bonds at any time Outstanding that it will not enter into any Commission Indebtedness (as defined below) or make any expenditure payable from taxes allocated to the Commission under the Redevelopment Law the payments of which, together with payments theretofore made or to be made with respect to other Commission Indebtedness (including, but not limited to the Bonds) previously entered into by the Commission, would exceed the then effective limit on the amount of taxes which can be allocated to the Commission pursuant to the Redevelopment Law and the Redevelopment Plan. In furtherance of such covenant, the Commission will cause to be prepared and filed with the Trustee annually, within 180 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Gross Tax Increment (defined in the Indenture as, all monies allocated to the Commission pursuant to Section 33670 of the Redevelopment Law and the Redevelopment Plan, including amounts required to be deposited into the Low and Moderate Income Housing Fund, payments due under any tax 13 sharing agreements (unless excluded from the Tax Increment Limitation) and payments received as subventions or payments in lieu of taxes) as of the end of such Fiscal Year. Based upon such audited financial statements, the Commission will prepare or cause to be prepared and filed with the Trustee and the Bond Insurer a pro forma statement demonstrating the future availability of sufficient tax increment revenues (within the existing limitation on the amount of Gross Tax Increment allocable and payable to the Commission under the Redevelopment Plan (the "Tax Increment Limitation")) to pay when due (i) Commission Indebtedness, (ii) the amount payable in the then current Fiscal Year included within the Tax Increment Limitation which are required by Section 33334.2 of the Redevelopment Law to be deposited in the Commission's Low and Moderate Income Housing Fund (the "Set-Aside Requirement"), and (iii) all amounts included within the Tax Increment Limitation which are payable pursuant to the pass-through agreements until the final maturity of the Bonds (the "Pass-Through Payments"). The pro forma statement shall be prepared on or before March 1 of each year or as soon thereafter as practicable, commencing March 1, 2007, and shall set forth: (i) the difference between the Tax Increment Limitation less the total amount of Gross Tax Increment theretofore allocated to the Commission (the "Remaining Limitation Amount"); and (ii) the principal and interest remaining to be paid on Commission Indebtedness, plus the Set-Aside Requirement and the Pass-Through Payments (collectively, the "Total Debt Service"). To the extent the Remaining Limitation Amount is less than 105% of the Total Debt Service, the pro forma statement shall set forth the principal amount of the Bonds (to the nearest integral multiple of $5,000) that must be retired in order for the Remaining Limitation Amount to be at least equal to 105% of the Total Debt Service (the "Prepayment Amount"). At the time the Remaining Limitation Amount is determined to be less than 105% of the Total Debt Service, the Commission shall notify the Trustee of the Prepayment Amount and transfer such Prepayment Amount to the Trustee for deposit in the Turbo Redemption Account. Such monies shall be used to redeem, prepay or defease the Bonds. Notwithstanding the above, if prior to any such redemption, prepayment or defeasance, a subsequent annual pro forma statement indicates that future Gross Tax Increment will be 105% or more of the Total Debt Service in each year such debt service is payable, the Commission may authorize the Trustee to transfer such Pledged Tax Revenues from the Redemption Account to the Special Fund. As defined in the Indenture, the term "Commission Indebtedness" means any obligation the payment of which is to be made in whole or in part (but if in part, only to the extent of that part) out of taxes allocated to the Commission pursuant to Section 33670 of the Redevelopment Law. For purposes of determining compliance with the covenant contained in Section 4.03 hereof the following assumptions shall apply: (i) the principal and interest remaining to be paid on Commission Indebtedness shall include only such amounts as are scheduled to be paid by the Commission pursuant to the terms of the loan or other form of agreement under which such Commission Indebtedness was incurred. Commission Indebtedness without a stated maturity shall be deemed to mature on the final maturity date of the Bonds; (ii) amounts scheduled to be paid by the Commission shall include regularly scheduled principal and interest payments, including, amounts payable pursuant to any mandatory redemption provision; and (iii) Commission Indebtedness bearing interest at a variable rate of interest shall be deemed to accrue interest at the lesser of the maximum rate specified or 12% per annum. Series 2006A Bonds Not a Debt of the City or the State The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than 14 those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are liable personally on the Series 2006A Bonds by reason of their issuance. BOND INSURANCE The following information has been furnished by Ambac Assurance Corporation ("Ambac Assurance') for use in this Official Statement. Reference is made to Appendix G for a specimen of the Ambac Assurance Corporation Financial Guaranty Insurance Policy. The information relating to Ambac Assurance and the Financial Guaranty Insurance Policy contained above has been furnished by Ambac Assurance. No representation is made by the Commission or the Underwriter as to the accuracy, completeness or adequacy of such information or as to the absence of material adverse changes in the condition of Ambac Assurance subsequent to the date of this Official Statement. Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 2006A Bonds effective as of the date of issuance of the Series 2006A Bonds. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, in New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Series 2006A Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the Trustee. The insurance will extend for the term of the Series 2006A Bonds and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Series 2006A Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Series 2006A Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Series 2006A Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Series 2006A Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration. In the event the Trustee has notice that any payment of principal of or interest on a Series 2006A Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty Insurance Policy does not cover: a) payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity. 15 b) payment of any redemption, prepayment or acceleration premium. C) nonpayment of principal or interest caused by the insolvency or negligence of any Trustee, Paying Agent or Bond Registrar, if any. If it becomes necessary to call upon the Financial Guaranty Insurance Policy, payment of principal requires surrender of Series 2006A Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Series 2006A Bonds to be registered in-the name of Ambac Assurance to the extent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of Holder entitlement to interest payments and an appropriate assignment of the Holder's right to payment to Ambac Assurance. Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Series 2006A Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Series 2006A Bond and will be fully subrogated to the surrendering Holder's rights to payment. In the event that Ambac Assurance were to become insolvent, any claims arising under such Financial Guaranty Insurance Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. Ambac Assurance Corporation Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $8,645,000,000 (unaudited) and statutory capital of approximately $5,403,000,000 (unaudited) as of September 30, 2005. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw-Hill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of a Series 2006A Bond by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such Bond and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its financial guaranty insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the Series 2006A Bonds. Ambac Assurance makes no representation regarding the Series 2006A Bonds or the advisability of investing in the Series 2006A Bonds and makes no representation regarding, nor has it participated in the preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the heading "BOND INSURANCE." Available Information The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC 16 maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New 'York, 10004 and (212) 668-0340. Incorporation of Certain Documents by Reference The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and filed on March 15, 2005; 2. The Company's Current Report on Form 8-K dated April 5, 2005 and filed on April 11, 2005; 3. The Company's Current Report on Form 8-K dated and filed on April 20, 2005; 4. The Company's Current Report on Form 8-K dated May 3, 2005 and filed on May 5, 2005; 5. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended March 31, 2005 and filed on May 10, 2005; 6. The Company's Current Report on Form 8-K dated and filed on July 20, 2005; 7. The Company's Current Report on Form 8-K dated July 28, 2005 and filed on August 2, 2005; 8. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended June 30, 2005 and filed on August 9, 2005; 9. The information furnished and deemed to be filed under Item 2.02 contained in the Company's Current Report on Form 8-K dated and filed on October 19, 2005; 10. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly peri od ended September 30, 2005 and filed on November 9, 2005; 11. The Company's Current Report on Form 8-K dated November 29, 2005 and filed on December 5,2005; and 12. The Company's Current Report on Form 8-K dated and filed on January 25, 2006. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information." 17 RISK FACTORS The following information should be considered by prospective investors in evaluating an investment in the Series 2006A Bonds. The following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Series 2006A Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Assumptions and Projections To estimate the tax increment available to pay debt service on, the Series 2006A Bonds, the Commission has retained GRC Associates, Inc., Brea, California as its Fiscal Consultant, which has made certain assumptions with regard to the assessed valuation in the Project Area, future tax rates, percentage of taxes collected, the amount of funds available for investment and the interest rate at which those funds will be invested. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Pledged Tax Revenues. The Commission believes these assumptions to be reasonable, but to the extent that the assessed valuation, the tax rates, the percentage of taxes collected, the amount of the funds available for investment or the interest rate at which they are invested are less than projected by the Fiscal Consultant, the tax increment available to pay debt service on the Series 2006A Bonds may be less than those projected herein. Real Estate and General Economic Risks The Commission's ability to make payments on the Series 2006A Bonds will depend upon the economic strength of the Project Area. The general economy of the Project Area will be subject to all the risks generally associated with real estate and real estate development. Projected redevelopment of real property within the Project Area by the Commission as well as private development in the Project Area, may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Area could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein or other impediments, the economy of the Project Area could be adversely affected, causing reduction of the Pledged Tax Revenues available to repay the Series 2006A Bonds. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Pledged Tax Revenues received by the Commission from the Project Area. Reduction in Assessed Value Pledged Tax Revenues allocated to the Commission are determined in part by the amount by which the assessed valuation of property in the Project Area exceeds the respective base year assessed valuation for such property, as well as by the current rate at which property in the Project Area is taxed. The Commission itself has no taxing power with respect to property, nor does it have the authority to affect the rate at which property is taxed. Assessed valuation of taxable property within the Project Area may be reduced by economic factors beyond the control of the Commission or by substantial damage, destruction or condemnation of such property. At least three types of events that are beyond the control of the Commission could occur and cause a reduction in Pledged Tax Revenues, thereby impairing the ability of the Commission to make payments of principal and interest and premium (if any) when due on the Series 2006A Bonds on a timely basis. 18 First, a reduction of the assessed valuation of taxable property in the Project Area caused by economic factors or other factors beyond the Commission's control, such as relocation out of the Project Area by one or more major property owners; successful appeals by property owners for a reduction in a property's assessed valuation; a reduction of the general inflationary rate (see "Reduction in Inflationary Rate" below); a reduction in transfers of property or construction activity; or the destruction of property caused by natural or other disasters (see "Risk of Earthquake" below); or other events that permit reassessment of property at lower values or could result in a reduction of tax increment revenues. Second, substantial delinquencies in the payment of property taxes by the owners of taxable property within the Project Area could impair the timely receipt by the Commission of Pledged Tax Revenues. Third, the State electorate or legislature could adopt further limitations with the effect of reducing tax increment revenues. A limitation already exists under Article XIIIA of the California Constitution, which was adopted pursuant to the initiative process. The State electorate could adopt additional similar limitations with the effect of reducing Pledged Tax Revenues. For a further description of Article XIIIA, see "TAX ALLOCATION FINANCING AND LIIVIITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. To estimate the total revenues available to pay debt service on the Series 2006A Bonds, the Commission has made certain assumptions with regard to the availability of tax increment revenues. The Commission believes these assumptions to be reasonable, but to the extent tax increment revenues are less than anticipated, the total revenues available to pay debt service on the Series 2006A Bonds or to refinance the Series 2006A Bonds may be less than those projected herein. Unless mentioned herein, no independent third party has reviewed the estimates or assumptions made by the Commission. See "TAX INCREMENT REVENUES - Debt Service and Estimated Coverage" herein. Assessment Appeals Property taxable values may be reduced as a result of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicant property owner. At the time of reassessment, after a change of ownership or completion of new construction, the assessee may appeal the base assessment value of the property. Under an appeal of a base assessment value, the assessee appeals the actual underlying market value of the sales transaction or the recently completed improvement. A successful appeal of the base assessment value of a parcel has significant future revenue impacts, because a reduced base year assessment will reduce the compounded future value of the property prospectively. Except for the 2% inflation factor, the base year value of the property cannot be increased until a change in ownership occurs or additional improvements are added. The Fiscal Consultant has identified one appeal currently pending on property within the Project Area. However, the Commission cannot predict whether such appeal or any future appeals will be successful, or whether the number of appeals may increase in the Project Area. Future reductions in taxable values in the Project Area resulting from successful appeals by property owners will reduce the amount of Pledged Tax Revenues available to pay the principal of and interest on the Series 2006A Bonds. See "TAX INCREMENT REVENUES - Assessment Appeals" herein and APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto. Reduction in Inflationary Rate As described in greater detail below, Article XIIIA of the California Constitution provides that the full cash value basis of real property used in determining taxable value may be adjusted from year to year to 19 reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. This measure is computed on a calendar year basis. The California State Department of Finance has indicated that such inflationary factor is 1.867% for Fiscal Year 2004-05. For Fiscal Year 1996-97, the inflationary factor as determined under Article )CM resulted in an increase in assessed valuation of 1.11°/x. For Fiscal Year 1995-96, the inflationary factor was 1.19%. The Fiscal Consultant has projected Pledged Tax Revenues to be received by it based, among other things, upon 2% inflationary increases. Should the assessed valuation of taxable property in the Project Area not increase at the projected annual rate of 2%, the Commission's receipt of future Pledged Tax Revenues may be adversely affected. See "TAX ALLOCATION FINANCING AND LHVHTATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. Real Estate and General Economic Risks The Commission's ability to make payments on the Series 2006A Bonds will depend upon the economic strength of the Project Area. The general economy of the Project Area will be subject to all the risks generally associated with real estate and real estate development. Projected redevelopment of real property within the Project Area by the Commission as well as private development in the Project Area, may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Area could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein or other impediments, the economy of the Project Area could be adversely affected, causing reduction of the Pledged Tax Revenues available to repay the Series 2006A Bonds. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Pledged Tax Revenues received by the Commission from the Project Area. State Budget Deficit and Its Impact on Pledged Tax Revenues Since Fiscal Year 1993-94, the State Legislature has authorized the reallocation of property tax revenues from redevelopment agencies multiple times in an effort to assist the State in balancing its General Fund budget. Each time the State reallocates property tax revenues from redevelopment agencies, it reduces the amount of revenues that can use in the payment of debt service, such as the Commission's payment of debt service on the Series 2006A Bonds. As the Commission's only active project area, Project Area No. 1 is responsible for any such revenue allocation in its entirety. Further, Proposition IA (see "Proposition 1A" below), which was approved by the California electorate in November 2004 and which placed restrictions in the State Constitution on the ability of the State Legislature to reallocate property tax revenues from local agencies, does not restrict or prevent the State Legislature from reallocating property tax revenues from redevelopment agencies, including the Commission. As such, no assurances can be made that the State will not make further reallocations in property tax revenues that would reduce the amount of property tax revenues to which the Commission is entitled. The following is a list of recent actions taken by the State Legislature which reallocated property tax revenues from redevelopment agencies: In connection with its approval of its budget for the 1993-94 fiscal year, the State Legislature enacted Senate Bill 1135 which, among other things, reallocated approximately $65 million from redevelopment agencies to school districts by shifting approximately 5.675% of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for the then current and next following fiscal years. The amount required to be transferred by a redevelopment agency to the county auditor for deposit in the Educational Revenue Augmentation Fund ("ERAF") under such legislation was apportioned among all of such county's redevelopment areas on a collective basis, and was not allocated separately to individual project 20 areas. The amount of tax revenues which the Commission was required to pay under the legislation during the two-year period was approximately $175,000 for each of the 1993-94 and 1994-95 fiscal years. In connection with its approval of a budget for the 2002-03 fiscal year, the State Legislature enacted California State Assembly Bill ("AB") 1768, effective September 30, 2002, which included a one-time ERAF shift of $75 million from redevelopment agencies to school districts during the 2002-03 fiscal year in order to meet State budget deficits. Each agency's proportionate share of such amount was required to be transferred to the county auditor for deposit in the ERAF prior to May 10, 2003. The Commission's ERAF obligation for Fiscal Year 2002-03 was $122,487, which was paid to the County as required prior to such date. In connection with its approval of a budget for the 2003-04 fiscal year, the State Legislature enacted Senate Bill 1045, effective September 1, 2003, which again introduced a one-time ERAF shift and reallocated $135 million from redevelopment agencies to school districts during the 2003-04 fiscal year to meet ongoing State budget deficits. Each agency's proportionate share of such amount is required to be transferred to the county auditor for deposit in the ERAF prior to May 10, 2004. The Commission's ERAF obligation for the 2003-04 fiscal year was $207,391. Subsequent to Senate Bill 1045, the State Legislature adopted SB 1096 which established an ERAF shift of $250,000,000 for the 2004-05 and 2005-06 fiscal years to meet the ongoing State budget deficits. The Commission's ERAF obligation for the 2004-05 fiscal year was $342,811 and for the 2005-06 fiscal year is estimated at $342,811. No other future ERAF obligations have been drafted or adopted, but it is possible that the State Legislature could shift property tax allocations or require additional redevelopment payments in future years. Since the ERAF shifts are subordinate to new and existing bond obligations, the ERAF payments are not included in the projections of tax increment revenues in the Fiscal Consultant's Report. The Commission cannot predict whether State Legislature will enact any other legislation requiring additional or increased future shifts in tax increment revenues to the State and/or to schools, whether through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on future Pledged Tax Revenues. Given the level of the State of California's deficit problems, tax increment available for payment of Series 2006A Bonds could be substantially reduced in the future. Information about the State budget and State spending is available at various State-maintained websites. Text of the budget may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading, "California Budget." An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State of California official statements for its various debt obligations, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. Each of such websites are provided for general informational purposes only and the material on such sites is in no way incorporated into this Official Statement. Proposition 1A Proposition IA, a State ballot proposition, was approved on the November 2, 2004 ballot. Proposition IA prohibits the State from reducing local governments' property tax proceeds, and protects revenues collected by local governments (cities, counties, and special districts) from being transferred to the State government for statewide use. The provisions may be suspended if the Governor declares a fiscal necessity and two-thirds of the Legislature approve the suspension. Suspended funds must be repaid within three years. Proposition lA was first effective in 2006. 21 Limited Obligations The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the---State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are liable personally on the Series 2006A Bonds by reason of their issuance. Hazardous Substances An environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition. Certain Bankruptcy Risks The enforceability of the rights and remedies of the owners of the Series 2006A Bonds and the obligations of the Commission may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which 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 federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Series 2006A Bonds 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. Secondary Market There can be no guarantee that there will be a secondary market for the Series 2006A Bonds, or, if a secondary market exists, that such Series 2006A Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price. 22 Loss of Tax Exemption As discussed under the caption "TAX MATTERS" herein, interest on the Series 2006A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date such Series 2006A Bonds were issued as a result of future acts or omissions of the Commission in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the Series 2006A Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity. Risk of Earthquake The City, like most regions in California, is an area of significant seismic activity and, therefor, is subject to potentially destructive earthquakes. The Los Angeles basin has experienced significant earthquakes in the past. Most recently in the vicinity of the Project Area, on October 1, 1987, a 5.9 magnitude earthquake occurred on a previously unknown, concealed thrust fault approximately 11 miles east of downtown Los Angeles, California, approximately 6 miles southeast of Pasadena and approximately 1 mile southeast of the City. The earthquake resulted in eight fatalities and approximately $358 million in property damage. Severe damage was confined mainly to communities east of Los Angeles and near the epicenter in the City of Whittier. Significant structural damage to property within the Project Area was reported and repairs were completed within one year of the earthquake. No severe structural damage to high-rise structures in downtown Los Angeles was reported. If an earthquake were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Pledged Tax Revenues that secure the Series 2006A Bonds, which in turn could impair the ability of the Commission to make payments of principal of and/or interest on the Series 2006A Bonds when due. Teeter Plan Certain counties in the State of California operate under a statutory program entitled Alternative Method of Distribution of Tax Levies and Collections and of Tax Sales Proceeds (the "Teeter Plan"). Under the Teeter Plan, local taxing entities receive 100% of their tax levies, net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. The County of Los Angeles has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within the County, such as the Commission. The Commission's receipt of property taxes is therefore subject to delinquencies in the Project Area. Concentration of Land Ownership Based upon Fiscal Year 2005-06 assessed value data as of June 30, 2005, 21.56% of the total net secured assessed property value in the Project Area is owned by the ten largest taxpayers. In addition, a substantial portion of Pledged Tax Revenues are derived from unitary property taxes. This is primarily because the headquarters of Southern California Edison are located within the Project Area. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property" herein. Reductions in Pledged Tax Revenues received by the Commission may result from declining tax rates, property tax administrative costs and refunds resulting from successful appeals of assessed values. The inability or unwillingness of such taxpayers to pay property taxes on their property in the Project Area might have an adverse effect on the Commission's ability to repay the Series 2006A Bonds. In addition, as a result of the high concentration of land ownership in the Project Area, decreases in the assessed value of one or more parcels of land may have a significant impact on the Pledged Tax Revenues. See "THE REDEVELOPMENT PROJECT AREA NO. 1- Ten Largest Secured Taxpayers" herein. 23 TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT Introduction The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a project area. First, the assessed valuation of the taxable property in a project area last equalized prior to adoption of the redevelopment plan is established and becomes the base roll. Thereafter, except for any-period during which the assessed valuation drops below the base year level, the taxing agencies on behalf of which taxes are levied on property within the project area will receive the taxes produced by the levy of the then current tax rate upon the base roll. Except as discussed in the following paragraph, taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes produced as above indicated. The State Legislature placed on the ballot for the November 1988, general election Proposition No. 87 (Assembly Constitutional Amendment No. 56) pertaining to allocation of tax increment revenues. This measure, which was approved by the electorate, authorized the State Legislature to cause tax increment revenues attributable to certain increases in tax rates occurring after January 1, 1989, to be allocated to the entities on whose behalf such increased tax rates are levied rather than to the Commission, as would have been the case under prior law. The measure applies to tax rates levied to pay principal of and interest on general obligation bonds approved by the voters on or after January 1, 1989. AB 89 (Statutes of 1989, Chapter 250), which implements this Constitutional Amendment, became effective on January 1, 1990. The Commission's projection of tax revenues to be allocated to the Commission does not assume any increase in the tax rate applicable to properties within the Project Area. Property Tax Rate and Appropriation Limitations Article .MM of State Constitution On June 6, 1978, California voters approved Proposition 13, which added Article XMA to the California Constitution ("Article XIIIA"). Article XMA limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and (as a result of an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978, by two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value,' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be increased at a rate not to exceed two percent per year to account for inflation. Article XIHA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways. The Commission has no power to levy and collect taxes. Any further reduction in the tax rate or the implementation of any constitutional or legislative property tax de-emphasis will reduce tax increment 24 revenues, and, accordingly, would have an adverse impact on the ability of the Commission to pay debt service on the Series 2006A Bonds. Legislation Implementing Article MM Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. Article MIIB of State Constitution An initiative to amend the California constitution entitled "Limitation of Government Appropriations," was approved on September 6, 1979, thereby adding Article XIlIB to the California Constitution ("Article X11113"). Under Article X1IIB, as amended, state and local governmental entities have an annual "appropriations limit" and are not permitted to spend certain moneys which are called "appropriations subject to limitation" (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the "appropriations limit". The State Legislature, by Statutes of 1980, Chapter 1342 enacted a provision of the Redevelopment Law (Health and Safety Code Section 33678) providing that the allocation and payment of taxes to an agency for the purpose of paying principal of or interest on loans, advances or indebtedness incurred for redevelopment activity as defined in the statute will not be deemed the receipt by the Commission of proceeds of taxes levied by or on behalf of an agency within the meaning or for the purpose of Article X11I13 of the State Constitution, nor will such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purposes of Article XIIIB of the State Constitution or any statutory provision enacted in implementation of Article X111B. Unitary Property AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization ("Unitary Property"), commencing with the 1988-89 fiscal year, will be allocated as follows: (1) each jurisdiction, including the Project Area, will receive up to 102% of its prior year State-assessed revenue; and (2) if county-wide revenues generated from Unitary Property are less than the previous year's revenues or greater than 102% of the previous year's revenues, each jurisdiction will share the burden of the shortfall or excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. To administer the allocation of unitary tax revenues to redevelopment agencies, the County no longer includes the taxable value of utilities as part of the reported taxable values of the project area, therefore, the base year of project areas have been reduced by the amount of utility value that existed originally in the base year. The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the method of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. 25 Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Commission. This is primarily because the headquarters of Southern California Edison are located within the Project Area. However, the revenues allocated to the Commission come from several sources and are allocated based on the statutory method described above and do not reflect the current unitary assessed value within the Project Area. Within the Project Area, the Auditor Controller allocated $1,173,352 in unitary tax revenue to the Commission for 2004-05. This amount is reasonably consistent with the unitary revenue allocations made to the Commission in prior years. However, the Commission's unitary revenues have fallen by approximately 23% since 1992-1993. According to the California State Board of Equalization, there have been two primary causes of the decrease unitary assessed valuation in the County of Los Angeles. The first was the privatization of power generation facilities in the late 1990s. When a power generation facility was sold to a private entity it became locally assessed and was attributed to the TRA in which it is located. Assessment of these facilities moved back to the State in 2003, but the value is associated with specific TRAs according to California Revenue and Taxation Code Section 100.9. The second primary cause of a decrease in unitary valuations within the County was due to a decrease in the assessed valuation of telecommunication companies during the period 2002 through 2005. The Fiscal Consultant has assumed that unitary tax revenue will continue to be allocated in similar amounts over the life of the Project Area, and that unitary tax will remain constant through the life of the project. The portion of Pledged Tax Revenues allocable to the Commission with respect to the Project Area and attributable to unitary property is projected to be constant at $1,173,352 for Fiscal Year 2005-06. The Commission cannot predict the effect of any future litigation or settlement agreements concerning these matters on the amount of Pledged Tax Revenues received or to be received by the Commission. Property Tax Administrative Costs In 1990, SB 2557, and in 1992, SB 1559, authorized county auditors to determine property tax administrative costs proportionately attributable to local jurisdictions and to charge agencies for such costs. For Fiscal Year 2004-05, the amount of County collection charges attributed to the Project Area is $69,875.11. The Fiscal Consultant has assumed, for purposes of its projections, that such charge will be 1.52% percent of the gross revenues of the Project Area. Contained in the estimate of this charge is a fee levied by the County since before the passage of the legislative administrative charge. The County continues to apply this offset to revenue as a designated part of the charge mandated by the legislation. The payments made as property tax administrative charges are considered tax increment for purposes of computation of the housing set-aside or the determination of compliance with tax increment limits in the numerical information set forth herein. Property Tax Collection Procedures For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing state-assessed public utilities property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." A tax levied on unsecured property does not become a lien against the unsecured property but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has a priority over all other liens arising pursuant to California law on the secured property, regardless of the time of creation of the other liens. 26 Property taxes on the secured roll are due in two installments, on July 1 and February 1 of each Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of the delinquent taxes and delinquent penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector. Current law provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on the following August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1-1/2% per month begins to accrue on the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recording in the County Recorder's office, in order to obtain alien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. Current tax payment practices by the County provide for payment to the Commission of approximately 45% of the secured taxes by the mid-January of each year, an additional 30% of the secured taxes by mid-April of each year, and the balance of the secured tax collections (excluding delinquency collections which are paid to the Commission during July and August each year) by mid August. Approximately 80% of the unsecured taxes are paid to the Commission by the end of November of each year, and substantially all of the unsecured taxes are paid to the Commission in August of each year. Plan Limitations Not including the one year extension permitted by SB 1045 to mitigate the impacts of ERAF payments, Redevelopment Law limits the period in which redevelopment activities can be undertaken for plans adopted prior to January 1, 1994, to 40 years from the date of adoption or January 1, 2009, whichever is later, and limits the period within which a redevelopment project area may receive tax increment to 50 years following the adoption. If redevelopment plans with shorter time frames were adopted, legislative bodies were allowed to extend their limits to conform to these requirements through the adoption of an ordinance prior to December 31, 1999. For projects adopted subsequent to 1994, redevelopment activities can be undertaken for 30 years and tax increment received for 45 years. A redevelopment plan adopted prior to January 1, 1994 is required to include a limitation on tax increment dollars that may be allocated to the redevelopment agency; a time limit on incurring indebtedness to be repaid with tax increment; and a limit on the amount of bonded indebtedness to be repaid with tax increment that can be outstanding at one time. These limits can be extended only by an amendment of the redevelopment plan. The legislative body, by adoption of an ordinance, can eliminate the time limit on the establishment of loans, advances, and indebtedness required prior to January 1, 2002. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property taxes and repay indebtedness. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law. Additionally, the Commission eliminated the timeframe to incur debt under state legislation SB 211. The original Redevelopment Plan has been amended four times since its adoption. The Redevelopment Plan was first amended on December 9, 1986, by City Council Ordinance 592, to increase the number of dollars 27 allocated to the Commission and re-establish eminent domain. The Redevelopment Plan was further amended on December 20, 1994 by City Council Ordinance 752 to bring the Redevelopment Plan into conformity with AB 1290. The Redevelopment Plan was amended a third time by City Council Ordinance 822 on June 22, 2002, to extend the duration of the Redevelopment Plan's effectiveness. In connection with the adoption of Senate Bill 1045, redevelopment agencies were permitted to extend the effective date of their redevelopment plans and the date to receive tax increment revenues by one year. The Redevelopment Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by one year pursuant to Senate Bill 1045. The Commission may not receive and may not repay indebtedness with the proceeds from property taxes received pursuant to Section 33670 of the Redevelopment Law and the Plan beyond the dates indicated in Table 1 below, except to repay debt to be paid from the Housing Fund' established pursuant to Section 33334.3 of the Redevelopment Law and the Plan, or debt established in order to fulfill the Commission's obligations under Section 33413 of the Redevelopment Law and the Plan. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property taxes and repay indebtedness. The Redevelopment Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by one year pursuant to Senate Bill 1045. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law as described herein. Additionally, the Commission eliminated the timeframe to incur debt under state legislation Senate Bill 211. Table 1 Rosemead Community Development Commission Redevelopment Project Area No. I Redevelopment Plan Limits Last Date to Limit on total Tax Last Date to Incur Repay Debt with Tax Increment Increment Bond Plan Effectiveness New Debt Tax Increment Limit Debt 6/27/2013 No Limit 6/27/2023 $249,245,938 No Limit The tax increment limit is net of any tax increment which is paid to an affected taxing agency pursuant to the Redevelopment Law. Source: GRC Associates, Inc. According to the County records, the Commission has received approximately $78,579,553 in total cumulative tax increment from the Project Area as of January 1, 2006. Based on the projected tax increment revenues to be received by the Commission, the limit on tax increment funds that the Commission may receive for the Project Area will not be exceeded within the term of the Bonds. Low and Moderate Income Housing Fund Chapter 1337 Statutes of 1976, added Section 33334.2 and 33334.3 to the Redevelopment Law requiring redevelopment agencies to set aside 20 percent of all tax increment derived from redevelopment project areas adopted after December 31, 1976, into a Low and Moderate Income Housing Fund. This low and moderate income housing requirement can be reduced or eliminated if a redevelopment agency finds that: (1) no need exists in the community to improve, increase or preserve the supply of low and moderate income housing, including housing for very low income households; (2) that some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing needs of the community, including its share of 28 the regional housing needs of persons and families of low or moderate income and very low income households; or (3) that other substantial efforts, including the obligation of funds from state, local and federal sources for low and moderate income housing of equivalent impact are being provided for in the community. Chapter 1135, Statutes of 1985 amended Section 33334.3 and added Sections 33334.6 and 33334.7 to extend the requirement for redevelopment agencies to set aside into a Low and Moderate Income Housing Fund, 20 percent of tax increment to redevelopment project areas adopted prior to January 1, 1977, beginning with Fiscal Year 1985-86 revenues. Pursuant to Chapter 1135, an agency may make1he same findings described above to reduce or eliminate the low and moderate income housing requirement. However, Chapter 997, Statutes of 1989, added Section 33334.14 to the Redevelopment Law which provides that a redevelopment agency with merged project areas may not make the findings described above as to avoid or reduce its obligations to deposit taxes from merged project areas in the Low and Moderate Income Housing Fund. No such findings as described in the two paragraphs above have been made by the Commission. However, on October 9, 1991 the Commission prepaid its housing obligation in the amount of $6,813,849.62. As a result, the Commission's housing obligation has been reduced by $469,142 per year through the 2021-22 fiscal year. This annual reduction was based on a present value factor determined by the yield on the Commission's outstanding bonds. In addition, the Commission has made findings that, for the years ended June 30, 1986 through 1991, it was allowed to defer funding of the set-aside. The set-aside amounts incurred during the fiscal years ended June 30, 1994, 1995 and 1996 were also deferred until the fiscal year ending June 30, 2023, as provided by the Commission's adoption of the housing deficit repayment plan. As of June 30, 2005, the accumulated set- aside amount not yet funded was approximately $4,947,000. As required by law, the Commission devised a plan to fund the accumulating amount. To help fund the completion of the Senior Citizen Housing project construction, the Capital Projects Fund transferred an additional $849,863 to the Low-Moderate Income Housing Set-Aside Fund during the fiscal year ended June 30, 2002, over and above the 20% requirement of $299,993, and an additional $1,279,548 to the Low-Moderate income Housing Set-Aside Fund during the fiscal year ended June 30, 2003, over and above the 20% requirement of $290,868. These additional amounts, which total $2,129,411, are considered an advance on future set-aside requirements and will be deducted from future transfers for the set- aside-over future years. During the fiscal years ended June 30, 2005 and 2004, the 20% requirements of $448,578 and $394,533 were funded using the cumulative advance. As of June 30, 2005, the remaining advance was $1,286,301. Assembly Bill 1290 Assembly Bill 1290 (being Chapter 942, Statutes of 1993) ("AB 1290") became law on January 1, 1994. AB 1290 contains several significant changes in the Redevelopment Law, including time limitations for incurring and repaying loans, advances and indebtedness repayable from tax increment revenues. The Commission is of the opinion that the provisions of AB 1290, including these new time limitations as they apply to the Project Area, will not have an adverse impact on the payment of debt service on the Series 2006A Bonds on a timely basis, and the Commission does not expect that the provisions of AB 1290 will have an adverse impact on the undertaking by the Commission of future redevelopment activities within the Project Area. 29 Pass-Through Arrangements The County of Los Angeles (the "County") and the Commission entered into a certain agreement for reimbursement of tax increment funds with the County, the Consolidated Fire Protection District, and the County Public Library District (the "County Agreement"). The elements of the County Agreement include the following: (i) the Commission is to provide for a pass-through of a portion of its tax increment revenues received after July 1, 1988 for the Consolidated Fire Protection District; and (ii) the Commission is to allow an additional pass-through of tax increment revenues for the Los Angles County Public Library District at such time that the Commission or the City constructs a replacement facility. The reimbursement of the Consolidated Fire Protection District is approximately 17% of Gross Tax Revenues (as defined in the County Agreement) and the reimbursement to the Los Angeles County Public Library District is 4% of Gross Tax Revenues. The 4% of Gross Tax Revenues obligation is contingent upon the Commission's construction of such a replacement facility. However, neither the Commission nor the City has any obligation to construct a replacement facility. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" for the Fiscal Consultant's projections of the pass-through payments to be made to other taxing entities. Such pass-through payments will not be available to the Commission to pay debt service on the Series 2006A Bonds. When the Commission extended the time frame to incur debt pursuant to SB 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is 83% of every $1.00 of property tax generated. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Commission makes the finding that the issuance of the debt will not impact the Commission's ability to make the statutory payments. The Commission has made the appropriate findings, and therefore the Fiscal Consultant has assumed that these payments are subordinated to bond indebtedness accordingly. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. Proposition 218 On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIIID to the State Constitution, which contain a number of provisions affecting the ability of the local governments to levy and collect both existing and future taxes, assessments, fees and charges, and extended the initiative power giving the voters the power to reduce or repeal local taxes, assessments, fees and charges. Because the Series 2006A Bonds are not payable from or secured by any such sources of revenue, the Commission believes that Proposition 218 does not affect the issuance or sale of, or the security for, the Series 2006A Bonds. Future Initiatives Articles XIIIA, XIIIB, XIIIC and X11ID were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further affecting Commission revenues or the Commission's ability to expend revenues. THE CONMSSION Organization The Commission, formerly known as the Rosemead Redevelopment Agency, was activated in 1972 by City Ordinance. Since 1975, the City Council Members have acted as the Members of the Commission. The Commission is a separate public body which plans and implements projects in accordance with the 30 requirements of the Redevelopment Law. The Commission has two active project areas, Redevelopment Project Area No. 1 and Redevelopment Project No. 2. The Series 2006A Bonds are being issued finance and refinance redevelopment activity for Redevelopment Project Area No. 1. Tax increment generated in Redevelopment Project Area No. 2 is NOT available to pay debt service on the Series 2006A Bonds. All powers of the Commission are legally vested in its five members, who are elected to the City Council for four year terms. The Commission exercises governmental functions in carrying out projects and has sufficiently broad authority to acquire, develop, administer and sell or lease property. The Mayor of the City, Jay Imperial, also serves as Chairperson of the Commission. The Commission's Vice-Chairperson, Gary Taylor, is Mayor Pro-Tern of the City.' Other members of the City Council and Commission Board are shown below. Bill Crowe, the City Manager and Executive Director of the Commission has been an employee of the City since 1999, and has been City Manager since 2002. Mr. Crowe has announced his resignation, effective February 21, 2006. Until such time as a replacement is appointed, Don Wagner will serve as Interim City Manager. Mr. Wagner was hired in 1983, and has served as Assistant City Manager since that time. Commission Member Term Expires Jay T. Imperial 2007 Gary A. Taylor 2007 Margaret Clark 2009 John Tran 2009 John H. Nunez 2009 Powers All powers of the Commission are vested in its five members. The Commission exercises governmental functions in carrying out projects, and has sufficiently broad authority to acquire, develop, administer and sell or lease property, including the right of eminent domain and the right to issue bonds, notes and other evidences of indebtedness and to expand their proceeds. The Commission can clear buildings and other improvements and develop as a building site any real property owned or acquired, and in connection with such development, cause streets, highways and sidewalks to be constructed or reconstructed and public utilities to be installed. Redevelopment in the State may be carried out pursuant to the Redevelopment Law. Section 33020 of the Redevelopment Law defines redevelopment as the planning, development, replanning, redesign, clearance, reconstruction or rehabilitation, or any combination of these, of all or part of a survey area and the provision of such residential, commercial, industrial, public or other structures or spaces as may be appropriate or necessary in the interest of the general welfare, including recreational and other facilities incidental or appurtenant to them. The Commission may, out of the funds available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, structures or other improvements to be publicly owned, to the extent that such improvements are of benefit to the relevant project area and no other reasonable means of financing is available. The Commission must sell or lease remaining property within a project for redevelopment by others in strict conformity with the redevelopment plan, and may specify a period within which such redevelopment must begin and be completed. 31 THE REDEVELOPMENT PROJECT AREA NO.1 Redevelopment Project Area No. 1 evolved from a City Council study commenced in 1967. The study determined areas in the City which were blighted within the meaning of the California Community Redevelopment Law, and were therefore qualified for redevelopment. The Redevelopment Plan for the Redevelopment Project Area No. 1 (the "Project Area") was adopted by Ordinance No. 340 of the City Council on June 27, 1972. Project Area Description The Project Area encompasses an area of 511 acres. The Project Area is roughly triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the major thoroughfares traversing the area. The Project Area is within a few miles of the City's Civic Center and is located between the San Bernardino and Pomona Freeways to the north and south, respectively. The area contains a complete cross section of the City's existing land uses. At the time of the adoption of the Redevelopment Plan, major sections were composed of deteriorating commercial strips along Garvey Avenue and San Gabriel Boulevard, industrial uses in the east Garvey area, large vacant areas surrounding the Southern California Edison headquarters, several schoolyards, segments of the Alhambra Wash, Southern California Edison rights-of-way, and residential areas with some deterioration present. In accordance with the Redevelopment Plan, the land uses by acreage and assessed valuation in the Project Area are set forth in Table No. 2 below. It should be noted with respect to Table No. 2 below that the figures below exclude the value of exempt parcels such as those owned by the City, Commission, State or other governmental agencies that do not contribute to Commission revenues. Table 2 Rosemead Community Development Commission Present Land Uses Within Redevelopment Project Area No. I Percent of Uses Parcels Assessed Value Assessed Value Residential 775 $165,381,310 44.61% Commercial 157 107,539,554 29.01 Industrial 66 35,576,839 9.60 Vacant Land 54 17,465,444 4.71 Government owned 15 1,315,041 0.35 Institutional 3 2,358,583 0.64 Miscellaneous 32 1,167,991 0.32 Public Utility 18,218,894 4.91 Unsecured 21,723,756 5.86 Total 1102 $370,747,412 55.8461% (1) Values assigned to other parcels and use categories. Source: Rosemead Community Development Commission. Assessed Values Taxable values are prepared and reported by the County Auditor-Controller each fiscal year and represent the aggregation of all locally assessed properties within the Project Area. The assessments are assigned Tax Rate Areas (TRA) that are coterminous to the boundaries of the project area in the first year that 32 an agency is eligible to receive tax increment revenue. The Project Area consists of 12 individual TRAs. Historic taxable values since 2000-01 were utilized to determine the historical growth rate of property values within the Project Area. Property values within the Project Area have steadily grown at a compounded rate of 10.5% per year between the years 2001-02 and 2005-06. Total assessed property values did not decline for any fiscal period between 2000-01 and 2005-06. Also, at no time during this period did property tax values grow at a rate of less than 2%. The historic taxable values for the Project Area are shown in Table 4 below. The historical average reduction in value for allowed appeals is 25.31 percent. There is one appeal currently pending on property within the Project Area. These owners have appealed valuations totaling $789,000. Based on the above historical averages, GRC expects a 42.4 percent chance that the outstanding appeal will be successful, with an average reduction in value of 25.31 percent. This would result in a loss of assessed value of $84,718. The projected assessed value for 2005-06 has been adjusted for this estimated loss of value. As noted in the Fiscal Consultant's Report, a number of the appeals in the Project Area that were allowed resulted in a reduction in value were based on Section 51 of the Revenue and Taxation Code. This section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions took place in some counties during the mid-1990's due to declining real estate values. Reductions made under this code section may be initiated by the Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine it's full cash value and the valuation is adjusted accordingly, which may result in either further reductions in or increases in assessed value. Such increases shall be in accordance with the actual full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. Project Status Several significant private developments have occurred within the Project Area since its inception in 1972. The Project Area's largest property owner, Southern California Edison Company ("SCE") relocated its corporate headquarters from downtown Los Angeles to the City of Rosemead, within the Project Area. The principal office structure completed in 1972, has 660,000 square feet of space and occupies 34 acres of its 75- acre site. In addition to these corporate offices, SCE completed in 1975 a 766,000 square foot computer center used to process utility bills. In 1979, SCE constructed a three-story, 231,500 square foot structure which serves as headquarters for its engineering and construction departments. In July 1986, SCE completed its general office 4 complex. The facility has an assessed valuation of approximately $16,860,000. Altogether the utility has developed 92 acres with overall total employment in the facilities of approximately 3,500. In 1982, Ticor Title Insurance Company completed a 180, 000 square foot office record storage. Ticor was subsequently acquired by Chicago Title and Trust Company in April 1991 and sold the property to the Panda Restaurant Group in 2002. Other commercial developments which have occurred in the Project Area include a branch office of Bank of America National Trust and Savings Association which was completed in October of 1972. This property was purchased in 2004 by Golden Security Bank and is assessed at $1,530,000. In addition, from 1973 to 1977, Owens Manufacturing Company, a warehouse manufacturing company, and Marge Carson, Inc. each added warehouse or office space to existing facilities within the Project Area. 33 In 1983, California Federal Bank completed construction of a 247,000 square foot automated data processing facility within the Project Area. The property is currently leased by Countrywide which is a national leader in home mortgages. The facility has an assessed valuation of $12,152,732 and employs approximately 1,100 people. ABC Plaza, located at 8819-21 Garvey Avenue, was completed in September 1988. Composed of 30,016 square feet of retail and light industrial space, the 1.24-acre development is one of the few to combine these uses in one site. In April 1992, the Diamond Square shopping center, located at 8150 Garvey Avenue, was completely renovated into a multi-tenant commercial complex. Over 25,000 square feet'of new retail space was added, including a new restaurant bringing the total square footage to 102,542. The property transferred ownership in 2004 and has a current assessed valuation $29,750,000. Several projects were completed in the early 1990's which were financed with proceeds of the Series 1993A Bonds, and included projects described in the Infrastructure Management Report adopted by the City and the Commission. Such proceeds were principally applied to make infrastructure improvements, such as street repairs within the Project Area, and deposited to the Commission's Low and Moderate Income Housing Fund. In 1994, the Commission completed the construction of the Angelus Senior Housing project, a 50 unit low income senior housing project located within the Project Area. In 2003, the Commission completed the construction of its Garvey Senior Housing project, a 72 unit low income senior housing facility also located within the Project Area. Both projects were approved by the voters, pursuant to Article 34 of the California Constitution, which requires voter approval for low-income housing projects. Related to the completion of its Garvey Senior Housing project, the Commission also completed construction in 2003 of its Community Center, located at 9108 Garvey Avenue. Proceeds of the Series 1993A Bonds facilitated the completion of these projects. The recent sale to Wal-Mart of an SCE owned 23-acre site at the corner of Walnut Grove and Rush Street was completed in December of 2005. Wal-Mart purchased the development site at a purchase price of approximately $10,000,000. The City has issued a building permit for an approximately 230,000 square foot retail building, with a total building valuation of $10,401,590, for a total valuation of approximately $21,000,000. See " Current Plans for the Redevelopment Project Area No. 1" below. Within this property, there are two additional outpads which Wal-Mart is expected to eventually sell to another developer for a fast food restaurant and a stand alone commercial structure. Significant building renovations within the project area include major remodeling of the former Chicago Title building, former California Federal building, and the Southern California Edison General Office building. The relocation of Panda Restaurant Group's corporate headquarters from South Pasadena to the vacant Chicago Title building in 2002 included a complete interior and exterior renovation of the Structure located at 1638 Walnut Grove Avenue. The estimated value of the improvements completed during 2002 was $1,826,000 for a current total valuation of $8,211,589. The Countrywide interior renovation project completed in 2000 was valued at 4,050,000 for a total valuation of $12,152,732. Southern California Edison has completed a number of major interior renovations of their General Office buildings over the past ten years with a total remodel valuation of approximately $21,000,000. Recently, two new office buildings and one new multi-tenant commercial retail center have been constructed. The commercial center included a new 14,000 square foot drug store and a 6,000 square foot market, for a combined building value of $2,400,000 and a total value of $3,000,000, located at the intersection of Garvey Avenue and San Gabriel Boulevard with a building valuation of $937,627 and a total 34 valuation of $1,748,250. A new two-story office building is currently under construction at 8653 Garvey Avenue with a valuation of $615,000. There are also preliminary proposals being discussed with developers for the redevelopment of two Marge Carson properties along the east end of Garvey Avenue. The current proposal is for a large mixed-use residential/commercial condominium project, adjacent to the Garvey Community Center. No specific scope of design has been agreed upon between the City and the developer. Controls, Land Use and Building Restrictions All real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan requires that new construction shall comply with all applicable State Statues and local law in effect, including City zoning ordinances and City codes for building, electrical, heating, ventilating, and plumbing. The Redevelopment Plan allows for commercial, industrial, residential, and public uses within the Project Area, but specified the particular area in which each of these uses is permitted. The Commission may permit an existing but non-conforming use to remain so long as the existing building is in good condition and is generally compatible with a non-conforming use, the owner is willing to enter into a participation agreement with the Commission and the owner agrees to the imposition of such reasonable restrictions as are necessary to protect the development and use of the Project Area. Within the limits, restrictions and controls established in the Redevelopment Plan, the Commission is authorized to establish land coverage, setback requirements, design criteria, and other development and design controls necessary for proper development of both private and public segments within the Project Area. Current Plans for the Redevelopment Project Area No.1 Within the Project Area there exists a 23 acre vacant site located at the southwest corner of Walnut Grove Avenue and Rush Street. In September 2004, the Rosemead City Council approved by unanimous vote a General Plan amendment, Parcel Map and Conditional Use Permit for development of a 230,367 square foot Wal-Mart Supercenter on the site. In December 2005 Wal-Mart closed escrow on the site at a purchase price of approximately $10,000,000. Development of the Supercenter has been the subject of vigorous local opposition and litigation by neighboring residents and the United Food and Commercial Workers Union operating through an organization named Save our Community ("SOC"). At the March 2005 municipal election two of the three incumbent councilmembers running for re-election were defeated and replaced by candidates opposed to the Wal-Mart project. Having failed to secure a majority of the seats on the Council in that election, SOC initiated recall campaigns against two other incumbent councilmembers. The recall petitions were qualified and an election was set for February 7, 2006. However the election will not be held at that time because of a preliminary injunction issued by the Federal District Court in litigation that is still in progress. SOC is also pursuing two lawsuits challenging the Wal-Mart project's compliance with the California Environmental Quality Act. Construction of the project has commenced despite the pending litigation but it is not certain that the project will be completed. This sale of the development site is expected to result in an increase in tax increment revenues of approximately $73,302. While construction of the project could commence in the near future, no projection of incremental revenue from a completed project has been made in the fiscal analysis, and it is uncertain whether the project will be completed. The Fiscal Consultant has not included in its report an increase in projected assessed value to reflect increased assessed value associated with sale of this property. Additionally, if the property is eventually privately developed as a Wal-Mart Supercenter, or otherwise, this could result in 35 a substantial increase in assessed value. The Fiscal Consultant has not included increases in assessed value for future development in its projections. See APPENDIX A - "FISCAL CONSULTANT'S REPORT." Ten Largest Secured Taxpayers Table 3 below sets forth the ten largest secured taxpayers in the Project Area during Fiscal Year 2005-06. The cumulative secured net assessed value of the ten largest secured taxpayers totals $75,257,352; which represents approximately 21.56% of the total secured net assessed value of Redevelopment Project Area No. 1. The following is restricted to only locally assessed tax payers, and does not include state assessed properties. Southern California Edison, which owns a significant amount of property within the Project Area, is a public utility and therefore its properties are state assessed and is, accordingly, not included in the following table of top ten property owners. See "Unitary Property" above for a description of unitary revenues. There are currently no pending appeals on properties owned by the following top ten taxpayers. Table 3 Rosemead Community Development Commission Redevelopment Project Area No.1 Ten Largest Secured Tax Payers Fiscal Year 2005-06 Percent of Project Parcel Secured Net Area Secured Net Owner Name Count Land Use Assessed Value Assessed Value Rosemead Hwang LLC 1 Commercial $29,750,000 8.52% California Federal Savings and Loan 1 Commercial 12,395,786 3.55 Panda Restaurant Group Inc. 1 Commercial 8,375,820 2.40 Yeh Tom C and Nancy Y, TRS Yee Fam 1 Industrial 5,818,642 1.67 Galaxy Realcorp Rosemead LP 7 Commercial 3,437,772 0.98 Thong Phillip T Co TR Thong Fam Trust 1 Residential 3,137,000 0.90 Chiang Raymond K Co TR Chiang Trust 2 Industrial 3,400,000 0.97 Irish Construction 2 Industrial 3,095,327 0.89 Beach Grocery Co Inc. 14 Commercial 2,947,005 0.84 Wong Shi Yin TR Shi Yin Wong MD 1 Commercial 2,900,000 0.83 Trumideb Nominees Inc. Top Ten Totals 31 $75,257,352 Fiscal Year 2005-06 Net Assessed Value for Project Area $349,023,656 Source: Los Angeles County, 2005-06 Equalized Tax Rolls. Includes only locally assessed properties. 21.56% Among these ten largest secured tax payers for Fiscal Year 2005-06, the Rosemead Hwang LLC ownership consists of the Diamond Square shopping center, which includes 235,000 square feet of retail, restaurant, and grocery store within the 7 acre property. The California Federal Savings and Loan property consists of a 250,000 square foot, four story office building that is currently being sublet to Countrywide Financial Corporation, which currently employees in excess of 1,100 persons at this site. Panda Restaurant Group Inc. owns and operates an approximately 180,000 square foot group headquarters building and currently employs approximately 300 persons at this site. TAX INCREMENT REVENUES The Commission has retained GRC Associates, Inc., to analyze the Redevelopment Project Area No. 1 and its Pledged Tax Revenues. Their report is included as Appendix A and should be read in its entirety. 36 The Redevelopment Project Area No. 1's base year assessed valuation is $25,162,672, of which $27,798,092 is attributable to secured assessed value and $3,364,580 is attributable to the unsecured assessed value. The total assessed valuation for Fiscal Year 2005-06 is $370,747,412 which produces a total incremental value of approximately $345,580,740. Pledged Tax Revenues consist primarily of tax increment revenues generated from the application of appropriate tax rates to the incremental taxable value of the Redevelopment Project Area No. 1. An additional significant source of Pledged Tax Revenue includes unitary property taxes. Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Commission. This is primarily because the headquarters of Southern California Edison are located within the Project Area. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property" herein. Reductions in Pledged Tax Revenues received by the Commission may result from declining tax rates, property tax administrative costs and refunds resulting from successful appeals of assessed values. For a more complete discussion of how the various adjustments are calculated see, APPENDIX A - "FISCAL CONSULTANT'S REPORT." Secured') Land Improvements Personal Property Exemptions Total Secured Unsecured Improvements Personal Property Total Unsecured GRAND TOTAL Annual Change Incremental Value: Table 4 Rosemead Community Development Commission Redevelopment Project Area No.1 Historical Values 2001-02 2002-03 2003-04 2004-05 2005-06 $125,341,703 $130,981,056 $155,175,638 $169,590,663 $203,769,318 116,444,795 121,189,983 128,977,977 135,434,124 148,698,519 2,953,024 2,042,074 1,843,772 1,586,980 1,917,867 5,572,510 5,663,775 5,045,427 5,252,907 5,362,048 $239,167,012 $248,549,338 $280,951,960 $301,358,860 $349,023,656 $ 8,081,798 13,641,958 $ 4,938,825 $ 5,117,181 $ 4,830,503 10,089,103 9,580,847 12,558,449 $ 15,027,928 $254,194,940 $229,032,268 $ 14,698,028 $263,247,366 3.56% $238,084,694 $ 17,388,952 $298,340,912 13.33% $273,178,240 (1) Secured values include state assessed non-unitary utility property. Source: Fiscal Consultant's Report and Los Angeles County Assessment Roll, 2000-2005. Projected Tax Revenues $ 3,261,252 15,215,984 $ 18,477,236 $319,836,096 7.20% $294,673,424 $ 21,723,756 $370,747,412 15.92% $345,584,740 Table 5 below shows the projected Pledged Tax Revenues for Redevelopment Project Area No. 1 for the Fiscal Years 2004-05 through 2014-15. While the projections are based on assumptions which are believed by the Fiscal Consultant to be reasonable, there can be no assurance that such projections will be realized. See "RISK FACTORS" herein. The projections of Pledged Tax Revenues are based on the following assumptions: 37 (1) Taxable values as reported by the County for the 2005-06 fiscal year. Projections inflate Land, Improvements and Exemptions 2% per year. No inflationary trend is applied to personal property value and the personal property assessed valuation is assumed in each Fiscal Year presented below to remain at the 2005-06 fiscal year level. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. (2) Projected Gross Tax Increment is based upon incremental taxable values factored against an assumed project tax rate and adjusted for indebtedness approved by voters prior to 198&:: The assumed future tax rates remain at $1.0052 per $100 of taxable value as reported by the County Auditor Controller. According to the redevelopment plan, the last day to receive tax increment is June 27, 2023. (3) Unitary tax amount is as reported by the County and held constant at the 2004-05 level. (4) Housing Set aside requirement is calculated at 20% of Adjusted Gross Revenue. In 1991, the Commission pre-paid $6.8 million from proceeds from its 1987 tax allocation notes. This pre-payment was restructured in 1993 along with the 1993 series tax allocation bonds. These actions have resulted in a decrease of $469,142 on annual housing set-aside requirement until fiscal year 2021-22. This decrease has been reflected in the projections. (5) Property tax rates are assumed to be 1.052%. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. Unitary tax amount as reported by the County. Unitary tax is held constant at the 2004-05 level. See "TAX ALLOCATION FINANCING AND LI IITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property." (6) Taxable values are as reported by the County for the 2005-06 fiscal year. The 2005 improvement value has been decreased by $84,718 to reflect potential losses due to assessment appeals. (7) With respect to pass-throughs, the Los Angeles County Fire Department receives approximately 17% of gross tax increment pursuant to an agreement with the Commission. Statutory pass throughs to agencies that do not have a current tax sharing agreement began 2004-05 at a rate of 20% of incremental growth from base year 2003-04. An additional pass through will begin in 2014-15 at 16.8% of incremental growth. These taxing agencies receive a combined share of 82.99% of general levy property tax. This assumes the City of Rosemead has elected to receive a pass-through under SB 211. These pass throughs are subordinate to debt service on the Bonds. As noted in the Fiscal Consultant's Report, growth in real property land and improvement values have been limited to an assumed rate of growth of real property taxable values of two percent annually as allowed under Article XIIIA of the state Constitution. The State Board of Equalization has directed county assessors to use an inflation adjustment of 1.867% in preparing the 2004-05 assessment rolls. Should the future growth of taxable value in the project areas be less than two percent, the resultant Gross Tax Increment Revenues would be reduced proportionately. Future values will also be impacted by changes of ownership and new construction not reflected in our projections. In addition, the values of property previously reduced in value due to assessment appeals based on reduced market values could increase more than two percent when real estate values increase more than two percent. The Commission, the City of Rosemead, the Fiscal Consultant and the Underwriter are unable to make any representation that taxable values will actually grow at the rate projected. 38 M\O-O rI 00 OEM 1 ^ ~ ~ ha N n ~ ~ . r ~ . ~v b M 00 M 0 0 N N60 r 7 e ^ V~O% Nbti to MO [ in N W I CL O .--I N 00~ 00 M In H b.-r M 10 to i O N m N~ Q0, m l ~ ~ ch 7M h ~ r OO i~ h' V M CN kn m N 00 OOH .-i V1 v n u rl M N NN 460 r- tn -0 -4 h 't O O O 1n l~ v O~ %O Vi Vj M 1A u O N - v- ~•4 O~ N . N ~ r ~ M ~ n 0 te) a C) N N :s m~ q (a O T O E Vl b 7 00 O tefn) v ,y O N v O 000 M .--i Inj v y N N ' m N h 00 N m v ti 00 ~ 00 M v 00 00 m u kn M OHO .r ,r Fd7 59 ^I y O ~Nr V~'bM n Irv rnv^i C b 00 tei 03 y~ y O W n~ N M r-i 'tt - m u N v~ ~d ~7 hil Q A N M SO m i7 t O "O O U d O p CD ~ y 4 V 00 e a N N m 01 \p 00 kn T ~ lu W V1 m N %C 00 O v N m PC A a aPC ° In M . - " v F y' b I~1 N en cq m ~ O O ~ y 0 0 p ON~~O H et O^1 CM ~ 6> T OO W O aD ~ n 00n v N U y Z5, C Cvi~kn 01 M u m v • 00 v m N M ~ 4) "O 0a'~ a N 6 9 M M t ~ ^ M b O 4~p00 'tN N h ° o 0,, ~ 7 m a v~ r n~ o a o O CN tz " - M NN v N m m ~O 08 N O M O M M \O O ^ kfl ^ N NN m M ~ v v ~ ~ o ~ a ce cue ~ ~ a C7 1 , o y ~ y d N F > 0 d tea' y a as qa 71 2 03 FA w ❑ cC a N N O R b~ O N vyi N y a° N a~awF F E~OQ co "4 A4 (;0 C403 o 000 3 aoi ,o y q 00 69 b ~ N U U N r'i N 00 'Uy' N U `b .o ~N pN y •U• O y ~ m ON U•b U R. ny 79 O0 0 w .w y N o q W O ti a > 8 a ID ° qq4, Vi 0> U q w o d 0 . o gyp ~ w y ,d p N 00 m c~~ii .d id a y ~ ~ ~ R~ fppgq]]+ 40 a7 pp ° O 'CJ U O O N 4 U y° a o U ° -8 a~ 0 Q 00~ y b d e q fsl H M N N N ID W d aU. 0` N U V~J q y v 0 A 69 N •'a m b A. O o l l G > N p 0 N O v N td id -pp O m O N 0 O y 'a/ a C\ OR y ~Z4oy 0 8 m > ~Z ~o o q>, a~ m~ Pi °v a' o ao m Aa ° ~ 0 0 1 + N O U ° U 0 U r > m p 1!~ 77 o 0 o y VUi Qa '0 O N ~ O e N .d 0 0 w a o U b U N A d 0 U d f~ N° N H 'o 'v 8.2 0 .1 0 4) a O N 0> U Oi N > a ti U N N N .D N V w my y y t0 V] idp M.'~- Q N y a'•37 •.yi .~~a LL 0 N t~j o U H c:, o w g p e to ob~ss d N "N a N 0w"0''03 0 0 ys ~bo N ~ LL o Q. o M 7 o N ~°ocUm0 CO, o~ss LL trod' ~a > w.d is U ,-U, w h p ° a ° °qd enyv bo U c o .°a 0 C~7 .0 00 V) 39 Table 6 provides a summary of Redevelopment Project Area No. 1 Projection of Tax Increment Revenues for Fiscal Years 2005-06 through 2022-23. Revenues or revenue reductions resulting from Supplemental Assessments are not included in projections of the Fiscal Consultant set forth herein. Table 6 Rosemead Community Development Commission Redevelopment Project Area No.1 Projected Taxable Values and Tag Increment Revenues Adjusted Projected Incremental Gross Pledged Tax Fiscal Year Taxable Value Revenues Revenues 2005-06 $345,500,000 $4,646,000 $3,325,000 2006-07 352,602,000 4,718,000 3,369,000 2007-08 359,846,000 4,791,000 3,414,000 2008-09 367,235,000 4,865,000 3,459,000 2009-10 374,772,000 4,941,000 3,506,000 2010-11 382,459,000 5,018,000 3,553,000 2011-12 390,301,000 5,097,000 3,602,000 2012-13 398,299,000 5,177,000 3,651,000 2013-14 406,457,000 5,259,000 3,702,000 2014-15 414,778,000 5,343,000 3,753,000 2015-16 423,266,000 5,428,000 3,806,000 2016-17 431,923,000 5,515,000 3,859,000 2017-18 440,753,000 5,604,000 3,914,000 2018-19 449,761,000 5,694,000 3,969,000 2019-20 458,948,000 5,787,000 4,026,000 2020-21 468,319,000 5,881,000 4,084,000 2021-22 477,877,000 5,997,000 4,143,000 2022-23 487,627,000 6,075,000 3,734,000 Assessment Appeals The Fiscal Consultant reports no material appeals of the taxable value for assessments within the Project Area that could potentially materially lower taxable values, as currently reported, thereby reducing Pledged Tax Revenues. See APPENDIX A-"FISCAL CONSULTANT'S REPORT" hereto. Debt Service and Estimated Coverage Table 7 sets forth the debt service and estimated coverage on the Series 2006A Bonds and the Series 1993 Bonds to remain outstanding after the defeasance of the Refunded Bonds. The following assumptions were made in creating the table: 1. The Fiscal Consultant's projections of net Pledged Tax Revenues as summarized in Table 5 and as set forth in APPENDIX A hereto are realized through Fiscal Year 2005-06 and escalated at 2% per year thereafter. 2. Debt service is based on an assumed maturity schedule and interest rates for the Series 2006A Bonds as set forth on the inside cover page hereof and the Series 1993 Bonds to remain outstanding after the defeasance of the Refunded Bonds. 40 3. The Commission will not incur any additional debt for the Project Area during the years shown. Table 7 Estimated Tax Increment, Debt Service and Coverage (Bond Year Ending October 1) Estimated Less: Tag Housing Set Series 1993 Series 2006A Combined Year p) Increment Aside Bond Debt Service (Z) Bond Debt Service Debt Service Total Coverage 2006 $1,293,320 2007 1,293,320 2008 1,293,320 2009 1,293,320 2010 1,293,320 2011 1,293,320 2012 1,293,320 2013 1,293,320 2014 1,293,320 2015 1,293,320 2016 1,293,320 2017 1,293,320 2018 1,293,320 2019 2,313,320 2020 2,316,200 2021 2,315,720 2022 2,316,880 (1) Tax Increment is for the Tax Year ending June 30 and debt service is for the Bond Year ending October 1. (2) Assumes the refunding of the Refunded Bonds as described herein. The Series 1993 Bonds mature on October 1, 2033. Debt service owing to the Series 1993 Bonds between 2023 and 2033 are not included in this table. Source: GRC Associates, Inc. with debt service schedules provided by Piper Jaffray & Co. 41 CERTAIN INFORMATION CONCERNING THE CITY Certain general information concerning the City of Rosemead is included herein as Appendix E hereto. Such information is provided for informational purposes only. The General Fund of the City is not liable for the payment of the Series 2006A Bonds or the interest thereon, nor is the taxing power of the City pledged for the payment of the Series 2006A Bonds or the interest thereon. CERTAIN LEGAL MATTERS Legal matters incident to the delivery of the Series 2006A Bonds are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. A complete copy of the proposed form of opinion of Bond Counsel is contained in Appendix B. As Bond Counsel, Orrick, Herrington & Sutcliffe LLP undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Commission in connection with the Series 2006A Bonds by Wallin, Kress, Reisman & Krantz LLP, Santa Monica, California, as counsel to the Commission, and by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2006A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix B hereto. Bond Counsel expects to deliver an opinion at the time of issuance of the Series 2006A Bonds substantially in the form set forth in APPENDIX B - "FORM OF OPINION OF BOND COUNSEL," subject to the matters discussed below To the extent the issue price of any maturity of the Series 2006A Bonds is less than the amount to be paid at maturity of such Series 2006A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2006A Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Series 2006A Bonds, 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 Series 2006A Bonds is the first price at which a substantial amount of such maturity of the Series 2006A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2006A Bonds accrues daily over the term to maturity of such Series 2006A Bonds 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 Series 2006A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2006A Bonds. Beneficial Owners of the Series 2006A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2006A Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Series 2006A Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2006A Bonds is sold to the public. 42 Series 2006A Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular- circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2006A Bonds. The City and the Authority have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2006A Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2006A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2006A Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Series 2006A Bonds may adversely affect the value of, or the tax status of interest on, the Series 2006A Bonds. Certain requirements and procedures contained or referred to in the Indenture, the Sublease, the Tax Certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Orrick, Herrington & Sutcliffe LLP. Although Bond Counsel is of the opinion that interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes and that interest on the Bonds is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Beneficial 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 Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislation, if enacted into law, or clarification of the Code may cause interest on the Series 2006A Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Series 2006A Bonds. Prospective purchasers of the Series 2006A Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Series 2006A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City or the Commission, or about the effect of future changes in the Code, 43 the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City and the Commission have covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Series 2006A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City, the Commission or the Beneficial Owners regarding the tax-exempt status of the Series 2006A Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City, the Commission and their appointed counsel, including the Beneficial 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 bonds is difficult, obtaining an independent review of IRS positions with which the City or the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2006A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2006A Bonds, and may cause the City, the Commission or the Beneficial Owners to incur significant expense. LITIGATION At the time of delivery of and payment for the Series 2006A Bonds, the Commission will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission in any way affecting the existence of the Commission or the titles of its officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or delivery of the Series 2006A Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of Pledged Tax Revenues pledged or to be pledged to pay the principal of and interest on the Series 2006A Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Series 2006A Bonds, the Resolution, the Indenture or any action of the Commission contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or the powers of the Commission or its authority, or which would adversely affect the exclusion of interest paid on the Series 2006A Bonds from gross income for Federal income tax purposes or the exemption of interest paid on the Series 2006A Bonds from California personal income taxation, nor, to the knowledge of the Commission, is there any basis therefor. RATINGS Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. ("S&P") has assigned its municipal bond rating of "AAA" to the Series 2006A Bonds based on the issuance by Ambac Assurance of the Financial Guaranty Insurance Policy. The Series 2006A Bonds have also been assigned an underlying rating of "BBB+" by S&P. Such ratings reflects only the views of the rating agencies and an explanation of the significance of such rating and any rating of the Commission's outstanding obligations may be obtained from such rating agency as follows: Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041-0003. There is no assurance that such ratings will continue for any given period or that they will not be revised downward or withdrawn entirely by such rating agencies, if in their judgment, circumstances so warrant. The Commission, the Bond Insurer and the Trustee undertake no responsibility either to notify the owners of the Series 2006A Bonds of any revision or withdrawal of the rating or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2006A Bonds. 44 UNDERWRITING The Series 2006A Bonds are to be purchased from the Authority by Piper Jaffray & Co., as Underwriter, pursuant to a Purchase Contract among Commission, the Authority and the Underwriter. The Underwriter will purchase the Series 2006A Bonds at a price of $ , which reflects the par amount of the Series 2006A Bonds, plus original issue premium of $ less an underwriter's discount of $ . The Underwriter is committed to purchase all the Series 2006A Bonds if any are purchased. The Underwriter may offer and sell the Series 2006A Bonds to certain dealers (including depositing the Series 2006A Bonds into investment trusts) and others at prices lower than the offering prices stated on the inside cover of this Official Statement. After the initial public offering, the public offering prices of the Series 2006A Bonds may be changed from time to time by the Underwriter. VERIFICATION The Arbitrage Group, Inc., certified public accountants (the "Verification Agent"), will verify as to the Escrow Agreement, the mathematical accuracy as of the date of the closing on the Series 2006A Bonds of the computations contained in the provided schedules to determine that the anticipated receipts from the investment of cash and direct obligations of the United States will be sufficient to pay, when due, the principal of and interest on the Series 1993 Bonds on April 10, 2006. The report of the Verification Agent will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report. FINANCIAL ADVISOR The Commission has retained Public Financial Management as Financial Advisor for the sale of the Series 2006A Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. Public Financial Management is an independent advisory firm and is not engaged in the business of underwriting, trading, or distributing municipal or other public securities. FISCAL CONSULTANT The Report of GRC Associates, Inc., included in Appendix A to this Official Statement has been presented in reliance upon the knowledge, experience and authority of that firm as experts in redevelopment consulting. MISCELLANEOUS All of the preceding summaries of the Series 2006A Bonds, other applicable legislation, agreements and other documents are made subject to the provisions of the Series 2006A Bonds and such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Commission for further information in connection therewith. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. 45 The execution and delivery of this Official Statement by the Executive Director of the Commission has been duly authorized by the Commission. Concurrently with the delivery of the Series 2006A Bonds, the Commission will furnish to the Underwriter a certificate of the Commission to the effect that this Official Statement, as of the date of this Official Statement and as of the date of delivery of the Series 2006A Bonds, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein, in the light of the circumstances under which they were made, not misleading. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Executive Director 46 APPENDIX A FISCAL CONSULTANT'S REPORT A-1 MRS PAGE INTENTIONALLY LEFT BLANK) ROSEMEAD CoNmuNiTY DEVELOPMENT COMMSSION ROSEMEAD REDEVELOPMENT PROJECT AREA NO. 1 PROJECTED TAX INCREMENT REVENUES FEBRUARY 7, 2006 1. Introduction The Community Development Commission of the City of Rosemead ("Agency") is proposing to issue its Tax Allocation Bonds, 2006 Series A, ("Bonds") secured by a pledge of and lien on the tax increment revenues derived from the Rosemead Redevelopment Project Area No. 1 ("Project Area"). The Project Area, to be described in this report, was originally established in 1972. The Bonds are being issued to refund a portion of the Rosemead Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993 A, previously issued by the Agency, as well as to raise new funds. The California Community Redevelopment Law ("CRL") provides for the creation of redevelopment agencies by cities and counties for the purpose of the elimination of blight. The CRL, collectively with Article 16, Section 16 of the California Constitution, authorizes redevelopment agencies to receive that portion of property tax revenue generated by project area taxable values that are in excess of the base year value. The base year ("Base Year") value is defined to be the amount of the taxable values within the project area boundaries on the last equalized tax roll prior to adoption of a project area or an amendment to a project area that adds area. The amount of current year taxable value that is in excess of the Base Year value is referred to as incremental taxable value. Tax revenues generated from the incremental taxable value are generally referred to as Tax Increment Revenues. The CRL provides that Tax Increment Revenues may be pledged by a redevelopment agency to the repayment of agency indebtedness. The purpose of this fiscal consultant report ("Report") is to examine the current fiscal year and estimate, for subsequent fiscal years, the amount of tax increment revenues anticipated to be received by the Agency from the Project Area. Provisions of the CRL and the Redevelopment Plan determine the amount of tax increment that the Agency may utilize for purposes of making debt service on bonds, loan payments, payments pursuant to tax sharing agreements between the Agency and other taxing entities and payments on other obligations. The estimated tax increment revenue available for bond debt service ("Pledged Revenues") generated by the Project Area are shown in the table below for fiscal years 2005-06 through 2022-23. Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Project Area (000's Omitted) Fiscal Year Incrementa 1 Taxable Value Adjuste d Gross Revenue Pledged` Revenues 2005-06 345,500 4,646 3,325 2006-07 352,602 4,718 3,369 2007-08 359,846 4,791 3,414 2008-09 367,235 4,865 3,459 2009-10 374,772 4,941 3,506 2010-11 382,459 5,018 3,553 2011-12 390,301 5,097 3,602 2012-13 398,299 5,177 3,651 2013-14 406,457 5,259 3,702 2014-15 414,778 5,343 3,753 2015-16 423,266 5,428 3,806 2016-17 431,923 5,515 3,859 2017-18 440,753 5,604 3,914 2018-19 449,761 5,694 3,969 2019-20 458,948 5,787 4,026 2020-21 468,319 5,881 4,084 2021-22 477,877 5,977 4,143 2022-23 487,627 6,075 3,734 The projected incremental taxable values of property and the resulting gross tax increment revenues ("Gross Revenue") and Pledged Revenues summarized above are reflected in Tables 1, 2, 3, 4, and 5 attached to this Report. The projections in this Report are based on the history of taxable values within the Project Area and the property tax assessment and property tax apportionment procedures of Los Angeles ("County"). Future year assessed values, Gross Revenues and Pledged Revenues are estimates based upon the assumptions described in this Report. This Report should not to be construed as a guarantee of Agency revenues by the Agency or GRC Associates, Inc. H. The Project Area The redevelopment plan for Rosemead Project Area No. 1 was originally adopted by Rosemead City Council on June 27, 1972 by Ordinance 340. The Project Area consists of approximately 511 acres and is roughly triangular in shape. Garvey Avenue, San Gabriel Boulevard and Walnut Grove are major thoroughfares traversing the area. The Project Area is located between the San Bernardino and Pomona freeways to the north and south and contains a complete cross section of the existing cities land use, including commercial, industrial and residential uses. The original Redevelopment Plan has been amended four times since its adoption. The plan was first amended on December 9, 1986, by City Council Ordinance 592, to increase the number of dollars allocated to the Agency and re-establish eminent domain. The plan was further amended on December 20, 1994 by City Council Ordinance 752 to bring the plan into conformity with 2 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 California State Assembly Bill 1290. The plan was amended a third time by City Council Ordinance 822 on June 22, 2002, to extend the duration of the plans effectiveness. Finally, the Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by 1 year pursuant to SB 1045. A. Land Use The following table presents a breakdown of land use in the Project Area, by assessed value for fiscal year 2005-06. Unsecured parcels are not shown because these parcels are tax bills that are assigned to secured parcels already and are accounted for in other categories. It should be noted that the figures below exclude the value of exempt parcels such as those owned by the City, Agency, State or other governmental agencies that do not contribute to Agency revenues. Project Area Category Parcels Assessed Value Percent of AV Residential 775 $ 165,381,310 44.61 %o Commercial 157 $ 107,539,554 29.01% Industrial 66 $ 35,576,839 9.60% Vacant Land 54 $ 17,465,444 4.71% Government owned 15 $ 1,315,041 0.35% Institutional 3 $ 2,358,583 0.64% Misc. 32 $ 1,167,991 0.32% Public Utility $ 18,218,894 4.91% Unsecured M $ 21,723,756 5.86% Totals 1102 $ 370,747,412 100.00% '9 Unsecured properties are assigned to the secured parcel in which they are located. Source: Los Angeles County Auditor Controller, based on 2005-06 Los Angeles County Equalized Tax Roll B. Redevelopment Plan Limits Not including the one year extension permitted by Senate Bill SB 1045 to mitigate the impacts of ERAF payments, CRL limits the period in which redevelopment activities can be undertaken for plans adopted prior to January 1, 1994, to 40 years from the date of adoption or January 1, 2009, whichever is later, and limits the period within which a redevelopment project area may receive tax increment to 50 years following the adoption. If redevelopment plans with shorter time frames were adopted, legislative bodies were allowed to extend their limits to conform to these requirements through the adoption of an ordinance prior to December 31, 1999. For projects adopted subsequent to 1994, redevelopment activities can be undertaken for 30 years and tax increment received for 45 years. A redevelopment plan adopted prior to January 1, 1994 is required to include a limitation on tax increment dollars that may be allocated to the redevelopment agency; a time limit on incurring indebtedness to be repaid with tax increment; and a limit on the amount of bonded indebtedness to be repaid with tax increment that can be outstanding at one time. These limits can be extended only by an amendment of the redevelopment plan. The legislative body, by adoption of 3 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 an ordinance, can eliminate the time limit on the establishment of loans, advances, and indebtedness required prior to January 1, 2002. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property.-taxes and repay indebtedness. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law. Additionally, the Agency eliminated the timeframe to incur debt under state legislation SB 211. Rosemead Redevelopment Project Area No. 1 Plan Limits Last Date to Tax Increment Limit on Total Last Date to Repay Debt with 'Fax Increment _ Plan Effectiveness Incur New Debt r Tax Increment Limit . Bond Debt Redevelopment 6/27/2013 No Limit 6/27/2023 $249,245,938 No Limit Project Area No. 1 According to the County records, the Agency has received approximately $78,579,553 in total cumulative tax increment from the Project Area as of January 1, 2006. Based on the projected tax increment revenues to be received by the Agency, the limit on tax increment funds that the Agency may receive for the Project Area will not be exceeded within the term of the Bonds. III. Project Area Assessed Values A. Assessed Values Taxable values are prepared and reported by the County Auditor-Controller each fiscal year and represent the aggregation of all locally assessed properties within the Project Area. The assessments are assigned Tax Rate Areas (TRA) that are coterminous to the boundaries of the project area in the first year that an agency is eligible to receive tax increment revenue. The Project Area consists of 12 individual TRAs. Historic taxable values since 2000-2001 were utilized to determine the historical growth rate of property values within the Project Area. Property values within the Project Area have steadily grown at a compounded rate of 10.5% per year between the years 2001-2002 and 2005-2006. Total assessed property values did not decline for any fiscal period between 2000-2001 and 2005-2006. Also, at no time during this period did property tax values grow at a rate of less than 2%. GRC is not aware of any potential exemptions that would substantially affect property values in the Project Area in the coming future. The historic taxable values for the Project Area are shown in Table 3. B. Top Ten Taxable Property Owners A review of the top ten taxable property owners in the Project Area for fiscal year 2005-06 was conducted. Within the Project Area, the aggregate total taxable value for the ten largest taxpayers totaled $79,920,183 of the assessed property values. These top-ten taxpayers account 4 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 for 20.7% percent of the secured assessed value within the Project Area and 21.5% percent of the unsecured assessed value. GRC's analysis is restricted to only locally assessed tax payers, and does not include state assessed properties. Southern California Edison, which owns a significant amount of property within the project area, is a public utility and therefore its properties are state assessed. For this reason, GRC has not included Southern California Edison in its analysis of top 10 property owners. See Section IV. H. below for a more complete descripti of unitary revenues. A list of the top ten taxpayers, and the number of parcels attributed to each owner for the Project Area, is presented in Table 5. IV. Tax Allocation and Disbursement A. Property Taxes The taxable values of property are established each year on the property tax lien date. Prior to 1997 the lien date was March 1 for locally assessed property and January 1 for State assessed utility property. Beginning with 1997, the lien date of January 1 was established for both locally and State assessed property. Real Property reflects the reported assessed values for secured and unsecured land and improvements. Pursuant to Article XIIIA of the State Constitution, the value of locally assessed Real Property may only be increased up to two percent annually to reflect inflation. Real Property values are also permitted to increase as a result of a change of ownership or new construction. Utility property assessed by the State Board of Equalization may be revalued annually and such assessments are not subject to the inflation limitations of Article XIIIA. The taxable value of Personal Property is also established on the lien dates and is not subject to the annual two percent limit of locally assessed Real Property. Secured property includes property on which any property tax levied by a county becomes a lien on that property. Unsecured property typically includes value for tenant improvements, fixtures and personal property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other secured property owned by the taxpayer. The taxes levied on unsecured property are levied at the previous year's secured property tax rate. B. Supplemental Assessments Chapter 498 of the Statutes of 1983 provides for the reassessment of property upon a change of ownership or completion of new construction. Such reassessment is referred to as a Supplemental Assessment and is determined by applying the current year's tax rate to the amount of increase in a property's value and prorating the resulting property taxes to reflect the portion of the tax year remaining as determined by the date of the change in ownership or completion of new construction. Supplemental Assessments become a lien against Real Property. Since 1984-85 revenues derived from Supplemental Assessments have been allocated to redevelopment agencies and taxing entities in the same manner as regularly collected property taxes. The Agency received $251,440 in revenue from Supplemental Assessments' within the 1 Supplemental Assessments as reported by Los Angeles County Auditor-Controller in monthly remittance reports for Fiscal Year 2004-05. Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Project Area during fiscal year 2004-05. This revenue is indicative of new development that was assessed after finalization of the tax roll and sales of property at prices that were higher than the assessed value. GRC has not included revenues or revenue reductions resulting from Supplemental Assessments in our projections. C. Tax Rates Tax rates will vary within a community and a project area. The tax rate for any particular parcel is based upon the taxing entities levying the tax rate for the area where the parcel is located. The tax rate consists of the General Levy Tax Rate of $1.00 per $100 of taxable values and the Over- ride Tax Rate. The Over-ride Tax Rate is that portion of the tax rate that exceeds the General Levy Tax Rate and is levied to pay voter approved indebtedness or contractual obligations that existed prior to the enactment of Proposition XIII. The State Constitution prohibits the allocation to redevelopment agencies of tax revenues derived from Over-ride Tax Rates levied for repayment of indebtedness approved by the voters after December 31, 1988. The Over-ride Tax Rates typically decline each year as a result of (1) increasing property values (which would reduce the Over-ride Tax Rate required to produce the revenue necessary to meet debt service obligations) and (2) the eventual retirement of debt over time. The Project Area is subject to the Metropolitan Water District. The tax rate levied by the Metropolitan Water District is authorized by a contract and does not have a termination date. The Project Area contains 12 Tax Rate Areas (TRA's). A Tax Rate Area is a geographic area within which the taxes on all property are levied by a certain set of taxing entities. These taxing entities each receive a prorated share of the General Levy and those taxing entities with voter approved Over-ride Tax Rates receive the revenue resulting from that tax rate. For the revenue projections contained within this report, it is assumed that the tax rate is $1.0052 per $100 of secured and unsecured assessed value for the life of the Project Area. The breakdown of the tax rate that is applicable to the Project Area is as follows: General Levy 1.000000 Metro Water District .0052 RDA Applicable Rate: 1.0052 D. Allocation of Taxes Taxes paid by property owners are due in two equal installments. Installments of taxes levied upon secured property become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. The County disburses Tax Increment Revenue to all redevelopment agencies from November through August with approximately 45 percent of secured revenues apportioned by the end of December. Unsecured revenues are disbursed in September, January and June of each fiscal year. E. Annual Tax Receipts to Tax Levy The Agency received a total of $4,588,594 in tax increment revenue from the Project Area for fiscal year 2004-05. This total is inclusive of revenues from supplemental assessments, homeowner's exemptions, public utilities and prior year collections and refunds. 6 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 The County of Los Angeles apportions tax revenues to redevelopment agencies based upon the amount of the tax levy that is received from the taxpayers. Secured collection rates for the Merged Project have been consistently high over last four years. The following table illustrates the tax revenue collections for Agency over the previous five years. The total tax levy includes the tax levy, including secured, unitary and unsecured tax levy's as reported at the beginning of each fiscal year. The total apportioned includes amounts actually allocate&-to the Agency including supplementary assessments and prior year collections. Fiscal Year Total Tax Le ` l'] Collection Rate Total` Apportione d Total % Received 2004-05 $ 4,205,694 99.00% $ 4,588,598 109.10% 2003-04 $ 4,053,338 98.40% $ 4,318,373 106.54% 2002-03 $ 3,720,264 96.40% $ 3,800,050 102.14% 2001-02 $ 3,711,493 97.30% $ 3,845,676 103.62% 2000-01 $ 3,475,165 87.10% $ 3,547,755 102.09% Source: Los Angeles County Auditor-Controller's Office, 2000-2001 to 2004-05 [11 Total tax levy includes secured tax levy, unitary taxes and unsecured tax levy Tax increment revenue projections contained in this report do not include any adjustments for delinquencies or collection history. F. Assessment Appeals GRC has provided for a reduction in assessed value based on appeals data from Project Area in the aggregate. Since 1999, there have been a total of 34 assessment appeals filed on properties within the Project Area. Of the 34 appeals filed, 14 have been allowed with a reduction in value and 19 have been denied or withdrawn. These figures result in an average of 42.4% percent of resolved appeals being allowed with a reduction of value. The historical average reduction in value for allowed appeals is 25.31 percent. There is 1 appeal currently pending on property within the Project Area. These owners have appealed valuations totaling $789,000. Based on the above historical averages, GRC expects a 42.4 percent chance that the outstanding appeal will be successful, with an average reduction in value of 25.31 percent. This would result in a loss of assessed value of $84,718. The projected assessed value for 2005-06 has been adjusted for this estimated loss of value. The historical appeals data for the Project Area is presented in Table 4 attached to this report. A number of the appeals in the Project Area that were allowed resulted in a reduction in value were based on Section 51 of the Revenue and Taxation Code. This section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XM of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions took place in some counties during the mid-1990's due to declining real estate values. Reductions made under this code section may be initiated by the Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine it's full cash value and the valuation is adjusted accordingly, which may result in either further reductions in or increases in assessed value. Such increases shall be in accordance 7 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 with the actual full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. G. County Collection Charges Counties are permitted by State law to recover charges for property tax administration in an amount equal to their property tax administration costs. For the fiscal year 2004-05, the amount of County collection charges attributed to the Project Area is $69,875.11. For purposes of these projections, GRC has assumed that the County will continue to charge the Agency for property tax administration and that such charge will be 1.52% percent of the gross revenues (see Tables 1 and 2) based on the prior year administration fee. H. Allocation of State Assessed Unitary Taxes Legislation enacted in 1986 (Chapter 1457) and 1987 (Chapter (921) provided for a modification of the distribution of tax revenues derived from utility property assessed by the State Board of Equalization, other than railroads. Prior to the 1988-89 fiscal year, property assessed by the SBE was assessed statewide and was allocated according to the location of individual components of a utility in a tax rate area. Since 1988-89, tax revenues derived from unitary property assessed by the SBE are accumulated in a single Tax Rate Area for the County. It is then distributed to each taxing entity in the County in the following manner: (1) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to two percent; (2) if utility tax revenues are insufficient to provide the same amount as in the previous year, each taxing entity's share would be reduced pro-rata county wide; and (3) any increase in revenue above two percent would be allocated in the same proportion as the taxing entity's local secured taxable values are to the local secured taxable values of the County. To administer the allocation of unitary tax revenues to redevelopment agencies, the County no longer includes the taxable value of utilities as part of the reported taxable values of the project area, therefore, the base year of project areas have been reduced by the amount of utility value that existed originally in the base year. Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Agency. This is primarily because the headquarters of Southern California Edison are located within the Project Area. However, the revenues allocated to the Agency come from several sources and are allocated based on the statutory method described above and do not reflect the current unitary assessed value within the Project Area. Within the Project Area, the Auditor Controller allocated $1,173,352 in unitary tax revenue to the Agency for 2004-05. This amount is reasonably consistent with the unitary revenue allocations made to the Agency in prior years. However, the Agency's unitary revenues have fallen by approximately 23% since 1992-1993. See the table below for the total unitary assessed values in the County of Los Angeles since 1997. According to the California State Board of Equalization, there have been two primary causes of the decrease unitary assessed valuation in the County of Los Angeles. The first was the privatization of power generation facilities in the late 1990s. When a power generation facility was sold to a private entity it became locally assessed and was attributed to the TRA in which it is located. Assessment of these facilities moved back to the State in 2003, but the value is associated with specific TRAs according to California Revenue and Taxation Code Section 100.9. The second primary cause of a decrease in unitary valuations within the County was due 8 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 to a decrease in the assessed valuation of telecommunication companies during the period 2002- 2005. We have assumed that unitary tax revenue will continue to be allocated in similar amounts over the life of the Project Area, and that unitary tax will remain constant through the life of the project. Total Unitary Assessed Value for County of Los Angeles - Year Total Assessed Value 1997-98 $ 12,668,473,940 1998-99 $ 12,681,433,366 1999-00 $ 12,505,962,644 2000-01 $ 12,348,514,649 2001-02 $ 12,425,634,651 2002-03 $ 12,357,025,398 2003-04 $ 11,587,735,634 2004-05 $ 10,648,846,372 2005-06 $ 10,718,105,185 Source: California State Board of Equalization V. Low and Moderate Income Housing Set-Aside Section 33334.2 of the CRL requires redevelopment agencies to set aside 20 percent of all tax increment revenues into a low and moderate-income housing fund ("Housing Set-Aside Requirement"). An agency can reduce the Housing Set-Aside Requirement if it annually makes certain prescribed determinations that are consistent with the housing element of the general plan. These findings are: (1) that no need exists in the community to improve or increase the supply of low and moderate income housing; or, (2) some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing need. In order to make findings (1) or (2), the Agency's finding must be consistent with the housing element of the community's general plan, including its share of the regional housing needs of very low income households and persons and families of low or moderate income. No such findings have been made by the Agency. However, on October 9, 1991 the Agency prepaid its housing obligation in the amount of $6,813,849.62. As a result, the Agency's housing obligation has been reduced by $469,142 per year until the 2021-22 fiscal year. This annual reduction was based on a present value factor determined by the yield on the Agency's outstanding bonds. The Agency additionally deferred its housing set-aside obligation for fiscal years 1992-93, 1993-94 and 1995-96. The agency must repay these amounts prior to the last date the Agency may receive tax increment. VI. Legislation In order to address State Budget deficits, the Legislature enacted SB614, SB844 and SB 1135 that required payments from redevelopment agencies for the 1992-93, 1993-94 and 1994-95 fiscal years into a countywide Education Revenue Augmentation Fund (the ERAF). The Agency was allowed to use any funds legally available and not legally obligated for other uses, including reserve funds, bond proceeds, earned income and proceeds of land sales to satisfy this obligation, but was prohibited from using moneys in the Low and Moderate Income Housing Fund (the Housing Fund). The obligation is applied to the agency and not to specific project areas. All 9 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 ERAF obligations of the Agency in the above noted years have been fulfilled and no repayment obligation exists. In addition to the payments from redevelopment agencies, the State budget solutions have involved the shifting of property tax revenues from cities, counties and special districts to the ERAF. In Los Angeles, this shift has been accomplished by allocating to the WRAF its share of taxes in the same manner as they are distributed to other taxing entities except for redevelopment agencies whose revenue is distributed in accordance with its incremental taxable value. Pursuant to AB 1768, the State introduced a one-time ERAF shift for redevelopment agencies of $75,000,000 for the fiscal year 2002-03 to help fund the State budget deficit. The Agency's ERAF obligation was $122,487, which was paid to the County. Additional State legislation, SB 1045, again introduced a one-time ERAF shift of $135,000,000 for fiscal year 2003-04 year to meet the ongoing State budget deficits. The Agency's ERAF obligation for the 2003-04 fiscal year was $207,391. Subsequent to SB1045, the State legislature adopted SB 1096 which established an ERAF shift of $250,000,000 for the 2004-05 and 2005-06 fiscal years to meet the ongoing State budget deficits. The Agency's ERAF obligation for the 2004-05 and 2005-06 fiscal years is estimated at $342,811.45. No other future ERAF obligations have been drafted or adopted, but it is possible that the Legislature could shift property tax allocations or require additional redevelopment payments in future years. Since the ERAF shifts are subordinate to new and existing bond obligations, the ERAF payments are not included in the projections of tax increment revenues in this Report. The Agency cannot predict whether State Legislature will enact any other legislation requiring additional or increased future shifts in tax increment revenues to the State and/or to schools, whether through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on future Pledged Tax Revenues. Given the level of the State of California's deficit problems, tax increment available for payment of Series 2005 Bonds could be substantially reduced in the future. VII. Tax Sharing Agreements and Other Obligations Pursuant to Section 33401 of the Redevelopment Law, a redevelopment agency may enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project in an amount which in the agency's determination is appropriate to alleviate any financial burden or detriment caused by the redevelopment project. These agreements normally provide for a pass-through of tax increment revenue directly to the affected taxing agency, and therefore, are commonly referred to as "pass-through" agreements or "tax sharing" agreements. The following paragraphs describe the pass-through agreements the Agency has entered into with respect to each project area. County of Los Angeles, Consolidated Fired Protection Department and Coup Library District. On September 22, 1989 the Agency entered into a reimbursement agreement with the County of Los Angeles, Consolidated Fire Protection District and County Library District. The Agency agreed to pay the Fire District its share of general levy property tax increment. The Fire District share of property tax revenues is approximately 17.1 Additionally, the Agency agree to pay the Library District its share of tax increment revenues, net of housing set-aside, if the Agency constructed a new Library facility within the Project Area. The Agency has not constructed a new facility and does not currently have plans to do so. Therefore, it has been assumed that the 10 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Agency will not make payments to the Library District. This agreement is not subordinated to bond indebtedness. Statutory Pass Throughs When the Agency extended the time frame to incur debt pursuant to State Assembly Bill 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is 83% of every $1.00 of property tax generated. These statutory pass-throughs to affected agencies will began in the year 2004-05 at a rate of 25% of the tax increment growth net of the Housing Set-Aside Requirement with of base year of 2003- 04. An additional pass through will begin in the year 2014-15 at a rate of 21% of the tax increment growth net of the Housing Set-Aside Requirement with a base year of 2013-14. The County of Los Angeles includes the unitary assessed values in its calculation of SB 211 pass throughs. However, there is no consistent methodology among various counties within the State as to the calculation of SB 211 pass throughs. The California Redevelopment Association is currently working on a standardized methodology for these payments. However, GRC is not aware of any pending legislation that would impact this matter. For the purpose of this report, GRC has calculated the pass throughs based on the County of Los Angeles's methodology. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Agency makes the finding that the issuance of the debt will not impact the Agency's ability to make the statutory payments. The Agency has made the appropriate findings, and therefore GRC has assumed that these payments are subordinated to bond indebtedness accordingly. VIII. Development Activities A. Future Projects New development is one of the primary sources of increased assessed property values above the 2% annual inflation factor. Within the Project Area there exists a 23 acre vacant site located at the northwest corner of Grove and Rush Streets. This property is current under the ownership of Southern California Edison. Southern California Edison has reached an agreement to sell this property to Wal-Mart for a price of $10,500,000. This transaction would result in an increase in tax increment revenues available for debt service of approximately $73,302. GRC has not included an increased in projected assessed value to reflect increased assessed value associated with resell of this property. Additionally, if the property is eventually privately developed, this could result in a substantial increase in assessed value. GRC has not included increases in assessed value for future development in our projections. IX. Trended Taxable Value Growth Growth in real property land and improvement values have been limited to an assumed rate of growth of real property taxable values of two percent annually as allowed under Article XIIIA of the state Constitution. A two percent growth rate has been assumed because it is the maximum inflationary growth rate permitted by law and this rate of growth has been realized in all but four years since 1981. The years in which less than two percent growth was realized were 1983-84 (1.0%), 1995-96 (1.19%), 1996-97 (1.11%) and 1999-00 (1.85%). In addition, the State Board of Equalization has directed county assessors to use an inflation adjustment of 1.867% in 11 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 preparing the 2004-05 assessment rolls. Should the future growth of taxable value in the project areas be less than two percent, the resultant Gross Tax Increment Revenues would be reduced proportionately. Future values will also be impacted by changes of ownership and new construction not reflected in our projections. In addition, the values of property previously reduced in value due to assessment appeals based on reduced market values could increase more than two percent when real estate values increase more than two percent (fee Section M.F above). Seismic activity and environmental conditions such as hazardous substances are not anticipated in this report and might also impact property taxes and Tax Increment Revenue. GRC Associates makes no representation that taxable values will actually grow at the rate projected. 12 Table 1 Rosemead Redevelopment Project Area No.1 Projection of Tax Increment Revenue (000's Omitted) Taxable Values (1) 2005106 2006107 2007108 2008109 2009110 2010111 2011112 20121`13 2013114 2014115 Land 203,769 207,845 212,002 216,242 220,566 224,978 229,477 234,067 238,748 243 523 Improvements 156,696 159,830 163,026 166,287 169,612 173,005 176,465 179,994 183,594 , 187 266 Less Exemptions -5,362 -5,469 -5,579 -5,690 5,804 -5,920 -6,039 5,159 -6,282 , -6 408 Personal Property (2) 15,560 15,560 15,560 15,560 15,560 15,560 15,560 15,560 15,560 , 15 560 Total Protected Taxable Value 370,663 377,765 385,009 392,398 399,935 407,622 415,463 423,46L. , 431,619 , 439,941 Taxable Value over Base 345,500 352,602 359,846 367,235 374,772 382,459 390,301 398,299 406,457 414,778 Tax Increment (3) 3,473 3,544 3,617 3,691 3,767 3,844 3,923 4,004 4,086 4,169 Unitary Tax Revenue (4) 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 Adjusted Gross Revenues 4,646 4,718 4,791 4,865 4,941 5,018 5,097 5,177 5,259 5,343 LESS: Housing Set Aside Requirement (5) (460) (474) (489) (504) (519) (534) (550) (566) (583) (599) SB 2557 Admin. Fee (6) (71) (72) (73) (74) (75) (76) (78) (79) (80) (81) Pass Throughs Fire Department (7) (790) (802) (815) (828) (840) (854) (867) (881) (895) (909) Pledged Revenues (8) 3,325 3,369 3,414 3,459 3,506 3,553 3,602 3,651 3,702 3,753 Subordinated Pass Throughs SB 211 Statutory Pass-Through(9) (103) (115) (127) (139) (152) (164) (177) (191) (204) (230) Footnotes For Table 1 (1) Taxable values as reported by Los Angeles for the 2005-2006 fiscal year. Projections inflate Land, Improvements and Exemptions 2% per year. The 2005 improvement value has been decreased by $84,718 to reflect potential losses due to appeals. See Table 4 for details. (2) Personal property is held constant at 2005-06 level. (3) Projected Gross Tax Increment is based upon incremental taxable values factored against an assumed project tax rate and adjusted for indebtedness approved by voters prior to 1988. The assumed future tax rates remain at $1.00604 per $100 of taxable value as reported by Los Angeles Auditor Controller. According to the redevelopment plan, the last day to receive tax increment is June 2023. (4) Unitary tax amount as reported by Los Angeles County. Unitary tax is held constant at 2004-2005 level. (5) Housing Set aside requirement is calculated at 20% of Adjusted Gross Revenue. In 1991, the Agency pre-paid $6.8 million from proceeds from its 1987 tax allocation notes. This pre-payment was restructured in 1993 along with the 1993 series tax allocation bands. These actions have resulted in a decrease of $469,142 on annual housing set-aside requirement until fiscal year 2021-22. This decrease has been reflected in the projections. (6) Los Angeles County Administration Fee is estimated at 1.52% of Gross Revenue based on actual 2004/05 (7) The Los Angeles County Fire Department recieves 17.01 % of gross tax increment pursuant to an agreement with the Agency. (8) Pledged revenues represent revenues available for debt service. (9) The time limit to incur debt was extended pursuant to SB 211. Statutory pass throughs to agencies that do not have a current tax sharing agreement began 20042005 at a rate of 20% of incremental growth from base year 2003-2004. An additional pass through will begin in 20142015 at 16.8% of incremental growth. These taxing agencies receive a combined share of 82.99% of general levy property tax. This assumes the City of Rosemead has elected to receive a pass-through under SB211. 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Cc U c m m m rn CL c a m w O c J m m U m co H v N (THIS PAGE INTENTIONALLY LEFT BLAND APPENDIX B FORM OF OPINION OF BOND COUNSEL Upon the issuance and sale of the Series 2006A Bonds, Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, proposes to render its final approving opinion with respect to the Series 2006A Bonds in substantially the following form: [Date of Delivery] Rosemead Community Development Commission Rosemead, California Re: Rosemead Community Development Commission (Los Angeles County, California) Redevelopment Project Area No. 1 Tax Allocation Bonds Series 2006A (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Rosemead Community Development Commission (the "Commission") of $ aggregate principal amount of bonds designated Rosemead Community Development Commission (Los Angeles County, California) Redevelopment Project Area No. 1 Tax Allocation Bonds Series 2006A (the 'Bonds"), issued pursuant to the provisions of the Community Redevelopment Law of the State of California (being Part I of Division 24 of the Health and Safety Code of the State of California), as amended, and a Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement to Indenture," together with the Original Indenture, the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate of the Commission, dated the date hereof (the "Tax Certificate"), opinions of counsel to the Commission, the Trustee, certificates of the Commission, the Trustee, and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, the defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions 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 B-1 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. Our engagement with respect to the Bonds has concluded with their issuance, 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 Commission. 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 second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture 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 Bonds 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 Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, 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 redevelopment agencies in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds 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: The Bonds constitute valid and binding limited obligations of the Commission. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Commission. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Pledged Tax Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and upon the terms and conditions set forth in the Indenture. 3. The Bonds are not a lien or charge upon the funds or property of the Commission except to the extent of the aforementioned pledge. Neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Commission. B-2 4. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds 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 ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, B ERRINGTON & SUTCLIFFE LLP Per B-3 OMM PAGE INTENTIONALLY LEFT BLANK) APPENDIX C DTC AND BOOK-ENTRY ONLY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Series 2006A Bonds, payment of principal of and interest on the Series 2006A Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Series 2006A Bonds, and other Series 2006A Bonds-related transactions by and-between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the Commission believes to be reliable, but the Commission takes no responsibility for the completeness or accuracy thereof The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Bonds"). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for the Bonds in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information on such websites is not incorporated herein by such reference or otherwise. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in tam to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on C-1 behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect-only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Commission or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission 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 securities depository with respect to the Bonds at any time by giving reasonable notice to the Commission or the Trustee. Under such circumstances, in the C-2 event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The Commission may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. The information herein concerning DTC and DTC's book-entry system has been-obtained from sources that the Commission believes to be reliable, but the Commission takes no responsibility for the accuracy thereof. C-3 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D DEFINITIONS AND SUMMARY OF INDENTURE The following is a brief summary of certain provisions of the Indenture and not otherwise summarized m the text of this Official Statement under the headings "THE SERIES 2006A BONDS" and "SECURITY FOR THE SERIES 2006A BONDS " This summary does not purport to be comprehensive or definitive and is subject to all of the terms and provisions of the Indenture in its entirety, to which reference is made for the detailed provisions thereof. DEFINITIONS Unless the context otherwise requires, the terms defined in this section shall for all purposes of the Indenture and of any certificate, opinion or other document mentioned in such document or in the Indenture, have the meanings specified in the Indenture. Annual Debt Service; Average Annual Debt Service; Maximum Annual Debt Service The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Tenn Bonds, if any, are redeemed from the Sinking Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year. "Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from amounts constituting capitalized interest or (b) principal and interest allocable to that portion of the proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a Supplemental Indenture, provided that (i) projected interest earnings on such proceeds, plus such amounts, if any, deposited by the Commission in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from escrow, insofar as they relate to Pledged Tax Revenue coverage and satisfaction of the Reserve Account Requirement, are substantially similar to those for the issuance of Additional Bonds. The term "Average Annual Debt Service" means the average Bond Year Annual Debt Service over all Bond Years. The term "Maximum Annual Debt Service" means the largest Annual Debt Service during the period from the date of such determination through the final maturity date of any Outstanding Bonds. Ambac Assurance The term "Ambac Assurance" means Ambac Assurance Corporation, a Wisconsin domiciled stock insurance company. Authorized Investments The term "Authorized Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: A. 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 TGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. D-1 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 of fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations 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 and written confirmation thereof is provided by the Commission to the Trustee): 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. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior Debt obligations 5. Resolution Funding Corp. (REFCORP) obligations D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of AAAm G, AAAm, or AAm. D-2 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. The collateral must be held by a third party and the Owners must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits, with a maximum term of one year, issued by any United States bank or trust company whose long-term obligations are rated "A+" or better by S&P or "A-1" or better by Moody's and whose short-term obligations are rated "Al" or better by S&P or "P-1" or better by Moody's. G. Investment Agreements, including guaranteed investment contracts, acceptable to the Bond Insurer. H. Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's or "A-1" or better by S&P. 1. Bonds or notes issued by any state or municipality which are rated by Moody's or S&P in one of the two highest rating categories assigned by such agencies. I Federal funds or banks acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - 1" and "A3" or better by Moody's and "Al" and "A" or better by S&P. K. Repurchase agreements, acceptable to the Bond Insurer, providing for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee 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 Trustee in exchange for the securities at a specified date. Repurchase agreements must satisfy the following criteria or be approved by the Bond Insurer. 1. Repurchase Agreements must be between the municipal entity or Trustee and a dealer bank or securities firm (a) Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody's, or (b) Banks rated "A" or above by S&P and Moody's. 2. Each repurchase agreement contract must be in writing and 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 & FMAC) (b) The term of each repurchase agreement 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 D-3 (1) The securities must be valued weekly, marked to market at current market price plus accrued interest. (a) 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 repurchase agreement, plus accrued interest. If, however, the securities used as collateral are FNMA or FMAC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the municipal entity or Trustee to the effect that the repurchase agreement meets guidelines under state law for legal investment or public funds. L. Any state-administered pool investment fund in which the issuer is statutorily permitted or required to invest and which will accept deposits and withdrawals directly from the Trustee; provided, that such investment is held in the name or to the credit of the Trustee. M. Shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, as it may be amended; provided that such shares are held in the name and to the credit of the Trustee. Authorized Representative The term "Authorized Representative" means the Chair, the Executive Director, the Treasurer of the Commission, or any other officer of the Commission duly authorized. Bonds, Series 1993A Bonds, Series 1993B Bonds, Series 1993 Bonds, Series 2006A Bonds, Additional Bonds, Serial Bonds, Term Bonds The term "Bonds" means the Series 1993 Bonds, Series 2006A Bonds and all Additional Bonds. The term "Series 1993 Bonds" means the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A, issued pursuant to the Indenture. The term "Series 2006A Bonds" means the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A. The term "Additional Bonds" means all tax allocation bonds of the Commission authorized and executed pursuant to the Indenture and issued and delivered in accordance with the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS." The term "Serial Bonds" means Bonds for which no mandatory sinking account payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from mandatory sinking account payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bond Insurance Policy The term "Bond Insurance Policy" means, the municipal bond insurance policy, if any, issued by the applicable Bond Insurer and guaranteeing, in whole or in part, the payment of principal of and interest on a Series of Bonds, and means with respect to the Series 2006A Bonds, the Financial Guaranty Insurance Policy. D-4 Bond Insurer The tern "Bond Insurer" means with respect to Series 2006A Bonds, Ambac Assurance. Bond Year The term "Bond Year" means (i) with respect to the initial Bond Year, the period extending from the date the Series 1993 Bonds are originally delivered to and including October 1, 1994, and (ii) thereafteF each successive twelve-month period. Notwithstanding the foregoing, the term Bond Year as used in the Tax Certificate is defined in the manner set forth in the Tax Certificate. Book Entry Bonds The term "Book Entry Bonds" means Bonds of any Series registered in the name of the Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of the Indenture. Business Day The term "Business Day" has the meaning set forth in this Appendix D under the caption "MISCELLANEOUS - Business Days." Certificate of the Commission The term "Certificate of the Commission" means an instrument in writing signed by the Chair or Vice Chair of the Commission, or by the Treasurer of the Commission, or by any other officer of the Commission duly authorized by the Commission for that purpose. City The term "City" means the City of Rosemead, California. Code The term "Code" means the Internal Revenue Code of 1986, and any regulations promulgated thereunder. Commission The term "Commission" means the Rosemead Community Development Commission, formerly known as the Rosemead Redevelopment Agency, a pubic body, corporate and politic, duly organized and existing under and pursuant to the Law. References to the Agency in the Original Indenture shall mean the Commission. Commission Indebtedness The term "Commission Indebtedness" means any obligation the payment of which is to be made in whole or in part (but if in part, only to the extent of that part) out of taxes allocated to the Commission pursuant to Section 33670 of the Law. For purposes of determining compliance with the covenant contained in the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS - Limit on Indebtedness" the following assumptions shall apply: (i) the principal and interest remaining to be paid on Commission Indebtedness shall include only such amounts as are scheduled to be paid by the Commission pursuant to the terms of the loan or other form of agreement under which such Commission Indebtedness was incurred. Commission Indebtedness without a stated maturity shall be deemed to mature on the final maturity date of the Bonds. D-5 (ii) Amounts scheduled to be paid by the Commission shall include regularly scheduled principal and interest payments, including, amounts payable pursuant to any mandatory redemption provision. (iii) Commission Indebtedness bearing interest at a variable rate of interest shall be deemed to accrue interest at the lesser of the maximum rate specified or 12% per annum. Consultant's Report The term "Consultant's Report" means a report signed by an Independent Financial Consultant or an Independent Redevelopment Consultant, as may be appropriate to the subject of the report, and including: (1) a statement that the person or firm making or giving such report has read the pertinent provisions of the Indenture to which such report relates; (2) a brief statement as to the nature and scope of the examination or investigation upon which the report is based; and (3) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said Independent Financial Consultant or Independent Redevelopment Consultant to express an informed opinion with respect to the subject matter referred to in the report. County Agreement The term "County Agreement" means that certain agreement for reimbursement of tax increment funds by and among the Commission, the County of Los Angeles, the Consolidated Fire Protection District and the Los Angeles County Public Library. Dated Date The term "Dated Date" means, with respect to any Series of Bonds, the dated date of such Bonds as specified in the Supplemental Indenture establishing such Series of Bonds, or, with respect to Series 2006A Bonds the date of initial issuance and delivery thereof. Depository The term "Depository" means the securities depository acting as Depository pursuant to the Indenture. DTC The term "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. Federal Securities The term "Federal Securities" means noncallable securities described in paragraphs (A) and (B) of the definition of Authorized Investments as and to the extent that such securities are eligible for the legal investment of Commission funds. Financial Guaranty Insurance Policy The term "Financial Guaranty Insurance Policy" means the financial guaranty insurance policy issued by Ambac Assurance insuring the payment when due of the principal of and interest on the Obligations as provided therein. D-6 First Supplement to indenture The term "First Supplement to Indenture" means the First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as trustee. Fiscal Year The term "Fiscal Year" means the period commencing on July 1 of each year and terminating on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the Commission as its Fiscal Year in accordance with the Law and identified in writing to the Trustee. Housing Fund The term "Housing Fund" means the Low and Moderate Income Housing Fund, established pursuant to Section 33334.3 of the Law with respect to the Project Area and held by the Commission. Indenture The term "Indenture" means the Indenture, dated as of October 1, 1993, by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee, as amended and supplemented by the First Supplement to Indenture and all Supplemental Indentures. Independent Certified Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the Commission, and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other audits of the books of or reports to the Commission. Independent Financial Consultant The term "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the Commission and satisfactory to and approved by the Trustee (which shall be under no liability by reason of such approval) and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other reports to the Commission. D-7 Independent Redevelopment Consultant The term "Independent Redevelopment Consultant" means a consultant or firm of such consultants generally recognized to be well qualified.in the field of consulting relating to tax allocation bond financing by California redevelopment agencies, appointed and paid by the Commission, and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other reports to the Commission. Information Services The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and S&P "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or to such other addresses and/or such other services providing information with respect to called bonds as the Commission may designate to the Trustee in writing. Interest Payment Date The term "Interest Payment Date" means each April 1 or October 1 on which interest on any Series of Bonds is scheduled to be paid. Investment Agreement The term "Investment Agreement" means an investment agreement or guaranteed investment contract by and between the Trustee and a national or state chartered bank or savings and loan institution (including the Trustee) or other financial institution or insurance company, respecting the investment of moneys in certain funds or accounts established pursuant to the Indenture; provided that, at the time of execution thereof, any such bank, institution, or company has unsecured debt obligations or claims-paying ability rated in one of the two highest rating categories by Moody's and S&P; and provided, further, that the Commission shall provide written notice to Moody's and S&P at least 15 days prior to entering into an Investment Agreement, together with a copy of the proposed form of such agreement. Law The term "Law" means the Community Redevelopment Law of the State of California (being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended), and all laws amendatory thereof or supplemental thereto. Letter of Representations The term "Letter of Representations" means the letter of the Commission and the Trustee delivered to and accepted by the Depository on or prior to the issuance of a Series of Book Entry Bonds setting forth the basis on which the Depository serves as depository for such Book Entry Bonds, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository. Moody's The term "Moody's" means Moody's Investors Service D-8 Nominee The term "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to the Indenture. Outstanding The term "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds") all Bonds except (1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning set forth in this Appendix D under the caption "DEFEASANCE - Discharge of Indebtedness"; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Commission pursuant to the Indenture. Owner The term "Owner" means the registered owner of any Outstanding Bond. Participants The term "Participants" means those broker dealers, banks and other financial institutions from time to time for which the Depository holds Book Entry Bonds as securities depository. Pledged Tax Revenues The term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Principal Payment Date The term "Principal Payment Date" means any date on which principal of any Series of Bonds is scheduled to be paid, which dates shall be as set forth in the Indenture. Project The term "Project" means the undertaking of the Commission pursuant to the Redevelopment Plan and the Law for the redevelopment of the Project Area. D-9 Project Area The term "Project Area" means the project area described in the Redevelopment Plan, known as the Redevelopment Project Area No. 1. Qualified Reserve Instrument The term "Qualified Reserve Instrument" means a letter of credit meeting the requirements of the Indenture as set forth in paragraph (4) (b) in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund" or an insurance policy meeting the requirements of the Indenture as set forth in paragraph (4) (c) in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund." Record Date The term "Record Date" means the 15th day of the month next preceding each Interest Payment Date. Redevelopment Plan The term "Redevelopment Plan" means the Redevelopment Plan for Redevelopment Project Area No. 1, adopted and approved as the Official Redevelopment Plan for the Project Area by Ordinance No. 340 duly adopted by the City Council of the City on July 27, 1972, as amended on January 8, 1987 by Ordinance No. 592, together with all amendments thereof or supplements thereto hereafter made in accordance with the Law. Reserve Account Requirement The term "Reserve Account Requirement" means, as of any calculation date, an amount equal to the least of (i) ten percent (10%) of the amount (within the meaning of Section 148 of the Code), as certified by the Commission to the Trustee, of that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average Annual Debt Service of such Bonds or (iii) Maximum Annual Debt Service of such Bonds; provided, that for the purposes of such calculations, there shall be excluded an amount of Bonds or debt service thereon equal to the amount deposited in any escrow fund established pursuant to the Indenture as set forth in paragraph (c) (ii) in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS - Conditions for the Issuance of Additional Bonds." S&P The term "S&P" means Standard & Poor's Corporation. Securities Depositories The term "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 277 4039 or 4190; Midwest Securities Trust Company, Capital Structures Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663 2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex (215) 496 5058; or to such other addresses and/or such other securities depositories as the Commission may designate to the Trustee in writing. Series The term "Series," when used with reference to the Bonds, means all of the Bonds authenticated and delivered on original issuance and identified pursuant to the Indenture or a Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture. D-10 Series 2006A Bonds The term "Series 2006A Bonds" means the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A. Sinking Account Installment The term "Sinking Account Installment" means the amount of money required by or pursuant to the Indenture to be paid by the Commission on any single date toward the retirement of any particular Term Bonds of any particular Series on or prior to their respective stated maturities. Sinking Account Payment Date The term "Sinking Account Payment Date" means any date on which Sinking Account Installments on any Series of Bonds are scheduled to be paid. Supplemental Indenture The term "Supplemental Indenture" means any indenture then in full force and effect which has been entered into by the Commission and the Trustee, amendatory of or supplemental to the Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indenture. Surety Bond The term "Surety Bond" means the surety bond issued by Ambac Assurance guaranteeing certain payments into the Reserve Account with respect to the Bonds as provided therein and subject to the limitations set forth therein. Tax Certificate The term "Tax Certificate" means the Tax Certificate dated the date of the original delivery of each Series of Bonds (except any Series of Bonds which the Commission shall certify to the Trustee is not intended to meet the requirements for tax exemption under the Code) relating to the requirements of certain provisions of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terns thereof. Trustee The term "Trustee" means such trustee at its corporate trust office in Los Angeles, California, as may be appointed by the Commission and acting as an independent trustee with the duties and powers provided under the Indenture, and its successors and assigns, or any other corporation or association which may at any time be substituted in its place, as provided under the Indenture. Written Request of the Commission The term "Written Request of the Commission" means an instrument in writing signed by the Chair, the Executive Director or Treasurer of the Commission or by any other officer of the Commission duly authorized by the Commission for that purpose. THE BONDS; SERIES 1993 BOND PROVISIONS Execution of Bonds. The Chair of the Commission is authorized and directed to execute each of the Bonds on behalf of the Commission and the Secretary of the Commission is authorized and directed to attest each of the Bonds on behalf of the Commission. Any of the signatures of said Chair or said Secretary may be by printed, lithographed or engraved facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless D-11 be valid and sufficient for all purposes the same as though such officer had remained in office until such delivery of the Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication and registration in the form hereinbefore recited, executed and dated by the Trustee, shall be entitled to any benefits under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so registered have been duly issued and delivered under the Indenture and are entitled to the benefits of the Indenture. Transfer and Registration of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept by the Trustee pursuant to the Indenture, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for transfer, the Commission shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds 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. The Commission shall not be required to register the transfer of or exchange any Bond during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have been selected for redemption. Exchange of Bonds. The Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds of the same maturity 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. No such exchange shall be required to be made during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or of any Bonds which have been selected for redemption. Bond Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Commission during regular business hours with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds on said books as hereinbefore provided. Mutilated. Destroyed. Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of the body of such Bond, or shall be believed by the Commission to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of such mutilated Bond at the office of the Trustee, or upon the receipt of evidence satisfactory to the Trustee of such destruction, theft or loss, and upon receipt also of indemnity satisfactory to the Commission and the Trustee, and upon payment of all expenses incurred by the Commission and the Trustee in the premises, the Commission shall execute (manually or by facsimile) and the Trustee shall authenticate and deliver at said office a new Bond or Bonds of the same maturity and for the same aggregate principal amount, of like Series, tenor and date, with such notations as the Commission shall determine, in exchange and substitution for and upon cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the Trustee and the Commission of like proof, indemnity and payment of expenses. Any such replacement Bonds issued pursuant to this section shall be entitled to equal and proportionate benefits with all other Bonds issued under the Indenture. The Commission and the Trustee shall not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued under the Indenture or for the purpose of determining any D-12 percentage of Bonds Outstanding under the Indenture, but both the original and replacement Bond shall be treated as one and the same. Temporary Bonds. Until definitive Bonds shall be prepared, the Commission may cause to be executed and delivered in lieu of such definitive Bonds and subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the Commission, one or more temporary typed, printed, lithographed or engraved Bonds in fully registered form, as may be authorized by the Commission, substantially of the same tenor and, until exchange for definitive Bonds, entitled and subject to the same benefits and provisions of the Indenture as definitive Bonds. If the Commission issues temporary Bonds, it will execute and furnish definitive Bonds without unnecessary delay and thereupon the temporary Bonds may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for such definitive Bonds. All temporary Bonds so surrendered shall be canceled by the Trustee and shall not be reissued. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken by the Commission for the financing or refinancing of the Project, or by any contracts made by the Commission in connection therewith, and shall not be dependent upon the completion of the financing or refinancing of the Project or upon the performance by any person of his obligation with respect to the Project, and the recital contained in the Bonds that the same are issued pursuant to the Law shall be conclusive evidence of their validity and of the regularity of their issuance. Book Entry System. Prior to the issuance of any Series of Bonds issued under the Indenture, the Commission may provide that such Series of Bonds shall be initially issued as Book Entry Bonds, and in such event, each maturity of such Series shall be in the form of a separate single fully registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond shall be registered in the bond register in the name of the Nominee, as nominee of the Depository. With respect to Book Entry Bonds, the Commission and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such Book Entry Bonds. Without limiting the immediately preceding sentence, the Commission and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in Book Entry Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the bond register, of any notice with respect to Book Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book Entry Bonds to be redeemed in the event the Commission redeems such in part, or (iv) the payment to any Participant or any other person, other than an Owner as shown in the bond register, of any amount with respect to principal of, premium, if any, or interest on Book Entry Bonds. The Commission and the Trustee may treat and consider the person in whose name each Book Entry Bond is registered in the bond register as the absolute Owner of such Book Entry Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owner, as shown in the bond register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Commission's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the bond register, shall receive a Bond evidencing the obligation of the Commission to make payments of principal, premium, if any, and interest pursuant to the Indenture. Upon delivery by the Depository to the Trustee and Commission of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions under the Indenture with respect to record dates, the word Nominee in the Indenture shall refer to such nominee of the Depository. In order to qualify the Book Entry Bonds for the Depository's book entry system, the Commission and the Trustee shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Commission or the Trustee any obligation whatsoever with respect to persons having interests in such Book Entry Bonds other than the Owners, as shown on the bond register. In addition to the execution and delivery of a Letter of Representations, the Commission and the D-13 Trustee shall take such other actions, not inconsistent with the Indenture, as are reasonably necessary to qualify Book Entry Bonds for the Depository's book entry program. In the event (i) the Depository determines not to continue to act as securities depository for any Series of Book Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Commission will discontinue the book entry system with the Depository. If the Commission determines to replace the Depository with another qualified securities depository, the Commission shall prepare or direct the preparation of a new single, separate, fully registered Bond for each of the maturities of such Book Entry Bonds, registered in the name of such successor or substitute qualified securities depository of its nominee. If the Commission fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in such bond register in the name of the Nominee, but shall be registered in whatever name or names Owners transferring or exchanging such Bonds shall designate, in accordance with provisions of the Indenture. Notwithstanding any other provision of the Indenture to the contrary, so long as any Book Entry Bond is registered in the name of the Nominee, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. ISSUANCE OF ADDITIONAL BONDS Conditions for the Issuance of Additional Bonds. The Commission may at any time after the issuance and delivery of the Series 2006A Bonds under the Indenture issue Additional Bonds payable from the Pledged Tax Revenues and secured by alien and charge upon the Pledged Tax Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture, but only subject to the following specific conditions, which are made conditions precedent to the issuance of any such Additional Bonds: (a) The Commission shall be in compliance with all covenants set forth in the Indenture and any Supplemental Indentures, and a Certificate of the Commission to that effect shall have been filed with the Trustee. (b) The issuance of such Additional Bonds shall have been duly authorized pursuant to the Law and all applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Indenture duly adopted by the Commission which shall specify the following: (1) The purpose for which such Additional Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing the Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the purpose of refunding any Bonds or other indebtedness related to the Project, including payment of all costs incidental to or connected with such refunding; (2) The authorized principal amount of such Additional Bonds; (3) The date and the maturity date or dates of such Additional Bonds; provided that (i) Principal and Sinking Account Payment Dates may occur only on Interest Payment Dates, (ii) all such Additional Bonds of like maturity and Series shall be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory Sinking Account Installments, or any combination thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their respective maturity dates; (4) The Interest Payment Dates, which shall be on the same semiannual dates as the Interest Payment Dates for the Series 1993 Bonds; provided, that such Additional Bonds may provide for compounding of interest in lieu of payment of interest on such dates; D-14 (5) The denomination and method of numbering of such Additional Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds; (7) The amount and due date of each mandatory Sinking Account Installment, if any, for such Additional Bonds; (8) The amount, if any, to be deposited from the proceeds of such Additional Bonds in the Interest Account; (9) The amount, if any, to be deposited from the proceeds of such Additional Bonds into the Reserve Account; provided that the amount on deposit in the Reserve Account shall be increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, which amount shall be maintained in the Reserve Account; (10) The form of such Additional Bonds; and (11) Such other provisions as may be necessary or appropriate and not inconsistent with the Indenture. (c) (i) The Pledged Tax Revenues based upon the assessed valuation of taxable property in the Project Area as shown on the most recently equalized assessment roll and the most recently established tax rates preceding the date of the Commission's adoption of the Supplemental Indenture providing for the issuance of such Additional Bonds shall be in an amount equal to at least one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all then Outstanding Bonds after giving effect to the issuance of such Additional Bonds, and any unsubordinated loans, advances or indebtedness payable from Pledged Tax Revenues pursuant to the Law. (ii) For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not include any Bonds the proceeds of which are deposited in an escrow fund held by an escrow agent, provided that the Supplemental Indenture authorizing issuance of such Additional Bonds shall provide that: (A) such proceeds shall be deposited or invested with or secured by an institution rated "AAA" by S&P and "Aaa" by Moody's at a rate of interest which, together with amounts made available by the Commission from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds; (B) moneys may be transferred from said escrow fund only if Pledged Tax Revenues for the next preceding fiscal year will be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Outstanding Bonds (exclusive of disqualified Bonds pursuant to the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds") less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer; and (C) Additional Bonds shall be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow period in such manner as may be determined by the Commission. (iii) For purposes of calculation of Pledged Tax Revenues pursuant to subsections (i) and (ii) above, the property tax rate shall be assumed to be the actual tax rate the year in which the calculation is made. (iv) Nothing contained in the Indenture shall limit the issuance of any tax allocation bonds of the Commission payable from the Pledged Tax Revenues and secured by a lien and charge on the Pledged Tax Revenues if, after the issuance and delivery of such tax allocation bonds, none of the Bonds theretofore issued under the Indenture will be Outstanding nor shall anything contained in the Indenture prohibit the issuance of any tax allocation bonds or other indebtedness by the Commission secured by a pledge of tax increment revenues (including Pledged Tax Revenues) subordinate to the pledge of Pledged Tax Revenues securing the Bonds. D-15 Procedure for the Issuance of Additional Bonds. All of the Additional Bonds shall be executed by the Commission for issuance under the Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee upon the Written Request of the Commission, but only upon receipt by the Trustee of the following documents or money or securities: (1) A certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds; (2) A Written Request of the Commission as to the delivery of such Additional Bonds; (3) An opinion of counsel of recognized standing in the field of law relating. to municipal bonds substantially to the effect that (a) the Commission has the right and power under the Law to execute and deliver the Supplemental Indenture thereto, and the Indenture and all such Supplemental Indentures have been duly executed and delivered by the Commission, are in full force and effect and are valid and binding upon the Commission in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights and similar qualifications); and (b) such Additional Bonds are valid and binding special obligations of the Commission, in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and are subject to the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures and the Law, and such Additional Bonds have been duly and validly issued in accordance with the Law and the Indenture and all such Supplemental Indentures; (4) A Certificate of the Commission containing such statements as may be reasonably necessary to show compliance with the requirements of the Indenture; and (5) Such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds. Limit on Indebtedness. The Commission covenants with the Owners of all of the Bonds at any time Outstanding that it will not enter into any Commission Indebtedness or make any expenditure payable from taxes allocated to the Commission under the Law the payments of which, together with payments theretofore made or to be made with respect to other Commission Indebtedness (including, but not limited to the Bonds) previously entered into by the Commission, would exceed the then effective limit on the amount of taxes which can be allocated to the Commission pursuant to the Law and the Redevelopment Plan. In furtherance of the covenant set forth in this section, the Commission will cause to be prepared and filed with the Trustee annually, within 180 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Gross Tax Increment (defined in the Indenture as, all monies allocated to the Commission pursuant to Section 33670 of the Law and the Redevelopment Plan, including amounts required to be deposited into the Low and Moderate Income Housing Fund, payments due under any tax sharing agreements (unless excluded from the Tax Increment Limitation, as defined in the Indenture) and payments received as subventions or payments in lieu of taxes) as of the end of such Fiscal Year. Based upon such audited financial statements, the Commission will prepare or cause to be prepared and filed with the Trustee and the Bond Insurer a pro forma statement demonstrating the future availability of sufficient tax increment revenues (within the existing limitation on the amount of Gross Tax Increment allocable and payable to the Commission under the Redevelopment Plan (the "Tax Increment Limitation")) to pay when due (i) Commission Indebtedness, (ii) the amount payable in the then current Fiscal Year included within the Tax Increment Limitation which are required by Section 33334.2 of the Redevelopment Law to be deposited in the Commission's Low and Moderate Income Housing Fund (the "Set-Aside Requirement"), and (iii) all amounts included within the Tax Increment Limitation which are payable pursuant to the pass-through agreements until the final maturity of the Bonds (the "Pass-Through Payments"). The audited financial statements and the pro forma statement shall be accompanied by a written certificate of the Commission stating that the Commission is in compliance with its obligations under the Indenture. The Trustee shall not be responsible for the review of such financial statements. The pro forma statement shall be prepared on or before March 1 of each year or as soon thereafter as practicable, commencing March 1, 2007, and shall set forth: D-16 (1) The difference between the Tax Increment Limitation less the total amount of Gross Tax Increment theretofore allocated to the Commission (the "Remaining Limitation Amount'); and (2) The principal and interest remaining to be paid on Commission Indebtedness, plus the Set-Aside Requirement and the Pass-Through Payments (collectively, the "Total Debt Service"). To the extent the Remaining Limitation Amount is less than 105% of the Total Debt Service, the pro forma statement shall set forth the principal amount of the Bonds (to the nearest integral multiple of $5,000) that must be retired in order for the Remaining Limitation Amount to be at least equal to 105% of the Total Debt Service (the "Prepayment Amount'). At the time the Remaining Limitation Amount is determined to be less than 105% of the Total Debt Service, the Commission shall notify the Trustee of the Prepayment Amount and transfer such Prepayment Amount to the Trustee for deposit in the Debt Service Fund. Such monies shall be used to redeem, prepay or defease the Bonds. Notwithstanding the above, if prior to any such redemption, prepayment or defeasance, a subsequent annual pro forma statement indicates that future Gross Tax Increment will be 105% or more of the Total Debt Service in each year such debt service is payable, the Commission may authorize the Trustee to transfer such Pledged Tax Revenues from the Debt Service Fund to the Special Fund. PLEDGED TAX REVENUES; CREATION OF FUNDS Pledge of Pledged Tax Revenues. All the Pledged Tax Revenues in the Special Fund, and all money in the Debt Service Fund and in the funds or accounts so specified and provided for in the Indenture, whether held by the Commission or the Trustee (except the Redevelopment Fund and the Rebate Fund), are irrevocably pledged to the punctual payment of the interest on and principal of the Bonds, and the Pledged Tax Revenues and such other money shall not be used for any other purpose while any of the Bonds remain Outstanding; subject to the provisions of the Indenture permitting application thereof for the purposes and on the terms and conditions in the Indenture. This pledge shall constitute a fast lien on the Pledged Tax Revenues and such other money for the payment of the Bonds in accordance with the terms thereof. Special Fund; Debt Service Fund• Receipt and Deposit of Pledged Tax Revenues. There is established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Special Fund" (herein the "Special Fund") which shall be held by the Commission. The Commission shall promptly deposit all of the Pledged Tax Revenues received in any Bond Year in the Special Fund, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into Debt Service Fund in such Bond Year pursuant to this section. All Pledged Tax Revenues received by the Commission during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding sentence shall be released from the pledge and lien under the Indenture and may be applied by the Commission for any lawful purposes of the Commission. So long as any Bonds remain Outstanding under the Indenture, the Commission shall not have any beneficial interest in or right to the moneys on deposit in the Special Fund, except as may be provided in the Indenture. There is established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Debt Service Fund" (herein the "Debt Service Fund") which shall be held by the Trustee. On or before five (5) days preceding each Interest Payment Date, the Commission shall transfer from the Special Fund to the Trustee for deposit in the Debt Service Fund an amount equal to the amount required to be transferred by the Trustee from the Debt Service Fund to the Interest Account, Principal Account, Sinking Account(s) and Reserve Account pursuant to the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund"; provided, that the Commission shall not be obligated to transfer to the Trustee in any Bond Year an amount of Pledged Tax Revenues which, together with other available amounts then in the Debt Service Fund, exceeds the amounts required to be transferred to the Trustee for deposit in the Interest Account, the Principal Account, the Sinking Account and the Reserve Account in such Bond Year, pursuant to the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund." There shall not be deposited with the Trustee any taxes eligible for allocation to the Commission for deposit in the Debt Service Fund in an amount in excess of that amount which, together with all D-17 money then on deposit with the Trustee in the Debt Service Fund and the accounts therein, shall be sufficient to discharge all Outstanding Bonds as set forth in this Appendix D under the caption "DEFEASANCE - Discharge of Indebtedness." All such Pledged Tax Revenues deposited in the Special Fund shall be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Commission. Establishment of Funds. In addition to the Special Fund and the Debt Service mod, there are further created a special trust fund to be held by the Commission called the "Rosemead Redevelopment Project No. 1 Redevelopment Fund" (the "Redevelopment Fund"), and a special trust fund to be held by the Trustee called the "Rosemead Redevelopment Project No. 1 Expense Fund" (the "Expense Fund"). So long as any of the Bonds authorized under the Indenture, or any interest thereon, remain unpaid, the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by the Indenture and the Law. Pursuant to the Tax Certificate, the funds and accounts established under the Indenture may be divided into sub accounts for each Series of Bonds issued under the Indenture, by the Commission or by the Trustee at the Commission's direction, in order to perform the necessary rebate calculations. Redevelopment Fund. Moneys in the Redevelopment Fund shall be used and disbursed in the manner provided by law for the purpose of aiding in financing or refinancing the Project (or for making reimbursements to the Commission for such costs theretofore paid by it), including payment of all costs incidental to or connected with such financing or refinancing. Any balance of money remaining in the Redevelopment Fund after the date of completion of the financing or refinancing of the Project may be used for any lawful purpose of the Commission. The Commission shall pay moneys from the Redevelopment Fund upon receipt of requisitions drawn thereon and signed by at least one duly authorized officer or member of the Commission. The Commission warrants that each withdrawal from the Redevelopment Fund shall be made in the manner provided by law for the purpose of aiding in financing or refinancing the Project or for making reimbursements to the Commission for such costs theretofore paid by the Commission. The Treasurer of the Commission shall establish and maintain an account within the Redevelopment Fund for each Series of Bonds issued under the Indenture known as the "Series Project Account" and all proceeds of each such Series of Bonds deposited in the Redevelopment Fund shall be held in the account established for such Series and shall be accounted for separately from all other amounts in the Redevelopment Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Redevelopment Fund. Expense Fund. All moneys in the Expense Fund shall be applied to the payment of costs and expenses incurred by the Commission in connection with the authorization, issuance and sale of the Bonds, including, without limitation, Trustee's fees and expenses and Trustee's legal fees and expenses, and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition executed by an Authorized Representative. Each such requisition shall be sequentially numbered and state the name and address of the person, firm or corporation to whom payment is due, the amount to be disbursed, the purposes for such disbursement and that such obligation has been properly incurred, is a proper charge against the Expense Fund and has not been the subject of any previous requisition. Upon the earlier of the payment in full of such costs and expenses or the making of adequate provision for the payment thereof, evidenced by a Certificate of the Commission to the Trustee or 180 days from the initial delivery of the Bonds to the original purchaser thereof, any balance remaining in such Fund shall be transferred to the Commission and deposited by the Commission in the Redevelopment Fund established under the Indenture, and pending such transfer and application, the moneys in such Fund may be invested as permitted by the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Investment of Moneys in Funds and Accounts"; provided, however, that investment income resulting from any such investment shall be retained in the Expense Fund. The Trustee shall establish and maintain an account within the Expense Fund for each series of Bonds issued under the Indenture known as the "Series Expense Account" and all proceeds of each such Series of Bonds deposited in the Expense Fund shall be held in the account established for such Series D-18 and shall be accounted for separately from all other amounts in the Expense Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Expense Fund. Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund. All moneys in the Debt Service Fund shall be set aside by the Trustee in each Bond Year when and as received in the following respective special accounts within the Debt Service Fund (each of which is created and each of which the Trustee covenants and agrees to cause to be maintained), in the following order of priority (except as otherwise provided in subsection (2) below): (1) Interest Account; (2) Principal Account; (3) Sinking Account; and (4) Reserve Account. All moneys 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. (1) Interest Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Interest Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on. the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (2) Principal Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Principal Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on the Principal Payment Date in such Bond Year. In the event that there shall be insufficient money in the Debt Service Fund to make in full all such principal payments and Sinking Account Installments required to be made pursuant to paragraph (3) below in such Bond Year, then the money available in the Debt Service Fund shall be applied pro rata to the making of such principal payments and such Sinking Account Installments in the proportion which all such principal payments and Sinking Account Installments bear to each other. No deposit need be made into the Principal Account if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds becoming due and payable on the Principal Payment Date in such Bond Year. All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds as they shall become due and payable. (3) Sinking Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to the Sinking Account Installment payable on the Sinking Account Payment Date in such Bond Year. All moneys in the Sinking Account shall be used by the Trustee to cause the Mandatory Sinking Fund Redemption of Tenn Bonds in accordance with the Indenture. (4) Reserve Account. (a) The Trustee shall set aside from the Debt Service Fund and deposit in the Reserve Account an amount of money (or other authorized deposit of security, as contemplated by the following paragraphs) equal to the Reserve Account Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing D-19 the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the Commission is lawfully available therefor, or for the retirement of all Bonds then Outstanding, except that for so long as the Commission is not in default under the Indenture, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon Written Request of the Commission, be withdrawn from the Reserve Account by the Trustee and transferred to the Commission. (b) In lieu of making the Reserve Account Requirement deposit in thelkeserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of a letter of credit satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P and Moody's, in an amount, together with moneys, Authorized Investments or insurance policies (as described in paragraph (c) below) on deposit in the Reserve Account, equal to the Reserve Account Requirement. Draws on such letter of credit must be payable no later than two (2) Business Days after presentation of a sight draft thereunder. Such letter of credit shall have a term of no less than three (3) years. The issuer of such letter of credit shall be required to notify the Trustee and the Commission whether or not the letter of credit will be extended no later than 13 months prior to the stated expiration date thereof. At least one year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year, or (iii) deliver to the Trustee an insurance policy satisfying the requirements of paragraph (c) below. Upon delivery of such replacement letter of credit, extended letter of credit, or insurance policy, the Trustee shall deliver the then effective letter of credit to or upon the order of the Commission. If the Commission shall fail to deposit a replacement letter of credit, extended letter of credit or insurance policy with the Trustee, the Commission shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Reserve Account Requirement is on deposit in the Reserve Account no later than the stated expiration date of the letter of credit. If the Commission shall fail to make such deposits, the Trustee shall draw on such letter of credit on or before 10 days prior to its stated expiration date in an amount necessary to replenish the Reserve Account to the Reserve Account Requirement. If a drawing is made on the letter of credit, the Commission shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of an insurance policy satisfying the requirements of paragraph (c) below or the deposit in the Reserve Account of an amount sufficient to increase the balance in the Reserve Account to the Reserve Account Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing. (c) In lieu of making the Reserve Account Requirement in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of an insurance policy satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may also deliver to the Trustee an insurance policy securing an amount, together with moneys, Authorized Investments or letters of credit (as described in paragraph (b) above) on deposit in the Reserve Account, no less than the Reserve Account Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of debt service on the Bonds and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies), at the time of such delivery, are rated in the highest rating category (without respect to any modifier) of A.M. Best & Company, S&P and Moody's. (d) If and to the extent that the Reserve Account has been funded with a combination of cash (or Authorized Investments) and a Qualified Reserve Instrument, then all such cash (or Authorized 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 Authorized Investments). If the Reserve Account is funded, in whole or in part, with more than D-20 one Qualified Reserve Instrument, then any draws made against such Qualified Reserve Instrument shall be made pro-rata. (5) Surplus. If during any Bond Year (i) Pledged Tax Revenues remain in the Debt Service Fund after providing (or otherwise reserving) for all deposits required by paragraphs (1) through (3) above during such Bond Year, (ii) the amounts on deposit in the Reserve Account equal the Reserve Account Requirement, (iii) Qualified Reserve Instruments, if any, used to fund the Reserve Account are fully replenished and all interest on amounts advanced under such Qualified Reserve Instruments has been paid to the provider thweof, and (iv) the Commission is not in default under the Indenture, then the Commission shall provide to the Trustee written certification thereof and the Trustee shall thereafter transfer any amount remaining on deposit in the Debt Service Fund to the Commission to be used for any lawful purpose of the Commission. Investment of Moneys in Funds and Accounts. Upon the Written Request of the Commission received by the Trustee at least two (2) Business Days prior to the date of such investment, moneys in the Debt Service Fund, the Interest Account, the Principal Account, any Sinking Account, the Expense Fund, the Rebate Fund or the Reserve Account shall be invested by the Trustee in Authorized Investments. In the absence of such instructions, the Trustee shall invest in the investments described in paragraph (D) of the definition of Authorized Investments, except as otherwise provided in this section. The obligations in which moneys in the Debt Service Fund, the Interest Account, the Principal Account or any Sinking Account are so invested shall mature prior to the date on which such moneys are estimated to be required to be paid out under the Indenture. The obligations in which moneys in the Reserve Account are so invested shall be in obligations maturing no more than five years from the date of purchase by the Trustee or on the final maturity date of the Bonds, whichever date is earlier; provided, however, that if an obligation may be redeemed by the Trustee at par on the Business Day prior to each Interest Payment Date during which such obligation is outstanding, such obligation may have any maturity. Any interest, income or profits from the deposits or investments of all funds (except the Special Fund, Redevelopment Fund, Expense Fund and Rebate Fund) and accounts shall be deposited in the Debt Service Fund. For purposes of determining the amount on deposit in any fund or account held under the Indenture, all Authorized Investments credited to such fund or account shall be valued monthly at the lower of cost or market (excluding accrued interest and brokerage commissions, if any). Except as otherwise provided in this section, Authorized Investments representing an investment of moneys attributable to any fund or account and all investment profits or losses thereon shall be deemed at all times to be a part of said fund or account. Absent negligence, bad faith or willful misconduct by the Trustee, the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this section. Amounts deposited in the Special Fund and the Redevelopment Fund may be invested in any investment permitted by law for Commission funds. All earnings on amounts in the Special Fund, Expense Fund and the Redevelopment Fund shall remain in such funds. The Trustee may act as principal or agent in the acquisition or disposition of investments under the Indenture. The Trustee may commingle moneys in any of the funds or accounts created under the Indenture for purposes of investment. The Commission acknowledges that notwithstanding regulations of the Comptroller of the Currency or other applicable regulatory authority having jurisdiction over the Trustee granting the Commission the right to receive brokerage confirmations of security transactions as they occur, the City agrees that the Trustee shall not send such confirmations to the Commission to the extent permitted by law. The Trustee shall furnish the Commission periodic cash transaction statements which include detail for all investment transactions made by the Trustee under the Indenture. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, the Indenture shall be deemed to be and shall constitute a contract between the Commission and the Trustee for the benefit of Owners from time to time of all Bonds issued under the Indenture and then Outstanding to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds authorized, executed, issued and delivered under the Indenture, subject to the agreements, conditions, covenants and provisions contained under the Indenture; and the agreements and covenants set forth in the Indenture to be performed on behalf of the D-21 Commission shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any Bonds over any other Bonds. COVENANTS OF THE COMMISSION Punctual Payment. The Commission will punctually pay the interest on and principal of and redemption premiums, if any, to become due with respect to the Bonds, but only from Pledged Tax Revenues, in strict conformity with the terms of the Bonds and of the Indenture and will faithfully satisfy, observe and perform all conditions, covenants and requirements of the Bonds and of the Indenture. Against Encumbrances. The Commission will not mortgage or otherwise encumber, pledge or place any charge upon any of the Pledged Tax Revenues, except as provided in the Indenture, and will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or in part from the Pledged Tax Revenues (other than Additional Bonds). Extension or Funding of Claims for Interest. In order to prevent any claims for interest after maturity, the Commission will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any Bonds and will not, directly or indirectly, be a party to or approve any such arrangements by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the Commission, such claim for interest so extended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Management and Operation of Properties. The Commission will manage and operate all properties owned by the Commission and comprising any part of the Project in a sound and business like manner and in conformity with all valid requirements of any governmental authority relative to the Project or any part thereof, and will keep such properties insured at all times in conformity with sound business practice. Payment of Claims. The Commission will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Commission or upon the Pledged Tax Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds; provided that nothing contained in the Indenture shall require the Commission to make any such payments so long as the Commission in good faith shall contest the validity of any such claims. Books and Accounts: Financial and Project Statements. The Commission will keep proper books of record and accounts, separate from all other records and accounts of the Commission, in which complete and correct entries shall be made of all transactions relating to the Project. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Bond Insurer or of the Owners of not less than ten per cent (109/6) of the aggregate principal amount of the Bonds then Outstanding or their representatives authorized in writing. The Commission will prepare and file with the Trustee and the Bond Insurer annually as soon as practicable, but in any event not later than one hundred eighty (180) days after the close of each Fiscal Year, so long as any Bonds are Outstanding, an audited financial statement relating to the Pledged Tax Revenues and all other funds or accounts established pursuant to the Indenture for the preceding Fiscal Year prepared by an Independent Certified Public Accountant, showing the balances in each such fund as of the beginning of such Fiscal Year and all deposits in and withdrawals from each such fund during such Fiscal Year and the balances in each such fund as of the end of such Fiscal Year, which audited financial statement shall include a statement as to the manner and extent to which the Commission and the Trustee have complied with the provisions of the Indenture as it relates to such funds. The Trustee, at the expense of the Commission, will furnish a copy of such audited financial statement to any Owner upon written request. The Trustee shall provide such statements with regard to any funds held by the Trustee under the Indenture to the Commission as the Commission may reasonably require to comply with the terms of this section. D-22 The Commission will permit the Bond Insurer to discuss the affairs, finances and accounts of the Commission or any other subject the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Commission. The Commission will permit the Bond Insurer to have access to and to make copies of all books and records relating to the Bonds at any reasonable time. The Bond Insurer shall have the right to direct an accounting at the Commission's expense, and the Commission's failure to comply with such direction within thirty (30) days after receipt of written notice of such direction from the Bond Insurer shall be deemed an Event of Default; provided, however, that if compliance cannot occur within such period, then such period shall be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any Owner. Protection of Security and Rights of Owners. The Commission will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any Bonds by the Commission, such Bonds shall be incontestable by the Commission. Payment of Taxes and Other Charges. The Commission will pay and discharge all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission or any properties owned by the Commission in the Project Area, or upon the revenues therefrom, when the same shall become due; provided that nothing contained in the Indenture shall require the Commission to make any such payments so long as the Commission in good faith shall contest the validity of any such taxes, service charges, assessments or other governmental charges. Financing the Project. The Commission will commence the financing or refinancing of the Project to be aided with the proceeds of the Bonds with all practicable dispatch, and such financing will be accomplished and completed in a sound, economical and expeditious manner and in conformity with the Redevelopment Plan and the Law so as to complete or refinance the Project as soon as possible. Taxation of Leased Property. Whenever any property in the Project is redeveloped by the Commission and thereafter is leased by the Commission to any person or persons, or whenever the Commission leases any real property in the Project to any person or persons for redevelopment, each property shall be assessed and taxed in the same manner as privately owned property (in accordance with the Law), and the lease or contract shall provide (1) that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of the leasehold interest, and (2) that if for any reason the taxes paid by the lessee on such property in any year during the term of the lease shall be less than the taxes that would have been payable upon the entire property if the property were assessed and taxed in the same manner as privately owned property, the lessee shall pay such difference to the Commission within thirty (30) days after the taxes for such year become payable, and in any event prior to the delinquency date of such taxes established by law, which such payments shall be treated as Pledged Tax Revenues and shall be deposited by the Commission in the Special Fund. Disposition of Property in Project Area. Except as provided below, the Commission will not authorize the disposition of any real property in the Project Area to anyone which will result in such property's becoming exempt from taxation because of public ownership or use or otherwise (except for public ownership or use contemplated by the Redevelopment Plan in effect on the date of execution and delivery of the Indenture, or property to be used for public streets or public off street parking facilities or easements or rights of way for public utilities, or other similar uses) if such dispositions, together with all similar prior dispositions on or subsequent to the effective date of the Indenture, shall comprise more than ten per cent (10%) of the land area in the Project Area. If the Commission proposes to make any such disposition which, together with all similar dispositions on or subsequent to the effective date of the Indenture, shall comprise more than ten per cent (10%) of the land area in the Project Area, it shall cause to be filed with the Trustee (i) written evidence of the consent of the Bond Insurer to such disposition and (ii) a Consultant's Report on the effect of such proposed disposition. If the Consultant's Report concludes that the Pledged Tax Revenues will not be materially reduced by such proposed disposition, the Commission may proceed with such proposed disposition. If the Consultant's Report concludes that Pledged Tax Revenues will be materially reduced by such proposed disposition, the Commission shall not proceed with such proposed disposition unless, as a condition precedent to such proposed disposition, the Commission shall require that such new owner or owners either: D-23 (1) Pay to the Commission, so long as any of the Bonds are Outstanding, an amount equal to the amount that would have been received by the Commission as Pledged Tax Revenues if such property were assessed and taxed in the same manner as privately owned non exempt property, which payment shall be made within thirty (30) days after taxes for each year would become payable to the taxing agencies for non exempt property and in any event prior to the delinquency date of such taxes established by law; or (2) Pay to the Commission a single sum equal to the amount estimated and certified to the Commission by an Independent Redevelopment Consultant to be receivable from taxes on such property from the date of such payment to the last maturity date of all Outstanding Bonds, less a reasonable discou-nt value. All such payments to the Commission in lieu of taxes shall be treated as Pledged Tax Revenues and shall be applied by the Commission as required by the Indenture. Amendment of Redevelopment Plan. If the Commission proposes to amend the Redevelopment Plan, it shall cause to be filed with the Trustee a Consultant's Report on the effect of such proposed amendment. If the Consultant's Report concludes that Pledged Tax Revenues will not be materially reduced by such proposed amendment, the Commission may adopt such amendment. If the Consultant's Report concludes that Pledged Tax Revenues will be materially reduced by such proposed amendment, the Commission shall not adopt such proposed amendment. The Trustee shall be entitled to rely upon any said report and shall have no duty to verify the information or statements set forth therein. Pledged Tax Revenues. The Commission shall comply with all requirements of the Law to insure the allocation and payment to it of the Pledged Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of Los Angeles County. Further Assurances. The Commission shall adopt, make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided under the Indenture. Tax Covenants: Rebate Fund. (a) In addition to the accounts created under the Indenture, the Trustee shall establish and maintain with respect to each Series of Bonds issued under the Indenture (other than any Series of Bonds which the Commission shall certify to the Trustee is exempt from the requirements of Section 148 of the Code related to rebate of arbitrage earnings) a fund separate from any other fund or account established and maintained under the Indenture designated as the "Series Rebate Fund" hereinafter in this section referred to as the "Rebate Fund." The provisions of this section shall apply separately to each Rebate Fund established for each Series of Bonds. Upon the written direction of the Commission, there shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of the Indenture relating to the pledge of Pledged Tax Revenues, the allocation of money in the Special Fund, the investments of money in any fund or account and the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this section and by the Tax Certificate (which is incorporated by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the Written Request of the Commission, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate. (b) The Commission shall not use or permit the use of any proceeds of Bonds or any funds of the Commission, directly or indirectly, to acquire any securities or obligations, and shall not take or permit to be taken any other action or actions, which would cause any Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements promulgated from time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as amended. The Commission shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Commission shall comply with all requirements of Sections 148 and 149(d) of D-24 the Code to the extent applicable to the Bonds. In the event that at any time the Commission is of the opinion that for purposes of this section it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Indenture, the Commission shall so instruct the Trustee under the Indenture in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. The Commission shall not use or permit the use of any proceeds of the Bonds or any funds of the Commission, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. (c) Notwithstanding any provisions of this section, if the Commission shall provide to the Trustee an opinion of nationally recognized bond counsel that any specified action required under this is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest with respect to the Bonds, the Trustee and the Commission may conclusively rely on such opinion in complying with the requirements of this section, and the covenants under the Indenture shall be deemed to be modified to that extent. (d) The provisions of this shall not apply to any Series of Bonds which the Commission shall certify to the Trustee is not intended to comply with the requirements of the Code necessary to make interest on such Series of Bonds excludable from gross income for federal tax purposes. Agreements with Other Taxing Agencies. So long as any Bonds are Outstanding, the Commission shall not enter into any agreement or amend any existing agreement with any other taxing agency entered into (i) pursuant to Section 33401 of the Law or (ii) which operates as a waiver of the Commission's right to receive Pledged Tax Revenues under the Redevelopment Plan, unless the Commission's obligations under such agreement are made expressly subordinate and junior to the Commission's obligations under the Indenture and the Bonds. Annual Review of Pledged Tax Revenues. The Commission covenants that it will annually review the total amount of Pledged Tax Revenues remaining available to be received by the Commission under the Redevelopment Plan's cumulative tax increment limitation, as well as future cumulative Annual Debt Service and estimated future fees and expenses of the Trustee. The Commission will not accept Pledged Tax Revenues greater than Annual Debt Service and estimated future fees and expenses, in any year, if such acceptance will cause the amount remaining under the tax increment limit to fall below remaining cumulative Annual Debt Service and estimated future fees and expenses of the Trustee, except for the purpose of depositing such revenues in escrow for the payment of interest on and principal of and redemption premiums, if any, on the Bonds. Continuing Disclosure. The Commission covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement executed by the Commission in connection with the issuance of the Series 2006A Bonds (the "Continuing Disclosure Agreement"). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default under the Indenture; provided, however, that the Trustee at the written direction of any underwriter or the Owners of at least 25% aggregate principal amount of Series 2006A Bonds, shall (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any Owner or beneficial owner of the Series 2006A Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. THE TRUSTEE Anuoint rent of Trustee. State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under and by virtue of the laws of the United States of America, is appointed Trustee by the Commission for the purpose of receiving all moneys required to be deposited with the Trustee under the Indenture and to allocate, use and apply the same as provided in the Indenture. The Commission agrees that it will maintain a Trustee having a corporate trust office in the State, with a combined capital and surplus, or a member of a bank holding company system the lead bank of which shall have a combined capital and surplus, of at least $50,000,000, and subject to supervision or examination by Federal or State authority, so long as any Bonds are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to D-25 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 is authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered by it and of all Bonds paid and discharged. Acceptance of Trusts. The Trustee accepts the trusts imposed upon it by the Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (b) Whenever in the administration of the Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action under the Indenture, the Trustee (unless other evidence is specifically prescribed under the Indenture) may, in the absence of bad faith on its part, rely upon a Certificate of the Commission. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Owners pursuant to the Indenture, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (e) The Trustee, prior to the occurrence of an Event of Default under the Indenture and after the curing or waiving of all such Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture and no covenants of or against the Trustee shall be implied in the Indenture. In case an Event of Default under the Indenture has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by the Indenture, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (0 The Trustee may execute any of the trusts or powers under the Indenture and perform the duties required of it under the Indenture either directly or by or through attorneys or agents, shall not be liable for the acts or omissions of such attorneys or agents appointed with due care, and shall be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture. The Trustee may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it under the Indenture. (g) The Trustee shall not be responsible for any recital under the Indenture or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued under the Indenture or intended to be secured under the Indenture and makes no representation as to the validity or sufficiency of the Bonds or the Indenture. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Commission under the Indenture. The Trustee shall not be responsible for the application by the Commission of the proceeds of the Bonds. (h) The Trustee may become the Owner or pledgee of Bonds with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Commission with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or D-26 directors to act as a member of, or in the capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (i) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to the Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of Bond by such person shall be reflected on the Registration Books. 0) The permissive right of the Trustee to do things enumerated in the Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (k) The Trustee shall not be required to take notice or to be deemed to have notice of any Event of Default under the Indenture except failure by the Commission to make any of the payments to the Trustee required to be made by the Commission pursuant hereto or failure by the Commission to file with the Trustee any document required by the Indenture to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default by the Commission or by the Owners of at least 25% in aggregate principal amount of the Bonds then Outstanding and all notice or other instruments required by the Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default under the Indenture except as aforesaid. 0) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers and records of the Commission pertaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (m) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises hereof. (n) Notwithstanding anything elsewhere in the Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of the Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Commission to the execution of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee. (o) All moneys received by the Trustee shall, until used or applied or invested as provided under the Indenture, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (p) Whether or not expressly provided therein, every provision of the Indenture relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this section. (q) No implied covenants or obligations shall be read into the Indenture against the Trustee. (r) Notwithstanding any other provision hereof, in determining whether the rights of the Owners will be adversely affected by and action taken or omitted under the Indenture, the Trustee shall consider the effect on the Owners as if there were no Bond Insurance Policy. D-27 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered under the Indenture and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default under the Indenture, but only upon any Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held under the Indenture for the foregoing fees, charges and expenses incurred by it. Notice to Bond Owners of Default. If an Event of Default under the Indenture occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in paragraph (k) under the section entitled "Acceptance of Trusts" above, then the Trustee shall, in addition to any notice required under the Indenture, within 30 days of the receipt of such notice, give written notice thereof by fast class mail to the Owner of each such Bond and to the Bond Insurer, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Commission to make any payment when due, the Trustee may elect not to give such notice to the Owners (but shall give such notice to the Bond Insurer) if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice. Intervention by Trustee. In any judicial proceeding to which the Commission is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to the terms of the Indenture as set forth hereinabove in paragraph (c) under the caption "Acceptance of Trusts," shall do so if requested in writing by the Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and the Bond Insurer or, in the case of breach by the Trustee of its obligations under the Indenture, by the Bond Insurer alone. The Commission may also remove the Trustee at any time, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth in the Indenture. Resignation by Trustee. The Trustee and any successor Trustee may at any time give prior written notice of its intention to resign as Trustee under the Indenture, such notice to be given to the Commission and the Bond Insurer by registered or certified mail. Upon receiving such notice of resignation, the Commission shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Commission shall cause notice thereof to be given by fast class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee as described in the paragraphs above, respectively, with the prior written consent of the Bond Insurer, the Commission shall promptly appoint a successor Trustee. In the event the Commission shall for any reason whatsoever fail to appoint a successor Trustee within 90 days following the delivery to the Trustee of the instrument as set forth above under the caption "Removal of Trustee" or within 90 days following the receipt of notice by the Commission as set forth above under the caption "Resignation by Trustee," the Trustee may, at the expense of the Commission, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of the Indenture. Any such successor Trustee appointed by such court shall become the successor Trustee under the Indenture notwithstanding any action by the Commission purporting to appoint a successor Trustee following the expiration of such 90 day period. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements of the Indenture, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything to the contrary under the Indenture notwithstanding. D-28 Concerning M Successor Trustee. Every successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to its predecessor and also to the Commission an instrument in writing accepting such appointment under the Indenture and thereupon such successor, without any further act, deed or conveyance, shall become fully vested. with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Written Request of the Commission, or of the Trustee's successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor under the Indenture; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee under the Indenture to its successor. Should any instrument in writing from the Commission be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties vested or intended to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Commission. Auuointment of Co Trustee. It is the purpose of the Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under the Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies granted under the Indenture to the Trustee or hold title to the properties, in trust, as granted under the Indenture, or take any other action that may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Commission appoint an additional individual or institution as a separate trustee or co trustee. The following provisions of this section are adopted to these ends. In the event that the Trustee or the Commission appoints an additional individual or institution as a separate trustee or co trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by the Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co trustee but only to the extent necessary to enable such separate trustee or co trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co trustee shall run to and be enforceable by either of them. Should any instrument in writing from the Commission be required by the separate trustee or co trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Commission. In case any separate trustee or co trustee, or a successor to either, shall become incapable of acting, shall resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co trustee. Limited Liability of Trustee. No provision in the Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability under the Indenture if it shall have reasonable grounds for believing repayment of such funds or adequate indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Bond Insurer or of the Owners of at least 25% in aggregate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under the Indenture or exercising any power conferred upon the Trustee under the Indenture. The Commission agrees to indemnify and hold harmless the Trustee for any loss or liability incurred by the Trustee not relating to its own negligence or willful misconduct. The obligations of the Commission under this section shall survive the resignation or removal of the Trustee under the Indenture. AMENDMENT OF THE INDENTURE Amendment Requirements. The Indenture and the rights and obligations of the Commission and of the Owners may be amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds," and the written consent of the Bond Insurer, if any, D-29 are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce the interest rate on, or otherwise alter or impair the obligation of the Commission to pay the interest or principal or redemption premium, if any, at the time and place and at the rate and in the currency provided under the Indenture of any Bond, without the express written consent of the Owner of such Bond, or (2) permit the creation by the Commission of any mortgage, pledge or lien upon the Pledged Tax Revenues superior to or on a parity with the pledge and lien created in the Indenture for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations of the Trustee without its prior written assent thereto. The Indenture and the rights and obligations of the Commission and of the Owners rriay also be amended at any time by a Supplemental Indenture which shall become binding upon execution, without the consent of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) To add to the covenants and agreements of the Commission in the Indenture contained, other covenants and agreements thereafter to be observed, or to surrender any right or power reserved under the Indenture to or conferred upon the Commission; (b) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in regard to questions arising under the Indenture, as the Commission may deem necessary or desirable and not inconsistent with the Indenture, and which shall not materially adversely affect the interest of the Owners; (c) To provide for the issuance of any Additional Bonds, and to provide the terms and conditions under which such Additional Bonds may be issued, subject to and in accordance with the provisions of the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS"; (d) To modify, amend or supplement the Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds; (e) To maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes (except with respect to any Bonds which the Commission certifies to the Trustee are not intended to qualify for such exclusion); (0 To the extent necessary to obtain a Bond Insurance Policy, to obtain a rating on the Bonds or in connection with satisfying all or a portion of the Reserve Account Requirement by crediting a Qualified Reserve Instrument to the Reserve Account; or (g) With the consent of the Bond Insurer, for any other purpose that does not materially adversely affect the interests of the Owners. Notwithstanding any other provision hereof, any provision of the Indenture expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer under the Indenture without the prior written consent of the Bond Insurer. A copy of any amendment of the Indenture which is consented to by the Bond Insurer shall be delivered by the Trustee to S&P as soon as practicable after the execution and delivery of such amendment. Disqualified Bonds. Bonds owned or held by or for the account of the Commission or the City shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds for such purposes in the Indenture provided for, and shall not be entitled to consent to, or take any other action in the Indenture provided for; provided, however, that for purposes of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held will be disregarded. D-30 Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Commission may determine that the Bonds may bear a notation, by endorsement in form approved by the Commission, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for such purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bond. If the Commission shall so determine, new Bonds so modified as, in the opinion of the Commission, shall be necessary to conform to such action shall be prepared and executed by the Trustee at the expense of the Commission, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the office of the Trustee or at such additional offices a~-the Trustee may select and designate for that purpose, without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. Opinion of Counsel. The Trustee may conclusively accept an opinion of nationally recognized bond counsel to the Commission that an amendment of the Indenture is in conformity with the provisions of this article. EVENTS OF DEFAULT AND REMEDIES OF OWNERS Events of Default and Acceleration of Maturities. If one or more of the following events (herein called "Events of Default") shall happen, that is to say: (a) If default shall be made in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) If default shall be made in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (c) If default shall be made by the Commission in the observance of any of the other agreements, conditions or covenants on its part in the Indenture or in the Bonds contained, and such default shall have continued for a period of 60 days after the Commission shall have been given notice in writing of such default by the Trustee; provided, however, that such default shall not constitute an Event of Default under the Indenture if the Commission shall commence to cure such default within said 60 day period and thereafter diligently and in good faith proceed to cure such default within a reasonable period of time; or (d) If the Commission shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Commission, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, 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 Commission 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, the Trustee may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, shall, by notice in writing to the Commission, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything under the Indenture or in the Bonds contained to the contrary notwithstanding; provided, however, that any such declaration shall be subject to the prior written consent of the Bond Insurer, if any. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall D-31 have been obtained or entered, the Commission shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest at the rate of interest which would have been paid on such overdue principal on such overdue installments of principal and interest, and the expenses of the Trustee, including attorneys fees, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds 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 Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Commission and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul si ch declaration and its consequences; provided, however, that no such rescission or annulment shall occur without the prior written consent of the Bond Insurer, if any. 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. Annlication of Funds Upon Acceleration. All money in the funds and accounts provided for under the Indenture upon the date of the declaration of acceleration by the Trustee as provided above under the caption "Events of Default and Acceleration of Maturities," and all Pledged Tax Revenues thereafter received by the Commission under the Indenture, shall be transmitted to the Trustee and shall be applied by the Trustee in the following order: First, to the payment of the costs, fees and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its agents and counsel, to the payment of any other amounts then due and payable to the Trustee, including any predecessor trustee, with respect to or in connection with the Indenture, whether as compensation, reimbursement, indemnification or otherwise, and to the payment of the costs and expenses of the Owners in providing for the declaration of such Event of Default, including reasonable compensation to their agents and counsel; Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on the overdue interest and principal at the rate of interest which would have been paid on such overdue principal, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal, ratably to the aggregate of such interest, principal and interest on overdue interest and principal; provided that the amounts in each subaccount of the Reserve Account shall be applied only to the payment of the Series of Bonds to which such subaccount relates. Other Remedies of Owners. Any Owner, subject to the conditions set forth below under the caption "Limitation on Owners' Right to Sue," shall have the right for the equal benefit and protection of all Owners similarly situated: (a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the Commission and any of the members, officers and employees of the Commission, and to compel the Commission or any such members, officers or employees to perform and carry out their duties under the Law and their agreements with the Owners as provided under the Indenture; (b) By suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owners; or (c) Upon the happening of an Event of Default (as deemed above under the caption "Events of Default and Acceleration of Maturities"), by a suit in equity to require the Commission and its members, officers and employees to account as the trustee of an express trust. Non Waiver. Nothing in this article or in any other provision of the Indenture, or in the Bonds, shall affect or impair the obligation of the Commission, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as provided under the Indenture, out of the Pledged Tax Revenues pledged for such payment, or affect or impair the right of action, which D-32 is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in the Indenture. A waiver of any default or breach of duty or contract by any Owner 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. No delay or omission by any Owner or the Trustee to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Law or by this article may be enforced aod exercised from time to time and as often as shall be deemed expedient by the Owners. If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the Trustee, the Commission and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Actions by Trustee as Attorney in Fact Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners, and the Trustee is appointed (and the successive respective Owners of the Bonds issued under the Indenture, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney in fact; provided, however, the Trustee shall have no duty or obligation to enforce any right or remedy unless it has been indemnified by the Owners from any liability or expense including without limitation fees and expenses of its attorneys. Remedies Not Exclusive. No remedy under the Indenture conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given under the Indenture 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 Law or any other law. Owners' Direction of Proceedings. Except as provided below under the caption "Bond Insurer's Direction of Proceedings," anything in the Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, with the written consent of the Bond Insurer, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee under the Indenture, provided that such direction shall not be otherwise than in accordance with law and the provisions of the Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction. Limitation on Owners' Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Indenture, the Law or any other applicable law with respect to such Bond, unless (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty five percent (259/6) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Owner or said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary directions from the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of D-33 Bonds, or to enforce any right under the Indenture, the Law or other applicable law with respect to the Bonds, except in the manner provided under the Indenture, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner provided under the Indenture and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of the Indenture. Bond Insurer's Direction of Proceedings. Notwithstanding any other provision hereof, so long as a Bond Insurance Policy is in effect with respect to any Series of Bonds, upon the occurrence and continuance of an Event of Default under the Indenture, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the Owners under theindenture, including, without limitation: (i) the right to accelerate the principal of the Bonds and (ii) the right to annul any declaration of acceleration, and the Bond Insurer shall also be entitled to approve all waivers of Events of Default. DEFEASANCE Discharge of Indebtedness. If the Commission shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, investments described in paragraphs A (except CATS and TGRS) or B (except items B(4) and B(6)) of the definition of Authorized Investments, in such amount as an Independent Certified Public Accountant or other qualified firm shall determine in a written report filed with the Trustee (upon which report the Trustee may conclusively rely) will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Written Request of the Commission, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the Commission under the Indenture with respect to all such Bonds, shall cease and terminate, except only (i) the obligation of the Commission to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, (ii) the obligation of the Commission to pay all expenses and costs of the Trustee and (iii) the obligations of the Commission to indemnify the Trustee pursuant to the Indenture. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to this section, which are not required for said purposes, shall be paid over to the Commission; provided, however, that (a) the Commission shall have delivered to the Trustee a Certificate of the Commission to the effect that: (i) the Commission is then in compliance with the provisions of the Indenture as set forth in this Appendix D under the caption "COVENANTS OF THE COMMISSION - Tax Covenants; Rebate Fund"; (ii) the Commission has irrevocably deposited with the Trustee such moneys, securities, documents and other things and issued such irrevocable instructions to the Trustee so that any remaining and continuing applicable requirements of the Code, with respect to the Bonds, from compliance with which the Commission has not theretofore been relieved under the provisions of this section are ministerial and reportorial in nature; and D-34 (iii) the Commission has irrevocably authorized the Trustee and/or another agent satisfactory to the Trustee, and delegated to the Trustee or such agent the authority, to perform such remaining and continuing applicable requirements on the Commission's behalf, and such Trustee has undertaken to do so; and provided, further, that (b) there shall have been delivered to the Trustee an opinion of nationally recognized bond counsel to the effect that, based upon the matters set forth in the Certificate of the Commission describes in (a) above and assuming compliance by the Trustee or such agent with its undertaking described in (a) (iii) above; no further action by or on the part of the Commission will be required under the applicable requirements of the Code to maintain the Federal income tax exclusion from gross income of the interest on the Bonds. Notwithstanding any other provision hereof, in the event that the principal of and/or interest on the Bonds shall be paid by the Bond Insurer pursuant to the Bond Insurance Policy, the Bonds shall remain Outstanding for all purposes, shall not be defeased or discharged under the Indenture and shall not be considered paid by the Commission, and the pledge of the Pledged Tax Revenues and all covenants, agreements and other obligations of the Commission to the Owners shall continue to exist and shall run to the benefit of the Bond Insurer and the Bond Insurer shall be subrogated to the rights of such Owners. In the event that the principal and/or interest due on the Series 2006A Bonds shall be paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy, the Series 2006A Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Commission, and the assignment and pledge created by the Indenture and all covenants, agreements and other obligations of the Commission to the registered owners shall continue to exist and shall run to the benefit of Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such registered owners, in each case to the extent of such payment. Unclaimed Moneys. Anything in the Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Commission, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Commission for the payment of such Bonds; provided, however, that before being required to make any such payment to the Commission, the Trustee shall, at the expense and upon the written Request of the Commission, cause to be mailed to the Owner of all such Bonds, at their respective addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Commission. ADDITIONAL PROVISIONS RELATING TO BOND INSURER AND SURETY BOND Payment Procedure Pursuant to the Financial Guaranty insurance Policy. As long as the Financial Guaranty Insurance Policy shall be in full force and effect, the Commission, the Trustee agrees to comply with the following provisions: (a) At least one (1) business day prior to all Interest Payment Dates the Trustee will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Bonds on such Interest Payment Date. If the Trustee determines that there will be insufficient funds in such Funds or Accounts, the Trustee shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee has not so notified Ambac Assurance at least one (1) business day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Series 2006A Bonds on or before the first (1st) business day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee. D-35 (b) the Trustee shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), the registration books of the Commission maintained by the Trustee and all records relating to the Funds and Accounts maintained under the Indenture. (c) the Trustee shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Series 2006A Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Frisurance Trustee (i) to mail checks or drafts to the registered owners of Series 2006A Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Series 2006A Bonds surrendered to the Insurance Trustee by the registered owners of Series 2006A Bonds entitled to receive full or partial principal payments from Ambac Assurance. (d) the Trustee shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Series 2006A Bonds entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Series 2006A Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds for payment thereon first to the Trustee who shall note on such Series 2006A Bonds the portion of the principal paid by the Trustee and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (e) in the event that the Trustee has notice that any payment of principal of or interest on an Series 2006A Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Commission has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee shall famish to Ambac Assurance its records evidencing the payments of principal of and interest on the Series 2006A Bonds which have been made by the Trustee and subsequently recovered from registered owners and the dates on which such payments were made. (f) in addition to those rights granted Ambac Assurance under the Indenture, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Series 2006A Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Series 2006A Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Trustee shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon surrender of the Series 2006A Bonds by the registered owners thereof together with proof of the payment of principal thereof. Payment Procedure Pursuant to the Surety Bond. As long as the Surety Bond shall be in full force and effect, the Commission and the Trustee, as appropriate, agree to comply with the following provisions: (a) In the event and to the extent that moneys on deposit in the Interest Account and the Principal Account or the Sinking Account, plus all amounts on deposit in and credited to the Reserve Account in excess of the amount of the Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the D-36 later of. (i) one (1) day after receipt by the General Counsel of Ambac Assurance of a demand for payment in the form attached to the Surety Bond as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment due under the Indenture has not been made to the Trustee; or (ii) the payment date of the Bonds as specified in the Demand for Payment presented by the Trustee to the General Counsel of Ambac Assurance, Ambac Assurance will make a deposit of funds in an account with the Trustee or its successor, in Los Angeles, California, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee under the Indenture (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Surety Bond; provided, however, that in the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the Surety Bond, includes amounts-available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. (b) the Trustee shall, after submitting to Ambac Assurance the Demand for Payment as provided in (a) above, make available to Ambac Assurance all records relating to the Funds and Accounts maintained under the Indenture. (c) the Trustee shall, upon receipt of moneys received from the draw on the Surety Bond, as specified in the Demand for Payment, credit the Reserve Account to the extent of moneys received pursuant to such Demand. (d) the Reserve Account shall be replenished in the following priority: (i) principal and interest on the Surety Bond and on any Additional Funding Instrument shall be paid from first available Pledged Tax Revenues on a pro rata basis; (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the Surety Bond and any Additional Funding Instrument shall be deposited from next available Pledged Tax Revenues. MISCELLANEOUS Liability of Commission Limited to Pledged Tax Revenues. Notwithstanding anything contained in the Indenture, the Commission shall not be required to advance any money derived from any source of income other than the Pledged Tax Revenues for the payment of the interest on or the principal of the Bonds or for the performance of any covenants contained in the Indenture, other than the covenants under the Indenture as set forth in this Appendix D under the caption "COVENANTS OF THE CON[ MISSION - Tax Covenants; Rebate Fund." The Commission may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. The Commission's obligation to pay the Rebate Requirement to the United States of America pursuant to the Indenture shall be considered the general obligation of the Commission and shall be payable from any available funds of the Commission. The Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal and redemption premium, if any, of the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Commission. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Benefits of Indenture Limited to Parties. Nothing expressed or implied in the Indenture, is intended to give to any person other than the Commission, the Trustee, the Bond Insurer and the Owners any right, remedy or claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements contained in the Indenture by and on behalf of the Commission or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Owners. D-37 Successor Is Deemed Included in All References to Predecessor. Whenever in the Indenture either the Commission or any member, officer or employee thereof is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Commission, that are presently vested in the Commission or such member, officer or employee, and all the agreements, covenants and provisions contained in the Indenture by or on behalf of the Commission or any member, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Execution of Documents by Owners. Any request, declaration or other instrument-which the Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise expressly provided in the Indenture, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act, that the person signing such request, declaration 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. Except as otherwise expressly provided in the Indenture, the amount of Bonds transferable by delivery held by any person executing such request, declaration or other instrument or writing as a Owner, and the numbers thereof, and the date of his holding such Bonds, may be proved by a certificate, which need not be acknowledged or verified, satisfactory to the Trustee, executed by a trust company, bank or other depositary wherever situated, showing that at the date therein mentioned such person had on deposit with such depositary the Bonds described in such certificate. The Trustee may nevertheless in its discretion require further or other proof in cases where it deems the same desirable. The ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books required to be kept by the Trustee pursuant to the Indenture. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Commission in good faith and in accordance therewith. Waiver of Personal Liability. No member, officer or employee of the Commission shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing under the Indenture contained shall relieve any member, officer or employee of the Commission from the performance of any official duty provided by law. Acquisition of Bonds by Commission. All Bonds acquired by the Commission, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Funds and Accounts. Any fund or account required by the Indenture to be established and maintained by the Commission or the Trustee may be established and maintained in the accounting records of the Commission or the Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts held by the Commission shall at all times be maintained in accordance with sound accounting practices and all funds and accounts held by the Trustee shall at all times be maintained in accordance with trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Owners. Partial Invali dity. If any one or more of the agreements or covenants or portions thereof provided in the Indenture to be performed on the part of the Commission (or of the Trustee) should 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 of the Indenture or of the Bonds; but the Owners shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The Commission declares that it would have adopted the Indenture and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would D-38 have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of the Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Business Days. When any action is provided for under the Indenture to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day other than a day which is not a Saturday, a Sunday, or a day on which banks located in the city where the corporate trust office of the Trustee is located are required or authorized to remain closed (a "Business Day"), such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within the-specified period. Third Party Beneficiarx. To the extent that the Indenture confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of the Indenture, the bond Insurer is explicitly recognized as being a third-party beneficiary under the Indenture and may enforce any such right, remedy or claim conferred, given or granted under the Indenture. Governing Law. The Indenture shall be governed and construed in accordance with the laws of the State of California. D-39 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX E SUPPLEMENTAL INFORMATION CONCERNING THE CITY OF ROSEMEAD This Appendix contains principally economic and demographic information relating to the City of Rosemead and the County of Los Angeles Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Series 2006A Bonds. The Series 2006A Bonds are special tax obligations of the Commissidirpayable solely from a portion of the Special Taxes and other amounts pledged under the Indenture, as more fully described in the Official Statement to which this Appendix is appended The information set forth herein that has been obtained from sources, other than the City is believed to be reliable, but such information is not guaranteed as to accuracy or completeness. Statements contained herein which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. INTRODUCTION Location The City of Rosemead (the "City"), encompassing approximately 5 %2 square miles, is located in the central northwestern section of Los Angeles County approximately 12 miles east of the central business district of Los Angeles. The City shares common boundaries with the municipalities of San Gabriel, Temple City, El Monte, Montebello, Monterey Park and Alhambra. Municipal Government Incorporated in August 4, 1959, the City operates as a general law city. It has a council-manager form of government, with five council members elected at large for four-year overlapping terms. The Council selects a major and major pro-tem each year from its membership. The Council is responsible for enacting local legislation, establishing general policy for the City and adopting the annual budget. The Council's duties also include the appointment of a City Manager, City Attorney, City Clerk and City Treasurer and the selection of citizens to serve of the City's various advisory commissions. The City contracts with the Los Angeles County Sheriffs Department for sheriff services. Fire protection is provided through the Los Angeles County Fire Protection District. Two fire stations are located in the City. ECONOMIC AND DEMOGRAPHIC INFORMATION Data contained under this caption is intended to portray economic, demographic, and business trends within the City and the County of Los Angeles (the "County'). While not constituting direct revenue sources as such, these trends help explain changes in revenue sources such as property taxes, sales taxes, and transient occupancy taxes, which could be affected by changes in economic conditions. All the information presented in the following tables and other specific data references is the latest information available from the respective data sources. E-1 Population Between 2001 and 2005, the population of the City increased by nearly 5%. The table below displays population changes and other demographic data for the City and the County for the past five years. . POPULATION DATA FOR THE CITY OF ROSEMEAD WELLS AND THE COUNTY OF LOS ANGELES Year City of Rosemead County of Los Angeles 2001 2002 2003 2004 2005 Population % Change 54,582 2.0 55,314 1.3 56,238 1.7 56,732 0.9 57,189 0.8 Source: State Department of Finance. Population % Change 9,662,859 1.5 9,828,805 1.7 9,979,361 1.5 10,107,451 1.3 10,226,506 1.2 E-2 Personal Income The table below summarizes the total effective buying income and median household effective buying income for the City of Rosemead, the Los Angeles Metropolitan Statistical Area (MSA), the State of California and the United States for the period 2000 through 2004. Los Angeles MSA, State of California, and United States Total Effective Buying Income Calendar Years 2000 through 2004 Year and Area 2000 Total Effective Buying Median Household Effective Income(in thousands) Buying Income City of Rosemead $ 594,960 $36,286 Los Angeles MSA 169,417,226 41,627 State of California 652,190,282 44,464 United States 5,230,824,904 39,129 2001 City of Rosemead $ 567,536 $33,978 Los Angeles MSA 170,440,432 40,789 State of California 650,251,407 43,532 United States 5,303,481,498 38,365 2002 City of Rosemead $ 554,088 $32,946 Los Angeles MSA 162,413,790 37,983 State of California 647,879,427 42,484 United States 5,340,682,818 38,035 2003 City of Rosemead $ 563,060 $32,973 Los Angeles MSA 233,020,235 41,237 State of California 674,721,020 42,924 United States 5,466,880,008 38,201 2004 City of Rosemead $ 579,423 $33,845 Los Angeles MSA 244,048,095 42,269 State of California 705,108,410 43,915 United States 5,692,909,567 39,324 Source: "Survey of Buying Power," Sales and Marketing Management Magazine. E-3 Labor Force The following chart provides information concerning the annual average total labor force, employment, and unemployment for Los Angeles County, the State of California and the United States for the years 2000 through 2004. Los Angeles County, State of California and United States Labor Force, Employment, and Unemployment Annual Averages from 2000 through 2004 Year and Area Labor Force Employment Unemployment Unemployment Rate(i) 2000 Los Angeles County State of California United States 2001 Los Angeles County State of California United States 2002 Los Angeles County State of California United States 2003 Los Angeles County State of California United States 2004 Los Angeles County State of California United States 4,681,300 4,427,800 253,500 5.4 16,869,700 16,034,100 835,600 5.0 142,864,000 137,613,000 5,251,000 3.7 4,752,900 4,483,000 269,900 5.7 17,150,100 16,217,500 932,600 5.4 144,030,000 136,508,000 7,522,000 5.2 4,769,900 4,446,100 323,800 6.8 17,326,900 16,165,100 1,161,800 6.7 144,994,000 136,945,000 8,049,000 5.6 4,782,000 4,447,800 334,200 7.0 17,414,000 16,223,500 1,190,500 6.8 146,753,000 138,625,000 8,128,000 5.5 4,809,700 4,494,000 315,700 6.6 17,552,300 16,459,900 1,092,400 6.2 148,034,000 140,435,000 7,598,000 5.1 (1) Unemployment rate is based on unrounded data. Source: California State Employment Development Department, Labor Market Information Division; U.S. Department of Labor, Bureau of Labor Statistics for United States statistics. E-4 Business and Industry A sample of the major employers in the City of Rosemead are shown below, together with the approximate number of persons employed by each. CITY OF ROSEMEAD Major Employers Employer Type of Business Number of Employees So. California Edison Countrywide Home Loans Garvey School District Rosemead School District Hermetic Seal Corp. La Victoria Foods (Seasonal) Marge Carson Inc. Irish Construction Panda Restaurant Group Don Bosco Technical Institute Source: Rosemead Chamber of Commerce. Commercial Activity Utility - Regional headquarters 3,000 - 4,000 Finance 2,500 Education 1,000 Education 375 Hermetic seal manufacturing 260 Food manufacturing 50 -250 Furniture manufacturing 225 Underground utility contractor 220 Restaurant management 220 Education 200 Taxable transactions in Rosemead totaled $281,489 in 2003, nearly a 20% increase over 1999. The following table details taxable permits and transactions in the City of Rosemead for the years 1999 through 2003. CITY OF ROSEMEAD Taxable Transactions Calendar Years 1999 through 2003 (Taxable Transactions in $0001s) 1999 2000 2001 2002 2003 Retail Stores Permits 491 499 537 562 565 Taxable Transactions $201,007 $217,764 $213,234 $230,327 $236,929 Total Outlets Permits 1,260 1,272 1,291 1,257 1,233 Taxable Transactions $234,959 $251,144 $246,755 $263,947 $281,489 Source: State Board of Equalization, Research & Statistics Section Construction Activity In the past five years for which complete information is available, Rosemead issued building permits totaling approximately $143,583,211. Approximately 37% of this total consisted of permits for non-residential construction. Permits for new housing included 321 units, of which 80 were for multi- family occupancy. The following table details building permit activity in Rosemead for the years 2000 through 2004: E-5 Valuation ($0001s) Residential Non-Residential Total New Housing Units Single Units Multiple Units Total CITY OF ROSEMEAD Building Permit Valuations Calendar Years 2000 through 2004 2000 2001 2002 $14,887,453 $16,358,607 $12,413,924 8,592,852 13,256,252 8,249,041 $23,480,305 $29,614,859 $20,662,965 51 29 0 72 51 101 Source: Construction Industry Research Board. Utilities 30 0 2003 2004 $22,253,442 13,024,000 $35,277,442 65 0 30 65 $24,193,125 10,354,515 $34,547,640 66 8 74 Electricity is provided by Southern California Edison Company and gas is supplied by the Southern California Gas Company. Telephone services are provided by AT&T (successor to SBC and Pacific Bell). Water is supplied by four water companies: California-American, San Gabriel Valley, Southern California and San Gabriel County Water District. The majority of these organizations obtain water from the Metropolitan Water District of Southern California, while the San Gabriel County Water District and locally drilled wells provide the balance. Sewage treatment services are provided by the County of Los Angeles Sanitation District. Transportation The City's location near several interstate freeways affords residents immediate access to the extensive Southern California freeway network. This network links Rosemead to a number of diverse commercial and recreation activities located throughout Orange, Los Angeles and San Bernardino Counties. Two main east-west thoroughfares pass through the City. The San Bernardino Freeway (Interstate 10) traverse the central portion of the City and the Pomona Freeway (State Route 60) crosses the southern extremity of the City. Rosemead Boulevard (State Route 19) intersects these major routes and continues north to Pasadena, and south to Orange County. Major airports in the Los Angeles Basin are easily accessible by means of the highly developed freeway network in the West San Gabriel Valley. Air cargo and passenger facilities include those at the Los Angeles International Airport, Burbank-Glendale-Pasadena Airport, Long Beach International Airport and Ontario International Airport. All are less than 35 miles from the City. El Monte Airport, located two miles to the east, has facilities to service private aircraft. E-6 Education Most of the City is located in the Garvey School District and the Rosemead School District. Rosemead has 11 elementary schools, 3 junior high schools and 1 high school. Continuing education is available through the Los Angeles City Community College District. Los Angeles County is the location of many colleges and universities, both public and private, including such well known institutions as the University of California at Los Angeles, the University of Southern California, Occidental College, Claremont College and the California Institute of Technology. State University campulges are located in Los Angeles, Long Beach, Northridge, Pomona and Dominguez Hills. Community Facilities Health care services are provided by medical centers in Alhambra, San Gabriel and other neighboring communities. Located within the City are 2 fully-equipped mental health centers and a convalescent center. Religious and cultural facilities include 22 churches of various denominations and two libraries. Financial institutions include 9 banks and two savings and loan institutions. Recreational facilities for area residents include the City's own community parks and outdoor recreation offered in the surrounding areas. City facilities include 6 major public parks, 10 playgrounds, two municipal swimming pools, tennis and shuffleboard courts, several baseball diamonds and 2 community centers. Southeast of the City is the Whittier Narrows Dam Recreation Area which includes the Whittier Narrows Golf Course. The San Gabriel Mountains and the Angeles National Forest, both located north of the City, provide additional outdoor recreation opportunities. Rosemead's proximity to the San Bernardino and Pomona Freeways bring the cultural and recreational advantages of Los Angeles and Orange Counties within convenient driving distance. E-7 UM PAGE INTENTIONALLY LEFT BLAND APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), is executed and entered into as of March 1, 2006, by and among the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, organized and-existing under, and by virtue of the laws of the State of California (the "Commission"), U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as trustee (the "Trustee"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as Dissemination Agent (the "Dissemination Agent"). WITNESSETH: WHEREAS, the Commission, has heretofore issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds") in the original principal amount of $34,275,000 for the purpose of financing portions of the Redevelopment Project Area No. 1, which Series 1993A Bonds were issued pursuant to the terms of an Indenture, dated as of October 1, 1993 (the "Original Indenture"), between the Trustee and the Commission; and WHEREAS, pursuant to the First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement" and the Original Indenture as supplemented by the First Supplement, and as hereinafter supplemented, referred to herein as the "Indenture"), by and between the Commission and the Trustee, the Commission has issued the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"), in the aggregate principal amount of $ ; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent, for the benefit of the holders and beneficial owners of the Bonds and in order to assist the underwriters of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b) (5); NOW, THEREFORE, for and in consideration of the mutual premises and covenants herein contained, the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Commission pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means not later than 270 days following the end of the Commission's fiscal year (which is currently June 30), commencing March 31, 2007. "Commission" means the Rosemead Community Development Commission. F-1 "Disclosure Representative" means the Executive Director of the Commission, or his or her designee, or such other person as the Commission shall designate in writing to the Trustee from time to time. "Dissemination Agent" means U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Commission and which has filed with the Trustee a written acceptance of such designation. "Listed Events" means any of the events listed in Section 4(a) hereof. "National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Official Statement" means the Official Statement, dated February 2006, relating to the Bonds. "Participating Underwriter" means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" means each National Repository and each State Repository. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. Section 2. Provision of Annual Reports. (a) The Commission shall, or, upon furnishing the Annual Report to the Dissemination Agent, shall cause the Dissemination Agent to, provide to each Repository and to Ambac Assurance an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2005-06 fiscal year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the Commission, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Commission's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 4(f) hereof. (b) Not later than 15 business days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Commission shall provide the Annual Report (in a form suitable for reporting to the Repositories) to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall notify the Disclosure Representative of such failure to receive the Annual Report. (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to the Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: F-2 (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; (ii) provide any Annual Report received by it to each Repository, as provided herein; and (iii) provided the Dissemination Agent has received the Annual Report pursuant to Section 2(b) hereof, file a report with the Commission and (if the Dissemination-Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. Section 3. Content of Annual Reports. The Commission's Annual Report shall contain or incorporate by reference the following: (a) The Commission's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to that used for the Commission's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available. (b) The following information: (i) An update of the information contained in Table 2 of the Official Statement for the most recently completed fiscal year. (ii) An update of the information contained in Table 3 of the Official Statement for the most recently completed fiscal year. (iii) An update of the information contained in Table 4 of the Official Statement based upon the most recently completed fiscal year. (iv) An update of the information contained in Table 7 of the Official Statement for the most recently completed fiscal year. (v) The amount of any payments by the Commission during the most recently completed Fiscal Year of the type described in "RISK FACTORS - State Budget Deficit and Its Impact on Pledged Tax Revenues" in the Official Statement. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Commission shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. 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 Commission or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities F-3 Rulemaking Board. The Commission shall clearly identify each such other document so included by reference. Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) Principal and interest payment delinquencies. (ii) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting fmancial difficulties. (iv) Unscheduled draws on credit enhancements reflecting fmancial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax-exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) The Trustee shall, within five business days of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the Commission promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (fl; provided, however, that the Dissemination Agent shall have no liability to Bond owners for any failure to provide such notice. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of the Listed Events described under clauses (ii), (iii), (vi), (x) and (xi) above shall mean actual knowledge by an officer at the corporate trust office of the Trustee. The Trustee shall have no responsibility for determining the materiality of any of the Listed Events. (c) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the Commission shall as soon as possible determine if such event would be material under applicable Federal securities law. (d) If the Commission determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (fl. The Commission shall provide the Dissemination Agent with a form of notice of such event in a format suitable for reporting to the Municipal Securities Rulemaking Board and each State Repository, if any. F-4 (e) If in response to a request under subsection (b), the Commission determines that the Listed Event would not be material under applicable Federal securities law, the Commission shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (fl If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository and Ambac Assurance. Notwithstanding the foregoing, notice of Listed Events described in subsections (a) (viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Indenture. Section 5. Termination of Reporting Obligation. The Commission's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under Section 4(f) hereof. Section 6. Electronic Filing. Submission of Annual Reports and notices of Listed Events to DisclosureUSA.org or another "Central Post Office" designated and accepted by the Securities and Exchange Commission shall constitute compliance with the requirement of filing such reports and notices with each Repository hereunder; and the Commission may satisfy its obligations hereunder to file any notice, document or information with a Repository by filing the same with any dissemination agent or conduit, including DisclosureUSA.org or another "Central Post Office" or similar entity, assuming or charged with responsibility for accepting notices, documents or information for transmission to such Repository, to the extent permitted by the Securities and Exchange Commission or Securities and Exchange Commission staff or required by the Securities and Exchange Commission. For this purpose, permission shall be deemed to have been granted by the Securities and Exchange Commission staff if and to the extent the agent or conduit has received an interpretive letter, which has not been revoked, from the Securities and Exchange Commission staff to the effect that using the agent or conduit to transmit information to the Repository will be treated for purposes of the Rule as if such information were transmitted directly to the Repository. Section 7. Dissemination Agent. The Commission 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. The Dissemination Agent may resign by providing thirty days' written notice to the Commission and the Trustee. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Commission in a timely manner and in a form suitable for filing. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Commission, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the Commission, so long as such amendment does not adversely affect the rights or obligations of the Trustee or the Dissemination Agent), 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 Sections 2(a), 3 or 4(a) hereof it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in F-5 law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, 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 Bonds, 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 sixty percent of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of holders. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first 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 statements or information, in order to provide information to investors to enable them to evaluate the ability of the Commission to meet its obligations, including its obligation to pay debt service on the Bonds. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 4(f) hereof. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Commission 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 Commission 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 Commission 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 Commission to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Commission or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance. F-6 Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture, and the Trustee and the Dissemination Agent shall be entitled to the protections, limitations from liability and indemnities afforded to the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties hereunder as are specifically set forth in this Disclosure Agreement. The Commission agrees to indemnify and save the Dissemination Agent, the Trustee, their officers, directors, employees and agent, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to this Disclosure Agreement or arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. This Disclosure Agreement does not apply to any other securities issued or to be issued by the Commission. The Dissemination Agent shall have no obligation to make any disclosure concerning the Bonds, the Commission or any other matter except as expressly set out herein, provided that no provision of this Disclosure Agreement shall limit the duties or obligations of the Trustee under the Indenture. The Dissemination Agent shall have no responsibility for the preparation, review, form or content of any Annual Report or any notice of a Listed Event. The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the Commission as constituting the Annual Report required of the Commission in accordance with the Disclosure Agreement. The fact that the Trustee has or may have any banking, fiduciary or other relationship with the Commission or any other party, apart from the relationship created by the Indenture and this Disclosure Agreement, shall not be construed to mean that the Trustee has knowledge or notice of any event or condition relating to the Bonds or the Commission except in its respective capacities under such agreements. No provision of this Disclosure Agreement shall require or be construed to require the Dissemination Agent to interpret or provide an opinion concerning any information disclosed hereunder. Information disclosed hereunder by the Dissemination Agent may contain such disclaimer language concerning the Dissemination Agent's responsibilities hereunder with respect thereto as the Dissemination Agent may deem appropriate. The Dissemination Agent may conclusively rely on the determination of the Commission as to the materiality of any event for purposes of Section 4 hereof. Neither the Trustee nor the Dissemination Agent make any representation as to the sufficiency of this Disclosure Agreement for purposes of the Rule. The Dissemination Agent shall be paid compensation by the Commission for its services provided hereunder in accordance with its schedule of fees, as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination in the performance of its duties hereunder. The Commission's obligations under this Section shall survive the termination of this Disclosure Agreement. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Commission, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without the filing of any paper or any further act. F-7 IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date fast above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By: Authorized Officer F-8 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Rosemead Community Development Commission Name of Bond Issue: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Date of Issuance: March 2006 NOTICE IS HEREBY GIVEN that the Rosemead Community Development Commission (the "Commission") has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent. [The Commission anticipates that the Annual Report will be filed by Dated: By: U.S. Bank National Association, as Trustee, on behalf of the Rosemead Community Development Commission cc: Rosemead Community Development Commission F-A-1 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX G FORM OF BOND INSURANCE POLICY G-1 9M PAGE INTENTIONALLY LEFT BLANK) Ambac Financial Guaranty Insurance Policy Obligor: Obligations: Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, New York 10004 Telephone: (212) 668-0340 Policy Number: Premium: Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the pa ent of the premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its essor (the "Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-describe o igations (the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e Obligo Ambac will make such payments to the Insurance Trustee within one (1) business day following wri en do c of Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpai gat! r d c s, uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will d to the d th e t principal and interest which is then Due for Payment but is unpaid. Upon such disburse mbac 1 be the owner of the surrendered Obligations and/or coupons and shall be fully subrogated to all of th Ho er righ hymen reon. In cases where the Obligations are issued in registered form, the Insurance Trustee isb ncipal to of er only upon presentation and surrender to the Insurance Trustee of the unpaid Obligation, un a and a of any v claim, together with an instrument of assignment, in form satisfactory to Ambac and nsurance a dul y the Holder or such Holder's duly authorized representative, so as to permit ownership of h ation b e 'ste d ! e name of Ambac or its nominee. The Insurance Trustee shall disburse interest to a er o a red bli n o y upon presentation to the Insurance Trustee of proof that the claimant is the person entitle to e p o st o e Obligation and delivery to the Insurance Trustee of an instrument of assignment, in form satisfac to b nsurance Trustee, duly executed by the Holder or such Holder's duly authorized representa ' rrm t Am c r under such Obligation to receive the interest in respect of which the insurance disbars t was ade. c sh 1 subrogated to all of the Holders' rights to payment on registered Obligations to the extent o y insurance disb nts made. In the event that a trustee or paying a or a Obligations noti that any payment of principal of or interest on an Obligation which has become Due for. ent an ch is mad t a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofo r vered fr m lder t to the United States Bankruptcy Code in accordance with a final, nonappealable order of a c of co t juri c on, Holder will be entitled to payment from Ambac to the extent of such recovery if sufficie ds e o rwise availab e. As used herein, the " e " m any pers o er than the Obligor or (ii) any person whose obligations constitute the underlying sec ource o p yme gations who, at the time of Nonpayment, is the owner of an Obligation or of a coupon relating Obli n. As ein, "Due for Payment", when referring to the principal of Obligations, is when the sche at t e mandato demption date for the application of a required sinking fund installment has been reach not fer any earlier date on which payment is due by reason of call for redemption (other than by application of r q ed sinking stallments), acceleration or other advancement of maturity: and, when referring to interest on the Ob g bons a he uled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure of ve ro d sufficient funds to the trustee or paying agent for payment in full of all principal of and interest on the gations ch are Due for Payment. This Pol c elable. The premium on this Policy is not refundable for any reason, including payment of the Obligations prior to m This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment. In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. ':01 President / rAL _ Secretary i / Effective Date: `"~J•`•°MS,'~ f ~ , Authorized Representative THE BANK OF NEW YORK acknowledges that it has agreed to perform the duties of Insurance Trustee under this Policy. - Form No.: 213-0012 (1/01) Authorized Officer of Insurance Trustee A- Ambac One Ambac Assurance Corporation One State Street Plaza, New York, New York 10004 Telephone: (212) 668-0340 Endorsement Policy for: Attached to and forming part of Policy No.: a 0 President\ Secretary Authorized Representative $-I'- Form No.: ZB-G 04 (7/97) Ambse Assurance Corporation $14,300,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS, SERIES 2006A CERTIFICATE REGARDING FINALITY OF PRELIMINARY OFFICIAL STATEMENT The undersigned hereby certifies and represents that the undersigned is the Chairperson of the Rosemead Community Development Commission (the "Commission"), and as such is duly authorized to execute and deliver this Certificate and further hereby certifies on behalf of the Commission as follows: (a) This Certificate is delivered in connection with the offering and sale by the Commission of its Rosemead Community Development Commission Redevelopment Project Area No. Y Tax Allocation Bonds, Series 2006A (the "Bonds") in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule"). (b) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, dated February 15, 2006, setting forth information concerning the Bonds and the Commission (the "Preliminary Official Statement"). (c) As used herein, "Permitted Omissions" shall mean the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (d) The Preliminary Official Statement is, except for Permitted Omissions, deemed final within the meaning of the Rule. Dated as of February 15, 2006 ROSEMEAD COMMUNITY DEVELOPMENT CO ION By: zo~ , a . Imperial, Chairperson * Preliminary, subject to change. DOCSI_A1:515895.1 41555-8 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A PURCHASE CONTRACT February 23, 2006 Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Rosemead Financing Authority 8838 E. Valley Boulevard Rosemead, California 91770 Ladies and Gentlemen: Piper Jaffray & Co. (the "Underwriter") hereby offers to enter into this Purchase Contract (the "Purchase Contract") with the Rosemead Community Development Commission (the "Commission") and the Rosemead Financing Authority (the "Authority") for the purchase by the Underwriter of the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). Capitalized terms not otherwise defined herein shall have the meaning assigned such terms in the First Supplement, hereinafter defined. This offer is made subject to acceptance thereof by the Commission and the Authority prior to 5:00 p.m., applicable California time, on the date hereof, and upon such acceptance, as evidenced by the execution hereof by the authorized officers of the Commission and the Authority in the space provided below, this Purchase Contract shall be in full force and effect in accordance with its terms and shall be binding upon the Commission, the Authority and the Underwriter. 1. Purchase and Sale of Bonds. Upon the terms and conditions and upon the basis of the representations herein set forth, (i) the Authority hereby agrees to purchase from the Commission, but only to the extent the Underwriter is obligated hereunder to purchase from the Authority, for offering to the Underwriter and the Commission hereby agrees to sell to the Authority for such purpose, and (ii) the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell to the Underwriter, all (but not less than all) of the Series 2006A Bonds in the aggregate principal amount of $14,005,000.00, at the purchase price of DOCSLA1:515200.4 41555-8 WWB/WWB $14,237,800.40 (representing the par amount of the Series 2006A Bonds, plus net original issue premium of $316,830.40, less an underwriting discount of $84,030.00). The Series 2006A Bonds will be issued pursuant to a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement") by and between, the Commission and U.S. Bank National Association, as trustee (the "Trustee"). The Series 2006A Bonds shall mature and shall be subject to redemption on the dates and in the amounts and shall bear interest at the rates as set forth in the First Supplement and the Official Statement (as hereinafter defined) and in Appendix I attached hereto. The Series 2006A Bonds shall be authorized to be issued by a resolution duly adopted by the Commission (the `Bond Resolution") and by the First Supplement, in accordance with the California Community Redevelopment Law (Part 1 of Division 24 of the California. Health and Safety Code) (the "Redevelopment Law"), and other applicable laws and the Constitution of the State of California. The Series 2006A Bonds will be purchased and sold by the Authority pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5, Division 7 of Title 1 (commencing with Section 6584) of the California Government Code (the "JPA Act"). The Underwriter agrees to make a bona fide public offering of the Series 2006A Bonds at the initial offering prices set forth in the Official Statement; however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering prices as the Underwriter shall deem necessary in connection with the marketing of the Series 2006A Bonds. Terms defined in the Official Statement are used herein as so defined. 2. Official Statement. The Commission hereby ratifies, approves and confirms the distribution of the Preliminary Official Statement of the Commission with respect to the Series 2006A Bonds, dated February 15, 2006 (together with the Appendices thereto, any documents incorporated therein by reference, and any supplements or amendments thereto, the "Preliminary Official Statement"), in connection with the public offering and sale of the Series 2006A Bonds by the Underwriter. The Commission shall deliver, or cause to be delivered, to the Underwriter within seven business days from the date hereof, five executed copies of the final Official Statement prepared in connection with the Series 2006A Bonds (together with the Appendices thereto, any documents incorporated therein by reference, and any supplements or amendments thereto on or prior to the Closing, the "Official Statement") to be dated as of the date hereof and to be in such form as shall be approved by the Commission and the Underwriter and such additional conformed copies thereof as the Underwriter may reasonably request in sufficient quantities to comply with applicable Municipal Securities Rulemaking Board rules, with Rule 15c2-12, adopted by the Securities Exchange Commission on June 28, 1989 ("Rule 15c2-12") and to meet potential customers' requests for copies of the Official Statement. By acceptance of this Purchase Contract, the Commission hereby authorizes the use of copies of the Official Statement in connection with the public offering and sale of the Series 2006A Bonds. 3. Delivery of Bonds. At 9:00 a.m., applicable California time, on March 9, 2006, or at such earlier or later time or date, as shall be agreed upon by the Commission and the Underwriter (such time and date herein referred to as the "Closing Date"), the Trustee shall deliver to the Underwriter, on DOCSLA1:515200.4 41555-8 WWB/WWB 2 behalf of the Commission, at a location or locations to be designated by the Underwriter, on behalf of the Commission and the Authority, in New York, New York (or such other place as may be designated by the Underwriter prior to the Closing Date), the Series 2006A Bonds in "book-entry" fully registered form, and the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Series 2006A Bonds as set forth in Section 1 hereof by same day funds (such delivery and payment being herein referred to as the "Closing"). The Series 2006A Bonds shall be made available to the Underwriter not later than the second business day before the Closing Date for purposes of inspection. 4. Representations of the Authority. The Authority represents that: (a) The Authority is a joint powers authority, duly organized and existing, and authorized to transact business and exercise powers under and pursuant to the provisions of the Constitution and the laws of the State of California and has, and at the date of the Closing will have, full legal right, power and authority to enter into this Purchase Contract, and to carry out and to consummate the transactions contemplated by this Purchase Contract and the Official Statement; (b) The Authority has complied, and will at the Closing be in compliance, in all respects, with the JPA Act and any other applicable laws of the State of California; (c) By official action of the Authority prior to or concurrently with the acceptance hereof, the Authority has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in this Purchase Contract; (d) The execution and delivery of this Purchase Contract, and compliance with the provisions thereof, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, note, resolution, agreement or other instrument to which the Commission is a party or is otherwise subject; (e) All approvals, consents and orders of any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to execution and delivery by the Authority of this Purchase Contract and the purchase from the Commission and sale to the Underwriter of the Series 2006A Bonds have been obtained or will be obtained prior to the Closing (provided the Authority shall not be responsible for state blue sky filings); (f) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or, to the knowledge of the Authority, threatened against the Authority, affecting the existence of the Authority or the titles of its members or officers, or seeking to enjoin the purchase and sale of the Series 2006A Bonds by the Authority, or in any way contesting or affecting the validity or enforceability of the Series 2006A Bonds or this Purchase Contract or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or contesting the power or authority DOCSLA1:515200.4 41555-8 WWB/WWB of the Authority to purchase and sell the Series 2006A Bonds, or to execute and deliver this Purchase Contract, nor is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Series 2006A Bonds or this Purchase Contract; and (g) Any certificate signed by an authorized officer of the Authority and delivered to the Underwriter shall be deemed a representation and warranty of the Authority to the Underwriter as to the statements made therein. 5. Representations of the Commission. The Commission represents that: (a) The Commission is a public body, corporate and politic, duly organized and existing, and authorized to transact business and exercise powers under and pursuant to the provisions of the Redevelopment Law and has, and at the date of the Closing will have, full legal right, power and authority (A) to enter into this Purchase Contract, (B) to adopt the Bond Resolution, (C) to issue, sell and deliver the Series 2006A Bonds to the Underwriter as provided herein, and (D) to carry out and to consummate the transactions contemplated by the Bond Resolution, the First Supplement, this Purchase Contract and the Official Statement; (b) The Preliminary Official Statement, as of its date, was correct in all material respects and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; (c) The Official Statement, as of its date, is correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; (d) The Commission covenants with the Underwriter that prior to the earlier of (i) receipt of notice from the Underwriter that Official Statements are no longer required under Rule 15c2-12 or (ii) 25 days after the end of the underwriting period (defined below) (the "Delivery Period"), if an event occurs, of which the Commission has knowledge, which might or would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Commission shall notify the Underwriter, and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Commission shall cooperate with the Underwriter in the preparation of an amendment or supplement to the Official Statement in a form and in a manner approved by the Underwriter, and all printing expenses thereby incurred shall be paid for by the Commission. The term "end of the underwriting period" means the later of (i) the date the Commission delivers the Series 2006A Bonds to the Underwriter or (ii) the date the Underwriter does not retain an unsold balance of the Series 2006A Bonds for sale to the public; DOCSLA1:515200.4 41555-8 WWB/WWB 4 (e) If the information contained in the Official Statement is amended or supplemented pursuant to the immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the end of the Delivery Period, the portions of the Official Statement so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (f) The Commission has complied, and will at the Closing be in compliance, in all respects, with the Redevelopment Law and any other applicable laws of the State of California; (g) By official action of the Commission prior to or concurrently with the acceptance hereof, the Commission has duly authorized and approved the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Commission of the obligations on its part contained, in the Bond Resolution, the First Supplement, the Series 2006A Bonds and this Purchase Contract; (h) The adoption of the Bond Resolution and the execution and delivery of the Series 2006A Bonds, the First Supplement and this Purchase Contract, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, loan agreement, note, resolution, agreement or other instrument to which the Commission is a party or is otherwise subject; and, except as described in the Official Statement, the Commission has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the revenues pledged pursuant to, or subject to the lien of, the Bond Resolution or the First Supplement; (i) All approvals, consents and orders of any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to adoption of the Bond Resolution, execution and delivery by the Commission of this Purchase Contract, the First Supplement and the issuance, sale and delivery of the Series 2006A Bonds have been obtained or will be obtained prior to the Closing (provided the Commission shall not be responsible for state blue sky filings); 0) The Series 2006A Bonds when issued, authenticated and delivered in accordance with the Bond Resolution and the First Supplement will be validly issued, and will be valid and binding, obligations of the Commission; (k) The terms and provisions of the Bond Resolution and the First Supplement comply in all respects with the requirements of the Redevelopment Law, and the Bond Resolution has been duly adopted by the Commission and is valid, legal and binding upon the Commission enforceable in accordance with its terms subject to bankruptcy, moratorium or DOCSLA1:515200.4 41555-8 WWB/WWB 5 insolvency or other laws affecting creditors' rights generally and general rules of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity); (1) Except as disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission, affecting the existence of the Commission or the titles of its members or officers, or seeking to enjoin the sale, issuance or delivery of the Series 2006A Bonds or the revenues of the Commission pledged or to be pledged to pay the principal of, redemption premium, if any, and interest on the Series 2006A Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Series 2006A Bonds, the Bond Resolution, the First Supplement or this Purchase Contract or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or contesting the power or authority of the Commission to issue the Series 2006A Bonds, to adopt the Bond Resolution or to execute and deliver the Purchase Contract or the First Supplement nor is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Series 2006A Bonds, the Bond Resolution, the First Supplement or this Purchase Contract; (m) Any certificate signed by an authorized officer of the Commission and delivered to the Underwriter shall be deemed a representation and warranty of the Commission to the Underwriter as to the statements made therein; (n) The Series 2006A Bonds shall be secured in the manner and to the extent set forth in the Bond Resolution and the First Supplement, as appropriate; and (o) The Commission has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Commission is an issuer whose arbitrage certificates may not be relied upon. (p) The proceeds of the Series 2006A Bonds are being used to (1) refund a portion of the Commission's outstanding Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds") scheduled to mature on October 1, 2006 through October 1, 2018; (2) to finance redevelopment activity in the Redevelopment Project Area No. 1; (3) to pay the fees associated with a surety which will be used to fund a debt service reserve account; and (4) to pay costs of issuance related to the Series 2006A Bonds. The expenditures of the proceeds of the Series 1993A Bonds were for facilities and improvements which constitute redevelopment activities authorized by the Redevelopment Law and the Redevelopment Plan for the Redevelopment Project Area No. 1. (q) The State of California Department of Housing and Community Development (the "Department") completed its audit of the Rosemead Community Development Commission compliance with statutory housing and housing fund requirements on May 12, 2005. The Commission provided the Department with all relevant information related to the prepayment of a portion of the Commission's Low and Moderate Income Housing Fund obligation through fiscal year 2021-22 in the manner and the amounts set forth in Exhibit A to DOCSLA1:515200.4 41555-8 WWB/WWB 6 Commission Resolution 93-27, adopted on October 13, 1993. The final audit report of the Department accepted the Commission's prepayment methodology. 6. Representations of the Underwriter. The Underwriter represents that it has full right, power, and authority to enter into this Purchase Contract. 7. Rule 15c2-12 Covenant. The Commission covenants to comply, and to perform all actions as may be requested by the Underwriter in order for the Underwriter to comply, with the applicable provisions of Rule 15c2-12. 8. Conditions to Obligations of Underwriter. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties and agreements of the Commission and the Authority contained herein and upon the accuracy of the statements to be contained in the documents, opinions, and instruments to be delivered at the Closing. Accordingly, the Underwriter's obligations under this Purchase Contract to purchase, accept delivery of, and pay for the Series 2006A Bonds on the Closing Date is subject to the performance by the Commission and the Authority of their respective obligations hereunder at or prior to the Closing. The parties hereto expressly understand that the obligations to purchase the Series 2006A Bonds are and shall be subject to the following further conditions: (a) At the time of the Closing, (i) the representations and warranties of the Commission and the Authority contained herein shall be true, complete and correct; (ii) each of the documents and certificates required to be delivered at Closing shall have been duly executed, acknowledged and delivered by the appropriate parties thereto, shall be in full force and effect and shall not have been amended, modified or supplemented,. except as therein permitted or as may have been agreed to in writing by the Underwriter; and (iii) the Bond Resolution shall be in full force and effect and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter; (b) The Underwriter shall have the right to cancel its obligations to purchase the Series 2006A Bonds if between the date hereof and the Closing, (i) legislation shall have been enacted (or resolution passed) by or introduced or pending legislation amended in the Congress of the United States or the State of California (the "State") or shall have been reported out of committee or be pending in committee (specifically including, but not limited to, legislation proposed in connection with the current State budget crisis which if enacted would adversely affect the Commission's receipt of tax increment revenues), or a decision shall have been rendered by a court of the United States or the State or the Tax Court of the United States, or a ruling shall have been made or a resolution shall have been proposed or made or any other release or announcement shall have been made by the Treasury Department of the United States or the Internal Revenue Service, or other federal or State authority, with respect to federal or State taxation upon interest on obligations of the general character of the Series 2006A Bonds or with respect to the security pledged to pay debt service on the Series 2006A Bonds, that, in the Underwriter's reasonable judgment, materially adversely affects the market for the Series 2006A Bonds, or the market price generally of obligations of the general character of the Series 2006A Bonds or (ii) there shall exist any event that, in the Underwriter's reasonable judgment, either (A) makes untrue or incorrect in any material respect any statement or information in the Official DOCSLA1:515200.4 41555-8 WWB/WWB 7 Statement or (B) is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect, or (iii) there shall have occurred any outbreak or escalation of hostilities or other local, national or international calamity or crisis (it being acknowledged by the Underwriter that as of the date hereof, no such event is occurring), or a default with respect to the debt obligations of, or the institution of proceedings under the federal bankruptcy laws by or against, any state of the United States or agency thereof, or any city in the United States having a population of over one million, the effect of which on the financial markets of the United States will be such as in the Underwriter's reasonable judgment, makes it impracticable for the Underwriter to market the Series 2006A Bonds or enforce contracts for the sale of the Series 2006A Bonds, or (iv) there shall be in force a general suspension of trading on the New York Stock Exchange, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of determination by that Exchange or by order of the Securities and Exchange Commission of the United States or any other governmental authority having jurisdiction that, in the Underwriter's reasonable judgment, makes it impracticable for the Underwriter to market the Series 2006A Bonds or enforce contracts for the sale of the Series 2006A Bonds, or (v) a general banking moratorium shall have been declared by federal, New York or State authorities having jurisdiction and be in force that, in the Underwriter's reasonable judgment, makes it impracticable for the Underwriter to market the Series 2006A Bonds or enforce contracts for the sale of the Series 2006A Bonds, or (vi) legislation shall be enacted or be proposed or actively considered for enactment, or a decision by a court of the United States shall be rendered, or a ruling, regulation, proposed regulation or statement by or on behalf of the Securities and Exchange Commission of the United States or other governmental agency having jurisdiction of the subject matter shall be made, to the effect that the Series 2006A Bonds, any obligations of the general character of the Series 2006A Bonds or the Bond Resolution or the First Supplement are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or of the Trust Indenture Act of 1939, as amended and as then in effect, or otherwise are or would be in violation of any provision of the federal securities laws, or (vii) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose any material restrictions not now in force with respect to the Series 2006A Bonds or obligations of the general character of the Series 2006A Bonds or securities generally, or materially increase any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, underwriters; or (viii) a ruling, regulation or order of the Treasury Department of the United States or the Internal Revenue Service (the "IRS"), specifically including Circular 230 initially proposed by the IRS on December 30, 2003, shall be made effective on or prior to the Closing Date, which in the Underwriter's reasonable judgment, materially and adversely affects the market price of the Series 2006A Bonds; or (ix) there shall have been any materially adverse change in the affairs of the Commission which in the Underwriter's reasonable judgment materially and adversely affects the market for the Series 2006A Bonds; and the following: DOCSLA1:515200.4 41555-8 WWB/WWB (c) At or prior to the Closing, the Underwriter shall receive 8 (1), The unqualified approving opinion of Orrick, Herrington & Sutcliffe LLP ("Bond Counsel") with respect to the Series 2006A Bonds, addressed to the Underwriter and the Commission, dated the date of the Closing, in substantially the form attached to the Official Statement as Appendix C; (2) The opinion of Orrick, Herrington & Sutcliffe LLP, as disclosure counsel to the Commission, addressed to or upon which the Underwriter may rely, dated the Closing Date, in substantially the form attached hereto as Exhibit A (3) The opinion or opinions of counsel to the Commission with respect to the Series 2006A Bonds, addressed to the Underwriter, Bond Counsel and the Commission, dated the date of Closing, in substantially the form attached hereto as Exhibit B; (4) A certificate dated the date of the Closing, signed by the Executive Director of the Commission to the effect that: (i) the representations, warranties and covenants of the Commission contained herein are true and correct in all material respects on and as of the date of Closing with the same effect as if made on the date of Closing; (ii) the Commission has complied with all the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to Closing; (iii) no event affecting the Commission has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing Date any statement of information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect; and (iv) the Bond Resolution, the Second Supplement and the First Supplement are in full force and effect and have not been amended in any respect, except as approved in writing by the Underwriter; (5) A certificate of the Trustee dated the date of the Closing, 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 full power and being qualified and duly authorized to perform the duties and obligation of the Trustee under and pursuant to the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement; (ii) the Trustee has agreed to perform the duties and obligations of the Trustee as set forth in the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement; (iii) compliance with the provisions on the Trustee's part contained in the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement will not conflict with or constitute a breach of or default under any judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Trustee is a party or is otherwise subject, or, to the best knowledge of the Trustee, any material law or administrative regulation to which. the Trustee is subject, as a result of which the Trustee's ability to perform its obligations under the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement would be impaired, nor will any such 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 DOCSLA1:515200.4 41555-8 WWB/WWB 9 properties or assets held by the Trustee pursuant to the lien created by the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement; and (iv) the Trustee has not been served in any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending nor, to the best of the knowledge of the Trustee, is any such action, suit, proceeding, inquiry or investigation threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the issuance, sale and delivery of the Series 2006A Bonds or the collection of revenues pledged or to be pledged to pay the principal of, premium, if any, and interest on the Series 2006A Bonds, or the pledge thereof, or in any, way contesting the powers of the Trustee or its authority to perform its obligations under the Bond Resolution, the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bond Resolution, the First Supplement, the Escrow Agreement or the Continuing Disclosure Agreement; (6) Two copies of this Purchase Contract duly executed and delivered by the parties hereto; (7) Two copies of the Official Statement, executed on behalf of the Commission by the Executive Director; (8) Two copies of the First Supplement; (9) Two copies of the Escrow Agreement; (10) Two copies of the Continuing Disclosure Agreement; (11) Two certified copies of the Bond Resolution; (12) Receipt of a municipal bond insurance policy guaranteeing payment of principal and interest on the Series 2006A Bonds (the "Policy"), to be provided by Ambac Assurance Corporation (the `Bond Insurer"), together with, certificates of the Bond Insurer and an opinion of its counsel relating to the legal status of the Bond Insurer, the information pertaining to the Bond Insurer, the Reserve Surety Bond and the Policy contained in the Official Statement, and the enforceability of the Reserve Surety Bond and the Policy, all in form and substance acceptable to the Underwriter; and (13) Evidence from Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. that the Series 2006A Bonds have been DOCSLA1:515200.4 41555-8 WWB/WWB 10 rated at least "BBB+" (Underlying) and "AAA" (based upon the bond insurance policy), and that such ratings continue to be in effect as of the Closing date; (14) The consent of GRC Associates, Inc. to the use of their report dated February 7, 2006, in the Preliminary Official Statement and the Official Statement; (15) A certificate of GRC Associates, Inc., dated the Closing Date, to the effect that, the Fiscal Consultant affirms the. accuracy of the data in the tables in the Preliminary Official Statement and the Official Statement which references such Fiscal Consultant and any statements and assumptions attributed to the Fiscal Consultant appearing in the Preliminary Official Statement and the Official Statement; (16) A certificate of The Arbitrage Group, Inc., independent certified public accountants, dated the Closing Date, to the effect that, with respect to the Escrow Agreement it has verified the accuracy of the mathematical computations of the adequacy of the Investment Securities (as defined in the Escrow Agreement), together with the earnings thereon and the cash held in the Escrow Fund established under such Escrow Agreement, to pay when due the principal and interest due and to become due on the Prior Bonds to be paid from such Escrow Fund on and prior to the redemption date thereof and to pay the redemption price thereof on such redemption date; (17) The opinion of counsel to the Trustee, in form and substance acceptable to the Underwriter; and (18) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Commission and the Authority with this Purchase Contract, legal requirements (including tax exemption), and the performance or satisfaction by the Commission 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 Commission and the Authority. The Commission will furnish the Underwriter with such conformed copies of such opinions, certificates, letters and documents as the Underwriter may reasonably request. If the Commission or the Authority shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and none of the Underwriter, the Commission nor the Authority shall have any further obligations hereunder, except as provided in Section 8 hereof. However, the Underwriter may in its sole discretion waive one or more of the conditions imposed by this Purchase Contract for the protection of the Underwriter, and proceed with the Closing. DOCSLA1:515200.4 41555-8 WWB/WWB 11 9. Expenses. The Underwriter shall be under no obligation to pay, and the Commission shall pay from its available funds or from the proceeds of the Series 2006A Bonds, certain expenses set forth in this Section, including but not limited to: (i) all expenses in connection with the preparation, distribution and delivery of the Preliminary Official Statement, the Official Statement, and any amendment or supplement thereto, and this Purchase Contract, exclusive of underwriter's counsel fees; (ii) all expenses in connection with the printing, issuance and delivery of the Series 2006A Bonds; (iii) the fees and disbursements of Bond Counsel; (iv) the fees and disbursements of counsel and consultants, including pricing and redevelopment advisors, to the Commission in connection with the Series 2006A Bonds; (v) the disbursements of the Commission and the Authority in connection with the Series 2006A Bonds; (vi) the fees and disbursements of the Trustee, including but not limited to, fees and disbursements of its counsel, travel and other expenses; (vii) any and all fees incurred in connection with obtaining a rating on the Series 2006A Bonds or in obtaining any form of credit enhancement or bond insurance; and (xiii) all expenses in connection with the preparation, execution and delivery of the First Supplement and the Series 2006A Bonds and the preparation and adoption of the Bond Resolution. 10. Qualification under Securities Laws. The Commission and the Authority agree to cooperate with the Underwriter in any endeavor to qualify the Series 2006A Bonds for offering and sale under the securities or "blue sky" laws of such jurisdictions of the United States as the Underwriter may request; provided that neither the Commission nor the Authority shall be required to qualify in, or submit to the general jurisdiction of, any state in which it is not now so qualified or of which it has not submitted to the general jurisdiction. The Commission and the Authority consents to the use of the Preliminary Official Statement and Official Statement by the Underwriter in obtaining such qualifications. 11. Notice. Any notice or other communication to be given to the Commission or the Authority under this Purchase Contract may be given by delivering the same in writing at the address set forth above. Any such notice or communication to be given to the Underwriter may be given by delivering the same in writing to: Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, CA 94104 Attention: Eric Scriven, Vice President 12. Governing Law. This Purchase Contract shall be governed by the laws of the State of California. 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. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] DOCSLA1:515200.4 41555-8 WWB/WWB 12 13. Parties in Interest. This Purchase Contract is made solely for the benefit of the signatories hereto (including the respective successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of (a) delivery of and payment for any of the Series 2006A Bonds and (b) any termination of this Purchase Contract. Accepted and agreed to as of the date first written above: Very truly yours, PIPER JAFFRAY & CO. By: Authorize Representative ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer Attest: By: Secretary ROSEMEAD FINANCING AUTHORITY By: Authorized Officer Attest: By: Secretary DOCSLA1:515200.4 41555-8 wwB/WWB 13 13. Parties in Interest. This Purchase Contract is made solely for the benefit of the signatories hereto (including the respective successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. All representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of (a) delivery of and payment for any of the Series 2006A Bonds and (b) any termination of this Purchase Contract. Accepted and agreed to as of the date first written above: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Very truly yours, PIPER JAFFRAY & CO. By: By: Authoriz Offi r Attest: By: Secretary ROSEMEAD FINANCING AUTHORITY Officer Attest: - r A~j4A, irA Secretary Authorized Representative DOCSLA1:515200.4 41555-8 WWB/WWB 13 APPENDIX I MATURITY SCHEDULE Series 2006A Bonds Maturity Interest Price or (October 1) Amount Rate Yield 2006 $ 780,000 4.000% 3.150% 2007 810,000 4.000 3.200 2008 845,000 3.250 3.300 2009 870,000 3.250 3.400 2010 900,000 3.375 3.480 2011 930,000 3.500 3.530 2012 965,000 3.500 3.630 2013 1,000,000 4.000 3.700 2014 1,035,000 5.000 3.750 2015 1,090,000 5.000 3.830 2016 1,145,000 5.000 3.930 2017 1,200,000 4.000 4.020 2018 1,250,000 4.250 101.702* 2019 280,000 4.000 4.150 2020 290,000 4.125 4.200 2021 300,000 4.125 4.250 2022 315,000 4.125 4.300 * Price reflects an assumed par call on October 1, 2016. DOCSLA1:515200.4 41555-8 WWB/WWB I-1 EXHIBIT A [Form of Opinion of Disclosure Counsel] [Closing Date] Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds Revenue Refunding Bonds, Series 2006A Ladies and Gentlemen: We have acted as disclosure counsel to the Rosemead Community Development Commission (the "Agency"), as the Commission on this date of $14,005,000 aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). In that connection, we have reviewed a printed copy of the official statement of the Commission, dated February 23, 2006, with respect to the Series 2006A Bonds (the "Official Statement"), the Purchase Contract, dated February 23, 2006 (the "Purchase Contract'), among the Commission, the Rosemead Financing Authority and Piper Jaffray & Co., as underwriter (the "Underwriter"), certificates and opinions of the Commission, the Authority, the County of San Diego and others, and we have made such investigations of law as we have deemed appropriate as a basis for the conclusion hereinafter expressed. We have not reviewed any electronic version of the Official Statement, and assume that any such version is identical in all respects to the printed version. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement. In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including, without limitation, any representations and legal conclusions regarding the due authorization, issuance, delivery, validity and enforceability of the Series 2006A Bonds and the exclusion of interest thereon from gross income for federal income tax purposes, and the legality, validity and enforceability of the First Supplement, the Master Pledge Agreement, the Second Supplement, and any laws, documents or instruments that may be related to the issuance, payment or security of the Series 2006A Bonds. We have assumed that all records, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make DOCSLAI :515200.4 41555-8 wWB/WWB A-1 no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the Commission, to assist it in part of its responsibility with respect to the Official Statement, we participated in conferences with representatives of the Commission and the Authority and their respective counsel, Public Financial Management, Inc., as financial advisor, GRC Associates, Inc., as fiscal consultant, the Underwriter and others, during which the contents of the Official Statement and related matters were discussed. Based on our participation in the above-mentioned conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon and on the records, documents, certificates, opinions and matters mentioned above, we advise you as a matter of fact and not opinion that, during the course of our role as disclosure counsel with respect to the Series 2006A Bonds, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such role which caused us to believe that the Official Statement as of its date (except for any CUSIP numbers, financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about feasibility, valuation, appraisals, absorption, real estate or environmental matters, any information about the Bond Insurer or the Insurance Policy, DTC or its book-entry system, or Appendices A, C, E and G, included or referred to therein, which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view) 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. By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not an opinion but in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm in our role as disclosure counsel; (ii) the scope of those activities performed by us were inherently limited and do not purport to encompass all activities that the Commission or the Authority may be responsible to undertake; (iii) those activities performed by us rely on third party representations, warranties, certifications and opinions, including and primarily, representations, warranties and certifications made by the Commission and the Authority, and are otherwise subject to the conditions set forth herein; and (iv) this letter may not be sufficient for or appropriate to your purposes. This letter is furnished by us as disclosure counsel. Our engagement with respect to this matter has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Very truly yours, ORRICK, HERRINGTON & SUTCLIFFE LLP DOCSLA1:515200.4 41555-8 WWB/WWB A-2 EXHIBIT B [Form of Opinion of Counsel to the Commission] [Closing Date] Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, California 94104 Orrick, Herrington & Sutcliffe LLP 777 S. Figueroa Street, Suite 3200 Los Angeles, California 90017 Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds Series 2006A Ladies and Gentlemen: We have acted as counsel to the Rosemead Community Development Commission (formerly Rosemead Redevelopment Agency, the "Commission") in connection with the sale of its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). The Series 2006A Bonds are being issued pursuant to Resolution No. 2006-02, adopted by the Commission on February 14, 2006 (the "Bond Resolution"), the Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and State Street Bank and Trust Company of California, N.A., as predecessor trustee to U.S. Bank National Association, as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (as amended, the "Indenture") between the Commission and the Trustee. In that connection we have examined originals or copies certified or otherwise identified to my satisfaction of the Issuing Documents, as defined below, the Tax Certificate dated as of the date hereof (the "Tax Certificate"), the Continuing Disclosure Agreement for the Series 2006A Bonds, dated as of March 1, 2006 (the "Continuing Disclosure Agreement") by and among the Commission, the Trustee and U.S. Bank National Association, as dissemination agent, the Escrow Agreement, dated as of March 1, 2006 (the "Escrow Agreement") between the Commission and the Trustee in its capacity as escrow bank under the Escrow Agreement, and the Official Statement of the Commission, dated February 23, 2006 (the "Official Statement") relating to the Series 2006A Bonds. The Indenture, the Continuing Disclosure Agreement and the Escrow Agreement are collectively referred to herein as the "Issuing Documents." DOCSLAI :515200.4 41555-8 WWB/WWB C-1 Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Issuing Documents. Based on the foregoing, we are of the opinion that: (i) The Commission is a public body, corporate and politic, duly organized and validly existing under the laws of the State. (ii) The Issuing Documents have been duly authorized, executed and delivered by the Commission and, assuming due authorization, execution and delivery by the other parties thereto, constitute the valid, legal and binding obligations of the Commission enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. (iii) The Bond Resolution has been duly adopted at a meeting of the governing body of the Commission, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout. The Bond Resolution is in full force and effect, has not been modified, amended or rescinded and constitutes the valid and binding obligation of the Commission enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. (iv) The execution and delivery of the First Supplement, the Continuing Disclosure Agreement, the Escrow Agreement, the Tax Certificate, the Purchase Contract and the Official Statement and compliance with the provisions of the Issuing Documents, under the circumstances contemplated thereby, (a) to the best of my knowledge based on inquiry deemed sufficient by me for the purpose of this opinion, do not and will not in any material respect conflict with or constitute on the part of the Commission a breach of or default under any agreement or other instrument to which the Commission is a party or by which it is bound, and (b) do not and will not in any material respect constitute on the part of the Commission a violation, breach of or default under any existing law, regulation, court order or consent decree to which the Commission is subject. (v) The Official Statement has been duly authorized by the governing body of the Commission and executed on its behalf by an authorized officer of the Commission. (vi) 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 date hereof for the Commission to adopt the Bond Resolution, to enter into or to perform its obligations under the Issuing Documents. (vii) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or DOCSLA1:515200.4 41555-8 WWB/WWB C-2 by any court, governmental agency or body, pending or threatened against the Commission, challenging. the creation, organization or existence of the Commission, or the validity of the Series 2006A Bonds or the Issuing Documents or seeking to restrain or enjoin the repayment of the Series 2006A Bonds or in any way contesting or affecting the validity of the Series 2006A Bonds or the Issuing Documents or any of the transactions referred to therein or contemplated thereby or contesting the authority of the Commission to enter into or perform its, obligations under any of the Series 2006A Bonds or the Issuing Documents, or which, in any manner, questions the right of the Commission to issue or to use the Pledged Tax Revenues for repayment of the Series 2006A Bonds or affects in any manner the right or ability of the Commission to enter into the Series 2006A Bonds or to collect or pledge the Pledged Tax Revenues for repayment of the Series 2006A Bonds. (viii) Based upon examinations which we have made and our discussions in conferences with certain officials of the Commission and others with respect to the Official Statement and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement (including the Appendices attached thereto), nothing has come to my attention which would lead me to believe that the Official Statement (other than financial and statistical data therein and incorporated therein by reference, and other than information relating to the Bond Insurer or its Insurance Policy or Surety Bond, DTC or its Book-Entry System, and the information provided by the Underwriter for inclusion in the Official Statement, as to which no opinion is expressed) contains an 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. Very truly yours, WALLIN, KREss, REIsmAN & KRANiTz LLP DOCSLA1:515200.4 41555-8 WWB/WWB C-3 NEW-ISSUE - FULL BOOK-ENTRY Ratings (Insured): S&P: "AAA" Underlying Rating: S&P: "BBB+" (See "RATINGS" herein) In the opinion of Orrick, Herrington Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2006A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Series 2006A Bonds. See "TAX MATTERS" herein. $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (LOS ANGELES COUNTY, CALIFORNIA) REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A Dated: Date of Delivery Due: October 1, as shown on inside cover THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY, IT IS NOT A SUMMARY OF ALL OF THE PROVISIONS OF THE SERIES 2006A BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 2006A Bonds will be issued in denominations of $5,000 or any integral multiple thereof as shown on the inside cover page of this Official Statement. Interest on the Series 2006A Bonds is payable on April 1 and October 1 of each year, commencing October 1, 2006. The Series 2006A Bonds will be issued in book-entry form, without coupons, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers of the Series 2006A Bonds will not receive physical certificates from the Commission representing their interests in the Series 2006A Bonds purchased. DTC will act as securities depository for the Series 2006A Bonds. The principal of and interest on the Series 2006A Bonds are payable directly to DTC by U .S. Bank National Association, Los Angeles, California, as Trustee. Upon receipt of payments of such principal and interest, DTC is obligated to remit such principal and interest to the participants in DTC for subsequent disbursement to the beneficial owners of the Series 2006A Bonds. The Series 2006A Bonds are being issued by the Rosemead Community Development Commission (the "Commission"): (1) to refund a portion of the Commission's outstanding Series 1993 Bonds (as defined herein); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined herein) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay costs of issuance related to the Series 2006A Bonds. See "PLAN OF FINANCE" herein. The Series 2006A Bonds are subject to optional and mandatory redemption as described herein. Payment of the principal of and interest on the Series 2006A Bonds when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Series 2006A Bonds. Ai1'fbac The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are liable personally on the Series 2006A Bonds by reason of their issuance. For a discussion of some of the risks associated with the purchase of the Series 2006A Bonds, see "RISK FACTORS" herein. Legal matters incident to the issuance and sale of the Series 2006A Bonds are subject to the approving opinion of Orrick, Herrington & Sutcl feLLP, LosAngeles, California, Bond Counsel. As Bond Counsel, Orrick, Herrington & Sutcliffe LLP undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Commission in connection with the Series 2006A Bonds by Wallin, Kress, Reisman & Krantz LLP, Santa Monica, California, as counsel to the Commission, and by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel. The Commission anticipates that the Series 2006A Bonds, in book entry form, will be available for delivery to DTC in New York, New York on or about March 9, 2006 PiperJaffray. Dated: February 23, 2006 MATURITY SCHEDULE SERIES 2006A BONDS BASE CUSIPt 777510 Maturity Interest CUSIP Maturity Interest CUSIP (October 1) Amount Rate Yield Numbert (October 1) Amount Rate Yield Numbert 2006 $ 780,000 4.000% 3.150% AA6 2015 $1,090,000 5.000% 3.830% AK4 2007 810,000 4.000 3.200 AB4 2016 1,145,000 5.000 3.930 AL2 2008 845,000 3.250 3.300 AC2 2017 1,200,000 4.000 4.020 AMO 2009 870,000 3.250 3.400 ADO 2018 1,250,000 4.250 4.050' AN8 2010 900,000 3.375 3.480 AE8 2019 280,000 4.000 4.150 AP3 2011 930,000 3.500 3.530 AF5 2020 290,000 4.125 4.200 AQl 2012 965,000 3.500 3.630 AG3 2021 300,000 4.125 4.250 AR9 2013 1,000,000 4.000 3.700 AH1 2022 315,000 4.125 4.300 AS7 2014 1,035,000 5.000 3.750 A77 t CUSIP data, copyright 2006, American Bankers Association. CUSIP data herein are provided for convenience of reference only. None of the Commission, the Authority or the Underwriter shall be responsible for the selection or correctness of the CUSIP numbers set forth above. * Priced to an assumed par call on October 1, 2016. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Jay T. Imperial, Chairperson Gary A. Taylor, Vice Chairperson Margaret Clark John Tran John H. Nunez CITY/COMMISSION STAFF William Crowe City Manager and Executive Director of the Commission Donald J. Wagner Assistant City Manager and Assistant Executive Director of the Commission Peter L. Wallin City Attorney and General Counsel to the Commission Karen Ogawa Finance Director Nina Castruita City Clerk Special Services U.S. Bank National Association Trustee Orrick, Herrington & Sutcliffe LLP Bond Counsel and Disclosure Counsel Wallin, Kress, Reisman & Kranitz LLP Commission's Counsel GRC Associates, Inc. Fiscal Consultant Public Financial Management, Inc. Financial Advisor The Arbitrage Group, Inc. Verification Agent NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OR SALE OF THE SERIES 2006A BONDS, OTHER THAN AS CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMMISSION, THE CITY OR THE UNDERWRITER. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE DESCRIBED ON THE INSIDE COVER PAGE OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOR WILL THERE BE ANY SALE OF THE SERIES 2006A BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER, SOLICITATION OR SALE. THE OFFICIAL STATEMENT IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE SERIES 2006A BONDS. Statements contained in this Official Statement which involve time estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The information set forth herein has been furnished by the Commission, the City, or other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Commission, the City or the Underwriter. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Commission or the City 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 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 securities referred to herein and may not be reproduced or be used, as a whole or in part, for any other purpose. IN CONNECTION WITH THE OFFERING OF THE SERIES 2006A BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2006A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER TO SELL THE SERIES 2006A BONDS 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. THE SERIES 2006A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE SERIES 2006A BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT 1 The Series 2006A Bonds I The Authority, the Commission and the Redevelopment Project Area No. 1 2 Tax Allocation Financing 2 Bond Insurance 2 Tax Exemption 3 Continuing Disclosure 3 Additional Information 3 PLAN OF FINANCE 4 General 4 Plan of Refunding 4 ESTIMATED SOURCES AND USES OF FUNDS 5 THE SERIES 2006A BONDS 5 Description of the Series 2006A Bonds 5 DTC and Book-Entry Only System ..........................................................................................................6 Redemption 6 Notice of Redemption 7 DEBT SERVICE SCHEDULES FOR THE SERIES 2006A BONDS AND THE SERIES 1993 BONDS 7 SECURITY FOR THE SERIES 2006A BONDS ...................................................................................................8 Pledge and Allocation of Taxes 8 Reserve Accounts 10 Reserve Surety Bond I I Issuance of Additional Bonds 12 Series 2006A Bonds Not a Debt of the City or the State 15 BOND INSURANCE 15 Payment Pursuant to Financial Guaranty Insurance Policy 15 Ambac Assurance Corporation 16 Available Information 17 Incorporation of Certain Documents by Reference 17 RISK FACTORS 18 Assumptions and Projections 18 Real Estate and General Economic Risks 18 Reduction in Assessed Value 19 Assessment Appeals 19 Reduction in Inflationary Rate 20 Real Estate and General Economic Risks 20 State Budget Deficit and Its Impact on Pledged Tax Revenues 20 Proposition IA 22 Limited Obligations 22 Hazardous Substances 22 Certain Bankruptcy Risks 22 Secondary Market 23 Loss of Tax Exemption 23 Risk of Earthquake 23 Teeter Plan 23 Concentration of Land Ownership 23 TABLE OF CONTENTS (continued) Page TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT 24 Introduction 24 Property Tax Rate and Appropriation Limitations 24 Unitary Property 25 Property Tax Administrative Costs 26 _ Property Tax Collection Procedures 27 Plan Limitations 27 Low and Moderate Income Housing Fund 29 Assembly Bill 1290 30 Pass-Through Arrangements 30 Proposition 218 30 Future Initiatives 31 THE COMMISSION 31 Organization 31 Powers 31 THE REDEVELOPMENT PROJECT AREA NO. 1 32 Project Area Description 32 Assessed Values 33 Project Status 34 Controls, Land Use and Building Restrictions 35 Current Plans for the Redevelopment Project Area No. 1 36 Ten Largest Secured Taxpayers 36 TAX INCREMENT REVENUES 37 Projected Tax Revenues 38 Assessment Appeals 41 Debt Service and Estimated Coverage 41 CERTAIN INFORMATION CONCERNING THE CITY 43 CERTAIN LEGAL MATTERS 43 TAX MATTERS ...................................................................................................................................................43 LITIGATION .......................................................................................................................................................45 RATINGS 45 UNDERWRITING 46 VERIFICATION ..................................................................................................................................................46 FINANCIAL ADVISOR ......................................................................................................................................46 FISCAL CONSULTANT .....................................................................................................................................46 MISCELLANEOUS .............................................................................................................................................46 APPENDIX A - FISCAL CONSULTANT'S REPORT .....................................................................................A-1 APPENDIX B - FORM OF OPINION OF BOND COUNSEL .........................................................................B-1 APPENDIX C - DTC AND BOOK-ENTRY ONLY SYSTEM C-1 APPENDIX D - DEFINITIONS AND SUMMARY OF INDENTURE ............................................................D-1 APPENDIX E - SUPPLEMENTAL INFORMATION CONCERNING THE CITY OF ROSEMEAD E-1 APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 APPENDIX G - FORM OF BOND INSURANCE POLICY .....................................................................G-1 11 OFFICIAL STATEMENT $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (LOS ANGELES COUNTY, CALIFORNIA) REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A INTRODUCTORY STATEMENT This Official Statement, including the cover page, the inside cover page and appendices hereto, is provided to furnish information regarding the Commission's $14,005,000 aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). The Series 2006A Bonds are to be issued by the Rosemead Community Development Commission (the "Commission"). The Series 2006A Bonds are payable from and secured by Pledged Tax Revenues, as defined in the Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement to Indenture," together with the Original Indenture, the "Indenture"), by and between the Commission and the Trustee. As used herein, the term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Redevelopment Law (as defined below) in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Redevelopment Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Capitalized terms used in this paragraph and not defined are defined below. See "SECURITY FOR THE SERIES 2006A BONDS" herein. The Series 2006A Bonds are being issued by the Commission: (1) to refund a portion of the Commission's outstanding Series 1993 Bonds (as defined below); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined below) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay.costs of issuance related to the Series 2006A Bonds. See "PLAN OF FINANCE" herein. The Series 2006A Bonds The Series 2006A Bonds are being issued for sale to the Rosemead Financing Authority (the "Authority") pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6854) of the California Government Code (the "JPA Law"). The Series 2006A Bonds purchased by the Authority will be resold concurrently to the Underwriter. The Series 2006A Bonds are being issued pursuant to the Constitution and the laws of the State of California (the "State"), including the California Community Redevelopment Law (Part 1, commencing with Section 33000 of Division 24 of the Health and Safety Code of the State (the "Redevelopment Law"). Additionally, the Series 2006A Bonds are being issued pursuant to a Resolution adopted by the Commission on February 14, 2006, and pursuant to and secured by the Indenture. See "SECURITY FOR THE SERIES 2006A BONDS" herein. The Authority, the Commission and the Redevelopment Project Area No.1 The Authority. The Rosemead Financing Authority was created by a Joint Exercise of Powers Agreement between the City and the Commission. The Agreement was entered into pursuant to the provisions of the JPA Law. The Authority was created for the primary purpose of providing financing or refinancing for purposes which are authorized under the JPA Law. Under the JPA Law, the Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Commission. The Rosemead Community Development Commission, formerly known as the Rosemead Redevelopment Agency, was activated in 1972 by City Ordinance. The City Council Members serve as the Members of the Commission. The Commission is a separate public body which plans and implements projects in accordance with the requirements of the Redevelopment Law. The Commission has two active project areas, Redevelopment Project Area No. 1 and Redevelopment Project No. 2. The Series 2006A Bonds are being issued finance and refinance redevelopment activity for Redevelopment Project Area No. 1. Tax increment generated in Redevelopment Project Area No. 2 is NOT available to pay debt service on the Series 2006A Bonds. The Project Area. The Redevelopment Plan for the Redevelopment Project Area No. 1 ("Redevelopment Project Area No. 1" or the "Project Area" herein) was adopted by Ordinance No. 340 of the City Council on June 27, 1972. The Project Area is a contiguous area of about 511 acres and is roughly triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the major thoroughfares traversing the area. The Project Area is within a few miles of the City's Civic Center and is located between the San Bernardino and Pomona Freeways to the north and south, respectively. Tag Allocation Financing Pursuant to the Redevelopment Law, a portion of all property tax revenues, including certain reimbursements by the State of California, collected by or for each taxing agency on any increase in the taxable value of certain property within each redevelopment project over that shown on the assessment rolls for the base year applicable to each such redevelopment project may be pledged to the repayment of indebtedness incurred by the Commission in connection with project redevelopment. Under the Indenture, the Commission has pledged tax increments to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds. See "SECURITY FOR THE SERIES 2006A BONDS" herein. Certain events, including any future decrease in the taxable valuation in the Project Area or in the applicable tax rates or increased delinquencies in the payment of property taxes within the Project Area may reduce tax increment allocated to and received by the Commission, and correspondingly may adversely impact the ability of the Commission to pay debt service on the Series 2006A Bonds. See "RISK FACTORS" herein. Bond Insurance The scheduled payment of principal of and interest on the Series 2006A Bonds when due will be insured under a financial guaranty insurance policy (the "Policy") to be issued concurrently with the delivery of the Series 2006A Bonds by Ambac Assurance Corporation (the "Bond Insurer" or "Ambac Assurance"). See "BOND INSURANCE" herein. 2 Tax Exemption For a summary of the opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Special Counsel, see "TAX MATTERS" herein. Continuing Disclosure The Commission has covenanted for the benefit of owners of the Series 2006A Bonds to provide, so long as the Series 2006A Bonds are outstanding, certain financial information and operating data relating to the Commission by not later than 270 days following the end of the Commission's fiscal year (which is currently June 30), commencing March 31, 2007, for the 2005-06 fiscal year report (the "Annual Report") and to provide notices of the occurrences of certain enumerated events, if material. These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5). The Commission has never failed to comply in all material respects with any continuing disclosure undertakings with regard to Rule 15c2-12(b)(5) to provide annual reports or notices of material events. The specific nature of the information to be contained in the Annual Report or the notices of material events by the Commission is set forth in APPENDIX F - "FORM OF CONTINUING DISCLOSURE AGREEMENT." Additional Information There follows in this Official Statement brief descriptions of the Series 2006A Bonds, the security for the Series 2006A Bonds, the Indenture, the Commission, the Project Area, and certain other information relevant to the issuance of the Series 2006A Bonds. All references herein to the Indenture are qualified in their entirety by reference to the definitive forms thereof and all references to the Series 2006A Bonds are further qualified by references to the information with respect thereto contained in the appropriate Indenture. The Report of GRC Associates, Inc., the Fiscal Consultant, dated February 7, 2006, regarding tax increment revenues is included in Appendix A (the "Fiscal Consultant's Report"). The proposed form of legal opinion for the Series 2006A Bonds is set forth in Appendix B. Certain information relating to DTC and the book- entry only system is included in Appendix C. Definitions and a summary of certain provisions of the Indenture are included in Appendix D. Selected information regarding the City of Rosemead and the County of Los Angeles is included in Appendix E. The proposed form of Continuing Disclosure Agreement is included in Appendix F. The specimen form of the Policy of the Bond Insurer is included in Appendix G. All capitalized terms used herein and not normally capitalized have the meanings assigned to them in the Indenture, as applicable, unless otherwise stated in this Official Statement. The information set forth herein and in the Appendices hereto has been furnished by the Commission and includes information which has been obtained from other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter. Copies of the Indenture and the Commission's audited financial statements regarding the Project Area for the Fiscal Year ended June 30, 2004, are available upon request of the Commission. The Commission's address and telephone number for such purpose are as follows: 8838 East Valley Boulevard, P.O. Bok 399, Rosemead, California 91770, Attn: Finance Director, Telephone: (626) 569-2100. PLAN OF FINANCE General The Series 2006A Bonds are being issued by the Commission: (1) to refund a portion of the Commission's outstanding Series 1993 Bonds (as defined below); (2) to finance redevelopment activity in the Redevelopment Project Area No. 1 (as defined below) (the "Project"); (3) to fund a debt service reserve account surety; and (4) to pay costs of issuance related to the Series 2006A Bonds. A p6ition of the proceeds of the Series 2006A Bond proceeds will be deposited in an escrow account and used to refinance redevelopment activities through the refunding of a portion of the outstanding principal amount of the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993 Bonds"). See "Plan of Refunding" below. Plan of Refunding $8,317,412.37 of the proceeds of the Series 2006A Bonds together with $998,561.87 currently on deposit in the Reserve Account and $253,053.75 currently on deposit in the Debt Service Fund under the Original Indenture will be deposited in an escrow fund (the "Escrow Fund") established under an Escrow Agreement between the Commission and the Trustee. The moneys so deposited will be used to purchase certain securities (the " Government Obligations"), the interest and principal of which will be sufficient to pay on April 1, 2006, the scheduled interest on the outstanding Series 1993 Bonds and on April 10, 2006 (the "Redemption Date"), the principal of the outstanding Series 1993 Bonds scheduled to mature on October 1, 2006 through October 1, 2018 (the "Refunded Bonds") at a redemption price of 100% and accrued and unpaid interest thereon. (See "VERIFICATION" herein). Upon the issuance of the Series 2006A Bonds, irrevocable instructions will be given to mail a timely notice of redemption of the Refunded Bonds on the Redemption Date. The maturing principal of and the investment income to be derived from the Government Obligations in the Escrow Fund will held in trust solely for the Refunded Bonds and will not be available to pay the principal amount or purchase price of or interest on the Series 2006A Bonds or any obligations other than the Refunded Bonds. 4 ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds for the Series 2006A Bonds are as follows: ESTIMATED SOURCES AND USES OF FUNDS Sources of Funds: Principal Amount of Series 2006A Bonds Net Original Issue Premium Underwriter's Discount Funds released from Original Indenture TOTAL SOURCES OF FUNDS Uses of Funds: Deposit to Series 2006A Expense Account(') Deposit to Redevelopment Fund Deposit to Escrow Fund TOTAL USES OF FUNDS $14,005,,000.00 316,830.40 (84,030.00) 1,251,615.62 $15,489,416.02 $ 466,293.09 5,454,094.94 9,569,027.99 $15,489,416.02 Includes the premium for the Financial Guaranty Insurance Policy and the Reserve Surety Bond issued by the Bond Insurer, the fees and expenses of the fiscal consultant, Bond Counsel and Disclosure Counsel, the Trustee (including counsel fees), the rating agencies, the financial advisor, other costs incidental to the issuance of the Series 2006A Bonds, and the costs of printing. THE SERIES 2006A BONDS Description of the Series 2006A Bonds The Series 2006A Bonds will be dated, will bear interest at the annual rates and will mature, subject to prior redemption or acceleration, as shown on the inside cover page of this Official Statement. The Series 2006A Bonds will be issued in denominations of $5,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2006A Bonds will be payable on April 1 and October 1 of each year (each an "Interest Payment Date"), commencing October 1, 2006. Principal and redemption premiums, if any, on the Series 2006A Bonds will be payable upon the surrender thereof at maturity or the earlier redemption thereof at the principal corporate trust office of the Trustee and will be paid in lawful money of the United States of America. Interest on the Series 2006A Bonds will be computed on the basis of a 360-day year of twelve 30-day months. The Series 2006A Bonds will bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from the 16th day of the month next preceding an Interest Payment Date to and including such Interest Payment Date, in which event they will bear interest from such Interest Payment Date, or unless such date of registration is on or before September 15, 2006, in which event they will bear interest from their Dated Date; provided, however, that if, at the time of registration of any Series 2006A Bond, interest is then in default on the outstanding Series 2006A Bonds, such Series 2006A Bond will bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the outstanding Series 2006A Bonds. Payment of interest on the Series 2006A Bonds due on or before the maturity or prior redemption of such Series 2006A Bonds will be made to the person whose name appears on the bond registration books of the Trustee as the registered owner thereof, as of the close of business on the 15th day of the month next preceding the Interest Payment Date, such interest to be paid by check mailed on the Interest Payment Date by first class mail to such registered owner at his address as it appears on such books or, upon written request received prior to the 15th day of the month preceding an Interest Payment Date of an Owner of at least $1,000,000 in aggregate principal amount of Series 2006A Bonds, by wire transfer in immediately available funds to an account within the continental United States designated by such Owner. DTC and Book-Entry Only System DTC will act as securities depository for the Series 2006A Bonds. The Series 2006A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered certificate will be issued for each series and for each year in which the miseries 2006A Bonds mature in denominations equal to the aggregate principal amount of the Series 2006A Bonds of each series maturing in that year, and will be deposited with DTC. So long as Cede & Co. is the registered owner of the Series 2006A Bonds, as nominee of DTC, references herein to the owners of the Series 2006A Bonds or Bondowners means Cede & Co. and does not mean the actual purchasers of the Series 2006A Bonds (the "Beneficial Owners"). See APPENDIX C - "DTC AND BOOK-ENTRY ONLY SYSTEM," herein, for a further description of DTC and its book-entry system. Redemption Optional Redemption. The Series 2006A Bonds due on or before October 1, 2016 are not subject to redemption prior to their respective stated maturities. Series 2006A Bonds maturing on or after October 1, 2017 are subject to redemption, as a whole or in part, as designated by the Commission, or, absent such designation, pro rata among maturities, and by lot within any one maturity if less than all of the Series 2006A Bonds of such maturity are to be redeemed, prior to their respective maturity dates, at the option of the Commission, on any date on or after October 1, 2016, from funds derived by the Commission from any source, at the redemption prices of the principal amount of the Series 2006A Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption. Purchase in Lieu of Redemption. In lieu of redemption of any Term Bond, amounts on deposit in the Debt Service Fund or in the Sinking Account therein may also be used and withdrawn by the Trustee at any time, upon the Request of the Commission received by the Trustee prior to the selection of Bonds for redemption, for the purchase of such Term Bonds 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 Commission may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date; provided, however, that no Bonds shall be purchased by the Trustee in accordance with this paragraph with a settlement date more than 90 days prior to the redemption date. The principal amount of any Term Bonds so purchased by the Trustee in any twelve month period ending 60 days prior to any Principal Payment Date in any year shall be credited towards and shall reduce the principal amount of such Term Bonds required to be redeemed on such Principal Payment Date in such year. Selection of Bonds. Whenever less than all the Outstanding Bonds of a Series maturing on any one date are called for redemption at any one time, the Trustee shall select the Bonds to be redeemed from the Outstanding Bonds of such Series maturing on such date not previously selected for redemption, by lot in any manner which the Trustee deems fair; provided, however, that if less than all the Outstanding Term Bonds of a Series of any maturity are called for redemption at any one time, upon the written direction from the Commission, the Trustee shall specify a reduction in any Sinking Account Installment payments required to be made with respect to such Bonds (in an amount equal to the amount of Outstanding Term Bonds to be redeemed) which, to the extent practicable, results in approximately equal Annual Debt Service on the Bonds Outstanding following such redemption. Notice of Redemption Notice of redemption will be mailed by first class mail by the Trustee, not less than 30 nor more than 60 days prior to the redemption date to (1) the respective Owners of Series 2006A Bonds designated for redemption at their addresses appearing on the bond registration books of the Trustee, (2) to one or more Information Services designated in writing to the Trustee by the Commission and (3) the Securities Depositories. Each notice of redemption will state the date of such notice, the Series 2006A Bonds to be redeemed, the date of issue of such Series 2006A Bonds, the redemption date, the redemption price, the place or places of redemption (including the name and appropriate address or addresses), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity are to be redeemed, the distinctive certificate numbers of the Series 2006A Bonds of such maturity to be redeemed and, in the case of Series 2006A Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice will also state that on said date there will become due and payable on each of such Series 2006A Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Series 2006A Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Series 2006A Bonds be then surrendered at the address or addresses of the Trustee specified in the redemption notice. Failure by the Trustee to give notice pursuant to above to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice will not affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed to such Owner and any defect in the notice so mailed will not affect the sufficiency of the proceedings for redemption. The Commission will have the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be canceled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Series 2006A Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Indenture. The Commission and the Trustee will have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. From and after the date fixed for redemption, if notice of such redemption shall have been duly given and funds available for the payment of such redemption price of the Bonds so called for redemption shall have been duly provided, no interest shall accrue on such Bonds from and after the redemption date specified in such notice. DEBT SERVICE SCHEDULES FOR THE SERIES 2006A BONDS AND THE SERIES 1993 BONDS Set forth below is the principal and interest on the Series 2006A Bonds and Series 1993 Bonds remaining outstanding as of the date of issuance of the Series 2006A Bonds. 7 DEBT SERVICE ON THE BONDS Year Series 1993 Principal' Series 1993 Interest' Series 1993 Total' Series 2006A Principal Series 2006A Interest Series 2006A Total Total Debt Service 2006 $ 1,546,373.75 $ 1,546,373.75 $ 780,000 $ 319,380.94 $ 1,099,380.94 $ 2,645,754.69 2007 - 1,293,320.00 1,293,320.00 810,000 537,993.76 1,347,993.76 2,641,313.76 2008 1,293,320.00 1,293,320.00 845,000 505,593.76 1,350,593.76 2,643,913.76 2009 1,293,320.00 1,293,320.00 870,000 478,131.26 1,348,131.26 2,641,451.26 2010 - 1,293,320.00 1,293,320.00 900,000 449,856.26 1,349,856.26 2,643,176.26 2011 - 1,293,320.00 1,293,320.00 930,000 419,481.26 1,349,481.26 2,642,801.26 2012 - 1,293,320.00 1,293,320.00 965,000 386,931.26 1,351,931.26 2,645,251.26 2013 1,293,320.00 1,293,320.00 1,000,000 353,156.26 1,353,156.26 2,646,476.26 2014 1,293,320.00 1,293,320.00 1,035,000 313,156.26 1,348,156.26 2,641,476.26 2015 - 1,293,320.00 1,293,320.00 1,090,000 261,406.26 1,351,406.26 2,644,726.26 2016 - 1,293,320.00 1,293,320.00 1,145,000 206,906.26 1,351,906.26 2,645,226.26 2017 1,293,320.00 1,293,320.00 1,200,000 149,656.26 1,349,656.26 2,642,976.26 2018 - 1,293,320.00 1,293,320.00 1,250,000 101,656.26 1,351,656.26 2,644,976.26 2019 $ 1,020,000 1,293,320.00 2,313,320.00 280,000 48,531.26 328,531.26 2,641,851.26 2020 1,080,000 1,236,200.00 2,316,200.00 290,000 37,331.26 327,331.26 2,643,531.26 2021 1,140,000 1,175,720.00 2,315,720.00 300,000 25,368.76 325,368.76 2,641,088.76 2022 1,205,000 1,111,880.00 2,316,880.00 315,000 12,993.76 327,993.76 2,644,873.76 2023 1,270,000 1,044,400.00 2,314,400.00 - 2,314,400.00 2024 1,340,000 973,280.00 2,313,280.00 - 2,313,280.00 2025 1,415,000 898,240.00 2,313,240.00 2,313,240.00 2026 1,495,000 819,000.00 2,314,000.00 2,314,000.00 2027 1,580,000 735,280.00 2,315,280.00 2,315,280.00 2028 1,675,000 646,800.00 2,321,800.00 2,321,800.00 2029 1,765,000 553,000.00 2,318,000.00 2,318,000.00 2030 1,865,000 454,160.00 2,319,160.00 - 2,319,160.00 2031 1,970,000 349,720.00 2,319,720.00 - 2,319,720.00 2032 2,080,000 239,400.00 2,319,400.00 - - 2,319,400.00 2033 2,195,000 122,920.00 2,317,920.00 - - 2,317,920.00 Total $23,095,000 $28,719,533.75 $51,814,533.75 $14,005,000 $4,607,531.10 $18,612,531.10 $70,427,064.85 * Assumes the refunding of the Refunded Bonds as described herein. Source: Rosemead Community Development Commission and Piper Jaffray & Co., as Underwriter of the Series 2006A Bonds. SECURITY FOR THE SERIES 2006A BONDS Pledge and Allocation of Taxes Under provisions of the California Constitution and the Redevelopment Law, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California, any city, county, city and county or other public corporation ("taxing agencies") for Fiscal Years beginning after the effective date of the ordinance approving the redevelopment plan for the Project Area (the "Effective Date"), are divided as follows: 1. The portion equal to the amount of those taxes which would have been produced by the current tax rate, applied to the assessed value of the taxable property in the Project Area as last equalized prior to the Effective Date is paid (when collected) into the funds of those respective taxing agencies as taxes by or for such taxing agencies; 2. Except as provided in subparagraph (3) below, that portion of such levied taxes each year in excess of such amount is allocated to and when collected paid into a special fund of the Commission, to the extent required to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed or otherwise) incurred by the Commission to finance or refinance, in whole or in part, (1) the Commission's redevelopment projects within the Project Area and (2) under certain circumstances, publicly owned improvements outside of the Project Area; and 3. That portion of the taxes identified in subparagraph (2) above that are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property approved by the voters of the taxing agency on or after January 1, 1989, will be allocated to, and when collected will be paid into, the fund of such taxing agency. Pursuant to the Indenture, "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Redevelopment Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Redevelopment Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Pursuant to the Indenture, the term "Housing Fund" means the Low and Moderate Income Housing Fund, established pursuant to Section 33334.3 of the Redevelopment Law with respect to the Project Area and held by the Commission. The County of Los Angeles (the "County") and the Commission entered into a certain agreement for reimbursement of tax increment funds with the County, the Consolidated Fire Protection District, and the County Public Library District pertaining to the Project Area. The elements of the County Agreement include the following: (i) the Commission is to provide for a pass-through of a portion of its tax increment revenues received after July 1, 1988 for the Consolidated Fire Protection District; and (ii) the Commission is to allow an additional pass-through of tax increment revenues for the Los Angles County Public Library District at such time that the Commission or the City constructs a replacement facility. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" for the Fiscal Consultant's projections of the pass-through payments to be made to other taxing entities. Such pass-through payments will not be available to the Commission to pay debt service on the Series 2006A Bonds. When the Commission extended the time frame to incur debt pursuant to California State Senate Bill ("SB") 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is approximately 83% of every $1.00 of property tax generated. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Commission makes the finding that the issuance of the debt will not impact the Commission's ability to make the statutory payments. The Commission has made the appropriate findings, and therefore the Fiscal Consultant has assumed that these payments are subordinated to bond indebtedness accordingly. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. These statutory pass-throughs to affected agencies began in the year 2004-05 at a rate of 25% of the tax increment growth net of the Housing Set-Aside Requirement with of base year of 2003-04. An additional pass through will begin in the year 2014-15 at a rate of 21% of the tax increment growth net of the Housing Set- Aside Requirement with a base year of 2013-14. The County includes the unitary assessed values in its calculation of SB 211 pass throughs. However, there is no consistent methodology among various counties 9 within the State as to the calculation of SB 211 pass throughs. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. For the purpose of its report and the projections set forth herein, the Fiscal Consultant has calculated the pass throughs based on the County's methodology. The Commission has no power to levy and collect property taxes, and any legislative property tax de- emphasis or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate would, in all likelihood, reduce the amount of Pledged Tax Revenues that would otherwise be available to pay the principal of, interest on and premium, if any, on the Series 2006A Bonds. Likewise, broadened property tax exemptions could have a similar effect. For a further description of factors which may result in decreased Pledged Tax Revenues, see "RISK FACTORS" herein. Reserve Accounts General. To further secure the payment of principal of and interest on the Series 2006A Bonds, the Commission is required to fund the Reserve Account established under the Original Indenture. The Reserve Account is a common reserve for Bonds at any time then Outstanding under the Indenture, in this case including the Series 1993 Bonds to remain Outstanding, the Series 2006A Bonds and any Additional Bonds to be issued in accordance with the Indenture. The following describes the Reserve Account provisions under the Indenture. Reserve Account Requirement. As defined in the Indenture, the Reserve Account Requirement for the Bonds means, as of any calculation date, an amount equal to the least of (i) ten percent (10%) of the amount (within the meaning of Section 148 of the Code), as certified by the Commission to the Trustee, of that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average Annual Debt Service of such Bonds or (iii) Maximum Annual Debt Service of such Bonds; provided, that for the purposes of such calculations, there shall be excluded an amount of Bonds or debt service thereon equal to the amount deposited in any escrow fund established pursuant to the Indenture. The Trustee shall set aside from the Debt Service Fund and deposit in the Reserve Account an amount of money (or other authorized deposit of security, as contemplated by the following paragraphs) equal to the Reserve Account Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the Commission is lawfully available therefor, or for the retirement of all Bonds then Outstanding, except that for so long as the Commission is not in default under the Indenture, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon Written Request of the Commission, be withdrawn from the Reserve Account by the Trustee and transferred to the Commission. In lieu of making the Reserve Account Requirement deposit in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of a letter of credit satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P and Moody's, in an amount, together with moneys, Authorized Investments or insurance policies satisfying the requirements set forth in the Indenture on deposit in the Reserve Account, equal to the Reserve Account Requirement and consistent with the terms specified in the Indenture. Such letter of credit shall have a term of no less than three (3) years. The issuer of such letter of credit shall be required to notify the Trustee and the Commission whether or not the letter of credit will be extended no later 10 than 13 months prior to the stated expiration date thereof. At least one year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year, or (iii) deliver to the Trustee an insurance policy satisfying the requirements set forth in the Indenture. Upon delivery of such replacement letter of credit, extended letter of credit, or insurance policy, the Trustee shall deliver the then effective letter of credit to or upon the order of the Commission. If the Commission shall fail to deposit a replacement letter of credit, extended letter of credit or insurance policy with the Trustee, the Commission shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Reserve AccountRequirement is on deposit in the Reserve Account no later than the stated expiration date of the letter of credit. If the Commission shall fail to make such deposits, the Trustee shall draw on such letter of credit on or before 10 days prior to its stated expiration date in an amount necessary to replenish the Reserve Account to the Reserve Account Requirement. If a drawing is made on the letter of credit, the Commission shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of an insurance policy satisfying the requirements set forth in the Indenture or the deposit in the Reserve Account of an amount sufficient to increase the balance in the Reserve Account to the Reserve Account Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing. In lieu of making the Reserve Account Requirement in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of an insurance policy satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may also deliver to the Trustee an insurance policy securing an amount, together with moneys, Authorized Investments or letters of credit satisfying the requirements set forth in the Indenture on deposit in the Reserve Account, no less than the Reserve Account Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of debt service on the Bonds and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies), at the time of such delivery, are rated in the highest rating category (without respect to any modifier) of A.M. Best & Company, S&P and Moody's. If and to the extent that the Reserve Account has been funded with a combination of cash (or Authorized Investments) and a Qualified Reserve Instrument, then all such cash (or Authorized 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 Authorized Investments). If the Reserve Account 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. Funding of Reserve Account Requirement. A portion of the Reserve Account Requirement is currently funded with cash. Upon issuance of the Series 2006A Bonds, the Reserve Account Requirement will equal $2,646,476.26. Upon issuance of the Series 2006A Bonds, the Commission anticipates that it will fund approximately 50% of the Reserve Account Requirement through the deposit of a Reserve Surety Bond issued by the Bond Insurer. The Reserve Surety Bond is a Qualified Reserve Instrument as defined below. Reserve Surety Bond The Indenture requires the establishment of a Reserve Account in an amount equal to the Reserve Account Requirement. The Indenture authorizes the Commission to obtain a surety bond in place of fully funding the Reserve Account. Accordingly, application has been made to Ambac Assurance for the issuance of the Surety Bond for the purpose of funding the Reserve Account. The Series 2006A Bonds will only be delivered upon the issuance of such Surety Bond with respect to the Series 2006A Bonds. The premium on the Surety Bond is to be fully paid at or prior to the issuance and delivery of the Series 2006A Bonds. The 11 Surety Bond provides that upon the later of (i) one day after receipt by Ambac Assurance of a demand for payment executed by the Trustee certifying that provision for the payment of principal of or interest on the Series 2006A Bonds when due has not been made or (ii) the interest payment date specified in the Demand for Payment submitted to Ambac Assurance, Ambac Assurance will promptly deposit funds with the Trustee sufficient to enable the Trustee to make such payments due on the Series 2006A Bonds, but in no event exceeding the Surety Bond Coverage, as defined in the Surety Bond. Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is automatically reduced to the extent of each payment made by Atnbac Assurance under the terms of the Surety Bond and the Commission is required to reimburse Ambac Assurance for any draws under the Surety Bond with interest at a market rate. Upon such reimbursement, the Surety Bond is reinstated to the extent of each principal reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement obligation of the Commission is subordinate to the Commission's obligations with respect to the Series 2006A Bonds. In the event the amount on deposit, or credited to the Reserve Account, exceeds the amount of the Surety Bond, any draw on the Surety Bond shall be made only after all the funds in the Reserve Account have been expended. In the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the Surety Bond, includes amounts available under a letter of credit, insurance policy, surety bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument, if any, shall be made on a pro rata basis to fund the insufficiency. The Indenture provides that the Reserve Account shall be replenished in the following priority: (i) principal and interest on the Surety Bond and on any Additional Funding Instrument shall be paid from first available Pledged Tax Revenues on a pro rata basis, and (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the Surety Bond and any such Additional Funding Instrument, shall be deposited from the next available amounts transferred to the Reserve Account pursuant to the foregoing provision of the Indenture. Trustee. The Surety Bond does not insure against nonpayment caused by insolvency or negligence of the In the event the Surety Provider were to be come insolvent, any claims arising under the Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. See "BOND INSURANCE - Ambac Assurance Corporation," Additional Information" and Incorporation of Certain Documents by Reference" for additional information regarding Ambac Assurance. Issuance of Additional Bonds The Commission may at any time after the issuance and delivery of the Series 2006A Bonds issue Additional Bonds payable from Pledged Tax Revenues and secured by a lien and charge upon Pledged Tax Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture, but only subject to the specific conditions set forth in the Indenture, which are conditions precedent to the issuance of any such Additional Bonds: (1) The Commission will be in compliance with all covenants set forth in the Indenture and any Supplemental Indentures, and a Certificate of the Commission to that effect will have been filed with the Trustee. 12 (2) The issuance of such Additional Bonds have been duly authorized pursuant to the Redevelopment Law and all applicable laws, and the issuance of such Additional Bonds has been provided for by a Supplemental Indenture duly adopted by the Commission which will contain certain matters set forth in the Indenture. (3) The Pledged Tax Revenues based upon the assessed valuation of taxable property in the Project Area as shown on the most recently equalized assessment roll and the most recently established tax rates preceding the date of the Commission's adoption of the Supplemental Indenture''-providing for the issuance of such Additional Bonds will be in an amount equal to at least 125% of the Maximum Annual Debt Service on all then Outstanding Bonds and such Additional Bonds and any unsubordinated loans, advances or indebtedness payable from Pledged Tax Revenues pursuant to the Redevelopment Law. For the purposes of the issuance of Additional Bonds, Outstanding Bonds will not include any Bonds the proceeds of which are deposited in an escrow fund held by an escrow agent, provided that the Supplemental Indenture authorizing issuance of such Additional Bonds will provide that: (a) such proceeds will be deposited or invested with or secured by an institution rated "AA" by S&P or "Aa" by Moody's (without regard to negative modifiers) at a rate of interest which, together with amounts made available by the Commission from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds; (b) moneys may be transferred from said escrow fund only if Pledged Tax Revenues for the next preceding fiscal year will be at least equal to 125% of Maximum Annual Debt Service on all Outstanding Bonds less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer; and (c) Additional Bonds will be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow period in such manner as may be determined by the Commission. For purposes of calculation of Pledged Tax Revenues as described in this paragraph, the property tax rate shall be assumed to be the actual tax rate the year in which the calculation is made. In the event such Additional Bonds are to be issued solely for the purpose of refunding and retiring any Outstanding Bonds, interest and principal payments on the Outstanding Bonds to be so refunded and retired from the proceeds of such Additional Bonds being issued will be excluded from the foregoing computation of Maximum Annual Debt Service. Nothing contained in the Indenture will limit the issuance of any tax allocation bonds of the Commission payable from Pledged Tax Revenues and secured by a lien and charge on Pledged Tax Revenues if, after the issuance and delivery of such tax allocation bonds, none of the Bonds theretofore issued under the Indenture will be Outstanding nor will anything contained in the Indenture prohibit the issuance of any tax allocation bonds or other indebtedness by the Commission secured by a pledge of tax increment revenues (including Pledged Tax Revenues) subordinate to the pledge of Pledged Tax Revenues securing the Bonds. As used above, the term "Maximum Annual Debt Service" means the largest Annual Debt Service during the period from the date of such determination through the fmal maturity date of any Outstanding Bonds. The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on the Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year. In addition, under the Indenture, the Commission has covenanted with the Owners of all of the Bonds at any time Outstanding that it will not enter into any Commission Indebtedness (as defined below) or make any expenditure payable from taxes allocated to the Commission under the Redevelopment Law the payments of which, together with payments theretofore made or to be made with respect to other Commission 13 Indebtedness (including, but not limited to the Bonds) previously entered into by the Commission, would exceed the then effective limit on the amount of taxes which can be allocated to the Commission pursuant to the Redevelopment Law and the Redevelopment Plan. In furtherance of such covenant, the Commission will cause to be prepared and filectwith the Trustee annually, within 180 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Gross Tax Increment (defined in the Indenture as, all monies allocated to the Commission pursuant to Section 33670 of the Redevelopment Law and the Redevelopment Plan, including amounts required to be deposited into the Low and Moderate Income Housing Fund, payment"ue under any tax sharing agreements (unless excluded from the Tax Increment Limitation) and payments received as subventions or payments in lieu of taxes) as of the end of such Fiscal Year. Based upon such audited financial statements, the Commission will prepare or cause to be prepared and filed with the Trustee and the Bond Insurer a pro forma statement demonstrating the future availability of sufficient tax increment revenues (within the existing limitation on the amount of Gross Tax Increment allocable and payable to the Commission under the Redevelopment Plan (the "Tax Increment Limitation")) to pay when due (i) Commission Indebtedness, (ii) the amount payable in the then current Fiscal Year included within the Tax Increment Limitation which are required by Section 33334.2 of the Redevelopment Law to be deposited in the Commission's Low and Moderate Income Housing Fund (the "Set-Aside Requirement"), and (iii) all amounts included within the Tax Increment Limitation which are payable pursuant to the pass-through agreements until the final maturity of the Bonds (the "Pass-Through Payments"). The pro forma statement shall be prepared on or before March 1 of each year or as soon thereafter as practicable, commencing March 1, 2007, and shall set forth: (i) the difference between the Tax Increment Limitation less the total amount of Gross Tax Increment theretofore allocated to the Commission (the "Remaining Limitation Amount"); and (ii) the principal and interest remaining to be paid on Commission Indebtedness, plus the Set-Aside Requirement and the Pass-Through Payments (collectively, the "Total Debt Service"). To the extent the Remaining Limitation Amount is less than 105% of the Total Debt Service, the pro forma statement shall set forth the principal amount of the Bonds (to the nearest integral multiple of $5,000) that must be retired in order for the Remaining Limitation Amount to be at least equal to 105% of the Total Debt Service (the "Prepayment Amount"). At the time the Remaining Limitation Amount is determined to be less than 105% of the Total Debt Service, the Commission shall notify the Trustee of the Prepayment Amount and transfer such Prepayment Amount to the Trustee for deposit in the Turbo Redemption Account. Such monies shall be used to redeem, prepay or defease the Bonds. Notwithstanding the above, if prior to any such redemption, prepayment or defeasance, a subsequent annual pro forma statement indicates that future Gross Tax Increment will be 105% or more of the Total Debt Service in each year such debt service is payable, the Commission may authorize the Trustee to transfer such Pledged Tax Revenues from the Redemption Account to the Special Fund. As defined in the Indenture, the term "Commission Indebtedness" means any obligation the payment of which is to be made in whole or in part (but if in part, only to the extent of that part) out of taxes allocated to the Commission pursuant to Section 33670 of the Redevelopment Law. For purposes of determining compliance with the covenant contained in Section 4.03 hereof the following assumptions shall apply: (i) the principal and interest remaining to be paid on Commission Indebtedness shall include only such amounts as are scheduled to be paid by the Commission pursuant to the terms of the loan or other form of agreement under which such Commission Indebtedness was incurred. Commission Indebtedness without a stated maturity shall be deemed to mature on the final maturity date of the Bonds; (ii) amounts scheduled to be paid by the Commission shall include regularly scheduled principal and interest payments, including, amounts payable pursuant to any mandatory redemption provision; and (iii) Commission Indebtedness bearing interest at a variable rate of interest shall be deemed to accrue interest at the lesser of the maximum rate specified or 12% per annum. 14 Series 2006A Bonds Not a Debt of the City or the State The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are liable personally on the Series 2006A Bonds by reason of their issuance. BOND INSURANCE The following information has been furnished by Ambac Assurance Corporation ("Ambac Assurance') for use in this Official Statement. Reference is made to Appendix G for a specimen of the Ambac Assurance Corporation Financial Guaranty Insurance Policy. The information relating to Ambac Assurance and the Financial Guaranty Insurance Policy contained above has been furnished by Ambac Assurance. No representation is made by the Commission or the Underwriter as to the accuracy, completeness or adequacy of such information or as to the absence of material adverse changes in the condition of Ambac Assurance subsequent to the date of this Official Statement. Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 2006A Bonds effective as of the date of issuance of the Series 2006A Bonds. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, in New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Series 2006A Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the Trustee. The insurance will extend for the term of the Series 2006A Bonds and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Series 2006A Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Series 2006A Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Series 2006A Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Series 2006A Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration. In the event the Trustee has notice that any payment of principal of or interest on a Series 2006A Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the 15 United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty Insurance Policy does not cover: a) payment on acceleration, as a result of a call for redemption (der than mandatory sinking fund redemption) or as a result of any other advancement of maturity. b) payment of any redemption, prepayment or acceleration premium. c) nonpayment of principal or interest caused by the insolvency or negligence of any Trustee, Paying Agent or Bond Registrar, if any. If it becomes necessary to call upon the Financial Guaranty Insurance Policy, payment of principal requires surrender of Series 2006A Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Series 2006A Bonds to be registered in the name of Ambac Assurance to the extent of the payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of Holder entitlement to interest payments and an appropriate assignment of the Holder's right to payment to Ambac Assurance. Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Series 2006A Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Series 2006A Bond and will be fully subrogated to the surrendering Holder's rights to payment. In the event that Ambac Assurance were to become insolvent, any claims arising under such Financial Guaranty Insurance Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. Ambac Assurance Corporation Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $8,994,000,000 (unaudited) and statutory capital of approximately $5,649,000,000 (unaudited) as of December 31, 2005. Statutory capital consists of Ambac Assurance's policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit Markets Services, a Division of The McGraw-Hill Companies, Moody's Investors Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of a Series 2006A Bond by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such Bond and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy provisions substantially identical to those contained in its financial guaranty insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the Series 2006A Bonds. Ambac Assurance makes no representation regarding the Series 2006A Bonds or the advisability of investing in the Series 2006A Bonds and makes no representation regarding, nor has it participated in the 16 preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the heading "BOND INSURANCE." Available Information The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Company"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with-the Securities and Exchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of Ambac Assurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. Incorporation of Certain Documents by Reference The following documents filed by the Company with the SEC (File No. 1-10777) are incorporated by reference in this Official Statement: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and filed on March 15, 2005; 2005; 2. The Company's Current Report on Form 8-K dated April 5, 2005 and filed on April 11, 3. The Company's Current Report on Form 8-K dated and filed on April 20, 2005; 4. The Company's Current Report on Form 8-K dated May 3, 2005 and filed on May 5, 2005; 5. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended March 31, 2005 and filed on May 10, 2005; 6. The Company's Current Report on Form 8-K dated and filed on July 20, 2005; 2005; 7. The Company's Current Report on Form 8-K dated July 28, 2005 and filed on August 2, 8. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended June 30, 2005 and filed on August 9, 2005; 9. The information furnished and deemed to be filed under Item 2.02 contained in the Company's Current Report on Form 8-K dated and filed on October 19, 2005; 10. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly period ended September 30, 2005 and filed on November 9, 2005; 17 11. The Company's Current Report on Form 8-K dated November 29, 2005 and filed on December 5, 2005; 12. The Company's Current Report on Form 8-K dated and filed on January 25, 2006; and 13. The Company's Current Report on Form 8-K dated January 23, 2006 and filed on January 27, 2006. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "Available Information." RISK FACTORS The following information should be considered by prospective investors in evaluating an investment in the Series 2006A Bonds. The following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Series 2006A Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. Assumptions and Projections To estimate the tax increment available to pay debt service on the Series 2006A Bonds, the Commission has retained GRC Associates, Inc., Brea, California as its Fiscal Consultant, which has made certain assumptions with regard to the assessed valuation in the Project Area, future tax rates, percentage of taxes collected, the amount of funds available for investment and the interest rate at which those funds will be invested. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Pledged Tax Revenues. The Commission believes these assumptions to be reasonable, but to the extent that the assessed valuation, the tax rates, the percentage of taxes collected, the amount of the funds available for investment or the interest rate at which they are invested are less than projected by the Fiscal Consultant, the tax increment available to pay debt service on the Series 2006A Bonds may be less than those projected herein. Real Estate and General Economic Risks The Commission's ability to make payments on the Series 2006A Bonds will depend upon the economic strength of the Project Area. The general economy of the Project Area will be subject to all the risks generally associated with real estate and real estate development. Projected redevelopment of real property within the Project Area by the Commission as well as private development in the Project Area, may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Area could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein or other impediments, the economy of the Project Area could be adversely affected, causing reduction of the Pledged Tax Revenues available to repay the Series 2006A Bonds. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Pledged Tax Revenues received by the Commission from the Project Area. 18 Reduction in Assessed Value Pledged Tax Revenues allocated to the Commission are determined in part by the amount by which the assessed valuation of property in the Project Area exceeds the respective base year assessed valuation for such property, as well as by the current rate at which property in the Project Area is taxed. The Commission itself has no taxing power with respect to property, nor does it have the authority to affect the rate at which property is taxed. Assessed valuation of taxable property within the Project Area may be reduced by economic factors beyond the control of the Commission or by substantial damage, destruction or condemnation of such property. At least three types of events that are beyond the control of the Commission could occur and cause a reduction in Pledged Tax Revenues, thereby impairing the ability of the Commission to make payments of principal and interest and premium (if any) when due on the Series 2006A Bonds on a timely basis. First, a reduction of the assessed valuation of taxable property in the Project Area caused by economic factors or other factors beyond the Commission's control, such as relocation out of the Project Area by one or more major property owners; successful appeals by property owners for a reduction in a property's assessed valuation; a reduction of the general inflationary rate (see "Reduction in Inflationary Rate" below); a reduction in transfers of property or construction activity; or the destruction of property caused by natural or other disasters (see "Risk of Earthquake" below); or other events that permit reassessment of property at lower values or could result in a reduction of tax increment revenues. Second, substantial delinquencies in the payment of property taxes by the owners of taxable property within the Project Area could impair the timely receipt by the Commission of Pledged Tax Revenues. Third, the State electorate or legislature could adopt further limitations with the effect of reducing tax increment revenues. A limitation already exists under Article XIIIA of the California Constitution, which was adopted pursuant to the initiative process. The State electorate could adopt additional similar limitations with the effect of reducing Pledged Tax Revenues. For a further description of Article XIIIA, see "TAX ALLOCATION FINANCING AND LMTATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. To estimate the total revenues available to pay debt service on the Series 2006A Bonds, the Commission has made certain assumptions with regard to the availability of tax increment revenues. The Commission believes these assumptions to be reasonable, but to the extent tax increment revenues are less than anticipated, the total revenues available to pay debt service on the Series 2006A Bonds or to refinance the Series 2006A Bonds may be less than those projected herein. Unless mentioned herein, no independent third party has reviewed the estimates or assumptions made by the Commission. See "TAX INCREMENT REVENUES - Debt Service and Estimated Coverage" herein. Assessment Appeals Property taxable values may be reduced as a result of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicant property owner. At the time of reassessment, after a change of ownership or completion of new construction, the assessee may appeal the base assessment value of the property. Under an appeal of a base assessment value, the assessee appeals the actual underlying market value of the sales transaction or the recently completed improvement. A successful appeal of the base assessment value of a parcel has significant future revenue impacts, because a reduced base year assessment will reduce the compounded future value of the property prospectively. Except for the 2% inflation factor, 19 the base year value of the property cannot be increased until a change in ownership occurs or additional improvements are added. The Fiscal Consultant has identified one appeal currently pending on property within the Project Area. However, the Commission cannot predict whether such appeal or any future appeals will be successful, or whether the number of appeals may increase in the Project Area. Future reductions in taxable values in the Project Area resulting from successful appeals by property owners will reduce the amount of Pledged Tax Revenues available to pay the principal of and interest on the Series 2006A Bonds. See "TAX INCREMENT REVENUES - Assessment Appeals" herein and APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto. Reduction in Inflationary Rate As described in greater detail below, Article XIIIA of the California Constitution provides that the full cash value basis of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. This measure is computed on a calendar year basis. The California State Department of Finance has indicated that such inflationary factor is 1.867% for Fiscal Year 2004-05. For Fiscal Year 1996-97, the inflationary factor as determined under Article XIIIA resulted in an increase in assessed valuation of 1.11%. For Fiscal Year 1995-96, the inflationary factor was 1.19%. The Fiscal Consultant has projected Pledged Tax Revenues to be received by it based, among other things, upon 2% inflationary increases. Should the assessed valuation of taxable property in the Project Area not increase at the projected annual rate of 2%, the Commission's receipt of future Pledged Tax Revenues may be adversely affected. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. Real Estate and General Economic Risks The Commission's ability to make payments on the Series 2006A Bonds will depend upon the economic strength of the Project Area. The general economy of the Project Area will be subject to all the risks generally associated with real estate and real estate development. Projected redevelopment of real property within the Project Area by the Commission as well as private development in the Project Area, may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Area could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein -or other impediments, the economy of the Project Area could be adversely affected, causing reduction of the Pledged Tax Revenues available to repay the Series 2006A Bonds. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Pledged Tax Revenues received by the Commission from the Project Area. State Budget Deficit and Its Impact on Pledged Tax Revenues Since Fiscal Year 1993-94, the State Legislature has authorized the reallocation of property tax revenues from redevelopment agencies multiple times in an effort to assist the State in balancing its General Fund budget. Each time the State reallocates property tax revenues from redevelopment agencies, it reduces the amount of revenues that can use in the payment of debt service, such as the Commission's payment of debt service on the Series 2006A Bonds. As the Commission's only active project area, Project Area No. 1 is responsible for any such revenue allocation in its entirety. Further, Proposition lA (see "Proposition IA" 20 below), which was approved by the California electorate in November 2004 and which placed restrictions in the State Constitution on the ability of the State Legislature to reallocate property tax revenues from local agencies, does not restrict or prevent the State Legislature from reallocating property tax revenues from redevelopment agencies, including the Commission. As such, no assurances can be made that the State will not make farther reallocations in property tax revenues that would reduce the amount of property tax revenues to which the Commission is entitled. The following is a list of recent actions taken by the State Legislature which reallocated property tax revenues from redevelopment agencies: In connection with its approval of its budget for the 1993-94 fiscal year, the State Legislature enacted Senate Bill 1135 which, among other things, reallocated approximately $65 million from redevelopment agencies to school districts by shifting approximately 5.675% of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for the then current and next following fiscal years. The amount required to be transferred by a redevelopment agency to the county auditor for deposit in the Educational Revenue Augmentation Fund ("ERAF") under such legislation was apportioned among all of such county's redevelopment areas on a collective basis, and was not allocated separately to individual project areas. The amount of tax revenues which the Commission was required to pay under the legislation during the two-year period was approximately $175,000 for each of the 1993-94 and 1994-95 fiscal years. In connection with its approval of a budget for the 2002-03 fiscal year, the State Legislature enacted California State Assembly Bill ("AB") 1768, effective September 30, 2002, which included a one-time ERAF shift of $75 million from redevelopment agencies to school districts during the 2002-03 fiscal year in order to meet State budget deficits. Each agency's proportionate share of such amount was required to be transferred to the county auditor for deposit in the ERAF prior to May 10, 2003. The Commission's ERAF obligation for Fiscal Year 2002-03 was $122,487, which was paid to the County as required prior to such date. In connection with its approval of a budget for the 2003-04 fiscal year, the State Legislature enacted Senate Bill 1045, effective September 1, 2003, which again introduced a one-time ERAF shift and reallocated $135 million from redevelopment agencies to school districts during the 2003-04 fiscal year to meet ongoing State budget deficits. Each agency's proportionate share of such amount is required to be transferred to the county auditor for deposit in the ERAF prior to May 10, 2004. The Commission's ERAF obligation for the 2003-04 fiscal year was $207,391. Subsequent to Senate Bill 1045, the State Legislature adopted SB 1096 which established an ERAF shift of $250,000,000 for the 2004-05 and 2005-06 fiscal years to meet the ongoing State budget deficits. The Commission's ERAF obligation for the 2004-05 fiscal year was $342,811 and for the 2005-06 fiscal year is estimated at $342,811. No other future ERAF obligations have been drafted or adopted, but it is possible that the State Legislature could shift property tax allocations or require additional redevelopment payments in future years. Since the ERAF shifts are subordinate to new and existing bond obligations, the ERAF payments are not included in the projections of tax increment revenues in the Fiscal Consultant's Report. The Commission cannot predict whether State Legislature will enact any other legislation requiring additional or increased future shifts in tax increment revenues to the State and/or to schools, whether through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on future Pledged Tax Revenues. Given the level of the State of California's deficit problems, tax increment available for payment of Series 2006A Bonds could be substantially reduced in the future. Information about the State budget and State spending is available at various State-maintained websites. Text of the budget may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading, "California Budget." An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.laoca.gov. In addition, various State of California official statements for its various debt obligations, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. Each of such websites are provided for 21 general informational purposes only and the material on such sites is in no way incorporated into this Official Statement. Proposition 1A Proposition IA, a State ballot proposition, was approved on the November 2, 2004 ballot. Proposition IA prohibits the State from reducing local governments' property tax proceeds, and protects revenues collected by local governments (cities, counties, and special districts) from being transferred to the State government for statewide use. The provisions may be suspended if the Governor declares a fiscal necessity and two-thirds of the Legislature approve the suspension. Suspended funds must be repaid within three years. Proposition IA was first effective in 2006. Limited Obligations The Series 2006A Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2006A Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal of the Series 2006A Bonds. The Series 2006A Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2006A Bonds be payable out of any funds or properties other than those of the Commission. The Series 2006A Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Series 2006A Bonds are liable personally on the Series 2006A Bonds by reason of their issuance. Hazardous Substances An environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition. Certain Bankruptcy Risks . The enforceability of the rights and remedies of the owners of the Series 2006A Bonds and the obligations of the Commission may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which 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 federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Series 2006A Bonds 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. 22 Secondary Market There can be no guarantee that there will be a secondary market for the Series 2006A Bonds, or, if a secondary market exists, that such Series 2006A Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original putphase price. Loss of Tax Exemption As discussed under the caption "TAX MATTERS" herein, interest on the Series 2006A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date such Series 2006A Bonds were issued as a result of future acts or omissions of the Commission in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the Series 2006A Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity. Risk of Earthquake The City, like most regions in California, is an area of significant seismic activity and, therefor, is subject to potentially destructive earthquakes. The Los Angeles basin has experienced significant earthquakes in the past. Most recently in the vicinity of the Project Area, on October 1, 1987, a 5.9 magnitude earthquake occurred on a previously unknown, concealed thrust fault approximately 11 miles east of downtown Los Angeles, California, approximately 6 miles southeast of Pasadena and approximately 1 mile southeast of the City. The earthquake resulted in eight fatalities and approximately $358 million in property damage. Severe damage was confined mainly to communities east of Los Angeles and near the epicenter in the City of Whittier. Significant structural damage to property within the Project Area was reported and repairs were completed within one year of the earthquake. No severe structural damage to high-rise structures in downtown Los Angeles was reported. If an earthquake were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Pledged Tax Revenues that secure the Series 2006A Bonds, which in turn could impair the ability of the Commission to make payments of principal of and/or interest on the Series 2006A Bonds when due. Teeter Plan Certain counties in the State of California operate under a statutory program entitled Alternative Method of Distribution of Tax Levies and Collections and of Tax Sales Proceeds (the "Teeter Plan"). Under the Teeter Plan, local taxing entities receive 100% of their tax levies, net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. The County of Los Angeles has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within the County, such as the Commission. The Commission's receipt of property taxes is therefore subject to delinquencies in the Project Area. Concentration of Land Ownership Based upon Fiscal Year 2005-06 assessed value data as of June 30, 2005, 21.56% of the total net secured assessed property value in the Project Area is owned by the ten largest taxpayers. In addition, a substantial portion of Pledged Tax Revenues are derived from unitary property taxes. This is primarily 23 because the headquarters of Southern California Edison are located within the Project Area. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property" herein. Reductions in Pledged Tax Revenues received by the Commission may result from declining tax rates, property tax administrative costs and refunds resulting from successful appeals of assessed values. The inability or unwillingness of such taxpayers to pay property taxes on their property in the Project Area might have an adverse effect on the Commission's ability to repay the Series 2006A Bonds. In addition, as a result of the high concentration of land ownership in the Project Area, decreases in the assessed value of one or more parcels of land may have a significant impact on the Pledged Tax Revenues. See "THE REDEVELOPMENT PROJECT AREA NO. 1 - Ten Largest Secured Taxpayers" herein. TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT Introduction The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a project area. First, the assessed valuation of the taxable property in a project area last equalized prior to adoption of the redevelopment plan is established and becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the taxing agencies on behalf of which taxes are levied on property within the project area will receive the taxes produced by the levy of the then current tax rate upon the base roll. Except as discussed in the following paragraph, taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes produced as above indicated. The State Legislature placed on the ballot for the November 1988, general election Proposition No. 87 (Assembly Constitutional Amendment No. 56) pertaining to allocation of tax increment revenues. This measure, which was approved by the electorate, authorized the State Legislature to cause tax increment revenues attributable to certain increases in tax rates occurring after January 1, 1989, to be allocated to the entities on whose behalf such increased tax rates are levied rather than to the Commission, as would have been the case under prior law. The measure applies to tax rates levied to pay principal of and interest on general obligation bonds approved by the voters on or after January 1, 1989. AB 89 (Statutes of 1989, Chapter 250), which implements this Constitutional Amendment, became effective on January 1, 1990. The Commission's projection of tax revenues to be allocated to the Commission does not assume any increase in the tax rate applicable to properties within the Project Area. Property Tax Rate and Appropriation Limitations Article NHA of State Constitution On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the California Constitution ("Article XIIIA"). Article XIIIA limits the amount of any ad valorem tax on real property to one percent of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and (as a result of an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978, by two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value,' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred 24 after the 1975 assessment." This full cash value may be increased at a rate not to exceed two percent per year to account for inflation. Article XIIIA has subsequently been amended to permit reduction-of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways. The Commission has no power to levy and collect taxes. Any further reduction iri'the tax rate or the implementation of any constitutional or legislative property tax de-emphasis will reduce tax increment revenues, and, accordingly, would have an adverse impact on the ability of the Commission to pay debt service on the Series 2006A Bonds. Legislation Implementing Article MIA Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among. the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. Article MIIB of State Constitution An initiative to amend the California constitution entitled "Limitation of Government Appropriations," was approved on September 6, 1979, thereby adding Article XM to the California Constitution ("Article XIIIB"). Under Article XIIIB, as amended, state and local governmental entities have an annual "appropriations limit" and are not permitted to spend certain moneys which are called "appropriations subject to limitation" (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the "appropriations limit". The State Legislature, by Statutes of 1980, Chapter 1342 enacted a provision of the Redevelopment Law (Health and Safety Code Section 33678) providing that the allocation and payment of taxes to an agency for the purpose of paying principal of or interest on loans, advances or indebtedness incurred for redevelopment activity as defined in the statute will not be deemed the receipt by the Commission of proceeds of taxes levied by or on behalf of an agency within the meaning or for the purpose of Article XIIIB of the State Constitution, nor will such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purposes of Article XIIIB of the State Constitution or any statutory provision enacted in implementation of Article XIIIB. Unitary Property AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization ("Unitary Property"), commencing with the 1988-89 fiscal year, will be allocated as follows: (1) each jurisdiction, including the Project Area, will receive up to 102% of its prior year State-assessed revenue; and (2) if county-wide revenues generated from Unitary Property are less than the previous year's revenues or greater than 102% of the previous year's revenues, each jurisdiction will 25 share the burden of the shortfall or excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. To administer the allocation of unitary tax revenues to redevelopment agencies, the County no longer includes the taxable value of utilities as part of the reported taxable values of the project area, therefore, the base year of project areas have been reduced by the amount of utility value that existed originally in the base year. The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the method of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Commission. This is primarily because the headquarters of Southern California Edison are located within the Project Area. However, the revenues allocated to the Commission come from several sources and are allocated based on the statutory method described above and do not reflect the current unitary assessed value within the Project Area. Within the Project Area, the Auditor Controller allocated $1,173,352 in unitary tax revenue to the Commission for 2004-05. This amount is reasonably consistent with the unitary revenue allocations made to the Commission in prior years. However, the Commission's unitary revenues have fallen by approximately 23% since 1992-1993. According to the California State Board of Equalization, there have been two primary causes of the decrease unitary assessed valuation in the County of Los Angeles. The first was the privatization of power generation facilities in the late 1990s. When a power generation facility was sold to a private entity it became locally assessed and was attributed to the TRA in which it is located. Assessment of these facilities moved back to the State in 2003, but the value is associated with specific TRAs according to California Revenue and Taxation Code Section 100.9. The second primary cause of a decrease in unitary valuations within the County was due to a decrease in the assessed valuation of telecommunication companies during the period 2002 through 2005. The Fiscal Consultant has assumed that unitary tax revenue will continue to be allocated in similar amounts over the life of the Project Area, and that unitary tax will remain constant through the life of the project. The portion of Pledged Tax Revenues allocable to the Commission with respect to the Project Area and attributable to unitary property is projected to be constant at $1,173,352 for Fiscal Year 2005-06. The Commission cannot predict the effect of any future litigation or settlement agreements concerning these matters on the amount of Pledged Tax Revenues received or to be received by the Commission. Property Tax Administrative Costs In 1990, SB 2557, and in 1992, SB 1559, authorized county auditors to determine property tax administrative costs proportionately attributable to local jurisdictions and to charge agencies for such costs. For Fiscal Year 2004-05, the amount of County collection charges attributed to the Project Area is $69,875.11. The Fiscal Consultant has assumed, for purposes of its projections, that such charge will be 1.52% percent of the gross revenues of the Project Area. Contained in the estimate of this charge is a fee levied by the County since before the passage of the legislative administrative charge. The County continues to apply this offset to revenue as a designated part of the charge mandated by the legislation. The payments made as property tax administrative charges are considered tax increment for purposes of computation of the housing set-aside or the determination of compliance with tax increment limits in the numerical information set forth herein. 26 Property Tax Collection Procedures For assessment and collection purposes, property is classified either as "secured" or "unsecured" and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing state-assessed public utilities property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." A tax levied on unsecured property does not become a lien against the unsecured property but may become a lien on certain other property owned by the taxpayel. Every tax which becomes a lien on secured property has a priority over all other liens arising pursuant to California law on the secured property, regardless of the time of creation of the other liens. Property taxes on the secured roll are due in two installments, on July 1 and February 1 of each Fiscal Year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of the delinquent taxes and delinquent penalty, plus a redemption penalty of 1-1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector. Current law provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on the following August 31. A 10% penalty attaches to delinquent taxes on property on the unsecured roll, and an additional penalty of 1-1/2% per month begins to accrue on the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recording in the 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 assessee. Current tax payment practices by the County provide for payment to the Commission of approximately 45% of the secured taxes by the mid-January of each year, an additional 30% of the secured taxes by mid-April of each year, and the balance of the secured tax collections (excluding delinquency collections which are paid to the Commission during July and August each year) by mid August. Approximately 80% of the unsecured taxes are paid to the Commission by the end of November of each year, and substantially all of the unsecured taxes are paid to the Commission in August of each year. Plan Limitations Not including the one year extension permitted by SB 1045 to mitigate the impacts of ERAF payments, Redevelopment Law limits the period in which redevelopment activities can be undertaken for plans adopted prior to January 1, 1994, to 40 years from the date of adoption or January 1, 2009, whichever is later, and limits the period within which a redevelopment project area may receive tax increment to 50 years following the adoption. If redevelopment plans with shorter time frames were adopted, legislative bodies were allowed to extend their limits to conform to these requirements through the adoption of an ordinance prior to December 31, 1999. For projects adopted subsequent to 1994, redevelopment activities can be undertaken for 30 years and tax increment received for 45 years. A redevelopment plan adopted prior to January 1, 1994 is required to include a limitation on tax increment dollars that may be allocated to the redevelopment agency; a time limit on incurring indebtedness to be repaid with tax increment; and a limit on the amount of bonded indebtedness to be repaid 27 with tax increment that can be outstanding at one time. These limits can be extended only by an amendment of the redevelopment plan. The legislative body, by adoption of an ordinance, can eliminate the time limit on the establishment of loans, advances, and indebtedness required prior to January 1, 2002. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property taxes and repay indebtedness. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law. Additionally, the Commission eliminated the timeframe to incur debt under state legislation SB 211. The original Redevelopment Plan has been amended four times since its adoption. The Redevelopment Plan was first amended on December 9, 1986, by City Council Ordinance 592, to increase the number of dollars allocated to the Commission and re-establish eminent domain. The Redevelopment Plan was further amended on December 20, 1994 by City Council Ordinance 752 to bring the Redevelopment Plan into conformity with AB 1290. The Redevelopment Plan was amended a third time by City Council Ordinance 822 on June 22, 2002, to extend the duration of the Redevelopment Plan's effectiveness. In connection with the adoption of Senate Bill 1045, redevelopment agencies were permitted to extend the effective date of their redevelopment plans and the date to receive tax increment revenues by one year. The Redevelopment Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by one year pursuant to Senate Bill 1045. The Commission may not receive and may not repay indebtedness with the proceeds from property taxes received pursuant to Section 33670 of the Redevelopment Law and the Plan beyond the dates indicated in Table 1 below, except to repay debt to be paid from the Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law and the Plan, or debt established in order to fulfill the Commission's obligations under Section 33413 of the Redevelopment Law and the Plan. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property taxes and repay indebtedness. The Redevelopment Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by one year pursuant to Senate Bill 1045. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law as described herein. Additionally, the Commission eliminated the timeframe to incur debt under state legislation Senate Bill 211. Table 1 Rosemead Community Development Commission Redevelopment Project Area No. 1 Redevelopment Plan Limits Last Date to Limit on total Tax Last Date to Incur Repay Debt with Tax Increment Increment Bond Plan Effectiveness New Debt Tax Increment (1) Limit (2) Debt 6/27/2013 No Limit 6/27/2023 $249,245,938 No Limit Such final date does not apply to repayment of the Series 1993 Bonds. (2) The tax increment limit is net of any tax increment which is paid to an affected taxing agency pursuant to the Redevelopment Law. Source: GRC Associates, Inc. According to the County records, the Commission has received approximately $78,579,553 in total cumulative tax increment from the Project Area as of January 1, 2006. Based on the projected tax increment 28 revenues to be received by the Commission, the limit on tax increment funds that the Commission may receive for the Project Area will not be exceeded within the term of the Bonds. Low and Moderate Income Housing Fund Chapter 1337 Statutes of 1976, added Section 33334.2 and 33334.3 to the Redevelopment Law requiring redevelopment agencies to set aside 20 percent of all tax increment derived from redevelopment project areas adopted after December 31, 1976, into a Low and Moderate Income Housing, Fund. This low and moderate income housing requirement can be reduced or eliminated if a redevelopment agency finds that: (1) no need exists in the community to improve, increase or preserve the supply of low and moderate income housing, including housing for very low income households; (2) that some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing needs of the community, including its share of the regional housing needs of persons and families of low or moderate income and very low income households;. or (3) that other substantial efforts, including the obligation of funds from state, local and federal sources for low and moderate income housing of equivalent impact are being provided for in the community. Chapter 1135, Statutes of 1985 amended Section 33334.3 and added Sections 33334.6 and 33334.7 to extend the requirement for redevelopment agencies to set aside into a Low and Moderate Income Housing Fund, 20 percent of tax increment to redevelopment project areas adopted prior to January 1, 1977, beginning with Fiscal Year 1985-86 revenues. Pursuant to Chapter 1135, an agency may make the same findings described above to reduce or eliminate the low and moderate income housing requirement. However, Chapter 997, Statutes of 1989, added Section 33334.14 to the Redevelopment Law which provides that a redevelopment agency with merged project areas may not make the findings described above as to avoid or reduce its obligations to deposit taxes from merged project areas in the Low and Moderate Income Housing Fund. No such findings as described in the two paragraphs above have been made by the Commission. However, on October 9, 1991 the Commission prepaid its housing obligation in the amount of $6,813,849.62. As a result, the Commission's housing obligation has been reduced by $469,142 per year through the 2021-22 fiscal year. This annual reduction was based on a present value factor determined by the yield on the Commission's outstanding bonds. In addition, the Commission has made findings that, for the years ended June 30, 1986 through 1991, it was allowed to defer funding of the set-aside. The set-aside amounts incurred during the fiscal years ended June 30, 1994, 1995 and 1996 were also deferred until the fiscal year ending June 30, 2023, as provided by the Commission's adoption of the housing deficit repayment plan. As of June 30, 2005, the accumulated set- aside amount not yet funded was approximately $4,947,000. As required by law, the Commission devised a plan to fund the accumulating amount. To help fund the completion of the Senior Citizen Housing project construction, the Capital Projects Fund transferred an additional $849,863 to the Low-Moderate Income Housing Set-Aside Fund during the fiscal year ended June 30, 2002, over and above the 20% requirement of $299,993, and an additional $1,279,548 to the Low-Moderate income Housing Set-Aside Fund during the fiscal year ended June 30, 2003, over and above the 20% requirement of $290,868. These additional amounts, which total $2,129,411, are considered an advance on future set-aside requirements and will be deducted from future transfers for the set- aside over future years. During the fiscal years ended June 30, 2005 and 2004, the 20% requirements of $448,578 and $394,533 were funded using the cumulative advance. As of June 30, 2005, the remaining advance was $1,286,301. 29 Assembly Bill 1290 Assembly Bill 1290 (being Chapter 942, Statutes of 1993) ("AB 1290") became law on January 1, 1994. AB 1290 contains several significant changes in the Redevelopment Law, including time limitations for incurring and repaying loans, advances and indebtedness repayable from tax increment revenues. The Commission is of the opinion that the provisions of AB 1290, including these new time limitations as they apply to the Project Area, will not have an adverse impact on the payment of debt service on the Series 2006A Bonds on a timely basis, and the Commission does not expect that the provisions of AB 1290 will have an adverse impact on the undertaking by the Commission of future redevelopment activities within the Project Area. Pass-Through Arrangements The County of Los Angeles (the "County") and the Commission entered into a certain agreement for reimbursement of tax increment funds with the County, the Consolidated Fire Protection District, and the County Public Library District (the "County Agreement"). The elements of the County Agreement include the following: (i) the Commission is to provide for a pass-through of a portion of its tax increment revenues received after July 1, 1988 for the Consolidated Fire Protection District; and (ii) the Commission is to allow an additional pass-through of tax increment revenues for the Los Angles County Public Library District at such time that the Commission or the City constructs a replacement facility. The reimbursement of the Consolidated Fire Protection District is approximately 17% of Gross Tax Revenues (as defined in the County Agreement) and the reimbursement to the Los Angeles County Public Library District is 4% of Gross Tax Revenues. The 4% of Gross Tax Revenues obligation is contingent upon the Commission's construction of such a replacement facility. However, neither the Commission nor the City has any obligation to construct a replacement facility. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" for the Fiscal Consultant's projections of the pass-through payments to be made to other taxing entities. Such pass-through payments will not be available to the Commission to pay debt service on the Series 2006A Bonds. When the Commission extended the time frame to incur debt pursuant to SB 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is 83% of every $1.00 of property tax generated. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Commission makes the finding that the issuance of the debt will not impact the Commission's ability to make the statutory payments. The Commission has made the appropriate findings, and therefore the Fiscal Consultant has assumed that these payments -are subordinated to bond indebtedness accordingly. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" herein. Proposition 218 On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIM to the State Constitution, which contain a number of provisions affecting the ability of the local governments to levy and collect both existing and future taxes, assessments, fees and charges, and extended the initiative power giving the voters the power to reduce or repeal local taxes, assessments, fees and charges. Because the Series 2006A Bonds are not payable from or secured by any such sources of revenue, the Commission believes that Proposition 218 does not affect the issuance or sale of, or the security for, the Series 2006A Bonds. 30 Future Initiatives Articles XIIIA, XIIIB, XIIIC and XIIIID were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further affecting Commission revenues or the Commission's ability to expend revenues. THE COMMISSION Organization The Commission, formerly known as the Rosemead Redevelopment Agency, was activated in 1972 by City Ordinance. Since 1975, the City Council Members have acted as the Members of the Commission. The Commission is a separate public body which plans and implements projects in accordance with the requirements of the Redevelopment Law. The Commission has two active project areas, Redevelopment Project Area No. 1 and Redevelopment Project No. 2. The Series 2006A Bonds are being issued finance and refinance redevelopment activity for Redevelopment Project Area No. 1. Tax increment generated in Redevelopment Project Area No. 2 is NOT available to pay debt service on the Series 2006A Bonds. All powers of the Commission are legally vested in its five members, who are elected to the City Council for four year terms. The Commission exercises governmental functions in carrying out projects and has sufficiently broad authority to acquire, develop, administer and sell or lease property. The Mayor of the City, Jay Imperial, also serves as Chairperson of the Commission. The Commission's Vice-Chairperson, Gary Taylor, is Mayor Pro-Tem of the City. Other members of the City Council and Commission Board are shown below. Bill Crowe, the City Manager and Executive Director of the Commission has been an employee of the City since 1999, and has been City Manager since 2002. Mr. Crowe resigned, effective February 21, 2006. Until such time as a replacement is appointed, Don Wagner will serve as Interim City Manager. Mr. Wagner was hired in 1983, and has served as Assistant City Manager since that time. Commission Member Jay T. Imperial Gary A. Taylor Margaret Clark John Tran John H. Nunez Term Expires 2007 2007 2009 2009 2009 Powers All powers of the Commission are vested in its five members. The Commission exercises governmental functions in carrying out projects, and has sufficiently broad authority to acquire, develop, administer and sell or lease property, including the right of eminent domain and the right to issue bonds, notes and other evidences of indebtedness and to expand their proceeds. The Commission can clear buildings and other improvements and develop as a building site any real property owned or acquired, and in connection with such development, cause streets, highways and sidewalks to be constructed or reconstructed and public utilities to be installed. Redevelopment in the State may be carried out pursuant to the Redevelopment Law. Section 33020 of the Redevelopment Law defines redevelopment as the planning, development, replanning, redesign, clearance, reconstruction or rehabilitation, or any combination of these, of all or part of a survey area and the 31 provision of such residential, commercial, industrial, public or other structures or spaces as may be appropriate or necessary in the interest of the general welfare, including recreational and other facilities incidental or appurtenant to them. The Commission may, out of the funds available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, structures or other improvements to be publicly owned, to the extent that such improvements are of benefit to the relevant project area and no other reasonable means of financing is available. The Commission must sell or lease remaining property within a project for redevelopment by others in strict conformity with the redevelopment plan, and may specify a period within which such redevelopment must begin and be completed. THE REDEVELOPMENT PROJECT AREA NO.1 Redevelopment Project Area No. 1 evolved from a City Council study commenced in 1967. The study determined areas in the City which were blighted within the meaning of the California Community Redevelopment Law, and were therefore qualified for redevelopment. The Redevelopment Plan for the Redevelopment Project Area No. 1 (the "Project Area") was adopted by Ordinance No. 340 of the City Council on June 27, 1972. Project Area Description The Project Area encompasses an area of 511 acres. The Project Area is roughly triangular with Garvey Avenue, San Gabriel Boulevard and Walnut Grove Avenue being the major thoroughfares traversing the area. The Project Area is within a few miles of the City's Civic Center and is located between the San Bernardino and Pomona Freeways to the north and south, respectively. The area contains a complete cross section of the City's existing land uses. At the time of the adoption of the Redevelopment Plan, major sections were composed of deteriorating commercial strips along Garvey Avenue and San Gabriel Boulevard, industrial uses in the east Garvey area, large vacant areas surrounding the Southern California Edison headquarters, several schoolyards, segments of the Alhambra Wash, Southern California Edison rights-of-way, and residential areas with some deterioration present. In accordance with the Redevelopment Plan, the land uses by acreage and assessed valuation in the Project Area are set forth in Table No. 2 below. It should be noted with respect to Table No. 2 below that the figures below exclude the value of exempt parcels such as those owned by the City, Commission, State or other governmental agencies that do not contribute to Commission revenues. 32 Table 2 Rosemead Community Development Commission Present Land Uses Within Redevelopment Project Area No.1 Uses Parcels Assessed Value Percent of Assessed Value Residential 775 $165,381,310 '44 61% Commercial 157 107,539,554 . 29 01 Industrial 66 35,576,839 . 9 60 Vacant Land 54 17,465,444 . 4 71 Government owned 15 1,315,041 . 0 35 Institutional 3 2,358,583 . 0 64 Miscellaneous 32 1,167,991 . 0 32 Public Utility Unsecured 18,218,894 . 4.91 _ 21,723,756 5 86 Total 1102 $370,747,412 . 55.85% (1) Values assigned CO other parcels and use categories. Source: Rosemead Community Development Commission. Assessed Values Taxable values are prepared and reported by the County Auditor-Controller each fiscal year and represent the aggregation of all locally assessed properties within the Project Area. The assessments are assigned Tax Rate Areas (TRA) that are coterminous to the boundaries of the project area in the first year that an agency is eligible to receive tax increment revenue. The Project Area consists of 12 individual TRAs. Historic taxable values since 2000-01 were utilized to determine the historical growth rate of property values within the Project Area. Property values within the Project Area have steadily grown at a compounded rate of 10.5% per year between the years 2001-02 and 2005-06. Total assessed property values did not decline for any fiscal period between 2000-01 and 2005-06. Also, at no time during this period did property tax values grow at a rate of less than 2%. The historic taxable values for the Project Area are shown in Table 4 below. The historical average reduction in value for allowed appeals is 25.31 percent. There is one appeal currently pending on property within the Project Area. These owners have appealed valuations totaling $789,000. Based on the above historical averages, GRC expects a 42.4 percent chance that the outstanding appeal will be successful, with an average reduction in value of 25.31 percent. This would result in a loss of assessed value of $84,718. The projected assessed value for 2005-06 has been adjusted for this estimated loss of value. As noted in the Fiscal Consultant's Report, a number of the appeals in the Project Area that were allowed resulted in a reduction in value were based on Section 51 of the Revenue and Taxation Code. This section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions took place in some counties during the mid-1990's due to declining real estate values. Reductions made under this code section may be initiated by the Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine it's full cash value and the valuation is adjusted accordingly, which may result in either further reductions in or increases in assessed value. Such increases shall be in accordance with the actual full cash value of the property and may exceed the maximum 33 annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. Project Status Several significant private developments have occurred within the Project Area since its inception in 1972. The Project Area's largest property owner, Southern California Edison Company_ "SCE") relocated its corporate headquarters from downtown Los Angeles to the City of Rosemead, within the Project Area. The principal office structure completed in 1972, has 660,000 square feet of space and occupies 34 acres of its 75- acre site. In addition to these corporate offices, SCE completed in 1975 a- 766,000 square foot computer center used to process utility bills. In 1979, SCE constructed a three-story, 231,500 square foot structure which serves as headquarters for its engineering and construction departments. In July 1986, SCE completed its general office 4 complex. The facility has an assessed valuation of approximately $16,860,000. Altogether the utility has developed 92 acres with overall total employment in the facilities of approximately 3,500. In 1982, Ticor Title Insurance Company completed a 180, 000 square foot office record storage. Ticor was subsequently acquired by Chicago Title and Trust Company in April 1991 and sold the property to the Panda Restaurant Group in 2002. Other commercial developments which have occurred in the Project Area include a branch office of Bank of America National Trust and Savings Association which was completed in October of 1972. This property was purchased in 2004 by Golden Security Bank and is assessed at $1,530,000. In addition, from 1973 to 1977, Owens Manufacturing Company, a warehouse manufacturing company, and Marge Carson, Inc. each added warehouse or office space to existing facilities within the Project Area. In 1983, California Federal Bank completed construction of a 247,000 square foot automated data processing facility within the Project Area. The property is currently leased by Countrywide which is a national leader in home mortgages. The facility has an assessed valuation of $12,152,732 and employs approximately 1,100 people. ABC Plaza, located at 8819-21 Garvey Avenue, was completed in September 1988. Composed of 30,016 square feet of retail and light industrial space, the 1.24-acre development is one of the few to combine these uses in one site. In April 1992, the Diamond Square shopping center, located at 8150 Garvey Avenue, was completely renovated into a multi-tenant commercial complex. Over 25,000 square feet of new retail space was added, including a new restaurant bringing the total square footage to 102,542. The property transferred ownership in 2004 and has a current assessed valuation $29,750,000. Several projects were completed in the early 1990's which were financed with proceeds of the Series 1993A Bonds, and included projects described in the Infrastructure Management Report adopted by the City and the Commission. Such proceeds were principally applied to make infrastructure improvements, such as street repairs within the Project Area, and deposited to the Commission's Low and Moderate Income Housing Fund. In 1994, the Commission completed the construction of the Angelus Senior Housing project, a 50 unit low income senior housing project located within the Project Area. In 2003, the Commission completed the construction of its Garvey Senior Housing project, a 72 unit low income senior housing facility also located within the Project Area. Both projects were approved by the voters, pursuant to Article 34 of the 34 California Constitution, which requires voter approval for low-income housing projects. Related to the completion of its Garvey Senior Housing project, the Commission also completed construction in 2003 of its Community Center, located at 9108 Garvey Avenue. Proceeds of the Series 1993A Bonds facilitated the completion of these projects. The recent sale to Wal-Mart of an SCE owned 23-acre site at the corner of Walnut Grove and Rush Street was completed in December of 2005. Wal-Mart purchased the development site at a purchase price of approximately $10,000,000. The City has issued a building permit for an approximately 230,000 square foot retail building, with a total building valuation of $10,401,590, for a total valuation of approximately $21,000,000. See " Current Plans for the Redevelopment Project Area No. 1" below. Within this property, there are two additional outpads which Wal-Mart is expected to eventually sell to another developer for a fast food restaurant and a stand alone commercial structure. Significant building renovations within the project area include major remodeling of the former Chicago Title building, former California Federal building, and the Southern California Edison General Office building. The relocation of Panda Restaurant Group's corporate headquarters from South Pasadena to the vacant Chicago Title building in 2002 included a complete interior and exterior renovation of the Structure located at 1638 Walnut Grove Avenue. The estimated value of the improvements completed during 2002 was $1,826,000 for a current total valuation of $8,211,589. The Countrywide interior renovation project completed in 2000 was valued at 4,050,000 for a total valuation of $12,152,732. Southern California Edison has completed a number of major interior renovations of their General Office buildings over the past ten years with a total remodel valuation of approximately $21,000,000. Recently, two new office buildings and one new multi-tenant commercial retail center have been constructed. The commercial center included a new 14,000 square foot drug store and a 6,000 square foot market, for a combined building value of $2,400,000 and a total value of $3,000,000, located at the intersection of Garvey Avenue and San Gabriel Boulevard with a building valuation of $937,627 and a total valuation of $1,748,250. A new two-story office building is currently under construction at 8653 Garvey Avenue with a valuation of $615,000. There are also preliminary proposals being discussed with developers for the redevelopment of two Marge Carson properties along the east end of Garvey Avenue. The current proposal is for a large mixed-use residential/commercial condominium project, adjacent to the Garvey Community Center. No specific scope of design has been agreed upon between the City and the developer. Controls, Land Use and Building Restrictions All real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan requires that new construction shall comply with all applicable State Statues and local law in effect, including City zoning ordinances and City codes for building, electrical, heating, ventilating, and plumbing. The Redevelopment Plan allows for commercial, industrial, residential, and public uses within the Project Area, but specified the particular area in which each of these uses is permitted. The Commission may permit an existing but non-conforming use to remain so long as the existing building is in good condition and is generally compatible with a non-conforming use, the owner is willing to enter into a participation agreement with the Commission and the owner agrees to the imposition of such reasonable restrictions as are necessary to protect the development and use of the Project Area. Within the limits, restrictions and controls established in the Redevelopment Plan, the Commission is authorized to establish land coverage, setback requirements, design criteria, and other development and 35 design controls necessary for proper development of both private and public segments within the Project Area. Current Plans for the Redevelopment Project Area No.1 Within the Project Area there exists a 23 acre vacant site located at the southwest corner of Walnut Grove Avenue and Rush Street. In September 2004, the Rosemead City Council approved by unanimous vote a General Plan amendment, Parcel Map and Conditional Use Permit for development of a 230,367 square foot Wal-Mart Supercenter on the site. In December 2005 Wal-Mart closed escrow on the site at a purchase price of approximately $10,000,000. Development of the Supercenter has been the subject of vigorous local opposition and litigation by neighboring residents and the,United Food and Commercial Workers Union operating through an organization named Save our Community ("SOC"). At the March 2005 municipal election two of the three incumbent councilmembers running for re-election were defeated and replaced by candidates opposed to the Wal-Mart project. Having failed to secure a majority of the seats on the Council in that election, SOC initiated recall campaigns against two other incumbent councilmembers. The recall petitions were qualified and an election was set for February 7, 2006. However the election was not held at that time because of a preliminary injunction issued by the Federal District Court in litigation that is still in progress. SOC is also pursuing two lawsuits challenging the Wal-Mart project's compliance with the California Environmental Quality Act. Construction of the project has commenced despite the pending litigation but it is not certain that the project will be completed. This sale of the development site is expected to result in an increase in tax increment revenues of approximately $73,302. While construction of the project could commence in the near future, no projection of incremental revenue from a completed project has been made in the fiscal analysis, and it is uncertain whether the project will be completed. The Fiscal Consultant has not included in its report an increase in projected assessed value to reflect increased assessed value associated with sale of this property. Additionally, if the property is eventually privately developed as a Wal-Mart Supercenter, or otherwise, this could result in a substantial increase in assessed value. The Fiscal Consultant has not included increases in assessed value for future development in its projections. See APPENDIX A - "FISCAL CONSULTANT'S REPORT." Ten Largest Secured Taxpayers Table 3 below sets forth the ten largest secured taxpayers in the Project Area during Fiscal Year 2005-06. The cumulative secured net assessed value of the ten largest secured taxpayers totals $75,257,352; which represents approximately 21.56% of the total secured net assessed value of Redevelopment Project Area No. 1. The following is restricted to only locally assessed tax payers, and does not include state assessed properties. Southern California Edison, which owns a significant amount of property within the Project Area, is a public utility and therefore its properties are state assessed and is, accordingly, not included in the following table of top ten property owners. See "Unitary Property" above for a description of unitary revenues. There are currently no pending appeals on properties owned by the following top ten taxpayers. 36 Table 3 Rosemead Community Development Commission Redevelopment Project Area No. I Ten Largest Secured Tax Payers Fiscal Year 2005-06 Parcel Owner Name Count Land Use Percent of Project Secured Net Area Secured Net Assessed Value Assessed Value Rosemead Hwang LLC 1 Commercial $29,750,000 8.52% California Federal Savings and Loan 1 Commercial 12,395,786 3.55 Panda Restaurant Group Inc. 1 Commercial 8,375,820 2.40 Yeh Tom C and Nancy Y, TRS Yee Fam 1 Industrial 5,818,642 1.67 Galaxy Realcorp Rosemead LP 7 Commercial 3,437,772 0.98 Thong Phillip T Co TR Thong Fam Trust 1 Residential 3,137,000 0.90 Chiang Raymond K Co TR Chiang Trust 2 Industrial 3,400,000 0.97 Irish Construction 2 Industrial 3,095,327 0.89 Beach Grocery Co Inc. 14 Commercial 2,947,005 0.84 Wong Shi Yin TR Shi Yin Wong MD 1 Commercial 2,900,000 0.83 Trumideb Nominees Inc. Top Ten Totals 31 $75,257,352 21.56% Fiscal Year 2005-06 Net Assessed Value for Project Area $349,023,656 Source: Los Angeles County, 2005-06 Equalized Tax Rolls . Includes only locally assessed properties. Among these ten largest secured tax payers for Fiscal Year 2005-06, the Rosemead Hwang LLC ownership consists of the Diamond Square shopping center, which includes 235,000 square feet of retail, restaurant, and grocery store within the 7 acre property. The California Federal Savings and Loan property consists of a 250,000 square foot, four story office building that is currently being sublet to Countrywide Financial Corporation, which currently employees in excess of 1,100 persons at this site. Panda Restaurant Group Inc. owns and operates an approximately 180,000 square foot group headquarters building and currently employs approximately 300 persons at this site. TAX INCREMENT REVENUES The Commission has retained GRC Associates, Inc., to analyze the Redevelopment Project Area No. 1 and its Pledged Tax Revenues. Their report is included as Appendix A and should be read in its entirety. The Redevelopment Project Area No. 1's base year assessed valuation is $25,162,672, of which $27,798,092 is attributable to secured assessed value and $3,364,580 is attributable to the unsecured assessed value. The total assessed valuation for Fiscal Year 2005-06 is $370,747,412 which produces a total incremental value of approximately $345,580,740. Pledged Tax Revenues consist primarily of tax increment revenues generated from the application of appropriate tax rates to the incremental taxable value of the Redevelopment Project Area No. 1. An additional significant source of Pledged Tax Revenue includes unitary property taxes. Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Commission. This is primarily because the headquarters of Southern California Edison are located within the Project Area. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property" herein. Reductions in Pledged Tax Revenues received by the Commission may result from declining tax rates, property tax administrative costs and refunds resulting from successful appeals of 37 assessed values. For a more complete discussion of how the various adjustments are calculated see, APPENDIX A - "FISCAL CONSULTANT'S REPORT." - Table 4 Rosemead Community Development Commission Redevelopment Project Area No.1 Historical Values Secured') 2001-02 2002-03 2003-04 2004-05J~ 2005-06 Land $125,341,703 $130,981,056 $155,175,638 $169,590,663 $203,769,318 Improvements 116,444,795 121,189,983 128,977,977 135,434,124 148,698,519 Personal Property 2,953,024 2,042,074 1,843,772 1,586,980 1,917,867 Exemptions 5,572,510 5,663,775 5,045,427 5,252,907 5,362,048 Total Secured $239,167,012 $248,549,338 $280,951,960 $301,358,860 $349,023,656 Unsecured Improvements $ 4,938,825 $ 5,117,181 $ 4,830,503 $ 3,261,252 $ 8,081,798 Personal Property 10,089,103 9,580,847 12,558,449 15,215,984 13,641,958 Total Unsecured $ 15,027,928 $ 14,698,028 $ 17,388,952 $ 18,477,236 $ 21,723,756 GRAND TOTAL $254,194,940 $263,247,366 $298,340,912 $319,836,096 _ $370,747,412 Annual Change - 3.56% 13.33% 7.20% 15.92% Incremental Value: $229,032,268 $238,084,694 $273,178,240 $294,673,424 $345,584,740 (1) Secured values include state assessed non-unitary utility property. Source: Fiscal Consultant's Report and Los Angeles County Assessment Roll, 2000-2005. Projected Tax Revenues Table 5 below shows the projected Pledged Tax Revenues for Redevelopment Project Area No. 1 for the Fiscal Years 2005-06 through 2014-15. While the projections are based on assumptions which are believed by the Fiscal Consultant to be reasonable, there can be no assurance that such projections will be realized. See "RISK FACTORS" herein. The projections of Pledged Tax Revenues are based on the following assumptions: (1) Taxable values as reported by the County for the 2005-06 fiscal year. Projections inflate Land, Improvements and Exemptions 2% per year. No inflationary trend is applied to personal property value and the personal property assessed valuation is assumed in each Fiscal Year presented below to remain at the 2005-06 fiscal year level. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. 38 (2) Projected Gross Tax Increment is based upon incremental taxable values factored against an assumed project tax rate and adjusted for indebtedness approved by voters prior to 1988. The assumed future tax rates remain at $1.0052 per $100 of taxable value as reported by the County Auditor Controller. According to the redevelopment plan, the last day to receive tax increment is June 27, 2023. (3) Unitary tax amount is as reported by the County and held constant at the 2004-05 level. (4) Housing Set aside requirement is calculated at 20% of Adjusted Gross Revenue. In 1991, the Commission pre-paid $6.8 million from proceeds from its 1987 tax allocation notes. This pre-payment was restructured in 1993 along with the 1993 series tax allocation bonds. These actions have resulted in a decrease of $469,142 on annual housing set-aside requirement until fiscal year 2021-22. This decrease has been reflected in the projections. (5) Property tax rates are assumed to be 1.052%. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. Unitary tax amount as reported by the County. Unitary tax is held constant at the 2004-05 level. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Unitary Property." (6) Taxable values are as reported by the County for the 2005-06 fiscal year. The 2005 improvement value has been decreased by $84,718 to reflect potential losses due to assessment appeals. (7) With respect to pass-throughs, the Los Angeles County Fire Department receives approximately 17% of gross tax increment pursuant to an agreement with the Commission. Statutory pass throughs to agencies that do not have a current tax sharing agreement began 2004-05 at a rate of 20% of incremental growth from base year 2003-04. An additional pass through will begin in 2014-15 at 16.8% of incremental growth. These taxing agencies receive a combined share of 82.99% of general levy property tax. This assumes the City of Rosemead has elected to receive a pass-through under SB 211. These pass throughs are subordinate to debt service on the Bonds. As noted in the Fiscal Consultant's Report, growth in real property land and improvement values have been limited to an assumed rate of growth of real property taxable values of two percent annually as allowed under Article XIIIA of the state Constitution. The State Board of Equalization has directed county assessors to use an inflation adjustment of 1.867% in preparing the 2004-05 assessment rolls. Should the future growth of taxable value in the project areas be less than two percent, the resultant Gross Tax Increment Revenues would be reduced proportionately. Future values will also be impacted by changes of ownership and new construction not reflected in our projections. In addition, the values of property previously reduced in value due to assessment appeals based on reduced market values could increase more than two percent when real estate values increase more than two percent. The Commission, the City of Rosemead, the Fiscal Consultant and the Underwriter are unable to make any representation that taxable values will actually grow at the rate projected. 39 Cl -c 00 "D "T n cl, n C r O NFfi .-r ~ ~ N O ~ M ~ Ov0 O ~ G~ en ti 700 ~ M 0--0~61^N O -~1 V1 r ~00MC~ n N M O ^ C N p ^ V' ~ e n Vl N 00 00 Ch [ N M o0 M to v ' 00 M C M W M O Neff e} M ~CNCN%0o~o a OPn t ^ 7 Oi v'i M oo v wl 00 00 M - C1 l ON N e Ci - N r ^ M o% Z ~d M M t- s, ^ ^ 00 N ^ i O V) `Cf M O\ •--I O v v oo ~ 1-4 ~~D v'i O m.: M N 00 'n O^ O N 0\ M moo M ~0a~~ ' V oo by N ~•q V1 O N O N en m u N m N v 7 O O M T ~ S p i- ~p O~~n O N V Z ~a fJ> ~ O Vi v 7 00 kn _ v' O ON kl) Ln m .--i t? 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Otoo .(i -qNo O 2 N 4~i v 4 v 4 H b v .n 00 40 Table 6 provides a summary of Redevelopment Project Area No. 1 Projection of Tax Increment Revenues for Fiscal Years 2005-06 through 2022-23. Revenues or revenue reductions resulting from Supplemental Assessments are not included in projections of the Fiscal Consultant set forth herein. Table 6 Rosemead Community Development Commission Redevelopment Project Area No.1 Projected Taxable Values and Tax Increment Revenues Adjusted Projected Incremental Gross Pledged Tax Fiscal Year Taxable Value Revenues Revenues 2005-06 $345,500,000 $4,646,000 $3,325,000 2006-07 352,602,000 4,718,000 3,369,000 2007-08 359,846,000 4,791,000 3,414,000 2008-09 367,235,000 4,865,000 3,459,000 2009-10 374,772,000 4,941,000 3,506,000 2010-11 382,459,000 5,018,000 3,553,000 2011-12 390,301,000 5,097,000 3,602,000 2012-13 398,299,000 5,177,000 3,651,000 2013-14 406,457,000 5,259,000 3,702,000 2014-15 414,778,000 5,343,000 3,753,000 2015-16 423,266,000 5,428,000 3,806,000 2016-17 431,923,000 5,515,000 3,859,000 2017-18 440,753,000 5,604,000 3,914,000 2018-19 449,761,000 5,694,000 3,969,000 2019-20 458,948,000 5,787,000 4,026,000 2020-21 468,319,000 5,881,000 4,084,000 2021-22 477,877,000 5,997,000 4,143,000 2022-23 487,627,000 6,075,000 3,734,000 See Table 5 above and APPENDIX A-"FISCAL CONSULTANT'S REPORT" hereto. Source: GRC Associates, Inc. Assessment Appeals The Fiscal Consultant reports no material appeals of the taxable value for assessments within the Project Area that could potentially materially lower taxable values, as currently reported, thereby reducing Pledged Tax Revenues. See APPENDIX A-"FISCAL CONSULTANT'S REPORT" hereto. Debt Service and Estimated Coverage Table 7 sets forth the debt service and estimated coverage on the Series 2006A Bonds and the Series 1993 Bonds to remain outstanding after the defeasance of the Refunded Bonds. The following assumptions were made in creating the table: 1. The Fiscal Consultant's projections of net Pledged Tax Revenues as summarized in Table 5 and as set forth in APPENDIX A hereto are realized through Fiscal Year 2005-06. As above, projections inflate Land, Improvements and Exemptions 2% per year. No inflationary trend is applied to personal property value and the personal property assessed valuation is assumed in each Fiscal Year presented below to remain at the 2005-06 fiscal year level. See "TAX ALLOCATION 41 FINANCING AND LIMITATIONS ON RECEIPT OF TAX INCREMENT - Property Tax Rate and Appropriation Limitations" herein. 2. Debt service is based on the maturity schedule and interest rates, subject to prior redemption or acceleration, for the Series 2006A Bonds as set forth on the inside cover page hereof and the Series 1993 Bonds to remain outstanding after the defeasance of the Refunded Bonds. 3. The Commission will not incur any additional debt for the Project Area during the years shown. Table 7 Estimated Tax Increment, Debt Service and Coverage (Bond Year Ending October 1) Pledged Tax Series 1993 Series 2006A Combined Year (1) Revenues Bond Debt Service (2) Bond Debt Service Debt Service Total Coverage 2006 $3,325,698 $1,546,373.75 $1,099,380.94 $2,645,754.69 1.26 2007 3,369,589 1,293,320.00 1,347,993.76 2,641,313.76 1.28 2008 3,414,357 1,293,320.00 1,350,593.76 2,643,913.76 1.29 2009 3,459,021 1,293,320.00 1,348,131.26 2,641,451.26 1.31 2010 3,506,598 1,293,320.00 1,349,856.26 2,643,176.26 1.33 2011 3,553,106 1,293,320.00 1,349,481.26 2,642,801.26 1.34 2012 3,602,565 1,293,320.00 1,351,931.26 2,645,251.26 1.36 2013 3,651,993 1,293,320.00 1,353,156.26 2,646,476.26 1.38 2014 3,702,409 1,293,320.00 1,348,156.26 2,641,476.26 1.40 2015 3,753,834 1,293,320.00 1,351,406.26 2,644,726.26 1.42 2016 3,806,287 1,293,320.00 1,351,906.26 2,645,226.26 1.44 2017 3,859,789 1,293,320.00 1,349,656.26 2,642,976.26 1.46 2018 3,914,362 1,293,320.00 1,351,656.26 2,644,976.26 1.48 2019 3,969,023 2,313,320.00 328,531.26 2,641,851.26 1.50 2020 4,026,803 2,316,200.00 327,331.26 2,643,531.26 1.52 2021 4,084,715 2,315,720.00 325,368.76 2,641,088.76 1.55 2022 4,143,786 2,316,880.00 327,993.76 2,644,873.76 1.57 (1) Tax Increment is for the Tax Year ending June 30 and debt service is for the Bond Year ending October 1. (2) Assumes the refunding of the Refunded Bonds as described herein. The Series 1993 Bonds mature on October 1, 2033. Debt service owing to the Series 1993 Bonds between 2023 and 2033 are not included in this table. Source: GRC Associates, Inc. with debt service schedules provided by Piper Jaffisy & Co. 42 CERTAIN INFORMATION CONCERNING THE CITY Certain general information concerning the City of Rosemead is included herein as Appendix E hereto. Such information is provided for informational purposes only. The General Fund of the City is not liable for the payment of the Series 2006A Bonds or the interest thereon, nor is the taxing power of the City pledged for the payment of the Series 2006A Bonds or the interest thereon. CERTAIN LEGAL MATTERS Legal matters incident to the delivery of the Series 2006A Bonds are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. A complete copy of the proposed form of opinion of Bond Counsel is contained in Appendix B. As Bond Counsel, Orrick, Herrington & Sutcliffe LLP undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Commission in connection with the Series 2006A Bonds by Wallin, Kress, Reisman & Krantz LLP, Santa Monica, California, as counsel to the Commission, and by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2006A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix B hereto. Bond Counsel expects to deliver an opinion at the time of issuance of the Series 2006A Bonds substantially in the form set forth in APPENDIX B - "FORM OF OPINION OF BOND COUNSEL," subject to the matters discussed below To the extent the issue price of any maturity of the Series 2006A Bonds is less than the amount to be paid at maturity of such Series 2006A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2006A Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Series 2006A Bonds, 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 Series 2006A Bonds is the first price at which a substantial amount of such maturity of the Series 2006A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2006A Bonds accrues daily over the term to maturity of such Series 2006A Bonds 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 Series 2006A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2006A Bonds. Beneficial Owners of the Series 2006A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2006A Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Series 2006A Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2006A Bonds is sold to the public. 43 Series 2006A Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2006A Bonds. The City and the Authority have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2006A Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2006A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2006A Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Series 2006A Bonds may adversely affect the value of, or the tax status of interest on, the Series 2006A Bonds. Certain requirements and procedures contained or referred to in the Indenture, the Sublease, the Tax Certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Orrick, Herrington & Sutcliffe LLP. Although Bond Counsel is of the opinion that interest on the Series 2006A Bonds is excluded from gross income for federal income tax purposes and that interest on the Bonds is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a Beneficial 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 Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislation, if enacted into law, or clarification of the Code may cause interest on the Series 2006A Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Series 2006A Bonds. Prospective purchasers of the Series 2006A Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Series 2006A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City or the Commission, or about the effect of future changes in the Code, 44 the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City and the Commission have covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Series 2006A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City, the Commission or the Beneficial Owners regarding the tax-exempt status of the Series 2006A Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City, the Commission and their appointed counsel, including the Beneficial 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 bonds is difficult, obtaining an independent review of IRS positions with which the City or the Commission legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Series 2006A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2006A Bonds, and may cause the City, the Commission or the Beneficial Owners to incur significant expense. LITIGATION At the time of delivery of and payment for the Series 2006A Bonds, the Commission will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Commission, threatened against the Commission in any way affecting the existence of the Commission or the titles of its officers to their respective offices or seeking to restrain or to enjoin the issuance, sale or delivery of the Series 2006A Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of Pledged Tax Revenues pledged or to be pledged to pay the principal of and interest on the Series 2006A Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Series 2006A Bonds, the Resolution, the Indenture or any action of the Commission contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or the powers of the Commission or its authority, or which would adversely affect the exclusion of interest paid on the Series 2006A Bonds from gross income for Federal income tax purposes or the exemption of interest paid on the Series 2006A Bonds from California personal income taxation, nor, to the knowledge of the Commission, is there any basis therefor. RATINGS Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. ("S&P") has assigned its municipal bond rating of "AAA" to the Series 2006A Bonds based on the issuance by Ambac Assurance of the Financial Guaranty Insurance Policy. The Series 2006A Bonds have also been assigned an underlying rating of "BBB+" by S&P. Such ratings reflects only the views of the rating agencies and an explanation of the significance of such rating and any rating of the Commission's outstanding obligations may be obtained from such rating agency as follows: Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041-0003. There is no assurance that such ratings will continue for any given period or that they will not be revised downward or withdrawn entirely by such rating agencies, if in their judgment, circumstances so warrant. The Commission, the Bond Insurer and the Trustee undertake no responsibility either to notify the owners of the Series 2006A Bonds of any revision or withdrawal of the rating or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2006A Bonds. 45 UNDERWRITING The Series 2006A Bonds are to be purchased from the Authority by Piper Jaffray & Co., as Underwriter, pursuant to a Purchase Contract among Commission, the Authority and the Underwriter. The Underwriter will purchase the Series 2006A Bonds at a price of $14,237,800.40, which reflects the par amount of the Series 2006A Bonds, plus net original issue premium of $316,830.40 less an underwriter's discount of $84,030.00. The Underwriter is committed to purchase all the Series 2006A Bonds if any are purchased. The Underwriter may offer and sell the Series 2006A Bonds to certain, dealers (including depositing the Series 2006A Bonds into investment trusts) and others at prices lower than the offering prices stated on the inside cover of this Official Statement. After the initial public offering, the public offering prices of the Series 2006A Bonds may be changed from time to time by the Underwriter. VERIFICATION The Arbitrage Group, Inc., certified public accountants (the "Verification Agent"), will verify as to the Escrow Agreement, the mathematical accuracy as of the date of the closing on the Series 2006A Bonds of the computations contained in the provided schedules to determine that the anticipated receipts from the investment of cash and direct obligations of the United States will be sufficient to pay on April 1, 2006, the scheduled interest on the outstanding Series 1993 Bonds and on the Redemption Date, the principal of the Refunded Bonds at a redemption price of 100% plus accrued and unpaid interest thereon. The report of the Verification Agent will include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained in such schedules provided to them and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report. FINANCIAL ADVISOR The Commission has retained Public Financial Management as Financial Advisor for the sale of the Series 2006A Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. Public Financial Management is an independent advisory firm and is not engaged in the business of underwriting, trading, or distributing municipal or other public securities. FISCAL CONSULTANT The Report of GRC Associates, Inc., included in Appendix A to this Official Statement has been presented in reliance upon the knowledge, experience and authority of that firm as experts in redevelopment consulting. MISCELLANEOUS All of the preceding summaries of the Series 2006A Bonds, other applicable legislation, agreements and other documents are made subject to the provisions of the Series 2006A Bonds and such documents, respectively, and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Commission for further information in connection therewith. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. 46 The execution and delivery of this Official Statement by the Executive Director of the Commission has been duly authorized by the Commission. Concurrently with the delivery of the Series 2006A Bonds, the Commission will furnish to the Underwriter a certificate of the Commission to the effect that this Official Statement, as of the date of this Official Statement and as of the date of delivery of the Series 2006A Bonds, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein, in the light of the circumstances under which they were made, not misleading. ATTEST: /s/ Nina Castruita Secretary ROSEMEAD COMMUNITY DEVELOPMENT COMMI SION By: /s/ Jay T. IChairperson (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A FISCAL CONSULTANT'S REPORT A-1 (THIS PAGE INTENTIONALLY LEFT BLAND ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION ROSEmEEAD REDEVELOPMENT PROJECT AREA NO. 1 PROJECTED TAx INCREMENT REVENUES FEBRUARY 7, 2006 I. Introduction The Community Development Commission of the City of Rosemead ("Agency") is proposing to issue its Tax Allocation Bonds, 2006 Series A, ("Bonds") secured by a pledge of and lien on the tax increment revenues derived from the Rosemead Redevelopment Project Area No. 1 ("Project Area"). The Project Area, to be described in this report, was originally established in 1972. The Bonds are being issued to refund a portion of the Rosemead Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993 A, previously issued by the Agency, as well as to raise new funds. The California Community Redevelopment Law ("CRL") provides for the creation of redevelopment agencies by cities and counties for the purpose of the elimination of blight. The CRL, collectively with Article 16, Section 16 of the California Constitution, authorizes redevelopment agencies to receive that portion of property tax revenue generated by project area taxable values that are in excess of the base year value. The base year ("Base Year") value is defined to be the amount of the taxable values within the project area boundaries on the last equalized tax roll prior to adoption of a project area or an amendment to a project area that adds area. The amount of current year taxable value that is in excess of the Base Year value is referred to as incremental taxable value. Tax revenues generated from the incremental taxable value are generally referred to as Tax Increment Revenues. The CRL provides that Tax Increment Revenues may be pledged by a redevelopment agency to the repayment of agency indebtedness. The purpose of this fiscal consultant report ("Report") is to examine the current fiscal year and estimate, for subsequent fiscal years, the amount of tax increment revenues anticipated to be received by the Agency from the Project Area. Provisions of the CRL and the Redevelopment Plan determine the amount of tax increment that the Agency may utilize for purposes of making debt service on bonds, loan payments, payments pursuant to tax sharing agreements between the Agency and other taxing entities and payments on other obligations. The estimated tax increment revenue available for bond debt service ("Pledged Revenues") generated by the Project Area are shown in the table below for fiscal years 2005-06 through 2022-23. Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Project Area (000's Omitted) Fiscal Year Incrementa 1 Taxable Value Adjuste d Gross Revenue Pledged Revenues 2005-06 345,500 4,646 3,325 2006-07 352,602 4,718 3,369 2007-08 359,846 4,791 3,414 2008-09 367,235 4,865 3,459 2009-10 374,772 4,941 3,506 2010-11 382,459 5,018 3,553 2011-12 390,301 5,097 3,602 2012-13 398,299 5,177 3,651 2013-14 406,457 5,259 3,702 2014-15 414,778 5,343 3,753 2015-16 423,266 5,428 3,806 2016-17 431,923 5,515 3,859 2017-18 440,753 5,604 3,914 2018-19 449,761 5,694 3,969 2019-20 458,948 5,787 4,026 2020-21 468,319 5,881 4,084 2021-22 477,877 5,977 4,143 2022-23 487,627 6,075 3,734 The projected incremental taxable values of property and the resulting gross tax increment revenues ("Gross Revenue") and Pledged Revenues summarized above are reflected in Tables 1, 2, 3, 4, and 5 attached to this Report. The projections in this Report are based on the history of taxable values within the Project Area and the property tax assessment and property tax apportionment procedures of Los Angeles ("County"). Future year assessed values, Gross Revenues and Pledged Revenues are estimates based upon the assumptions described in this Report. This Report should not to be construed as a guarantee of Agency revenues by the Agency or GRC Associates, Inc. II. The Project Area The redevelopment plan for Rosemead Project Area No. 1 was originally adopted by Rosemead City Council on June 27, 1972 by Ordinance 340. The Project Area consists of approximately 511 acres and is roughly triangular in shape. Garvey Avenue, San Gabriel Boulevard and Walnut Grove are major thoroughfares traversing the area. The Project Area is located between the San Bernardino and Pomona freeways to the north and south and contains a complete cross section of the existing cities land use, including commercial, industrial and residential uses. The original Redevelopment Plan has been amended four times since its adoption. The plan was first amended on December 9, 1986, by City Council Ordinance 592, to increase the number of dollars allocated to the Agency and re-establish eminent domain. The plan was further amended on December 20, 1994 by City Council Ordinance 752 to bring the plan into conformity with 2 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 California State Assembly Bill 1290. The plan was amended a third time by City Council Ordinance 822 on June 22, 2002, to extend the duration of the plans effectiveness. Finally, the Plan was amended on July 27, 2004 by City Council Ordinance 832 to extend the life of the Project by 1 year pursuant to SB 1045. A. Land Use The following table presents a breakdown of land use in the Project Area, by assessed value for fiscal year 2005-06. Unsecured parcels are not shown because these parcels are tax bills that are assigned to secured parcels already and are accounted for in other categories. It should be noted that the figures below exclude the value of exempt parcels such as those owned by the City, Agency, State or other governmental agencies that do not contribute to Agency revenues. Project Area Category Parcels Assessed Value Percent of AV Residential 775 $ 165,381,310 44.61% Commercial 157 $ 107,539,554 29.01% Industrial 66 35,576,839 9.60% Vacant Land 54 $ 17,465,444 4.71% Government owned 15 $ 1,315,041 0.35% Institutional 3 $ 2,358,583 0.64% Misc. 32 $ 1,167,991 0.32% Public Utility $ 18,218,894 4.91%. Unsecured $ 21,723,756 5.86% Totals 1102 $ 370,747,412 100.00% I'l Unsecured properties are assigned to the secured parcel in which they are located. Source: Los Angeles County Auditor Controller, based on 2005-06 Los Angeles County Equalized Tax Roll B. Redevelopment Plan Limits Not including the one year extension permitted by Senate Bill SB 1045 to mitigate the impacts of ERAF payments, CRL limits the period in which redevelopment activities can be undertaken for plans adopted prior to January 1, 1994, to 40 years from the date of adoption or January 1, 2009, whichever is later, and limits the period within which a redevelopment project area may receive tax increment to 50 years following the adoption. If redevelopment plans with shorter time frames were adopted, legislative bodies were allowed to extend their limits to conform to these requirements through the adoption of an ordinance prior to December 31, 1999. For projects adopted subsequent to 1994, redevelopment activities can be undertaken for 30 years and tax increment received for 45 years. A redevelopment plan adopted prior to January 1, 1994 is required to include a limitation on tax increment dollars that may be allocated to the redevelopment agency; a time limit on incurring indebtedness to be repaid with tax increment; and a limit on the amount of bonded indebtedness to be repaid with tax increment that can be outstanding at one time. These limits can be extended only by an amendment of the redevelopment plan. The legislative body, by adoption of 3 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 an ordinance, can eliminate the time limit on the establishment of loans, advances, and indebtedness required prior to January 1, 2002. Pursuant to California State Senate Bill 1045, which became effective September 1, 2003, redevelopment agencies may amend the redevelopment plan to extend by one year the time limit on the effectiveness of the plan and the time limit to receive property taxes and repay indebtedness. The City Council has adopted a series of ordinances conforming the time limits of the Redevelopment Plan to the maximum allowed under law. Additionally, the Agency eliminated the timeframe to incur debt under state legislation SB 211. Rosemead Redevelopment Project Area No. 1 Plan Limits Last Date to Limit on Total' Last Date to Repay Debt Nvith Tax Increment Tax Increment Plan Effectiveness Incur New Debt Tax Increment Limit Bond Debt Redevelopment 6/27/2013 No Limit 6/27/2023 $249,245,938 No Limit Project Area No. 1 According to the County records, the Agency has received approximately $78,579,553 in total cumulative tax increment from the Project Area as of January 1, 2006. Based on the projected tax increment revenues to be received by the Agency, the limit on tax increment funds that the Agency may receive for the Project Area will not be exceeded within the term of the Bonds. III. Project Area Assessed Values A. Assessed Values Taxable values are prepared and reported by the County Auditor-Controller each fiscal year and represent the aggregation of all locally assessed properties within the Project Area. The assessments are assigned Tax Rate Areas (TRA) that are coterminous to the boundaries of the project area in the first year that an agency is eligible to receive tax increment revenue. The Project Area consists of 12 individual TRAs. Historic taxable values since 2000-2001 were utilized to determine the historical growth rate of property values within the Project Area. Property values within the Project Area have steadily grown at a compounded rate of 10.5% per year between the years 2001-2002 and 2005-2006. Total assessed property values did not decline for any fiscal period between 2000-2001 and 2005-2006. Also, at no time during this period did property tax values grow at a rate of less than 2%. GRC is not aware of any potential exemptions that would substantially affect property values in the Project Area in the coming future. The historic taxable values for the Project Area are shown in Table 3. B. Top Ten Taxable Property Owners A review of the top ten taxable property owners in the Project Area for fiscal year 2005-06 was conducted. Within the Project Area, the aggregate total taxable value for the ten largest taxpayers totaled $79,920,183 of the assessed property values. These top-ten taxpayers account 4 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 for 20.7% percent of the secured assessed value within the Project Area and 21.5% percent of the unsecured assessed value. GRC's analysis is restricted to only locally assessed tax payers, and does not include state assessed properties. Southern California Edison, which owns a significant amount of property within the project area, is a public utility and therefore its properties are state assessed. For this reason, GRC has not included Southern California Edison in its analysis of top 10 property owners. See Section IV. H. below for a more complete description of unitary revenues. A list of the top ten taxpayers, and the number of parcels attributed to-each owner for the Project Area, is presented in Table 5. IV. Tax Allocation and Disbursement A. Property Taxes The taxable values of property are established each year on the property tax lien date. Prior to 1997 the lien date was March 1 for locally assessed property and January 1 for State assessed utility property. Beginning with 1997, the lien date of January 1 was established for both locally and State assessed property. Real Property reflects the reported assessed values for secured and unsecured land and improvements. Pursuant to Article XIIIA of the State Constitution, the value of locally assessed Real Property may only be increased up to two percent annually to reflect inflation. Real Property values are also permitted to increase as a result of a change of ownership or new construction. Utility property assessed by the State Board of Equalization may be revalued annually and such assessments are not subject to the inflation limitations of Article XIIIA. The taxable value of Personal Property is also established on the lien dates and is not subject to the annual two percent limit of locally assessed Real Property. Secured property includes property on which any property tax levied by a county becomes a lien on that property. Unsecured property typically includes value for tenant improvements, fixtures and personal property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other secured property owned by the taxpayer. The taxes levied on unsecured property are levied at the previous year's secured property tax rate. B. Supplemental Assessments Chapter 498 of the Statutes of 1983 provides for the reassessment of property upon a change of ownership or completion of new construction. Such reassessment is referred to as a Supplemental Assessment and is determined by applying the current year's tax rate to the amount of increase in a property's value and prorating the resulting property taxes to reflect the portion of the tax year remaining as determined by the date of the change in ownership or completion of new construction. Supplemental Assessments become a lien against Real Property. Since 1984-85 revenues derived from Supplemental Assessments have been allocated to redevelopment agencies and taxing entities in the same manner as regularly collected property taxes. The Agency received $251,440 in revenue from Supplemental Assessments' within the ' Supplemental Assessments as reported by Los Angeles County Auditor-Controller in monthly remittance reports for Fiscal Year 2004-05. Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Project Area during fiscal year 2004-05. This revenue is indicative of new development that was assessed after finalization of the tax roll and sales of property at prices that were higher than the assessed value. GRC has not included revenues- or revenue reductions resulting from Supplemental Assessments in our projections. C. Tax Rates Tax rates will vary within a community and a project area. The tax rate for any particular parcel is based upon the taxing entities levying the tax rate for the area where the parcel is located. The tax rate consists of the General Levy Tax Rate of $1.00 per $100 of taxable values and the Over- ride Tax Rate. The Over-ride Tax Rate is that portion of the tax rate that exceeds the General Levy Tax Rate and is levied to pay voter approved indebtedness or contractual obligations that existed prior to the enactment of Proposition XIII. The State Constitution prohibits the allocation to redevelopment agencies of tax revenues derived from Over-ride Tax Rates levied for repayment of indebtedness approved by the voters after December 31, 1988. The Over-ride Tax Rates typically decline each year as a result of (1) increasing property values (which would reduce the Over-ride Tax Rate required to produce the revenue necessary to meet debt service obligations) and (2) the eventual retirement of debt over time. The Project Area is subject to the Metropolitan Water District. The tax rate levied by the Metropolitan Water District is authorized by a contract and does not have a termination date. The Project Area contains 12 Tax Rate Areas (TRA's). A Tax Rate Area is a geographic area within which the taxes on all property are levied by a certain set of taxing entities. These taxing entities each receive a prorated share of the General Levy and those taxing entities with voter approved Over-ride Tax Rates receive the revenue resulting from that tax rate. For the revenue projections contained within this report, it is assumed that the tax rate is $1.0052 per $100 of secured and unsecured assessed value for the life of the Project Area. The breakdown of the tax rate that is applicable to the Project Area is as follows: General Levy 1.000000 Metro Water District .0052 RDA Applicable Rate: 1.0052 D. Allocation of Taxes Taxes paid by property owners are due in two equal installments. Installments of taxes levied upon secured property become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. The County disburses Tax Increment Revenue to all redevelopment agencies from November through August with approximately 45 percent of secured revenues apportioned by the end of December. Unsecured revenues are disbursed in September, January and June of each fiscal year. E. Annual Tax Receipts to Tax Levy The Agency received a total of $4,588,594 in tax increment revenue from the Project Area for fiscal year 2004-05. This total is inclusive of revenues from supplemental assessments, homeowner's exemptions, public utilities and prior year collections and refunds. 6 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 The County of Los Angeles apportions tax revenues to redevelopment agencies based upon the amount of the tax levy that is received from the taxpayers. Secured collection rates for the Merged Project have been consistently high over last four years. The following table illustrates the tax revenue collections for Agency over the previous five years. The total tax levy includes the tax levy, including secured, unitary and unsecured tax levy's as reported at the beginning of each fiscal year. The total apportioned includes amounts actually allocated to the Agency including supplementary assessments and prior year collections. Fiscal Year Total Tax Le Collection Rate Total Apportione d' Total % Received. 2004-05 $ 4,205,694 99.00%0 $ 4,588,598 109.10% 2003-04 $ 4,053,338 98.40% $ 4,318,373 106.54% 2002-03 $ 3,720,264 96.40% $ 3,800,050 102.14% 2001-02 $ 3,711,493 97.30% $ 3,845,676 103.62% 2000-01 $ 3,475,165 87.10% $ 3,547,755 102.09% Source: Los Angeles County Auditor-Controller's Office, 2000-2001 to 2004-05 [1] Total tax levy includes secured tax levy, unitary taxes and unsecured tax levy Tax increment revenue projections contained in this report do not include any adjustments for delinquencies or collection history. F. Assessment Appeals GRC has provided for a reduction in assessed value based on appeals data from Project Area in the aggregate. Since 1999, there have been a total of 34 assessment appeals filed on properties within the Project Area. Of the 34 appeals filed, 14 have been allowed with a reduction in value and 19 have been denied or withdrawn. These figures result in an average of 42.4% percent of resolved appeals being allowed with a reduction of value. The historical average reduction in value for allowed appeals is 25.31 percent. There is 1 appeal currently pending on property within the Project Area. These owners have appealed valuations totaling $789,000. Based on the above historical averages, GRC expects a 42.4 percent chance that the outstanding appeal will be successful, with an average reduction in value of 25.31 percent. This would result in a loss of assessed value of $84,718. The projected assessed value for 2005-06 has been adjusted for this estimated loss of value. The historical appeals data for the Project Area is presented in Table 4 attached to this report. A number of the appeals in the Project Area that were allowed resulted in a reduction in value were based on Section 51 of the Revenue and Taxation Code. This section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions took place in some counties during the mid-1990's due to declining real estate values. Reductions made under this code section may be initiated by the Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine it's full cash value and the valuation is adjusted accordingly, which may result in either further reductions in or increases in assessed value. Such increases shall be in accordance 7 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 with the actual full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. G. County Collection Charges Counties are permitted by State law to recover charges for property tax administration in an amount equal to their property tax administration costs. For the fiscal year 2004-05, the amount of County collection charges attributed to the Project Area is $69,875.11. For purposes of these projections, GRC has assumed that the County will continue to charge the Agency for property tax administration and that such charge will be 1.52% percent of the gross revenues (see Tables 1 and 2) based on the prior year administration fee. H. Allocation of State Assessed Unitary Taxes Legislation enacted in 1986 (Chapter 1457) and 1987 (Chapter (921) provided for a modification of the distribution of tax revenues derived from utility property assessed by the State Board of Equalization, other than railroads. Prior to the 1988-89 fiscal year, property assessed by the SBE was assessed statewide and was allocated according to the location of individual components of a utility in a tax rate area. Since 1988-89, tax revenues derived from unitary property assessed by the SBE are accumulated in a -single Tax Rate Area for the County. It is then distributed to each taxing entity in the County in the following manner: (1) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to two percent; (2) if utility tax revenues are insufficient to provide the same amount as in the previous year, each taxing entity's share would be reduced pro-rata county wide; and (3) any increase in revenue above two percent would be allocated in the same proportion as the taxing entity's local secured taxable values are to the local secured taxable values of the County. To administer the allocation of unitary tax revenues to redevelopment agencies, the County no longer includes the taxable value of utilities as part of the reported taxable values of the project area, therefore, the base year of project areas have been reduced by the amount of utility value that existed originally in the base year. Unitary tax revenues make up a substantial portion of the tax increment revenues received by the Agency. This is primarily because the headquarters of Southern California Edison are located within the Project Area. However, the revenues allocated to the Agency come from several sources and are allocated based on the statutory method described above and do not reflect the current unitary assessed value within the Project Area. Within the Project Area, the Auditor Controller allocated $1,173,352 in unitary tax revenue to the Agency for 2004-05. This amount is reasonably consistent with the unitary revenue allocations made to the Agency in prior years. However, the Agency's unitary revenues have fallen by approximately 23% since 1992-1993. See the table below for the total unitary assessed values in the County of Los Angeles since 1997. According to the California State Board of Equalization, there have been two primary causes of the decrease unitary assessed valuation in the County of Los Angeles. The first was the privatization of power generation facilities in the late 1990s. When a power generation facility was sold to a private entity it became locally assessed and was attributed to the TRA in which it is located. Assessment of these facilities moved back to the State in 2003, but the value is associated with specific TRAs according to California Revenue and Taxation Code Section 100.9. The second primary cause of a decrease in unitary valuations within the County was due 8 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 to a decrease in the assessed valuation of telecommunication companies during the period 2002- 2005. We have assumed that unitary tax revenue will continue to be allocated in similar amounts over the life of the Project Area, and that unitary tax will remain constant through the life of the project. Total Unitary Assessed Value for County of Los Angeles Year Total Assessed Value 1997-98 $ 12,668,473,940 1998-99 $ 12,681,433,366 1999-00 $ 12,505,962,644 2000-01 $ 12,348,514,649 2001-02 $ 12,425,634,651 2002-03 $ 12,357,025,398 2003-04 $ 11,587,735,634 2004-05 $ 10,648,846,372 2005-06 $ 10,718,105,185 Source: California State Board of Equalization V. Low and Moderate Income Housing Set-Aside Section 33334.2 of the CRL requires redevelopment agencies to set aside 20 percent of all tax increment revenues into a low and moderate-income housing fund ("Housing Set-Aside Requirement'). An agency can reduce the Housing Set-Aside Requirement if it annually makes certain prescribed determinations that are consistent with the housing element of the general plan. These findings are: (1) that no need exists in the community to improve or increase the supply of low and moderate income housing; or, (2) some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing need. In order to make findings (1) or (2), the Agency's finding must be consistent with the housing element of the community's general plan, including its share of the regional housing needs of very low income households and persons and families of low or moderate income. No such findings have been made by the Agency. However, on October 9, 1991 the Agency prepaid its housing obligation in the amount of $6,813,849.62. As a result, the Agency's housing obligation has been reduced by $469,142 per year until the 2021-22 fiscal year. This annual reduction was based on a present value factor determined by the yield on the Agency's outstanding bonds. The Agency additionally deferred its housing set-aside obligation for fiscal years 1992-93, 1993-94 and 1995-96. The agency must repay these amounts prior to the last date the Agency may receive tax increment. VI. Legislation In order to address State Budget deficits, the Legislature enacted SB614, SB844 and SB 1135 that required payments from redevelopment agencies for the 1992-93, 1993-94 and 1994-95 fiscal years into a countywide Education Revenue Augmentation Fund (the ERAF). The Agency was allowed to use any funds legally available and not legally obligated for other uses, including reserve funds, bond proceeds, earned income and proceeds of land sales to satisfy this obligation, but was prohibited from using moneys in the Low and Moderate Income Housing Fund (the Housing Fund). The obligation is applied to the agency and not to specific project areas. All 9 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 ERAF obligations of the Agency in the above noted years have been fulfilled and no repayment obligation exists. In addition to the payments from redevelopment agencies, the State budget solutions have involved the shifting of property tax revenues from cities, counties and special districts to the ERAF. In Los Angeles, this shift has been accomplished by allocating to the ERAF its share of taxes in the same manner as they are distributed to other taxing entities except for redevelopment agencies whose revenue is distributed in accordance with its incremental taxable value. Pursuant to AB 1768, the State introduced a one-time ERAF shift for redevelopment agencies of $75,000,000 for the fiscal year 2002-03 to help fund the State budget deficit. The Agency's ERAF obligation was $122,487, which was paid to the County. Additional State legislation, SB 1045, again introduced a one-time ERAF shift of $135,000,000 for fiscal year 2003-04 year to meet the ongoing State budget deficits. The Agency's ERAF obligation for the 2003-04 fiscal year was $207,391. Subsequent to SB 1045, the State legislature adopted SB 1096 which established an ERAF shift of $250,000,000 for the 2004-05 and 2005-06 fiscal years to meet the ongoing State budget deficits. The Agency's ERAF obligation for the 2004-05 and 2005-06 fiscal years is estimated at $342,811.45. No other future ERAF obligations have been drafted or adopted, but it is possible that the Legislature could shift property tax allocations or require additional redevelopment payments, in future years. Since the ERAF shifts are subordinate to new and existing bond obligations, the ERAF payments are not included in the projections of tax increment revenues in this Report. The Agency cannot predict whether State Legislature will enact any other legislation requiring additional or increased future shifts in tax increment revenues to the State and/or to schools, whether through an arrangement similar to ERAF or by other arrangements, and, if so, the effect on future Pledged Tax Revenues. Given the level of the State of California's deficit problems, tax increment available for payment of Series 2005 Bonds could be substantially reduced in the future. VII. Tax Sharing Agreements and Other Obligations Pursuant to Section 33401 of the Redevelopment Law, a redevelopment agency may enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project in an amount which in the agency's determination is appropriate to alleviate any financial burden or detriment caused by the redevelopment project. These agreements normally provide for a pass-through of tax increment revenue directly to the affected taxing agency, and therefore, are commonly referred to * as "pass-through" agreements or "tax sharing" agreements. The following paragraphs describe the pass-through agreements the Agency has entered into with respect to each project area. County of Los Angeles, Consolidated Fired Protection Department and Coun Library District. On September 22, 1989 the Agency entered into a reimbursement agreement with the County of Los Angeles, Consolidated Fire Protection District and County Library District. The Agency agreed to pay the Fire District its share of general levy property tax increment. The Fire District share of property tax revenues is approximately 17.1 Additionally, the Agency agree to pay the Library District its share of tax increment revenues, net of housing set-aside, if the Agency constructed a new Library facility within the Project Area. The Agency has not constructed a new facility and does not currently have plans to do so. Therefore, it has been assumed that the 10 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 Agency will not make payments to the Library District. This agreement is not subordinated to bond indebtedness. Statutory Pass Throughs. When the Agency extended the time frame to incur debt pursuant to State Assembly Bill 211, it initiated statutory pass throughs to all affected tax agencies that do not currently have tax sharing agreements. The general levy share of all agencies that do not currently possess tax-sharing agreements is 83% of every $1.00 of property tax generated. These statutory pass-throughs to affected agencies will began in the year 2004-05 at a rate of 25% of the tax increment growth net of the Housing Set-Aside Requirement with of base year of 2003- 04. An additional pass through will begin in the year 2014-15 at a rate of 21% of the tax increment growth net of the Housing Set-Aside Requirement with abase year of 2013-14. The County of Los Angeles includes the unitary assessed values in its calculation of SB 211 pass throughs. However, there is no consistent methodology among various counties within the State as to the calculation of SB 211 pass throughs. The California Redevelopment Association is currently working on a standardized methodology for these payments. However, GRC is not aware of any pending legislation that would impact this matter. For the purpose of this report, GRC has calculated the pass throughs based on the County of Los Angeles's methodology. Pursuant to SB 211, these pass throughs may be subordinated to bond debt if the Agency makes the finding that the issuance of the debt will not impact the Agency's ability to make the statutory payments. The Agency has made the appropriate findings, and therefore GRC has assumed that these payments are subordinated to bond indebtedness accordingly. VIII. Development Activities A. Future Projects New development is one of the primary sources of increased assessed property values above the 2% annual inflation factor. Within the Project Area there exists a 23 acre vacant site located at the northwest corner of Grove and Rush Streets. This property is current under the ownership of Southern California Edison. Southern California Edison has reached an agreement to sell this property to Wal-Mart for a price of $10,500,000. This transaction would result in an increase in tax increment revenues available for debt service of approximately $73,302. GRC has not included an increased in projected assessed value to reflect increased assessed value associated with resell of this property. Additionally, if the property is eventually privately developed, this could result in a substantial increase in assessed value. GRC has not included increases in assessed value for future development in our projections. IX. Trended Taxable Value Growth Growth in real property land and improvement values have been limited to an assumed rate of growth of real property taxable values of two percent annually as allowed under Article XIIIA of the state Constitution. A two percent growth rate has been assumed because it is the maximum inflationary growth rate permitted by law and this rate of growth has been realized in all but four years since 1981. The years in which less than two percent growth was realized were 1983-84 (1.0%), 1995-96 (1.19%), 1996-97 (1.11%) and 1999-00 (1.85%). In addition, the State Board of Equalization has directed county assessors to use an inflation adjustment of 1.867% in 11 Rosemead Community Development Commission Fiscal Consultant's Report February 7, 2006 preparing the 2004-05 assessment rolls. Should the future growth of taxable value in the project areas be less than two percent, the resultant Gross Tax Increment Revenues would be reduced proportionately. Future values will also be impacted by -changes of ownership and new construction not reflected in our projections. In addition, the values of property previously reduced in value due to assessment appeals based on reduced market values could increase more than two percent when real estate values increase more than two percent (see Section IH.F above). Seismic activity and environmental conditions such as hazardous substances are not anticipated in this report and might also impact property taxes and Tax Increment Revenue. GRC Associates makes no representation that taxable values will, actually grow at the rate projected. 12 Table 1 Rosemead Redevelopment Project Area No. 1 Projection of Tax Increment Reve nue (000's Omitted) Taxable Values (1) 2005106 2006107 2007108 2008109 2009110 2010/11 2011112 2012113 2013/14 2014115 Land 203,769 207,845 212,002 216,242 220,566 224,978 229,477 234,067 238,748 243,523 Improvements 156,696 159,830 163,026 166,287 169,612 173,005 176,465 179,994 183,594 187,266 Less Exemptions -5,362 -5,469 -5,579 -5,690 -5,804 -5,920 -6,039 -6,159 -6,282 -6,408 Personal Property (2) 15,560 15,560 15,560 15,560 15,560 15,560 15,560 15,560 15,560 15,560 Total Projected Taxable Value 370,663 377,765 385,009 392,398 399,935 407,622 415,463 423,461 431,619 439,941 Taxable Value over Base 345,500 352,602 359,846 367,235 374,772 382,459 390,301 398,299 406,457 414,778 Tax Increment (3) 3,473 3,544 3,617 3,691 3,767 3,844 3,923 4,004 4,086 4,169 Unitary Tax Revenue (4) 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 1,173 Adjusted Gross Revenues 4,646 4,718 4,791 4,865 4,941 5,018 5,097 5,177 5,259 5,343 LESS: Housing Set Aside Requirement (5) (460) (474) (489) (504) (519) (534) (550) (566) (583) (599) SB 2557 Admin. Fee (6) (71) (72) (73) (74) (75) (76) (78) (79) (80) (81) Pass Through Fire Department (7) (790) (802) (815) (828) (840) (854) (867) (881) (895) (909) Pledged Revenues (8) 3,325 3,369 3,414 3,459 3,506 3,553 3,602 3,651 3,702 3,753 Subordinated Pass Through SB 211 Statutory Pass-Through (9) (103) (115) (127) (139) (152) (164) (177) (191) (204) (230) Footnotes For Table 1 (1) Taxable values as reported by Los Angeles for the 2005-2006 fiscal year. Projections inflate Land, Improvements and Exemptions 2% per year. The 2005 improvement value has been decreased by $84,718 to reflect potential losses due to appeals. See Table 4 for details. (2) Personal property is held constant at 2005-06 level. (3) Projected Gross Tax Increment is based upon incremental taxable values factored against an assumed project tax rate and adjusted for indebtedness approved by voters prior to 1988. The assumed future tax rates remain at $1.00604 per $100 of taxable value as reported by Los Angeles Auditor Controller. According to the redevelopment plan, the last day to receive tax increment is June 2023. (4) Unitary tax amount as reported by Los Angeles County. Unitary tax is held constant at 2004-2005 level. (5) Housing Set aside requirement is calculated at 20% of Adjusted Gross Revenue. In 1991, the Agency pre-paid $6.8 million from proceeds from its 1987 tax allocation notes. This pre-payment was restructured in 1993 along with the 1993 series tax allocation bonds. These actions have resulted in a decrease of $469,142 on annual housing set-aside requirement until fiscal year 2021-22. This decrease has been reflected in the projections. (6) Los Angeles County Administration Fee is estimated at 1.52% of Gross Revenue based on actual 2004105 (7) The Los Angeles County Fire Department recieves 17.01% of gross tax increment pursuant to an agreement with the Agency. (8) Pledged revenues represent revenues available for debt service. (9) The time limit to incur debt was extended pursuant to SB 211. Statutory pass throughs to agencies that do not have a current tax sharing agreement began 2004-2005 at a rate of 20% of incremental growth from base year 2003-2004. An additional pass through will begin in 2014-2015 at 16.8% of incremental growth. These taxing agencies receive a bombined share of 82.99% of general levy property tax. This assumes the City of Rosemead has elected to receive a pass-through under SB211. 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Co 0 U a_2 n N m pI p_ c Q co co o J C N U N 3 N 0 FL-- z N (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX B FORM OF OPINION OF BOND COUNSEL Upon the issuance and sale of the Series 2006A Bonds, Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, proposes to render its final approving opinion with respect to the Series 2006A Bonds in substantially the following form: [Date of Delivery] Rosemead Community Development Commission Rosemead, California Re: Rosemead Community Development Commission (Los Angeles County, California) Redevelopment Project Area No. 1 Tax Allocation Bonds Series 2006A (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Rosemead Community Development Commission (the "Commission") of $14,005,000 aggregate principal amount of bonds designated Rosemead Community Development Commission (Los Angeles County, California) Redevelopment Project Area No. 1 Tax Allocation Bonds Series 2006A (the 'Bonds"), issued pursuant to the provisions of the Community Redevelopment Law of the State of California (being Part I of Division 24 of the Health and Safety Code of the State of California), as amended, and a Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement to Indenture," together with the Original Indenture, the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate of the Commission, dated the date hereof (the "Tax Certificate"), opinions of counsel to the Commission, the Trustee, certificates of the Commission, the Trustee, and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, the defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions 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 B-1 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. Our engagement with respect to the Bonds has concluded with their issuance, 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 Commission. 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 second paragraph hereof. Furthermore, we have assumed.compliance with all covenants and agreements contained in the Indenture 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 Bonds 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 Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, 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 redevelopment agencies in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds 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: The Bonds constitute valid and binding limited obligations of the Commission. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Commission. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Pledged Tax Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and upon the terms and conditions set forth in the Indenture. 3. The Bonds are not a lien or charge upon the funds or property of the Commission except to the extent of the aforementioned pledge. Neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Commission. B-2 4. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds 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 ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, BERRINGTON & SUTCLIFFE LLP Per B-3 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C DTC AND BOOENTRY ONLY SYSTEM The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Series 2006A Bonds, payment of principal of and interest on the Series 2006A Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Series 2006A Bonds, and other Series 2006A Bonds-related transactions by and_hetween DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the Commission believes to be reliable, but the Commission takes no responsibility for the completeness or accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Bonds"). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for the Bonds in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information on such websites is not incorporated herein by such reference or otherwise. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on C-1 behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect:only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Commission as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Commission or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, nor its nominee, the Trustee, or the Commission, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Commission 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 securities depository with respect to the Bonds at any time by giving reasonable notice to the Commission or the Trustee. Under such circumstances, in the C-2 event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The Commission may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC. The information herein concerning DTC and DTC's book-entry system has been obtained from sources that the Commission believes to be reliable, but the Commission takes no responsibility for the accuracy thereof. C-3 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D DEFINITIONS AND SUMMARY OF INDENTURE The following is a brief summary of certain provisions of the Indenture and not otherwise summarized in the text of this Official Statement under the headings "THE SERIES 2006A BONDS" and "SECURITY FOR THE SERIES 2006A BONDS. " This summary does not purport to be comprehensive or definitive and is subject to all of the terms and provisions of the Indenture in its entirety, to which reference is made for the detailed provisions thereof. ' DEFINITIONS Unless the context otherwise requires, the terms defined in this section shall for all purposes of the Indenture and of any certificate, opinion or other document mentioned in such document or in the Indenture, have the meanings specified in the Indenture. Annual Debt Service; Average Annual Debt Service; Maximum Annual Debt Service The term "Annual Debt Service" means, for each Bond Year, the sum of (1) the interest falling due on all Outstanding Bonds in such Bond Year, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds, if any, are redeemed from the Sinking Account, as may be scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Bonds), (2) the principal amount of the Outstanding Serial Bonds, if any, maturing by their terms in such Bond Year, and (3) the minimum amount of such Outstanding Term Bonds required to be paid or called and redeemed in such Bond Year. - "Annual Debt Service" shall not include (a) interest on Bonds which is to be paid from amounts constituting capitalized interest or (b) principal and interest allocable to that portion of the proceeds of any Bonds required to remain unexpended and to be held in escrow pursuant to the terms of a Supplemental Indenture, provided that (i) projected interest earnings on such proceeds, plus such amounts, if any, deposited by the Commission in the Interest Account, are sufficient to pay the interest due on such portion of the Bonds so long as it is required to be held in escrow and (ii) the conditions for the release of such proceeds from escrow, insofar as they relate to Pledged Tax Revenue coverage and satisfaction of the Reserve Account Requirement, are substantially similar to those for the issuance of Additional Bonds. The term "Average Annual Debt Service" means the average Bond Year Annual Debt Service over all Bond Years. The term "Maximum Annual Debt Service" means the largest Annual Debt Service during the period from the date of such determination through the final maturity date of any Outstanding Bonds. Ambac Assurance The term "Ambac Assurance" means Ambac Assurance Corporation, a Wisconsin domiciled stock insurance company. Authorized Investments The term "Authorized Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein: A. 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 TGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. D-1 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 of fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations 7. U.S. Maritime Administration Guaranteed Title )U 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 and written confirmation thereof is provided by the Commission to the Trustee): 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. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior Debt obligations 5. Resolution Funding Corp_(REFCORP) obligations D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by S&P of AAAm G, AAAm, or AAm. D-2 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. The collateral must be held by a third party and the Owners must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits, with a maximum term of one year, issued by any United States bank or trust company whose long-term obligations are rated "A+" or better by S&P or "A-1" or better by Moody's and whose short-term obligations are rated "A 1" or better by S&P or "P-1" or better by Moody's. G. Investment Agreements, including guaranteed investment contracts, acceptable to the Bond Insurer. H. Commercial paper rated, at the time of purchase, "Prime - V by Moody's or "A-1" or better by S&P. I. Bonds or notes issued by any state or municipality which are rated by Moody's or S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or banks acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - V and "A3" or better by Moody's and "A1" and "A" or better by S&P. K. Repurchase agreements, acceptable to the Bond Insurer, providing for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee 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 Trustee in exchange for the securities at a specified date. Repurchase agreements must satisfy the following criteria or be approved by the Bond Insurer. Repurchase Agreements must be between the municipal entity or Trustee and a dealer bank or securities firm (a) Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody's, or (b) Banks rated "A" or above by S&P and Moody's. 2. Each repurchase agreement contract must be in writing and 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 & FMAC) (b) The term of each repurchase agreement 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 D-3 (1) The securities must be valued weekly, marked to market at current market price plus accrued interest. (a) 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 repurchase agreement, plus accrued interest. If, however, the securities used as collateral are FNMA or FMAC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the municipal entity or Trustee to the effect that the repurchase agreement meets guidelines under state law for legal investment or public funds. L. Any state-administered pool investment fund in which the issuer is statutorily permitted or required to invest and which will accept deposits and withdrawals directly from the Trustee; provided, that such investment is held in the name or to the credit of the Trustee. M. Shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, as it may be amended; provided that such shares are held in the name and to the credit of the Trustee. Authorized Representative The term "Authorized Representative" means the Chair, the Executive Director, the Treasurer of the Commission, or any other officer of the Commission duly authorized. Bonds, Series 1993A Bonds, Series 1993B Bonds, Series 1993 Bonds, Series 2006A Bonds, Additional Bonds, Serial Bonds, Term Bonds The term "Bonds" means the Series 1993 Bonds, Series 2006A Bonds and all Additional Bonds. The term "Series 1993 Bonds" means the Rosemead Redevelopment Agency Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A, issued pursuant to the Indenture. The term "Series 2006A Bonds" means the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A. The term "Additional Bonds" means all tax allocation bonds of the Commission authorized and executed pursuant to the Indenture and issued and delivered in accordance with the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS." The term "Serial Bonds" means Bonds for which no mandatory sinking account payments are provided. The term "Term Bonds" means Bonds which are payable on or before their specified maturity dates from mandatory sinking account payments established for that purpose and calculated to retire such Bonds on or before their specified maturity dates. Bond Insurance Policy The term "Bond Insurance Policy" means, the municipal bond insurance policy, if any, issued by the applicable Bond Insurer and guaranteeing, in whole or in part, the payment of principal of and interest on a Series of Bonds, and means with respect to the Series 2006A Bonds, the Financial Guaranty Insurance Policy. D-4 Bond Insurer The term "Bond Insurer" means with respect to Series 2006A Bonds, Ambac Assurance. Bond Year The term "Bond Year" means (i) with respect to the initial Bond Year, the period extending from the date the Series 1993 Bonds are originally delivered to and including October 1, 1994, and (ii) thereafter, each successive twelve-month period. Notwithstanding the foregoing, the term Bond Year as used in the Tax Cerhf cate is deemed in the manner set forth in the Tax Certificate. Book Entry Bonds The term "Book Entry Bonds" means Bonds of any Series registered in the name of the Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of the Indenture. Business Day The term "Business Day" has the meaning set forth in this Appendix D under the caption "MISCELLANEOUS - Business Days." Certificate of the Commission The term "Certificate of the Commission" means an instrument in writing signed by the Chair or Vice Chair of the Commission, or by the Treasurer of the Commission, or by any other officer of the Commission duly authorized by the Commission for that purpose. City The term "City" means the City of Rosemead, California. Code The term "Code" means the Internal Revenue Code of 1986, and any regulations promulgated thereunder. Commission The term "Commission" means the Rosemead Community Development Commission, formerly known as the Rosemead Redevelopment Agency, a pubic body, corporate and politic, duly organized and existing under and pursuant to the Law. References to the Agency in the Original Indenture shall mean the Commission. Commission Indebtedness The term "Commission Indebtedness" means any obligation the payment of which is to be made in whole or in part (but if in part, only to the extent of that part) out of taxes allocated to the Commission pursuant to Section 33670 of the Law. For purposes of determining compliance with the covenant contained in the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS - Limit on Indebtedness" the following assumptions shall apply: (i) the principal and interest remaining to be paid on Commission Indebtedness shall include only such amounts as are scheduled to be paid by the Commission pursuant to the terms of the loan or other form of agreement under which such Commission Indebtedness was incurred. Commission Indebtedness without a stated maturity shall be deemed to mature on the fmal maturity date of the Bonds. D-5 (ii) Amounts scheduled to be paid by the Commission shall include regularly scheduled principal and interest payments, including, amounts payable pursuant to any mandatory redemption provision. (iii) Commission Indebtedness bearing interest at a variable rate of interest shall be deemed to accrue interest at the lesser of the maximum rate specified or 12% per annum. Consultant's Report The term "Consultant's Report" means a report signed by an Independent Financial Consultant or an Independent Redevelopment Consultant, as may be appropriate to the subject of the report, and including: (1) a statement that the person or firm making or giving such report has read the pertinent provisions of the Indenture to which such report relates; (2) a brief statement as to the nature and scope of the examination or investigation upon which the report is based; and (3) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said Independent Financial Consultant or Independent Redevelopment Consultant to express an informed opinion with respect to the subject matter referred to in the report. County Agreement The term "County Agreement" means that certain agreement for reimbursement of tax increment funds by and among the Commission, the County of Los Angeles, the Consolidated Fire Protection District and the Los Angeles County Public Library. Dated Date The term "Dated Date" means, with respect to any Series of Bonds, the dated date of such Bonds as specified in the Supplemental Indenture establishing such Series of Bonds, or, with respect to Series 2006A Bonds the date of initial issuance and delivery thereof. Depository The term "Depository" means the securities depository acting as Depository pursuant to the Indenture. DTC The term "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. Federal Securities The term "Federal Securities" means noncallable securities described in paragraphs (A) and (B) of the definition of Authorized Investments as and to the extent that such securities are eligible for the legal investment of Commission funds. Financial Guaranty Insurance Policy The term "Financial Guaranty Insurance Policy" means the financial guaranty insurance policy issued by Ambac Assurance insuring the payment when due of the principal of and interest on the Obligations as provided therein. D-6 First Supplement to Indenture The term "First Supplement to Indenture" means the First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S,. Bank National Association, as trustee. Fiscal Year The term "Fiscal Year" means the period commencing on July 1 of each year and terminating on the next succeeding June 30, or any other annual accounting period hereafter selected and designated by the Commission as its Fiscal Year in accordance with the Law and identified in writing to the Trustee. Housing Fund The term "Housing Fund" means the Low and Moderate Income Housing Fund, established pursuant to Section 33334.3 of the Law with respect to the Project Area and held by the Commission. Indenture The term "Indenture" means the Indenture, dated as of October 1, 1993, by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee, as amended and supplemented by the First Supplement to Indenture and all Supplemental Indentures. Independent Certified Public Accountant The term "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the Commission, and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other audits of the books of or reports to the Commission. Independent Financial Consultant The term "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the Commission and satisfactory to and approved by the Trustee (which shall be under no liability by reason of such approval) and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other reports to the Commission. D-7 Independent Redevelopment Consultant The term "Independent Redevelopment Consultant" means a consultant or firm of such consultants generally recognized to be well qualified in the field of consulting relating to tax allocation bond financing by California redevelopment agencies, appointed and paid by the Commission, and who, or each of whom: (1) is in fact independent and not under the domination of the Commission; (2) does not have any substantial interest, direct or indirect, with the Commission; and (3) is not connected with the Commission as a member, officer or employee of the Commission, but who may be regularly retained to make annual or other reports to the Commission. Information Services The term "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and S&P "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or to such other addresses and/or such other services providing information with respect to called bonds as the Commission may designate to the Trustee in writing. Interest Payment Date The term "Interest Payment Date" means each April 1 or October 1 on which interest on any Series of Bonds is scheduled to be paid. Investment Agreement The term "Investment Agreement" means an investment agreement or guaranteed investment contract by and between the Trustee and a national or state chartered bank or savings and loan institution (including the Trustee) or other financial institution or insurance company, respecting the investment of moneys in certain funds or accounts established pursuant to the Indenture; provided that, at the time of execution thereof, any such bank, institution, or company has unsecured debt obligations or claims-paying ability rated in one of the two highest rating categories by Moody's and S&P; and provided, further, that the Commission shall provide written notice to Moody's and S&P at least 15 days prior to entering into an Investment Agreement, together with a copy of the proposed form of such agreement. Law The term "Law" means the Community Redevelopment Law of the State of California (being Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended), and all laws amendatory thereof or supplemental thereto. Letter of Representations The term "Letter of Representations" means the letter of the Commission and the Trustee delivered to and accepted by the Depository on or prior to the issuance of a Series of Book Entry Bonds setting forth the basis on which the Depository serves as depository for such Book Entry Bonds, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository. Moody's The term "Moody's" means Moody's Investors Service. D-8 Nominee The term "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to the Indenture. Outstanding The term "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds") all Bonds except (1) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (2) Bonds paid or deemed to have been paid within the meaning set forth in this Appendix D under the caption "DEFEASANCE - Discharge of Indebtedness"; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Commission pursuant to the Indenture. Owner The term "Owner" means the registered owner of any Outstanding Bond. Participants The term "Participants" means those broker dealers, banks and other financial institutions from time to time for which the Depository holds Book Entry Bonds as securities depository. Pledged Tax Revenues The term "Pledged Tax Revenues" means, for each Fiscal Year, the taxes (including, except to the extent limited by law, all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Commission pursuant to the Law in connection with the Project Area, excluding (a) amounts, if any, required to be deposited by the Commission in the Housing Fund and used for certain housing purposes, provided, however, that such amounts shall not be excluded if and to the extent that the Commission makes such amounts available as Pledged Tax Revenues, (b) amounts, if any, payable pursuant to the County Agreement, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds, (c) amounts, if any, payable pursuant to Section 33607.5 of the Law, but only to the extent such amounts are not subordinated to the payment of debt service on the Bonds and (d) amount, if any, received by the Commission pursuant to Section 16111 of the Government Code, as provided in the Redevelopment Plan. Principal Payment Date The term "Principal Payment Date" means any date on which principal of any Series of Bonds is scheduled to be paid, which dates shall be as set forth in the Indenture. Project The term "Project" means the undertaking of the Commission pursuant to the Redevelopment Plan and the Law for the redevelopment of the Project Area. D-9 Project Area The term "Project Area" means the project area described in the Redevelopment Plan, known as the Redevelopment Project Area No. 1. _ Qualified Reserve Instrument The term "Qualified Reserve Instrument" means a letter of credit meeting the requirements of the Indenture as set forth in paragraph (4)(b) in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund" or an insurance policy meeting the requirements of the Indenture as set forth in paragraph (4)(c) in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund." Record Date The term "Record Date" means the 15th day of the month next preceding each Interest Payment Date. Redevelopment Plan The term "Redevelopment Plan" means the Redevelopment Plan for Redevelopment Project Area No. 1, adopted and approved as the Official Redevelopment Plan for the Project Area by Ordinance No. 340 duly adopted by the City Council of the City on July 27, 1972, as amended on January 8, 1987 by Ordinance No. 592, together with all amendments thereof or supplements thereto hereafter made in accordance with the Law. Reserve Account Requirement The term "Reserve Account Requirement" means, as of any calculation date, an amount equal to the least of (i) ten percent (10%) of the amount (within the meaning of Section 148 of the Code), as certified by the Commission to the Trustee, of that portion of Bonds Outstanding with respect to which Annual Debt Service is calculated, (ii) 125% of Average Annual Debt Service of such Bonds or (iii) Maximum Annual Debt Service of such Bonds; provided, that for the purposes of such calculations, there shall be excluded an amount of Bonds or debt service thereon equal to the amount deposited in any escrow fund established pursuant to the Indenture as set forth in paragraph (c)(ii) in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS - Conditions for the Issuance of Additional Bonds." S&P The term "S&P" means Standard & Poor's Corporation. Securities Depositories The term "Securities Depositories" means: The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax (516) 277 4039 or 4190; Midwest Securities Trust Company, Capital Structures Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax (312) 663 2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex (215) 496 5058; or to such other addresses and/or such other securities depositories as the Commission may designate to the Trustee in writing. Series The term "Series," when used with reference to the Bonds, means all of the Bonds authenticated and delivered on original issuance and identified pursuant to the Indenture or a Supplemental Indenture authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the Indenture. D-10 Series 2006A Bonds The term "Series 2006A Bonds" means the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A. Sinking Account Installment The term "Sinking Account Installment" means the amount of money required by or pursuant to the Indenture to be paid by the Commission on any single date toward the retirement of any particular Term Bonds of any particular Series on or prior to their respective stated maturities. Sinking Account Payment Date The term "Sinking Account Payment Date" means any date on which Sinking Account Installments on any Series of Bonds are scheduled to be paid. Supplemental Indenture The term "Supplemental Indenture" means any indenture then in full force and effect which has been entered into by the Commission and the Trustee, amendatory of or supplemental to the Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indenture. Surety Bond The term "Surety Bond" means the surety bond issued by Ambac Assurance guaranteeing certain payments into the Reserve Account with respect to the Bonds as provided therein and subject to the limitations set forth therein. Tax Certificate The term "Tax Certificate" means the Tax Certificate dated the date of the original delivery of each Series of Bonds (except any Series of Bonds which the Commission shall certify to the Trustee is not intended to meet the requirements for tax exemption under the Code) relating to the requirements of certain provisions of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terms thereof. Trustee The term "Trustee" means such trustee at its corporate trust office in Los Angeles, California, as may be appointed by the Commission and acting as an independent trustee with the duties and powers provided under the Indenture, and its successors and assigns, or any other corporation or association which may at any time be substituted in its place, as provided under the Indenture. Written Request of the Commission The term "Written Request of the Commission" means an instrument in writing signed by the Chair, the Executive Director or Treasurer of the Commission or by any other officer of the Commission duly authorized by the Commission for that purpose. THE BONDS; SERIES 1993 BOND PROVISIONS Execution of Bonds. The Chair of the Commission is authorized and directed to execute each of the Bonds on behalf of the Commission and the Secretary of the Commission is authorized and directed to attest each of the Bonds on behalf of the Commission. Any of the signatures of said Chair or said Secretary may be by printed, lithographed or engraved facsimile reproduction. In case any officer whose signature appears on the Bonds shall cease to be such officer before the delivery of the Bonds to the purchaser thereof, such signature shall nevertheless D-11 be valid and sufficient for all purposes the same as though such officer had remained in office until such delivery of the Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication and registration in the form hereinbefore recited, executed and dated by the Trustee, shall be entitled to any benefits under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that the Bonds so registered have been duly issued and delivered under the Indenture and are entitled to the benefits of the Indenture. Transfer and Registration of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept by the Trustee pursuant to the Indenture, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for transfer, the Commission shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds 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. The Commission shall not be required to register the transfer of or exchange any Bond during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have been selected for redemption. Exchange of Bonds. The Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds of the same maturity 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. No such exchange shall be required to be made during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or of any Bonds which have been selected for redemption. Bond Registration Books. The Trustee will keep at its office sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Commission during regular business hours with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the Bonds on said books as hereinbefore provided. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of the body of such Bond, or shall be believed by the Commission to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Trustee, and upon the surrender of such mutilated Bond at the office of the Trustee, or upon the receipt of evidence satisfactory to the Trustee of such destruction, theft or loss, and upon receipt also of indemnity satisfactory to the Commission and the Trustee, and upon payment of all expenses incurred by the Commission and the Trustee in the premises, the Commission shall execute (manually or by facsimile) and the Trustee shall authenticate and deliver at said office a new Bond or Bonds of the same maturity and for the same aggregate principal amount, of like Series, tenor and date, with such notations as the Commission shall determine, in exchange and substitution for and upon cancellation of the mutilated Bond, or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt by the Trustee and the Commission of like proof, indemnity and payment of expenses. Any such replacement Bonds issued pursuant to this section shall be entitled to equal and proportionate benefits with all other Bonds issued under the Indenture. The Commission and the Trustee shall not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued under the Indenture or for the purpose of determining any D-12 percentage of Bonds Outstanding under the Indenture, but both the original and replacement Bond shall be treated as one and the same. Temporary Bonds. Until definitive Bonds sball be prepared, the Commission may cause to be executed and delivered in lieu of such definitive Bonds and subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the Commission, one or more temporary typed, printed, lithographed or engraved Bonds in fully registered form, as may be authorized by the Commission, substantially of the same tenor and, until exchange for definitive Bonds, entitled and subject to the same benefits and provisions of the Indenture as definitive Bonds. If the Commission issues temporary Bonds, it will execute and furnish definitive Bonds without unnecessary delay and thereupon the temporary Bonds may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for such definitive Bonds. All temporary Bonds so surrendered shall be canceled by "the Trustee and shall not be reissued. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken by the Commission for the financing or refinancing of the Project, or by any contracts made by the Commission in connection therewith, and shall not be dependent upon the completion of the financing or refinancing of the Project or upon the performance by any person of his obligation with respect to the Project, and the recital contained in the Bonds that the same are issued pursuant to the Law shall be conclusive evidence of their validity and of the regularity of their issuance. Book Entry System. Prior to the issuance of any Series of Bonds issued under the Indenture, the Commission may provide that such Series of Bonds shall be initially issued as Book Entry Bonds, and in such event, each maturity of such Series shall be in the form of a separate single fully registered Bond (which may be typewritten). Upon initial issuance, the ownership of each such Bond shall be registered in the bond register in the name of the Nominee, as nominee of the Depository. With respect to Book Entry Bonds, the Commission and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such Book Entry Bonds. Without limiting the immediately preceding sentence, the Commission and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in Book Entry Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the bond register, of any notice with respect to Book Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book Entry Bonds to be redeemed in the event the Commission redeems such in part, or (iv) the payment to any Participant or any other person, other than an Owner as shown in the bond register, of any amount with respect to principal of, premium, if any, or interest on Book Entry Bonds. The Commission and the Trustee may treat and consider the person in whose name each Book Entry Bond is registered in the bond register as the absolute Owner of such Book Entry Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owner, as shown in the bond register, or his respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Commission's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the bond register, shall receive a Bond evidencing the obligation of the Commission to make payments of principal, premium, if any, and interest pursuant to the Indenture. Upon delivery by the Depository to the Trustee and Commission of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions under the Indenture with respect to record dates, the word Nominee in the Indenture shall refer to such nominee of the Depository. In order to qualify the Book Entry Bonds for the Depository's book entry system, the Commission and the Trustee shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Commission or the Trustee any obligation whatsoever with respect to persons having interests in such Book Entry Bonds other than the Owners, as shown on the bond register. In addition to the execution and delivery of a Letter of Representations, the Commission and the D-13 Trustee shall take such other actions, not inconsistent with the Indenture, as are reasonably necessary to qualify Book Entry Bonds for the Depository's book entry program. In the event (i) the Depository determines not to continue to act as securities depository for any Series of Book Entry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Commission will discontinue the book entry system with the Depository. If the Commission determines to replace the Depository with another qualified securities depository, the Commission shall prepare or direct the preparation of a new single, separate, fully registered Bond for each of the maturities of such Book Entry Bonds, registered in the name of such successor or substitute qualified securities depository outs nominee. If the Commission fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in such bond register in the name of the Nominee, but shall be registered in whatever name or names Owners transferring or exchanging such Bonds shall designate, in accordance with provisions of the Indenture. Notwithstanding any other provision of the Indenture to the contrary, so long as any Book Entry Bond is registered in the name of the Nominee, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. ISSUANCE OF ADDITIONAL BONDS Conditions for the Issuance of Additional Bonds. The Commission may at any time after the issuance and delivery of the Series 2006A Bonds under the Indenture issue Additional Bonds payable from the Pledged Tax Revenues and secured by a lien and charge upon the Pledged Tax Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indenture, but only subject to the following specific conditions, which are made conditions precedent to the issuance of any such Additional Bonds: (a) The Commission shall be in compliance with all covenants set forth in the Indenture and any Supplemental Indentures, and a Certificate of the Commission to that effect shall have been filed with the Trustee. (b) The issuance of such Additional Bonds shall have been duly authorized pursuant to the Law and all applicable laws, and the issuance of such Additional Bonds shall have been provided for by a Supplemental Indenture duly adopted by the Commission which shall specify the following: (1) The purpose for which such Additional Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the proceeds of such Additional Bonds to be applied solely for (i) the purpose of aiding in financing the Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the purpose of refunding any Bonds or other indebtedness related to the Project, including payment of all costs incidental to or connected with such refunding; (2) The authorized principal amount of such Additional Bonds; (3) The date and the maturity date or dates of such Additional Bonds; provided that (i) Principal and Sinking Account Payment Dates may occur only on Interest Payment Dates, (ii) all such Additional Bonds of like maturity and Series shall be identical in all respects, except as to number, and (iii) fixed serial maturities or mandatory Sinking Account Installments, or any combination thereof, shall be established to provide for the retirement of all such Additional Bonds on or before their respective maturity dates; (4) The Interest Payment Dates, which shall be on the same semiannual dates as the Interest Payment Dates for the Series 1993 Bonds; provided, that such Additional Bonds may provide for compounding of interest in lieu of payment of interest on such dates; D-14 (5) The denomination and method of numbering of such Additional Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Additional Bonds; (7) The amount and due date of each mandatory Sinking Account Installment, if any, for such Additional Bonds; (8) The amount, if any, to be deposited from the proceeds of such Additional Bonds in the Interest Account; (9) The amount, if any, to be deposited from the proceeds of such Additional Bonds into the Reserve Account; provided that the amount on deposit in the Reserve Account shall be increased at or prior to the time such Additional Bonds become Outstanding to an amount at least equal to the Reserve Account Requirement on all then Outstanding Bonds and such Additional Bonds, which amount shall be maintained in the Reserve Account; (10) The form of such Additional Bonds; and (11) Such other provisions as may be necessary or appropriate and not inconsistent with the Indenture. (c) (i) The Pledged Tax Revenues based upon the assessed valuation of taxable property in the Project Area as shown on the most recently equalized. assessment roll and the most recently established tax rates preceding the date of the Commission's adoption of the Supplemental Indenture providing for the issuance of such Additional Bonds shall be in an amount equal to at least one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all then Outstanding Bonds after giving effect to the issuance of such Additional Bonds, and any unsubordinated loans, advances or indebtedness payable from Pledged Tax Revenues pursuant to the Law. (ii) For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not include any Bonds the proceeds of which are deposited in an escrow fund held by an escrow agent, provided that the Supplemental Indenture authorizing issuance of such Additional Bonds shall provide that: (A) such proceeds shall be deposited or invested with or secured by an institution rated "AAA" by S&P and "Aaa" by Moody's at a rate of interest which, together with amounts made available by the Commission from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds; (B) moneys may be transferred from said escrow fund only if Pledged Tax Revenues for the next preceding fiscal year will be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt Service on all Outstanding Bonds (exclusive of disqualified Bonds pursuant to the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds") less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer; and (C) Additional Bonds shall be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow period in such manner as may be determined by the Commission. (iii) For purposes of calculation of Pledged Tax Revenues pursuant to subsections (i) and (ii) above, the property tax rate shall be assumed to be the actual tax rate the year in which the calculation is made. (iv) Nothing contained in the Indenture shall limit the issuance of any tax allocation bonds of the Commission payable from the Pledged Tax Revenues and secured by a lien and charge on the Pledged Tax Revenues if, after the issuance and delivery of such tax allocation bonds, none of the Bonds theretofore issued under the Indenture will be Outstanding nor shall anything contained in the Indenture prohibit the issuance of any tax allocation bonds or other indebtedness by the Commission secured by a pledge of tax increment revenues (including Pledged Tax Revenues) subordinate to the pledge of Pledged Tax Revenues securing the Bonds. D-15 Procedure for the Issuance of Additional Bonds. All of the Additional Bonds shall be executed by the Commission for issuance under the Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee upon the Written Request of the Commission, but only upon receipt by the Trustee of the following documents or money or securities: _ (1) A certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds; (2) A Written Request of the Commission as to the delivery of such Additional Bonds; (3) An opinion of counsel of recognized standing in the field of law relating to municipal bonds substantially to the effect that (a) the Commission has the right and power under the Law to execute and deliver the Supplemental Indenture thereto, and the Indenture and all such Supplemental Indentures have been duly executed and delivered by the Commission, are in full force and effect and are valid and binding upon the Commission in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights and similar qualifications); and (b) such Additional Bonds are valid and binding special obligations of the Commission, in accordance with their terms (except as may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and are subject to the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures and the Law, and such Additional Bonds have been duly and validly issued in accordance with the Law and the Indenture and all such Supplemental Indentures; (4) A Certificate of the Commission containing such statements as may be reasonably necessary to show compliance with the requirements of the Indenture; and (5) Such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds. Limit on Indebtedness. The Commission covenants with the Owners of all of the Bonds at any time Outstanding that it will not enter into any Commission Indebtedness or make any expenditure payable from taxes allocated to the Commission under the Law the payments of which, together with payments theretofore made or to be made with respect to other Commission Indebtedness (including, but not limited to the Bonds) previously entered into by the Commission, would exceed the then effective limit on the amount of taxes which can be allocated to the Commission pursuant to the Law and the Redevelopment Plan. In furtherance of the covenant set forth in this section, the Commission will cause to be prepared and filed with the Trustee annually, within 180 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Gross Tax Increment (defined in the Indenture as, all monies allocated to the Commission pursuant to Section 33670 of the Law and the Redevelopment Plan, including amounts required to be deposited into the Low and Moderate Income Housing Fund, payments due under any tax sharing agreements (unless excluded from the Tax Increment Limitation, as defined in the Indenture) and payments received as subventions or payments in lieu of taxes) as of the end of such Fiscal Year. Based upon such audited financial statements, the Commission will prepare or cause to be prepared and filed with the Trustee and the Bond Insurer a pro forma statement demonstrating the future availability of sufficient tax increment revenues (within the existing limitation on the amount of Gross Tax Increment allocable and payable to the Commission under the Redevelopment Plan (the "Tax Increment Limitation")) to pay when due (i) Commission Indebtedness, (ii) the amount payable in the then current Fiscal Year included within the Tax Increment Limitation which are required by Section 33334.2 of the Redevelopment Law to be deposited in the Commission's Low and Moderate Income Housing Fund (the "Set-Aside Requirement"), and (iii) all amounts included within the Tax Increment Limitation which are payable pursuant to the pass-through agreements until the final maturity of the Bonds (the "Pass-Through Payments"). The audited financial statements and the pro forma statement shall be accompanied by a written certificate of the Commission stating that the Commission is in compliance with its obligations under the Indenture. The Trustee shall not be responsible for the review of such financial statements. The pro forma statement shall be prepared on or before March 1 of each year or as soon thereafter as practicable, commencing March 1, 2007, and shall set forth: D-16 (1) The difference between the Tax Increment Limitation less the total amount of Gross Tax Increment theretofore allocated to the Commission (the "Remaining Limitation Amount"); and (2) The principal and interest remaining to be paid on Commission Indebtedness, plus the Set-Aside Requirement and the Pass-Through Payments (collectively, the "Total Debt Service"). To the extent the Remaining Limitation Amount is less than 105% of the Total Debt Service, the pro forma statement shall set forth the principal amount of the Bonds (to the nearest integral multiple of $5000) that must be retired in order for the Remaining Limitation Amount to be at least equal to 105% of the Total Debt Service (the "Prepayment Amount"). At the time the Remaining Limitation Amount is determined to be less than 105% of the Total Debt Service, the Commission shall notify the Trustee of the Prepayment Amount and transfer such Prepayment Amount to the Trustee for deposit in the Debt Service Fund. Such monies shall be used to redeem, prepay or defease the Bonds. Notwithstanding the above, if prior to any such redemption, prepayment or defeasance, a subsequent annual pro forma statement indicates that future Gross Tax Increment will be 105% or more of the Total Debt Service in each year such debt service is payable, the Commission may authorize the Trustee to transfer such Pledged Tax Revenues from the Debt Service Fund to the Special Fund. PLEDGED TAX REVENUES; CREATION OF FUNDS Pledee of Pledged Tax Revenues. All the Pledged Tax Revenues in the Special Fund, and all money in the Debt Service Fund and in the funds or accounts so specified and provided for in the Indenture, whether held by the Commission or the-Trustee (except the Redevelopment Fund and the Rebate Fund), are irrevocably pledged to the punctual payment of the interest on and principal of the Bonds, and the Pledged Tax Revenues and such other money shall not be used for any other purpose while any of the Bonds remain Outstanding; subject to the provisions of the Indenture permitting application thereof for the purposes and on the terms and conditions in the Indenture. This pledge shall constitute a fast lien on the Pledged Tax Revenues and such other money for the payment of the Bonds in accordance with the terms thereof. Special Fund; Debt Service Fund; Receipt and Deposit of Pledged Tax Revenues. There is established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Special Fund" (herein the "Special Fund") which shall be held by the Commission. The Commission shall promptly deposit all of the Pledged Tax Revenues received in any Bond Year in the Special Fund, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into Debt Service Fund in such Bond Year pursuant to this section. All Pledged Tax Revenues received by the Commission during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding sentence shall be released from the pledge and lien under the Indenture and may be applied by the Commission for any lawful purposes of the Commission. So long as any Bonds remain Outstanding under the Indenture, the Commission shall not have any beneficial interest in or right to the moneys on deposit in the Special Fund, except as may be provided in the Indenture. There is established a special fund to be known as the "Rosemead Redevelopment Project No. 1 Debt Service Fund" (herein the "Debt Service Fund") which shall be held by the Trustee. On or before five (5) days preceding each Interest Payment Date, the Commission shall transfer from the Special Fund to the Trustee for deposit in the Debt Service Fund an amount equal to the amount required to be transferred by the Trustee from the Debt Service Fund to the Interest Account, Principal Account, Sinking Account(s) and Reserve Account pursuant to the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund"; provided, that the Commission shall not be obligated to transfer to the Trustee in any Bond Year an amount of Pledged Tax Revenues which, together with other available amounts then in the Debt Service Fund, exceeds the amounts required to be transferred to the Trustee for deposit in the Interest Account, the Principal Account, the Sinking Account and the Reserve Account in such Bond Year, pursuant to the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund." There shall not be deposited with the Trustee any taxes eligible for allocation to the Commission for deposit in the Debt Service Fund in an amount in excess of that amount which, together with all D-17 money then on deposit with the Trustee in the Debt Service Fund and the accounts therein, shall be sufficient to discharge all Outstanding Bonds as set forth in this Appendix D under the caption "DEFEASANCE - Discharge of Indebtedness." All such Pledged Tax Revenues deposited in the Special Fund shall be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Commission. Establishment of Funds. In addition to the Special Fund and the Debt Service Fitnd, there are further created a special trust fund to be held by the Commission called the "Rosemead Redevelopment Project No. 1 Redevelopment Fund" (the "Redevelopment Fund"), and a special trust fund to be held by the Trustee called the "Rosemead Redevelopment Project No. 1 Expense Fund" (the "Expense Fund"). ' So long as any of the Bonds authorized under the Indenture, or any interest thereon, remain unpaid, the moneys in the foregoing funds shall be used for no purpose other than those required or permitted by the Indenture and the Law. Pursuant to the Tax Certificate, the funds and accounts established under the Indenture may be divided into sub accounts for each Series of Bonds issued under the Indenture, by the Commission or by the Trustee at the Commission's direction, in order to perform the necessary rebate calculations. Redevelopment Fund. Moneys in the Redevelopment Fund shall be used and disbursed in the manner provided by law for the purpose of aiding in financing or refinancing the Project (or for making reimbursements to the Commission for such costs theretofore paid by it), including payment of all costs incidental to or connected with such financing or refinancing. Any balance of money remaining in the Redevelopment Fund after the date of completion of the financing or refinancing of the Project may be used for any lawful purpose of the Commission. The Commission shall pay moneys from the Redevelopment Fund upon receipt of requisitions drawn thereon and signed by at least one duly authorized officer or member of the Commission. The Commission warrants that each withdrawal from the Redevelopment Fund shall be made in the manner provided by law for the purpose of aiding in financing or refinancing the Project or for making reimbursements to the Commission for such costs theretofore paid by the Commission. The Treasurer of the Commission shall establish and maintain an account within the Redevelopment Fund for each Series of Bonds issued under the Indenture known as the "Series Project Account" and all proceeds of each such Series of Bonds deposited in the Redevelopment Fund shall be held in the account established for such Series and shall be accounted for separately from all other amounts in the Redevelopment Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Redevelopment Fund. Expense Fund. All moneys in the Expense Fund shall be applied to the payment of costs and expenses incurred by the Commission in connection with the authorization, issuance and sale of the Bonds, including, without limitation, Trustee's fees and expenses and Trustee's legal fees and expenses, and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition executed by an Authorized Representative. Each such requisition shall be sequentially numbered and state the name and address of the person, firm or corporation to whom payment is due, the amount to be. disbursed, the purposes for such disbursement and that such obligation has been properly incurred, is a proper charge against the Expense Fund and has not been the subject of any previous requisition. Upon the earlier of the payment in full of such costs and expenses or the making of adequate provision for the payment thereof, evidenced by a Certificate of the Commission to the Trustee or 180 days from the initial delivery of the Bonds to the original purchaser thereof, any balance remaining in such Fund shall be transferred to the Commission and deposited by the Commission in the Redevelopment Fund established under the Indenture, and pending such transfer and application, the moneys in such Fund may be invested as permitted by the Indenture as set forth in this Appendix D under the caption "PLEDGED TAX REVENUES; CREATION OF FUNDS - Investment of Moneys in Funds and Accounts"; provided, however, that investment income resulting from any such investment shall be retained in the Expense Fund. The Trustee shall establish and maintain an account within the Expense Fund for each series of Bonds issued under the Indenture known as the "Series Expense Account" and all proceeds of each such Series of Bonds deposited in the Expense Fund shall be held in the account established for such Series D-18 and shall be accounted for separately from all other amounts in the Expense Fund. Amounts in each such account shall be used for the purposes authorized for use of amounts in the Expense Fund. Establishment and Maintenance of Accounts for Use of Moneys in the Debt Service Fund. All moneys in the Debt Service Fund shall be set aside by the Trustee in each Bond Year when and as received in the following respective special accounts within the Debt Service Fund (each of which is created and each of which the Trustee covenants and agrees to cause to be maintained), in the following order of priority (except as otherwise provided in subsection (2) below): (1) Interest Account; (2) Principal Account; (3) Sinking Account; and (4) Reserve Account. All moneys 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. (1) Interest Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Interest Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the Interest Payment Dates in such Bond Year. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (2) Principal Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Principal Account an amount of money which, together with any money contained therein, is equal to the aggregate amount of the principal becoming due and payable on all Outstanding Serial Bonds on the Principal Payment Date in such Bond Year. In the event that there shall be insufficient money in the Debt Service Fund to make in full all such principal payments and Sinking Account Installments required to be made pursuant to paragraph (3) below in such Bond Year, then the money available in the Debt Service Fund shall be applied pro rata to the making of such principal payments and such Sinking Account Installments in the proportion which all such principal payments and Sinking Account Installments bear to each other. No deposit need be made into the Principal Account if the amount contained therein is at least equal to the aggregate amount of the principal of all Outstanding Serial Bonds becoming due and payable on the Principal Payment Date in such Bond Year. All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds as they shall become due and payable. (3) Sinking Account. The Trustee shall set aside from the Debt Service Fund and deposit in the Sinking Account an amount of money equal to the Sinking Account Installment payable on the Sinking Account Payment Date in such Bond Year. All moneys in the Sinking Account shall be used by the Trustee to cause the Mandatory Sinking Fund Redemption of Term Bonds in accordance with the Indenture. (4) Reserve Account. (a) The Trustee shall set aside from the Debt Service Fund and deposit in the Reserve Account an amount of money (or other authorized deposit of security, as contemplated by the following paragraphs) equal to the Reserve Account Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit therein an amount equal to the Reserve Account Requirement. All money in (or available to) the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing D-19 the Interest Account, the Principal Account or the Sinking Account in such order, in the event of any deficiency at any time in any of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the Commission is lawfully available therefor, or for the retirement of all Bonds then Outstanding, except that for so long as the Commission is not in default under the Indenture, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon Written Request of the Commission, be withdrawn from the Reserve Account by the Trustee and transferred to the Commission. (b) In lieu of making the Reserve Account Requirement deposit in the Deserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of a letter of credit satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may deliver to the Trustee an irrevocable letter of credit issued by a financial institution having, at the time of such delivery, unsecured debt obligations rated in at least the second highest rating category (without respect to any modifier) of S&P and Moody's, in an amount, together with moneys, Authorized Investments or insurance policies (as described in paragraph (c) below) on deposit in the Reserve Account, equal to the Reserve Account Requirement. Draws on such letter of credit must be payable no later than two (2) Business Days after presentation of a sight draft thereunder. Such letter of credit shall have a term of no less than three (3) years. The issuer of such letter of credit shall be required to notify the Trustee and the Commission whether or not the letter of credit will be extended no later than 13 months prior to the stated expiration date thereof. At least one year prior to the stated expiration of such letter of credit, the Commission shall either (i) deliver a replacement letter of credit, (ii) deliver an extension of the letter of credit for at least an additional year, or (iii) deliver to the Trustee an insurance policy satisfying the requirements of paragraph (c) below. Upon delivery of such replacement letter of credit, extended letter of credit, or insurance policy, the Trustee shall deliver the then effective letter of credit to or upon the order of the Commission. If the Commission shall fail to deposit a replacement letter of credit, extended letter of credit or insurance policy with the Trustee, the Commission shall immediately commence to make monthly deposits with the Trustee so that an amount equal to the Reserve Account Requirement is on deposit in the Reserve Account no later than the stated expiration date of the letter of credit. If the Commission shall fail to make such deposits, the Trustee shall draw on such letter of credit on or before 10 days prior to its stated expiration date in an amount necessary to replenish the Reserve Account to the Reserve Account Requirement. If a drawing is made on the letter of credit, the Commission shall make such payments as may be required by the terms of the letter of credit or any obligations related thereto (but no less than quarterly pro rata payments) so that the letter of credit shall, absent the delivery to the Trustee of an insurance policy satisfying the requirements of paragraph (c) below or the deposit in the Reserve Account of an amount sufficient to increase the balance in the Reserve Account to the Reserve Account Requirement, be reinstated in the amount of such drawing within one year of the date of such drawing. (c) In lieu of making the Reserve Account Requirement in the Reserve Account or in replacement of moneys then on deposit in the Reserve Account (which shall be transferred by the Trustee to the Commission upon delivery of an insurance policy satisfying the requirements stated below), the Commission, with the consent of the Bond Insurer, if any, and with prior written notification to S&P and Moody's, may also deliver to the Trustee an insurance policy securing an amount, together with moneys, Authorized Investments or letters of credit (as described in paragraph (b) above) on deposit in the Reserve Account, no less than the Reserve Account Requirement, issued by an insurance company licensed to issue insurance policies guaranteeing the timely payment of debt service on the Bonds and whose unsecured debt obligations (or for which obligations secured by such insurance company's insurance policies), at the time of such delivery, are rated in the highest rating category (without respect to any modifier) of A.M. Best & Company, S&P and Moody's. (d) If and to the extent that the Reserve Account has been funded with a combination of cash (or Authorized Investments) and a Qualified Reserve Instrument, then all such cash (or Authorized 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 Authorized Investments). If the Reserve Account is funded, in whole or in part, with more than D-20 one Qualified Reserve Instrument, then any draws made against such Qualified Reserve Instrument shall be made pro-rata. (5) Surplus. If during any Bond Year (i) Pledged Tax Revenues remain in the Debt Service Fund after providing (or otherwise reserving) for all deposits required by paragraphs (1) through (3) above during such Bond Year, (ii) the amounts on deposit in the Reserve Account equal the Reserve Account Requirement, (iii) Qualified Reserve Instruments, if any, used to fund the Reserve Account are fully replenished and all interest on amounts advanced under such Qualified Reserve Instruments has been paid to the provider thereof, and (iv) the Commission is not in default under the Indenture, then the Commission shall provide to &e--Trustee written certification thereof and the Trustee shall thereafter transfer any amount remaining on deposit in the Debt Service Fund to the Commission to be used for any lawful purpose of the Commission. Investment of Moneys in Funds and Accounts. Upon the Written Request of the Commission received by the Trustee at least two (2) Business Days prior to the date of such investment, moneys in the Debt Service Fund, the Interest Account, the Principal Account, any Sinking Account, the Expense Fund, the Rebate Fund or the Reserve Account shall be invested by the Trustee in Authorized Investments. In the absence of such instructions, the Trustee shall invest in the investments described in paragraph (D) of the definition of Authorized Investments, except as otherwise provided in this section. The obligations in which moneys in the Debt Service Fund, the Interest Account, the Principal Account or any Sinking Account are so invested shall mature prior to the date on which such moneys are estimated to be required to be paid out under the Indenture. The obligations in which moneys in the Reserve Account are so invested shall be in obligations maturing no more than five years from the date of purchase by the Trustee or on the final maturity date of the Bonds, whichever date is earlier; provided, however, that if an obligation may be redeemed by the Trustee at par on the Business Day prior to each Interest Payment Date during which such obligation is outstanding, such obligation may have any maturity. Any interest, income or profits from the deposits or investments of all funds (except the Special Fund, Redevelopment Fund, Expense Fund and Rebate Fund) and accounts shall be deposited in the Debt Service Fund. For purposes of determining the amount on deposit in any fund or account held under the Indenture, all Authorized Investments credited to such fund or account shall be valued monthly at the lower of cost or market (excluding accrued interest and brokerage commissions, if any). Except as otherwise provided in this section, Authorized Investments representing an investment of moneys attributable to any fund or account and all investment profits or losses thereon shall be deemed at all times to be a part of said fund or account. Absent negligence, bad faith or willful misconduct by the Trustee, the Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with this section. Amounts deposited in the Special Fund and the Redevelopment Fund may be invested in any investment permitted by law for Commission funds. All earnings on amounts in the Special Fund, Expense Fund and the Redevelopment Fund shall remain in such funds. The Trustee may act as principal or agent in the acquisition or disposition of investments under the Indenture. The Trustee may commingle moneys in any of the funds or accounts created under the Indenture for purposes of investment. The Commission acknowledges that notwithstanding regulations of the Comptroller of the Currency or other applicable regulatory authority having jurisdiction over the Trustee granting the Commission the right to receive brokerage confirmations of security transactions as they occur, the City agrees that the Trustee shall not send such confirmations to the Commission to the extent permitted by law. The Trustee shall fiunish the Commission periodic cash transaction statements which include detail for all investment transactions made by the Trustee under the Indenture. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, the Indenture shall be deemed to be and shall constitute a contract between the Commission and the Trustee for the benefit of Owners from time to time of all Bonds issued under the Indenture and then Outstanding to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds authorized, executed, issued and delivered under the Indenture, subject to the agreements, conditions, covenants and provisions contained under the Indenture; and the agreements and covenants set forth in the Indenture to be performed on behalf of the D-21 Commission shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any Bonds over any other Bonds. COVENANTS OF TBE COMMISSION Punctual Payment. The Commission will punctually pay the interest on and principal of and redemption premiums, if any, to become due with respect to the Bonds, but only from Pledged Tax Revenues, in strict conformity with the terms of the Bonds and of the Indenture and will faithfully satisfy, observe and perform all conditions, covenants and requirements of the Bonds and of the Indenture. Against Encumbrances. The Commission will not mortgage or otherwise encumber, pledge or place any charge upon any of the Pledged Tax Revenues, except as provided in the Indenture; and will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or in part from the Pledged Tax Revenues (other than Additional Bonds). Extension or Funding of Claims for Interest. In order to prevent any claims for interest after maturity, the Commission will not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any Bonds and will not, directly or indirectly, be a party to or approve any such arrangements by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the Commission, such claim for interest so extended or funded shall not be entitled, in case of default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Management and Operation of Properties. The Commission will manage and operate all properties owned by the Commission and comprising any part of the Project in a sound and business like manner and in conformity with all valid requirements of any governmental authority relative to the Project or any part thereof, and will keep such properties insured at all times in conformity with sound business practice. Payment of Claims. The Commission will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Commission or upon the Pledged Tax Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds; provided that nothing contained in the Indenture shall require the Commission to make any such payments so long as the Commission in good faith shall contest the validity of any such claims. Books and Accounts, Financial and Project Statements. The Commission will keep proper books of record and accounts, separate from all other records and accounts of the Commission, in which complete and correct entries shall be made of all transactions relating to the Project. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Bond Insurer or of the Owners of not less than ten per cent (10%) of the aggregate principal amount of the Bonds then Outstanding or their representatives authorized in writing. The Commission will prepare and file with the Trustee and the Bond Insurer annually as soon as practicable, but in any event not later than one hundred eighty (180) days after the close of each Fiscal Year, so long as any Bonds are Outstanding, an audited financial statement relating to the Pledged Tax Revenues and all other funds or accounts established pursuant to the Indenture for the preceding Fiscal Year prepared by an Independent Certified Public Accountant, showing the balances in each such fund as of the beginning of such Fiscal Year and all deposits in and withdrawals from each such fund during such Fiscal Year and the balances in each such fund as of the end of such Fiscal Year, which audited financial statement shall include a statement as to the manner and extent to which the Commission and the Trustee have complied with the provisions of the Indenture as it relates to such funds. The Trustee, at the expense of the Commission, will furnish a copy of such audited financial statement to any Owner upon written request. The Trustee shall provide such statements with regard to any funds held by the Trustee under the Indenture to the Commission as the Commission may reasonably require to comply with the terms of this section. D-22 . The Commission will permit the Bond Insurer to discuss the affairs, finances and accounts of the Commission or any other subject the Bond Insurer may reasonably request regarding the security for the Bonds with appropriate officers of the Commission. The Commission will permit the Bond Insurer to have access to and to make copies of all books and records relating to the Bonds at any reasonable time. The Bond Insurer shall have the right to direct an accounting at the Commission's expense, and the Commission's failure to comply with such direction within thirty (30) days after receipt of written notice of such direction from the Bond Insurer shall be deemed an Event of Default; provided, however, that if compliance cannot occur within such period, then such period shall be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any Owner. Protection of Security and Riehts of Owners. The Commission will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any Bonds by the Commission, such Bonds shall be incontestable by the Commission. Payment of Taxes and Other Charees. The Commission will pay and discharge all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Commission or any properties owned by the Commission in the Project Area, or upon the revenues therefrom, when the same shall become due; provided that nothing contained in the Indenture shall require the Commission to make any such payments so long as the Commission in good faith shall contest the validity of any such taxes, service charges, assessments or other governmental charges. Financine the Proiect. The Commission will commence the financing or refinancing of the Project to be aided with the proceeds of the Bonds with all practicable dispatch, and such financing will be accomplished and completed in a sound, economical and expeditious manner and in conformity with the Redevelopment Plan and the Law so as to complete or refinance the Project as soon as possible. Taxation of Leased Property. Whenever any property in the Project is redeveloped by the Commission and thereafter is leased by the Commission to any person or persons, or whenever the Commission leases any real property in the Project to any person or persons for redevelopment, each property shall be assessed and taxed in the same manner as privately owned property (in accordance with the Law), and the lease or contract shall provide (1) that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of the leasehold interest, and (2) that if for any reason the taxes paid by the lessee on such property in any year during the term of the lease shall be less than the taxes that would have been payable upon the entire property if the property were assessed and taxed in the same manner as privately owned property, the lessee shall pay such difference to the Commission within thirty (30) days after the taxes for such year become payable, and in any event prior to the delinquency date of such taxes established by law, which such payments shall be treated as Pledged Tax Revenues and shall be deposited by the Commission in the Special Fund. Disposition of Property in Project Area. - Except as provided below, the Commission will not authorize the disposition of any real property in the Project Area to anyone which will result in such property's becoming exempt from taxation because of public ownership or use or otherwise (except for public ownership or use contemplated by the Redevelopment Plan in effect on the date of execution and delivery of the Indenture, or property to be used for public streets or public off street parking facilities or easements or rights of way for public utilities, or other similar uses) if such dispositions, together with all similar prior dispositions on or subsequent to the effective date of the Indenture, shall comprise more than ten per cent (10%) of the land area in the Project Area. If the Commission proposes to make any such disposition which, together with all similar dispositions on or subsequent to the effective date of the Indenture, shall comprise more than ten per cent (10%) of the land area in the Project Area, it shall cause to be filed with the Trustee (i) written evidence of the consent of the Bond Insurer to such disposition and (ii) a Consultant's Report on the effect of such proposed disposition. If the Consultant's Report concludes that the Pledged Tax Revenues will not be materially reduced by such proposed disposition, the Commission may proceed with such proposed disposition. If the Consultant's Report concludes that Pledged Tax Revenues will be materially reduced by such proposed disposition, the Commission shall not proceed with such proposed disposition unless, as a condition precedent to such proposed disposition, the Commission shall require that such new owner or owners either: D-23 (1) Pay to the Commission, so long as any of the Bonds are Outstanding, an amount equal to the amount that would have been received by the Commission as Pledged Tax Revenues if such property were assessed and taxed in the same manner as privately owned non exempt property, which payment shall be made within thirty (30) days after taxes for each year would become payable to the taxing agencies for non exempt property and in any event prior to the delinquency date of such taxes established by law; or (2) Pay to the Commission a single sum equal to the amount estimated and certified to the Commission by an Independent Redevelopment Consultant to be receivable from taxes on such property from the date of such payment to the last maturity date of all Outstanding Bonds, less a reasonable discount value. All such payments to the Commission in lieu of taxes shall be treated as Pledged Tax Revenues and shall be applied by the Commission as required by the Indenture. Amendment of Redevelopment Plan. If the Commission proposes to amend the Redevelopment Plan, it shall cause to be filed with the Trustee a Consultant's Report on the effect of such proposed amendment. If the Consultant's Report concludes that Pledged Tax Revenues will not be materially reduced by such proposed amendment, the Commission may adopt such amendment. If the Consultant's Report concludes that Pledged Tax Revenues will be materially reduced by such proposed amendment, the Commission shall not adopt such proposed amendment. The Trustee shall be entitled to rely upon any said report and shall have no duty to verify the information or statements set forth therein. Pledged Tax Revenues. The Commission shall comply with all requirements of the Law to insure the allocation and payment to it of the Pledged Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of Los Angeles County. Further Assurances. The Commission shall adopt, make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided under the Indenture. Tax Covenants; Rebate Fund. (a) In addition to the accounts created under the Indenture, the Trustee shall establish and maintain with respect to each Series of Bonds issued under the Indenture (other than any Series of Bonds which the Commission shall certify to the Trustee is exempt from the requirements of Section 148 of the Code related to rebate of arbitrage earnings) a fund separate from any other fund or account established and maintained under the Indenture designated as the "Series Rebate Fund" hereinafter in this section referred to as the "Rebate Fund." The provisions of this section shall apply separately to each Rebate Fund established for each Series of Bonds. Upon the written direction of the Commission, there shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of the Indenture relating to the pledge of Pledged Tax Revenues, the allocation of money in the Special Fund, the investments of money in any fund or account and the defeasance.of Outstanding Bonds, all amounts required fo be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this section and by the Tax Certificate (which is incorporated by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the Written Request of the Commission, and shall have no liability or responsibility to enforce compliance by the Commission with the terms of the Tax Certificate. (b) The Commission shall not use or permit the use of any proceeds of Bonds or any funds of the Commission, directly or indirectly, to acquire any securities or obligations, and shall not take or permit to be taken any other action or actions, which would cause any Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements promulgated from time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as amended. The Commission shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Commission shall comply with all requirements of Sections 148 and 149(d) of D-24 the Code to the extent applicable to the Bonds. In the event that at any time the Commission is of the opinion that for purposes of this section it is necessary to restrict or to limit the yield on the investment of any moneys held by the Trustee under the Indenture, the Commission shall so instruct the Trustee under the Indenture in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. The Commission shall not use or permit the use of any proceeds of the Bonds or any funds of the Commission, directly or indirectly, in any manner, and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. (c) Notwithstanding any provisions of this section, if the Commission shall provide to the Trustee an opinion of nationally recognized bond counsel that any specified action required under this is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest with respect to the Bonds, the Trustee and the Commission may conclusively rely on such opinion in complying with the requirements of this section, and the covenants under the Indenture shall be deemed to be modified to that extent. (d) The provisions of this shall not apply to any Series of Bonds which the Commission shall certify to the Trustee is not intended to comply with the requirements of the Code necessary to make interest on such Series of Bonds excludable from gross income for federal tax purposes. Aereements with Other Taxine Aeencies. So long as any Bonds are Outstanding, the Commission shall not enter into any agreement or amend any existing agreement with any other taxing agency entered into (i) pursuant to Section 33401 of the Law or (ii) which operates as a waiver of the Commission's right to receive Pledged Tax Revenues under the Redevelopment Plan, unless the Commission's obligations under such agreement are made expressly subordinate and junior to the Commission's obligations under the Indenture and the Bonds. Annual Review of Pledged Tax Revenues. The Commission covenants that it will annually review the total amount of Pledged Tax Revenues remaining available to be received by the Commission under the Redevelopment Plan's cumulative tax increment limitation, as well as future cumulative Annual Debt Service and estimated future fees and expenses of the Trustee. The Commission will not accept Pledged Tax Revenues greater than Annual Debt Service and estimated future fees and expenses, in any year, if such acceptance will cause the amount remaining under the tax increment limit to fall below remaining cumulative Annual Debt Service and estimated future fees and expenses of the Trustee, except for the purpose of depositing such revenues in escrow for the payment of interest on and principal of and redemption premiums, if any, on the Bonds. Continuine Disclosure. The Commission covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement executed by the Commission in connection with the issuance of the Series 2006A Bonds (the "Continuing Disclosure Agreement"). Notwithstanding any other provision of the Indenture, failure of the Commission to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default under the Indenture; provided, however, that the Trustee at the written direction of any underwriter or the Owners of at least 25% aggregate principal amount of Series 2006A Bonds, shall (but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any Owner or beneficial owner of the Series 2006A Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order. THE TRUSTEE Appointment of Trustee. State Street Bank and Trust Company of California, N.A., a national banking association organized and existing under and by virtue of the laws of the United States of America, is appointed Trustee by the Commission for the purpose of receiving all moneys required to be deposited with the Trustee under the Indenture and to allocate, use and apply the same as provided in the Indenture. The Commission agrees that it will maintain a Trustee having a corporate trust office in the State, with a combined capital and surplus, or a member of a bank holding company system the lead bank of which shall have a combined capital and surplus, of at least $50,000,000, and subject to supervision or examination by Federal or State authority, so long as any Bonds are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to D-25 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 is authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered by it and of all Bonds paid and discharged. Acceptance of Trusts. The Trustee accepts the trusts imposed upon it by the Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (b) Whenever in the administration of the Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action under the Indenture, the Trustee (unless other evidence is specifically prescribed under the Indenture) may, in the absence of bad faith on its part, rely upon a Certificate of the Commission. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Owners pursuant to the Indenture, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (e) The Trustee, prior to the occurrence of an Event of Default under the Indenture and after the curing or waiving of all such Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture and no covenants of or against the Trustee shall be implied in the Indenture. In case an Event of Default under the Indenture has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by the Indenture, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (f) The Trustee may execute any of the trusts or powers under the Indenture and perform the duties required of it under the Indenture either directly or by or through attorneys or agents, shall not be liable for the acts or omissions of such attorneys or agents appointed with due care, and shall be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture. The Trustee may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it under the Indenture. (g) The Trustee shall not be responsible for any recital under the Indenture or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued under the Indenture or intended to be secured under the Indenture and makes no representation as to the validity or sufficiency of the Bonds or the Indenture. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Commission under the Indenture. The Trustee shall not be responsible for the application by the Commission of the proceeds of the Bonds. (h) The Trustee may become the Owner or pledgee of Bonds with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Commission with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or D-26 directors to act as a member of, or in the capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (i) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to the Indenture upon the request or authority or consent of any pers(3'n'who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of Bond by such person shall be reflected on the Registration Books. 0) The permissive right of the Trustee to do things enumerated in the Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (k) The Trustee shall not be required to take notice or to be deemed to have notice of any Event of Default under the Indenture except failure by the Commission to make any of the payments to the Trustee required to be made by the Commission pursuant hereto or failure by the Commission to file with the Trustee any document required by the Indenture to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default by the Commission or by the Owners of at least 25% in aggregate principal amount of the Bonds then Outstanding and all notice or other instruments required by the Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default under the Indenture except as aforesaid. (1) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers and records of the Commission pertaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (m) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises hereof. (n) Notwithstanding anything elsewhere in the Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of the Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Commission to the execution of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee. (o) All moneys received by the Trustee shall, until used or applied or invested as provided under the Indenture, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (p) Whether or not expressly provided therein, every provision of the Indenture relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this section. (q) No implied covenants or obligations shall be read into the Indenture against the Trustee. (r) Notwithstanding any other provision hereof, in determining whether the rights of the Owners will be adversely affected by and action taken or omitted under the Indenture, the Trustee shall consider the effect on the Owners as if there were no Bond Insurance Policy. D-27 Fees. Charaes and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered under the Indenture and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default under the Indenture, but only upon any Event of Default, the Trustee shall _ have a first lien with right of payment prior to payment of any Bond upon the amounts held under the Indenture for the foregoing fees, charges and expenses incurred by it. Notice to Bond Owners of Default. If an Event of Default under the Indenture occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in pat-agraph (k) under the section entitled "Acceptance of Trusts" above, then the Trustee shall, in addition to any notice required under the Indenture, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Bond and to the Bond Insurer, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Commission to make any payment when due, the Trustee may elect not to give such notice to the Owners (but shall give such notice to the Bond Insurer) if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice. Intervention by Trustee. In any judicial proceeding to which the Commission is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to the terms of the Indenture as set forth hereinabove in paragraph (c) under the caption "Acceptance of Trusts," shall do so if requested in writing by the Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and the Bond Insurer or, in the case of breach by the Trustee of its obligations under the Indenture, by the Bond Insurer alone. The Commission may also remove the Trustee at any time, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee's duties set forth in the Indenture. _Resignation by Trustee. The Trustee and any successor Trustee may at any time give prior written notice of its intention to resign as Trustee under the Indenture, such notice to be given to the Commission and the Bond Insurer by registered or certified mail. Upon receiving such notice of resignation, the Commission shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Commission shall cause notice thereof to be given by fast class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee as described in the paragraphs above, respectively, with the prior written consent of the Bond Insurer, the Commission shall promptly appoint a successor Trustee. In the event the Commission shall for any reason whatsoever fail to appoint a successor Trustee within 90 days following the delivery to the Trustee of the instrument as set forth above under the caption "Removal of Trustee" or within 90 days following the receipt of notice by the Commission as set forth above under the caption "Resignation by Trustee," the Trustee may, at the expense of the Commission, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of the Indenture. Any such successor Trustee appointed by such court shall become the successor Trustee under the Indenture notwithstanding any action by the Commission purporting to appoint a successor Trustee following the expiration of such 90 day period. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be party or any company to which the Trustee may sell or transfer all or substantially all of its corporate. trust business, provided that such company shall meet the requirements of the Indenture, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything to the contrary under the Indenture notwithstanding. D-28 Concerning any Successor Trustee. Every successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to its predecessor and also to the Commission an instrument in writing accepting such appointment under the Indenture and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Written Request of the Commission, or of the Trustee's successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor under the Indenture; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trustee under the Indenture to its successor. Should any instrument in writing from the Commission be required by any successor Trustee for more fully and certainly vesting in such successor the es&-fe, rights, powers and duties vested or intended to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Commission. Appointment of Co Trustee. It is the purpose of the Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under the Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies granted under the Indenture to the Trustee or hold title to the properties, in trust, as granted under the Indenture, or take any other action that may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Commission appoint an additional individual or institution as a separate trustee or co trustee. The following provisions of this section are adopted to these ends. In the event that the Trustee or the Commission appoints an additional individual or institution as a separate trustee or co trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by the Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co trustee but only to the extent necessary to enable such separate trustee or co trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co trustee shall run to and be enforceable by either of them. Should any instrument in writing from the Commission be required by the separate trustee or co trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Commission. In case any separate trustee or co trustee, or a successor to either, shall become incapable of acting, shall resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co trustee. Limited Liability of Trustee. No provision in the Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability under the Indenture if it shall have reasonable grounds for believing repayment of such funds or adequate indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Bond Insurer or of the Owners of at least 25% in aggregate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under the Indenture or exercising any power conferred upon the Trustee under the Indenture. The Commission agrees to indemnify and hold harmless the Trustee for any loss or liability incurred by the Trustee not relating to its own negligence or willful misconduct. The obligations of the Commission under this section shall survive the resignation or removal of the Trustee under the Indenture. AMENDMENT OF THE INDENTURE Amendment Requirements. The Indenture and the rights and obligations of the Commission and of the Owners may be amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Indenture as set forth in this Appendix D under the caption "AMENDMENT OF THE INDENTURE - Disqualified Bonds," and the written consent of the Bond Insurer, if any, D-29 are filed with the Trustee. No such amendment shall (1) extend the maturity of or reduce the interest rate on, or otherwise alter or impair the obligation of the Commission to pay the interest or principal or redemption premium, if any, at the time and place and at the rate and in the currency provided under the Indenture of any Bond, without the express written consent of the Owner of such Bond, or (2) permit the creation by the Commission of any mortgage, pledge or lien upon the Pledged Tax Revenues superior to or on a parity with the pledge and lien created in the Indenture for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations of the Trustee without its prior written assent thereto. The Indenture and the rights and obligations of the Commission and of the Owners may also be amended at any time by a Supplemental Indenture which shall become binding upon execution, without the consent of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes: (a) To add to the covenants and agreements of the Commission in the Indenture contained, other covenants and agreements thereafter to be observed, or to surrender any right or power reserved under the Indenture to or conferred upon the Commission; (b) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in regard to questions arising under the Indenture, as the Commission may deem necessary or desirable and not inconsistent with the Indenture, and which shall not materially adversely affect the interest of the Owners; (c) To provide for the issuance of any Additional Bonds, and to provide the terms and conditions under which such Additional Bonds may be issued, subject to and in accordance with the provisions of the Indenture as set forth in this Appendix D under the caption "ISSUANCE OF ADDITIONAL BONDS"; (d) To modify, amend or supplement the Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds; (e) To maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes (except with respect to any Bonds which the Commission certifies to the Trustee are not intended to qualify for such exclusion); (f) To the extent necessary to obtain a Bond Insurance Policy, to obtain a rating on the Bonds or in connection with satisfying all or a portion of the Reserve Account Requirement by crediting a Qualified Reserve Instrument to the Reserve Account; or (g) With the consent of the Bond Insurer, for any other purpose that does not materially adversely affect the interests of the Owners. Notwithstanding any other provision hereof, any provision of the Indenture expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer under the Indenture without the prior written consent of the Bond Insurer.' A copy of any amendment of the Indenture which is consented to by the Bond Insurer shall be delivered by the Trustee to S&P as soon as practicable after the execution and delivery of such amendment. Disqualified Bonds. Bonds owned or held by or for the account of the Commission or the City shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds for such purposes in the Indenture provided for, and shall not be entitled to consent to, or take any other action in the Indenture provided for; provided, however, that for purposes of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held will be disregarded. D-30 Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Commission may determine that the Bonds may bear a notation, by endorsement in form approved by the Commission, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for such purpose at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such action shall be made on such Bond. If the Commission shall so determine, new Bonds so modified as, in the opinion of the Commission, shall be necessary to conform to such action shall be prepared and executed by the Trustee at the expense of the Commission, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds. Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. Opinion of Counsel. The Trustee may conclusively accept an opinion of nationally recognized bond counsel to the Commission that an amendment of the Indenture is in conformity with the provisions of this article. EVENTS OF DEFAULT AND REMEDIES OF OWNERS Events of Default and Acceleration of Maturities. If one or more of the following events (herein called "Events of Default") shall happen, that is to say: (a) If default shall be made in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) If default shall be made in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (c) If default shall be made by the Commission in the observance of any of the other agreements, conditions or covenants on its part in the Indenture or in the Bonds contained, and such default shall have continued for a period of 60 days after the Commission shall have been given notice in writing of such default by the Trustee; provided, however, that such default shall not constitute an Event of Default under the Indenture if the Commission shall commence to cure such default within said 60 day period and thereafter diligently and in good faith proceed to cure such default within a reasonable period of time; or (d) If the Commission shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Commission, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, 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 Commission 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, the Trustee may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, shall, by notice in writing to the Commission, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything under the Indenture or in the Bonds contained to the contrary notwithstanding; provided, however, that any such declaration shall be subject to the prior written consent of the Bond Insurer, if any. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the money due shall D-31 have been obtained or entered, the Commission shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest at the rate of interest which would have been paid on such overdue principal on such overdue installments of principal and interest, and the expenses of the Trustee, including attorneys fees, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds 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 Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Commission and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences; provided, however, that no such rescission or annulment shall occur without the prior written consent of the Bond Insurer, if any. 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. Application of Funds Upon Acceleration. All money in the funds and accounts provided for under the Indenture upon the date of the declaration of acceleration by the Trustee as provided above under the caption "Events of Default and Acceleration of Maturities," and all Pledged Tax Revenues thereafter received by the Commission under the Indenture, shall be transmitted to the Trustee and shall be applied by the Trustee in the following order: First, to the payment of the costs, fees and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its agents and counsel, to the payment of any other amounts then due and payable to the Trustee, including any predecessor trustee, with respect to or in connection with the Indenture, whether as compensation, reimbursement, indemnification or otherwise, and to the payment of the costs and expenses of the Owners in providing for the declaration of such Event of Default, including reasonable compensation to their agents and counsel; Second, upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with interest on the overdue interest and principal at the rate of interest which would have been paid on such overdue principal, and in case such money shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal, ratably to the aggregate of such interest, principal and interest on overdue interest and principal; provided that the amounts in each subaccount of the Reserve Account shall be applied only to the payment of the Series of Bonds to which such subaccount relates. Other Remedies of Owners. Any Owner, subject to the conditions set forth below under the caption "Limitation on Owners' Right to Sue," shall have the right for the equal benefit and protection of all Owners similarly situated: (a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the Commission and any of the members, officers and employees of the Commission, and to compel the Commission or any such members, officers or employees to perform and carry out their duties under the Law and their agreements with the Owners as provided under the Indenture; (b) By suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owners; or (c) Upon the happening of an Event of Default (as deemed above under the caption "Events of Default and Acceleration of Maturities"), by a suit in equity to require the Commission and its members, officers and employees to account as the trustee of an express trust. Non Waiver. Nothing in this article or in any other provision of the Indenture, or in the Bonds, shall affect or impair the obligation of the Commission, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners of the Bonds at the respective dates of maturity, as provided under the Indenture, out of the Pledged Tax Revenues pledged for such payment, or affect or impair the right of action, which D-32 is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in the Indenture. A waiver of any default or breach of duty or contract by any Owner 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. No delay or omission by any Owner or the Trustee to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. , - If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the Trustee, the Commission and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. Actions by Trustee as Attorney in Fact. Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners, and the Trustee is appointed (and the successive respective Owners of the Bonds issued under the Indenture, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney in fact; provided, however, the Trustee shall have no duty or obligation to enforce any right or remedy unless it has been indemnified by the Owners from any liability or expense including without limitation fees and expenses of its attorneys. Remedies Not Exclusive. No remedy under the Indenture conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given under the Indenture 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 Law or any other law. Owners' Direction of Proceedings. Except as provided below under the caption "Bond Insurer's Direction of Proceedings," anything in the Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, with the written consent of the Bond Insurer, by an instrument or concurrent instruments in writing executed and delivered to the Trustee and upon furnishing the Trustee with indemnification satisfactory to it, to direct the method of conducting all remedial proceedings taken by the Trustee under the Indenture, provided that such direction shall not be otherwise than in accordance with law and the provisions of the Indenture, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction. Limitation on Owners' Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Indenture, the Law or any other applicable law with respect to such Bond, unless (1) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Owners of not less than twenty five percent (25%) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (3) such Owner or said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (5) the Trustee shall not have received contrary directions from the Owners of a majority in aggregate principal amount of the Bonds then Outstanding. Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of D-33 Bonds, or to enforce any right under the Indenture, the Law or other applicable law with respect to the Bonds, except in the manner provided under the Indenture, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner provided under the Indenture and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of the Indenture. Bond Insurer's Direction of Proceedings. Notwithstanding any other provision hereof, so long as a Bond Insurance Policy is in effect with respect to any Series of Bonds, upon the occurrence and continuance of an Event of Default under the Indenture, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the Owners under the "-Indenture, including, without limitation: (i) the right to accelerate the principal of the Bonds and (ii) the right to annul any declaration of acceleration, and the Bond Insurer shall also be entitled to approve all waivers of Events of Default. DEFEASANCE Discharge of Indebtedness. If the Commission shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, investments described in paragraphs A (except CATS and TGRS) or B (except items B(4) and B(6)) of the definition of Authorized Investments, in such amount as an Independent Certified Public Accountant or other qualified firm shall determine in a written report filed with the Trustee (upon which report the Trustee may conclusively rely) will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Written Request of the Commission, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Pledged Tax Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the Commission under the Indenture with respect to all such Bonds, shall cease and terminate, except only (i) the obligation of the Commission to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, (ii) the obligation of the Commission to pay all expenses and costs of the Trustee and (iii) the obligations of the Commission to indemnify the Trustee pursuant to the Indenture. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to this section, which are not required for said purposes, shall be paid over to the Commission; provided, however, that (a) the Commission shall have delivered to the Trustee a Certificate of the Commission to the effect that: (i) the Commission is then in compliance with the provisions of the Indenture as set forth in this Appendix D under the caption "COVENANTS OF THE COMMISSION - Tax Covenants; Rebate Fund"; (ii) the Commission has irrevocably deposited with the Trustee such moneys, securities, documents and other things and issued such irrevocable instructions to the Trustee so that any remaining and continuing applicable requirements of the Code, with respect to the Bonds, from compliance with which the Commission has not theretofore been relieved under the provisions of this section are ministerial and reportorial in nature; and D-34 (iii) the Commission has irrevocably authorized the Trustee and/or another agent satisfactory to the Trustee, and delegated to the Trustee or such agent the authority, to perform such remaining and continuing applicable requirements on the Commission's behalf, and such Trustee has undertaken to do so; and provided, further, that (b) there shall have been delivered to the Trustee an opinion of nationally recognized bond counsel to the effect that, based upon the matters set forth in the Certificate of the Commission described in (a) above and assuming compliance by the Trustee or such agent with its undertaking described in (a)(iii) above,'-no further action by or on the part of the Commission will be required under the applicable requirements of the Code to maintain the Federal income tax exclusion from gross income of the interest on the Bonds. Notwithstanding any other provision hereof, in the event that the principal of and/or interest on the Bonds shall be paid by the Bond Insurer pursuant to the Bond Insurance Policy, the Bonds shall remain Outstanding for all purposes, shall not be defeased or discharged under the Indenture and shall not be considered paid by the Commission, and the pledge of the Pledged Tax Revenues and all covenants, agreements and other obligations of the Commission to the Owners shall continue to exist and shall run to the benefit of the Bond Insurer and the Bond Insurer shall be subrogated to the rights of such Owners. In the event that the principal and/or interest due on the Series 2006A Bonds shall be paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy, the Series 2006A Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Commission, and the assignment and pledge created by the Indenture and all covenants, agreements and other obligations of the Commission to the registered owners shall continue to exist and shall run to the benefit of Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such registered owners, in each case to the extent of such payment. Unclaimed Moneys. Anything in the Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Commission, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Commission for the payment of such Bonds; provided, however, that before being required to make any such payment to the Commission, the Trustee shall, at the expense and upon the written Request of the Commission, cause to be mailed to the Owner of all such Bonds, at their respective addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Commission. ADDITIONAL PROVISIONS RELATING TO BOND INSURER AND SURETY BOND Payment Procedure Pursuant to the Financial Guaranty insurance Policy. As long as the Financial Guaranty Insurance Policy shall be in full force and effect, the Commission, the Trustee agrees to comply with the following provisions: (a) At least one (1) business day prior to all Interest Payment Dates the Trustee will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Bonds on such Interest Payment Date. If the Trustee determines that there will be insufficient funds in such Funds or Accounts, the Trustee shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee has not so notified Ambac Assurance at least one (1) business day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Series 2006A Bonds on or before the first (1st) business day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee. D-35 (b) the Trustee shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), the registration books of the Commission maintained by the Trustee and all records relating to the Funds and Accounts maintained under the Indenture. (c) the Trustee shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Series 2006A Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Series 2006A Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Series 2006A Bonds surrendered to the Insurance Trustee by the registered owners of Series 2006A Bonds entitled to receive full or partial principal payments from Ambac Assurance. (d) the Trustee shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Series 2006A Bonds entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Series 2006A Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Series 2006A Bonds for payment thereon first to the Trustee who shall note on such Series 2006A Bonds the portion of the principal paid by the Trustee and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. (e) in the event that the Trustee has notice that any payment of principal of or interest on an Series 2006A Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Commission has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Series 2006A Bonds which have been made by the Trustee and subsequently recovered from registered owners and the dates on which such payments were made. (f) in addition to those rights granted Ambac Assurance under the Indenture, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Series 2006A Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Series 2006A Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Trustee shall note Ambac Assurance's rights as subrogee on the registration books of the Commission maintained by the Trustee upon surrender of the Series 2006A Bonds by the registered owners thereof together with proof of the payment of principal thereof. Payment Procedure Pursuant to the Surety Bond. As long as the Surety Bond shall be in full force and effect, the Commission and the Trustee, as appropriate, agree to comply with the following provisions: (a) In the event and to the extent that moneys on deposit in the Interest Account and the Principal Account or the Sinking Account, plus all amounts on deposit in and credited to the Reserve Account in excess of the amount of the Surety Bond, are insufficient to pay the amount of principal and interest coming due, then upon the D-36 later of. (i) one (1) day after receipt by the General Counsel of Ambac Assurance of a demand for payment in the form attached to the Surety Bond as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment due under the Indenture has not been made to the Trustee; or (ii) the payment date of the Bonds as specified in the Demand for Payment presented by the Trustee to_the General Counsel of Ambac Assurance, Ambac Assurance will make a deposit of funds in an account with the Trustee or its successor, in Los Angeles, California, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee under the Indenture (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage, as defined in the Surety Bond; provided, however, that in the event that the amount on deposit in, or credited to, the Reserve Account, in addition to the amount available under the Surety Bond, includes amounts-available under a letter of credit, insurance policy, Surety Bond or other such funding instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency. (b) the Trustee shall, after submitting to Ambac Assurance the Demand for Payment as provided in (a) above, make available to Ambac Assurance all records relating to the Funds and Accounts maintained under the Indenture. (c) the Trustee shall, upon receipt of moneys received from the draw on the Surety Bond, as specified in the Demand for Payment, credit the Reserve Account to the extent of moneys received pursuant to such Demand. (d) the Reserve Account shall be replenished in the following priority: (i) principal and interest on the Surety Bond and on any Additional Funding Instrument shall be paid from fast available Pledged Tax Revenues on a pro rata basis; (ii) after all such amounts are paid in full, amounts necessary to fund the Reserve Account to the required level, after taking into account the amounts available under the Surety Bond and any Additional Funding Instrument shall be deposited from next available Pledged Tax Revenues. MISCELLANEOUS Liability of Commission Limited to Pledged Tax Revenues. Notwithstanding anything contained in the Indenture, the Commission shall not be required to advance any money derived from any source of income other than the Pledged Tax Revenues for the payment of the interest on or the principal of the Bonds or for the performance of any covenants contained in the Indenture, other than the covenants under the Indenture as set forth in this Appendix D under the caption "COVENANTS OF THE COI iMSSION - Tax Covenants; Rebate Fund." The Commission may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. The Commission's obligation to pay the Rebate Requirement to the United States of America pursuant to the Indenture shall be considered the general obligation of the Commission and shall be payable from any available funds of the Commission. The Bonds are limited obligations of the Commission and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the Commission is not obligated to pay them except from the Pledged Tax Revenues. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and the principal and redemption premium, if any, of the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Commission. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the Commission nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Benefits of Indenture Limited to Parties. Nothing expressed or implied in the Indenture, is intended to give to any person other than the Commission, the Trustee, the Bond Insurer and the Owners any right, remedy or claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements contained in the Indenture by and on behalf of the Commission or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Owners. D-37 Successor Is Deemed Included in All References to Predecessor. Whenever in the Indenture either the Commission or any member, officer or employee thereof is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Commission, that are presently vested in the Commission or such member, officer or employee, and all the agreements, covenants and provisions contained in the Indenture by or on behalf of the Commission or any member, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. Execution of Documents by Owners. Any request, declaration or other instrumekwhich the Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise expressly provided in the Indenture, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act, that the person signing such request, declaration 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. Except as otherwise expressly provided in the Indenture, the amount of Bonds transferable by delivery held by any person executing such request, declaration or other instrument or writing as a Owner, and the numbers thereof, and the date of his holding such Bonds, may be proved by a certificate, which need not be acknowledged or verified, satisfactory to the Trustee, executed by a trust company, bank or other depositary wherever situated, showing that at the date therein mentioned such person had on deposit with such depositary the Bonds described in such certificate. The Trustee may nevertheless in its discretion require further or other proof in cases where it deems the same desirable. The ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books required to be kept by the Trustee pursuant to the Indenture. Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Commission in good faith and in accordance therewith. Waiver of Personal Liability. No member, officer or employee of the Commission shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing under the Indenture contained shall relieve any member, officer or employee of the Commission from the performance of any official duty provided by law. Acquisition of Bonds by Commission. All Bonds acquired by the Commission, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. Funds and Accounts. Any fund or account required by the Indenture to be established and maintained by the Commission or the Trustee may be established and maintained in the accounting records of the Commission or the Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts held by the Commission shall at all times be maintained in accordance with sound accounting practices and all funds and accounts held by the Trustee shall at all times be maintained in accordance with trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Owners. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof provided in the Indenture to be performed on the part of the Commission (or of the Trustee) should 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 of the Indenture or of the Bonds; but the Owners shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The Commission declares that it would have adopted the Indenture and each and every other section, paragraph, subdivision, sentence, clause and phrase hereof and would D-38 have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of the Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. Business Days. When any action is provided for under the Indenture to be done on a day named or within a specified time period, and the day or the last day of the period falls on a day other than a day which is not a Saturday, a Sunday, or a day on which banks located in the city where the corporate trust office of the Trustee is located are required or authorized to remain closed (a 'Business Day"), such action may be performed on the next ensuing Business Day with the same effect as though performed on the appointed day or within 66-specified period. Third Party Beneficiary. To the extent that the Indenture confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of the Indenture, the bond Insurer is explicitly recognized as being a third-party beneficiary under the Indenture and may enforce any such right, remedy or claim conferred, given or granted under the Indenture. Governing Law. The Indenture shall be governed and construed in accordance with the laws of the State of California. D-39 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX E SUPPLEMENTAL INFORMATION CONCERNING THE CITY OF ROSEMEAD This Appendix contains principally economic and demographic information relating to the City of Rosemead and the County of Los Angeles. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Series 2006A Bonds. The Series 2006A Bonds are special tax obligations of the Commission-,payable solely from a portion of the Special Taxes and other amounts pledged under the Indenture, as more fully described in the Official Statement to which this Appendix is appended The information set forth herein that has been obtained from sources, other than the City is believed to be reliable, but such information is not guaranteed as to accuracy or completeness. Statements contained herein which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. INTRODUCTION Location The City of Rosemead (the "City"), encompassing approximately 5 '/2 square miles, is located in the central northwestern section of Los Angeles County approximately 12 miles east of the central business district of Los Angeles. The City shares common boundaries with the municipalities of San Gabriel, Temple City, El Monte, Montebello, Monterey Park and Alhambra. Municipal Government Incorporated in August 4, 1959, the City operates as a general law city. It has a council-manager form of government, with five council members elected at large for four-year overlapping terms. The Council selects a major and major pro-tem each year from its membership. The Council is responsible for enacting local legislation, establishing general policy for the City and adopting the annual budget. The Council's duties also include the appointment of a City Manager, City Attorney, City Clerk and City Treasurer and the selection of citizens to serve of the City's various advisory commissions. The City contracts with the Los Angeles County Sheriffs Department for sheriff services. Fire protection is provided through the Los Angeles County Fire Protection District. Two fire stations are located in the City. ECONOMIC AND DEMOGRAPHIC INFORMATION Data contained under this caption is intended to portray economic, demographic, and business trends within the City and the County of Los Angeles (the "County"). While not constituting direct revenue sources as such, these trends help explain changes in revenue sources such as property taxes, sales taxes, and transient occupancy taxes, which could be affected by changes in economic conditions. All the information presented in the following tables and other specific data references is the latest information available from the respective data sources. E-1 Population Between 2001 and 2005, the population of the City increased by nearly 5%. The table below displays population changes and other demographic data for the City and the County for the past five years. POPULATION DATA FOR THE CITY OF ROSEMEAD WELLS AND THE COUNTY OF LOS Al\IGELES City of Rosemead County of Los Angeles Year Population % Change Population % Change 2001 54,582 2.0 9,662,859 1.5 2002 55,314 1.3 9,828,805 1.7 2003 56,238 1.7 9,979,361 1.5 2004 56,732 0.9 10,107,451 1.3 2005 57,189 0.8 10,226,506 1.2 Source: State Department of Finance. E-2 Personal Income The table below summarizes the total effective buying income and median household effective buying income for the City of Rosemead, the Los Angeles Metropolitan Statistical Area (MSA), the State of California and the United States for the period 2000 through 2004. Los Angeles MSA, State of California, and United States Total Effective Buying Income Calendar Years 2000 through 2004 Total Effective Buying Median Household Effective Year and Area Income(n thousands) Buying Income 2000 City of Rosemead $ 594,960 $36,286 Los Angeles MSA 169,417,226 41,627 State of California 652,190,282 44,464 United States 5,230,824,904 39,129 2001 City of Rosemead $ 567,536 $33,978 Los Angeles MSA 170,440,432 40,789 State of California 650,251,407 43,532 United States 5,303,481,498 38,365 2002 City of Rosemead $ 554,088 $32,946 Los Angeles MSA 162,413,790 37,983 State of California 647,879,427 42,484 United States 5,340,682,818 38,035 2003 City of Rosemead $ 563,060 $32,973 Los Angeles MSA 233,020,235 41,237 State of California 674,721,020 42,924 United States 5,466,880,008 38,201 2004 City of Rosemead $ 579,423 $33,845 Los Angeles MSA 244,048,095 42,269 State of California 705,108,410 43,915 United States 5,692,909,567 39,324 Source: "Survey of Buying Power," Sales and Marketing Management Magazine E-3 Labor Force The following chart provides information concerning the annual average total labor force, employment, and unemployment for Los Angeles County, the State of California and the United States for the years 2000 through 2004. Los Angeles County, State of California and United States Labor Force, Employment, and Unemployment Annual Averages from 2000 through 2004 Year and Area Labor Force Employment Unemployment Unemployment Rater) 2000 Los Angeles County 4,681,300 4,427,800 253,500 5.4 State of California 16,869,700 16,034,100 835,600 5.0 United States 142,864,000 137,613,000 5,251,000 3.7 2001 Los Angeles County 4,752,900 4,483,000 269,900 5.7 State of California 17,150,100 16,217,500 932,600 5.4 United States 144,030,000 136,508,000 7,522,000 5.2 2002 Los Angeles County 4,769,900 4,446,100 323,800 6.8 State of California 17,326,900 16,165,100 1,161,800 6.7 United States 144,994,000 136,945,000 8,049,000 5.6 2003 Los Angeles County 4,782,000 4,447,800 334,200 7.0 State of California 17,414,000 16,223,500 1,190,500 6.8 United States 146,753,000 138,625,000 8,128,000 5.5 2004 Los Angeles County 4,809,700 4,494,000 315,700 6.6 State of California 17,552,300 16,459,900 1,092,400 6.2 United States 148,034,000 140,435,000 7,598,000 5.1 (1) Unemployment rate is based on unrounded data. Source: California State Employment Development Department, Labor Market Information Division; U.S. Department of Labor, Bureau of Labor Statistics for United States statistics. E-4 Business and Industry A sample of the major employers in the City of Rosemead are shown below, together with the approximate number of persons employed by each. CITY OF ROSEMEAD Major Employers Employer Type of Business Number of Employees So. California Edison Countrywide Home Loans Garvey School District Rosemead School District Hermetic Seal Corp. La Victoria Foods (Seasonal) Marge Carson Inc. Irish Construction Panda Restaurant Group Don Bosco Technical Institute Utility - Regional headquarters 3,000 -4,000 Finance 2,500 Education 1,000 Education 375 Hermetic seal manufacturing 260 Food manufacturing 50 - 250 Furniture manufacturing 225 Underground utility contractor 220 Restaurant management 220 Education 200 Source: Rosemead Chamber of Commerce. Commercial Activity Taxable transactions in Rosemead totaled $281,489 in 2003, nearly a 20% increase over 1999. The following table details taxable permits and transactions in the City of Rosemead for the years 1999 through 2003. CITY OF ROSEMEAD Taxable Transactions Calendar Years 1999 through 2003 (raxable Transactions in 000's) 1999 2000 2001 2002 2003 Retail Stores Permits 491 499 537 562 565 Taxable Transactions $201,007 $217,764 $213,234 $230,327 $236,929 Total Outlets Permits 1,260 1,272. 1,291 1,257 1,233 Taxable Transactions $234,959 $251,144 $246,755 $263,947 $281,489 Source: State Board of Equalization, Research & Statistics Section. Construction Activity In the past five years for which complete information is available, Rosemead issued building permits totaling approximately $143,583,211. Approximately 37% of this total consisted of permits for non-residential construction. Permits for new housing included 321 units, of which 80 were for multi- family occupancy. The following table details building permit activity in Rosemead for the years 2000 through 2004: E-5 Valuation 900's) Residential Non-Residential Total New Housing Units Single Units Multiple Units Total CITY OF ROSEMEAD Building Permit Valuations Calendar Years 2000 through 2004 2000 2001 2002 $14,887,453 $16,358,607 $12,413,924 8,592,852 13,256,252 8,249,041 $23,480,305 $29,614,859 $20,662,965 2003 2004 $22,253,442-- $24,193,125 13,024,000 10,354,515 $35,277,442 $34,547,640 51 29 30 65 66 0 72 0 0 8 51 101 30 65 74 Source: Construction Industry Research Board. Utilities Electricity is provided by Southern California Edison Company and gas is supplied by the Southern California Gas Company. Telephone services are provided by AT&T (successor to SBC and Pacific Bell). Water is supplied by four water companies: California-American, San Gabriel Valley, Southern California and San Gabriel County Water District. The majority of these organizations obtain water from the Metropolitan Water District of Southern California, while the San Gabriel County Water District and locally drilled wells provide the balance. Sewage treatment services are provided by the County of Los Angeles Sanitation District. Transportation The City's location near several interstate freeways affords residents immediate access to the extensive Southern California freeway network. This network links Rosemead to a number of diverse commercial and recreation activities located throughout Orange, Los Angeles and San Bernardino Counties. Two main east-west thoroughfares pass through the City. The San Bernardino Freeway (Interstate 10) traverse the central portion of the City and the Pomona Freeway (State Route 60) crosses the southern extremity of the City. Rosemead Boulevard (State Route 19) intersects these major routes and continues north to Pasadena, and south to Orange County. Major airports in the Los Angeles Basin are easily accessible by means of the highly developed freeway network in the West San Gabriel Valley. Air cargo and passenger facilities include those at the Los Angeles International Airport, Burbank-Glendale-Pasadena Airport, Long Beach International Airport and Ontario International Airport. All are less than 35 miles from the City. El Monte Airport, located two miles to the east, has facilities to service private aircraft. E-6 Education Most of the City is located in the Garvey School District and the Rosemead School District. Rosemead has 11 elementary schools, 3 junior high schools and 1 high school. Continuing education is available through the Los Angeles City Community College District. Los Angeles County is the location of many colleges and universities, both public and private, including such well known institutions as the University of California at Los Angeles, the University of Southern California, Occidental College, Claremont College and the California Institute of Technology. State University campuses are located in Los Angeles, Long Beach, Northridge, Pomona and Dominguez Hills. Community Facilities Health care services are provided by medical centers in Alhambra, San Gabriel and other neighboring communities. Located within the City are 2 fully-equipped mental health centers and a convalescent center. Religious and cultural facilities include 22 churches of various denominations and two libraries. Financial institutions include 9 banks and two savings and loan institutions. Recreational facilities for area residents include the City's own community parks and outdoor recreation offered in the surrounding areas. City facilities include 6 major public parks, 10 playgrounds, two municipal swimming pools, tennis and shuffleboard courts, several baseball diamonds and 2 community centers. Southeast of the City is the Whittier Narrows Dam Recreation Area which includes the Whittier Narrows Golf Course. The San Gabriel Mountains and the Angeles National Forest, both located north of the City, provide additional outdoor recreation opportunities. Rosemead's proximity to the San Bernardino and Pomona Freeways bring the cultural and recreational advantages of Los Angeles and Orange Counties within convenient driving distance. E-7 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), is executed and entered into as of March 1, 2006, by and among the ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, organized anti-existing under, and by virtue of the laws of the State of California (the "Commission'), U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as trustee (the "Trustee"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, in its capacity as Dissemination Agent (the "Dissemination Agent"). WITNESSETH: WHEREAS, the Commission, has heretofore issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993A Bonds") in the original principal amount of $34,275,000 for the purpose of financing portions of the Redevelopment Project Area No. 1, which Series 1993A Bonds were issued pursuant to the terms of an Indenture, dated as of October 1, 1993 (the "Original Indenture"), between the Trustee and the Commission; and WHEREAS, pursuant to the First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement" and the Original Indenture as supplemented by the First Supplement, and as hereinafter supplemented, referred to herein as the "Indenture"), by and between the Commission and the Trustee, the Commission has issued the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the `Bonds"), in the aggregate principal amount of $14,005,000; and WHEREAS, this Disclosure Agreement is being executed and delivered by the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent, for the benefit of the holders and beneficial owners of the Bonds and in order to assist the underwriters of the Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5); NOW, THEREFORE, for and in consideration of the mutual premises and covenants herein contained, the parties hereto agree as follows: Section 1. Definitions. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. In addition, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Commission pursuant to, and as described in, Sections 2 and 3 hereof. "Annual Report Date" means not later than 270 days following the end of the Commission's fiscal year (which is currently June 30), commencing March 31, 2007. "Commission" means the Rosemead Community Development Commission. F-1 "Disclosure Representative" means the Executive Director of the Commission, or his or her designee, or such other person as the Commission shall designate in writing to the Trustee from time to time. "Dissemination Agent" means U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Commission and which has filed with the Trustee a written acceptance of such designation. "Listed Events" means any of the events listed in Section 4(a) hereof. "National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Bonds. "Official Statement" means the Official Statement, dated February 23, 2006, relating to the "Participating Underwriter" means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" means each National Repository and each State Repository. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. Section 2. Provision of Annual Reports. (a) The Commission shall, or, upon furnishing the Annual Report to the Dissemination Agent, shall cause the Dissemination Agent to, provide to each Repository and to Ambac Assurance an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2005-06 fiscal year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 3 hereof; provided, however, that the audited financial statements of the Commission, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the Commission's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 4(f) hereof. (b) Not later than 15 business days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Commission shall provide the Annual Report (in a form suitable for reporting to the Repositories) to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall notify the Disclosure Representative of such failure to receive the Annual Report. (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to the Municipal Securities Rulemaking Board and the appropriate State Repository, if any, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: F-2 (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; (ii) provide any Annual Report received by it to each Repository, as provided herein; and (iii) provided the Dissemination Agent has received the Annual Report pursuant to Section 2(b) hereof, file a report with the Commission and (if the Dissemination,- Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. Section 3. Content of Annual Reports. The Commission's Annual Report shall contain or incorporate by reference the following: (a) The Commission's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Commission's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to that used for the Commission's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available. (b) The following information: (i) An update of the information contained in Table 2 of the Official Statement for the most recently completed fiscal year. (ii) An update of the information contained in Table 3 of the Official Statement for the most recently completed fiscal year. (iii) An update of the information contained in Table 4 of the Official Statement based upon the most recently completed fiscal year. (iv) An update of the information contained in Table 7 of the Official Statement for the most recently completed fiscal year. (v) The amount of any payments by the Commission during the most recently completed Fiscal Year of the type described in "RISK FACTORS - State Budget Deficit and Its Impact on Pledged Tax Revenues" in the Official Statement. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Commission shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. 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 Commission or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities F-3 Rulemaking Board. The Commission shall clearly identify each such other document so included by reference. Section 4. Rep orting of Significant Events. (a) Pursuant to the provisions of this Section, the Commission shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) Principal and interest payment delinquencies. _ (ii) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax-exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) The Trustee shall, within five business days of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the Commission promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f); provided, however, that the Dissemination Agent shall have no liability to Bond owners for any failure to provide such notice. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of the Listed Events described under clauses (ii), (iii), (vi), (x) and (xi) above shall mean actual knowledge by an officer at the corporate trust office of the Trustee. The Trustee shall have no responsibility for determining the materiality of any of the Listed Events. (c) Whenever the Commission obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee pursuant to subsection (b) or otherwise, the Commission shall as soon as possible determine if such event would be material under applicable Federal securities law. (d) If the Commission determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Commission shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). The Commission shall provide the Dissemination Agent with a form of notice of such event in a format suitable for reporting to the Municipal Securities Rulemaking Board and each State Repository, if any. F-4 (e) If in response to a request under subsection (b), the Commission determines that the Listed Event would not be material under applicable Federal securities law, the Commission shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the Commission to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository and Ambac Assurance. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Indenture. Section 5. Termination of Reuortine Obligation. The Commission's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Commission shall give notice of such termination in the same manner as for a Listed Event under Section 4(f) hereof. Section 6. Electronic Filing. Submission of Annual Reports and notices of Listed Events to DisclosureUSA.org or another "Central Post Office" designated and accepted by the Securities and Exchange Commission shall constitute compliance with the requirement of filing such reports and notices with each Repository hereunder; and the Commission may satisfy its obligations hereunder to file any notice, document or information with a Repository by filing the same with any dissemination agent or conduit, including DisclosureUSA.org or another "Central Post Office" or similar entity, assuming or charged with responsibility for accepting notices, documents or information for transmission to such Repository, to the extent permitted by the Securities and Exchange Commission or Securities and Exchange Commission staff or required by the Securities and Exchange Commission. For this purpose, permission shall be deemed to have been granted by the Securities and Exchange Commission staff if and to the extent the agent or conduit has received an interpretive letter, which has not been revoked, from the Securities and Exchange Commission staff to the effect that using the agent or conduit to transmit information to the Repository will be treated for purposes of the Rule as if such information were transmitted directly to the Repository. Section 7. Dissemination Ayent. The Commission 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. The Dissemination Agent may resign by providing thirty days' written notice to the Commission and the Trustee. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Commission in a timely manner and in a form suitable for filing. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Commission, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Trustee and the Dissemination Agent shall agree to any amendment so requested by the Commission, so long as such amendment does not adversely affect the rights or obligations of the Trustee or the Dissemination Agent), 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 Sections 2(a), 3 or 4(a) hereof it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in F-5 law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, 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 Bonds, 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 sixty percent of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of holders. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first 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 statements or information, in order to provide information to investors to enable them to evaluate the ability of the Commission to meet its obligations, including its obligation to pay debt service on the Bonds. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 4(f) hereof. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Commission 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 Commission 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 Commission 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 Commission to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Commission to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Commission or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance. F-6 Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Men . Article VIII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture, and the Trustee and the Dissemination Agent shall be entitled to the protections, limitations from liability and -indemnities afforded to the Trustee thereunder. The Dissemination Agent and the Trustee shall have only such duties hereunder as are specifically set forth in this Disclosure Agreement. The Commission agrees to indemnify and save the Dissemination Agent, the Trustee, their officers, directors, employees and agent, harmless against any loss, expense and liabilities which it may incur arising out of the disclosure of information pursuant to this Disclosure Agreement or arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. This Disclosure Agreement does not apply to any other securities issued or to be issued by the Commission. The Dissemination Agent shall have no obligation to make any disclosure concerning the Bonds, the Commission or any other matter except as expressly set out herein, provided that no provision of this Disclosure Agreement shall limit the duties or obligations of the Trustee under the Indenture. The Dissemination Agent shall have no responsibility for the preparation, review, form or content of any Annual Report or any notice of a Listed Event. The Dissemination Agent may conclusively rely upon the Annual Report provided to it by the Commission as constituting the Annual Report required of the Commission in accordance with the Disclosure Agreement. The fact that the Trustee has or may have any banking, fiduciary or other relationship with the Commission or any other party, apart from the relationship created by the Indenture and this Disclosure Agreement, shall not be construed to mean that the Trustee has knowledge or notice of any event or condition relating to the Bonds or the Commission except in its respective capacities under such agreements. No provision of this Disclosure Agreement shall require or be construed to require the Dissemination Agent to interpret or provide an opinion concerning any information disclosed hereunder. Information disclosed hereunder by the Dissemination Agent may contain such disclaimer language concerning the Dissemination Agent's responsibilities hereunder with respect thereto as the Dissemination Agent may deem appropriate. The Dissemination Agent may conclusively rely on the determination of the Commission as to the materiality of any event for purposes of Section 4 hereof. Neither the Trustee nor the Dissemination Agent make any representation as to the sufficiency of this Disclosure Agreement for purposes of the Rule. The Dissemination Agent shall be paid compensation by the Commission for its services provided hereunder in accordance with its schedule of fees, as amended from time to time, and all expenses, legal fees and advances made or incurred by the Dissemination in the performance of its duties hereunder. The Commission's obligations under this Section shall survive the termination of this Disclosure Agreement. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Commission, the Trustee, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 14. Merger. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without the filing of any paper or any further act. F-7 IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By: Authorized Officer F-8 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Rosemead Community Development Commission Name of Bond Issue: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Date of Issuance: March 9, 2006 NOTICE IS HEREBY GIVEN that the Rosemead Community Development Commission (the "Commission") has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission and U.S. Bank National Association, in its capacity as Trustee and in its capacity as Dissemination Agent. [The Commission anticipates that the Annual Report will be filed by Dated: By: U.S. Bank National Association, as Trustee, on behalf of the Rosemead Community Development Commission cc: Rosemead Community Development Commission F-A-1 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX G FORM OF BOND INSURANCE POLICY G-1 (THIS PAGE INTENTIONALLY LEFT BLANK) Ambac Financial Guaranty Insurance Policy Obligor: Obligations: Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, New York 10004 Telephone: (212) 668-0340 Policy Number: Premium: Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the pa ent of the premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its u essor the "Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-describ o igations (the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e Obligo Ambac will make such payments to the Insurance Trustee within one (1) business day following wri en do c of Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpai gati s r dc s, uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will d' to the d the t principal and interest which is then Due for Payment but is unpaid. Upon such disburse mbac 1 be th e owner of the surrendered Obligations and/or coupons and shall be fully subrogated to all of th Ho er righ aymen reon. In cases where the Obligations are issued in registered form, the Insurance Trustee isb ncipal to of er only upon presentation and surrender to the Insurance Trustee of the unpaid Obligation, unca a and a of any v e claim, together with an instrument of assignment, in form satisfactory to Ambac and nsurance a dul e c y the Holder or such Holders duly authorized representative, so as to permit ownership of s h ation b e Me d i e name of Ambac or its nominee. The Insurance Trustee shall disburse interest to a er o a red b11 no y upon presentation to the Insurance Trustee of proof that the claimant is the person entitle to e p o st o e Obligation and delivery to the Insurance Trustee of an instrument of assignment, in form satisfac to b nsurance Trustee, duly executed by the Holder or such Holders duly authorized representa ' an rrin t Am c 1 n under such Obligation to receive the interest in respect of which the insurance disbars t was ade. c sh 1 e subrogated to all of the Holders rights to payment on registered Obligations to the extent o y insurance dish nts made. In the event that a trustee or paying Pwred for abligations noti at any payment of principal of or interest on an Obligation which has become Due fo nt an ich is mad t a older by or on behalf of the Obligor has been deemed a preferential transfer and eretofo fr in lder t to the United States Bankruptcy Code in accordance with a final, nonappealable order of a c u of com e t juri 'ctaon, Holder will be entitled to payment from Ambac to the extent of such recovery if sufficie ands e o rw.se availab e. As used herein, the e " m any pers o er than (i) the Obligor or (ii) any person whose obligations constitute the underlying sec ource o p yme t gations who, at the time of Nonpayment, is the owner of an Obligation or of a coupon relating Obli n. As ein, "Due for Payment", when referring to the principal of Obligations, is when the sche at 't a mandato demption date for the application of a required sinking fund installment has been reach not fer any earlier date on which payment is due by reason of call for redemption (other than by application of r q ed sinking fu stallments), acceleration or other advancement of maturity; and, when referring to interest on the Ob g tions ' e e h uled date for payment of interest has been reached. As used herein, Nonpayment" means the failure of i ve ro d sufficient funds to the trustee or paying agent for payment in full of all principal of and interest on the igations h ch are Due for Payment. This Pol' c celable. The premium on this Policy is not refundable for any reason, including payment of the Obligations prior to This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment. In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. P_MCE JQ• COP-% 4 President a j SEAL _ sir e~ A, scoff Effective Date: P4 Ap \ • THE BANK OF NEW YORK acknowledges that it has agreed to perform the duties of Insurance Trustee under this Policy. Form No.: 213-0012 (1/01) A- G J4~ $,LL Secretary Authorized Representative Authorized Officer of Insurance Trustee Ambac One Ambac Assurance Corporation One Stare Street Plaza, New York, New York 10004 Telephone: (212) 668-0340 Endorsement Policy for: Attached to and forming part of Policy No.: In the event that Ambac Assurance Corporation were under the Policy would be excluded from cover1%; Association, established pursuant to the laws of Nothing here: or limitations Effective Date of }afms arising Guaranty I be h2 o ter, waive or extend any of the terms, conditions, provisions, agreements ntioned oo . other than as above stated. >ac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to ed officers in facsimile to become effective as its original seal and signatures and binding countersignature of its duly authorized representative. ♦ RpMfE i`' sm ~i President Secretary Authorized Representative Form No.: 2WO004 (7/97) Ambac Assurance Corposadou $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF MAILING I, Kellie S. Boles, of Orrick, Herrington & Sutcliffe LLP, hereby state and certify that for and on behalf of the Rosemead Community Development Commission, on the date hereof, caused to be mailed a Report of Final Sale pertaining to the Series 2006A Bonds, postage prepaid, to the California Debt and Investment Advisory Commission at 915 Capitol Mall, Room 400, Sacramento, California 95814, a true copy of each such Report is attached hereto. Dated: March 9, 2006 Kellie S. Boles, Project Manager Orrick, Herrington & Sutcliffe LLP DOCSLA1:515415.2 41555-8 K35/K35 REPORT OF FINAL SALE California Debt and Investment Advisory Commission For Office Use Only 915 Capitol Mall, Room 400, Sacramento, CA 95814 P.O. Box 942809, Sacramento, CA 94209-0001 Tel.: (916) 653-3269 FAX: (916) 654-7440 Under California Government Code Section 8855(1), "The issuer of any new public debt issue shall, not later than 45 days after the signing of the bond purchase contract in a negotiated or private financing, or after the acceptance of a bid in a competitive offering, submit a report of final sale and official statement to the Commission. The Commission may require information to be submitted in the report of final sale that is considered appropriate." CDIAC NO 2006-0173 ISSUER NAME: Rosemead Community Development Commission (If pool bond, list participants) ISSUE NAME: Rosemead Community Development Commission Redevelopment Project Area No.1 Tax Allocation Bonds. Series 2006A IF THIS IS A POOLED FINANCING, WHICH ISSUANCE STATUTE IS IT AUTHORIZED UNDER? ❑1) Marks-Roos Local Bond Pooling Act ❑2) JPA Law ❑3) Installment Sales Agreement, Lease ❑4) Housing Revenue Bond Law & Industrial Development Bond Law ❑5) Other WILL A VALIDATION ACTION BE PURSUED? ® No ❑ Yes ❑ Unknown ACTUAL SALE DATE: February 23.2006 PRINCIPAL SOLD: $ 14.005.000 IS ANY PORTION OF THE DEBT FOR REFUNDING?' ❑ No ® Yes, refunding amount (including costs) $ 8.317.412.37 Issuer Contact: Name: Karen Ogawa Title: Finance Director Address: City of Rosemead. 8838 E. Valley Blvd.. Rosemead. CA 91770 Phone: (626) 569-2121 ISSUER LOCATED IN Los Angeles COUNTY Filing Contact:: Name of Individual (representing. ® Bond Counsel, ❑ Issuer, ❑ Financial Advisor, or ❑ Lead Underwriter) who completed this form and may be contacted for information: Name: M. Kevin Hale. Esq. Firm/Agency: Orrick_ Herrington & Sutcliffe LLP Address: 777 S. Figueroa Street. Suite 3200. Los Angeles. CA 90017 Phone: (213) 612-2356 E-mail: khaleCct~,orrick.com Send acknowledgement/ copies to: Kellie S. Boles. Project Manger (same address) Name of individual to whom an invoice for the CDIAC issue fee should be sent:2 Name: Steven J. Gortler Firm: Piper Jaffray & Co. Address: 345 California Street. Suite 2200. San Francisco. CA 94104 Phone: (415) 984-3652 Section 53583(c)(2)(B) of the California Government Code require that any local agency yelling refunding bandy at private role or on a negotiated basis shall send o written statement, within two weeks after the bonds are sold to the CDIAC explaining the reasons why the local agency determined to sell the bonds at private sale or on a negotiated basis instead of at public sale. 2 This fee is authori.Zed by Section 8856 of the California Government Code and is charged to the lead underwriter orpurchaser of the issue. The fee is administratively set by the Commission. The current fee schedule may be obtained from CDIAC. DOCSLA1:518237.1 CDIAC• Report of Final Sale Page 2 FINANCING PARTICIPANTS (Firm Name) OFFICE LOCATION (City/State) FINANCIAL ADVISOR: Public Financial Management, Inc. Newport Beach, CA LEAD UNDERWRITER/PURCHASER: Pipper-laffray & Co. San Francisco, California BOND COUNSEL: Orrick, Herrington & Sutcliffe LLP Los Ang_e1es, California TRUSTEE/PAYING AGENT: U.S. Bank National Association Los Angeles. California MATURITY SCHEDULE ❑ Attached ® Included in Official Statement MATURITY STRUCTURE ® Serial (S) ❑ Term (T) ❑ Serial and term bonds or two or more term (B) FINAL MATURITY DATE: 10/01/2022 FIRST OPTIONAL CALL DATE: 10/01/2016 SENIOR/SUBORDINATE STRUCTURE ❑ Yes ®No OFFICIAL STATEMENT/OFFERING MEMORANDUM: ® Enclosed ❑ None prepared WAS THE ISSUE INSURED OR GUARANTEED? ❑ No ® Bond Insurance T ❑ Letter of Credit (L) ❑ State Intercept Program (I) ❑ Other (O) GUARANTOR Ambac Assurance Corporation ENHANCEMENT EXPIRATION DATE: INDICATE CREDIT RATING: (For example, "AA)V" or "Aaa" ❑ Not Rated ® Rated Standard & Poor's: AAA Fitch: Moody's: Other: IS THE INTEREST ON THE DEBT TAXABLE? Under State Law. ® No (tax-exempt) ❑ Yes (taxable) Under Federal Law: ® No (tax-exempt) ❑ Yes (taxable) If the issue is federally tax-exempt, is interest a specific preference item for the purpose of alternative minimum tax? ❑ Yes ® No INTEREST TYPE: ❑ NIC ® TIC ❑ Variable INTEREST COST: 3.9537% CAPITAL APPRECIATION BOND: ❑ Yes ® No ISSUANCE COSTS AND FEES: (Obtain from Underwriter) A) Management Fee B) Total Takedown C) Underwriter Expenses Underwriter Spread or Discount D) Bond Counsel E) Disclosure Counsel F) Financial Advisor G) Rating Agency H) Credit Enhancement 1) Trustee Fee J) Other Expenses Total Issuance Costs K~ ORIGINAL ISSUE PREMIUM L) ORIGINAL ISSUE DISCOUNT M) NET ORIGINAL ISSUE DISCOUNT/PREMIUM REASON FOR NEGOTIATED REFUNDINGS If the issue is a negotiated refunding, indicate the reason(s) why the bonds were issued at a private or negotiated versus a competitive sale. ❑ (1) Timing of the sale provided more flexibility than a public sale ❑ (2) More cost savings were expected to be realized than a public sale ❑ (3) More flexibility in debt structure was available than a public sale ❑ (4) Issuer able to work with participants familiar with issue/r than a public sale ® (5) All of the above ❑ (6) Other (please specify) FOR OFFICE USE ONLY FEE: $ DOCSLA1:518237.1 ESCROW AGREEMENT by and between ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION and U.S. BANK NATIONAL ASSOCIATION as Trustee Dated as of March 1, 2006 Relating to Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds Series 1993A DOCSLA1:515201.3 41555-8 WWB/WWB ESCROW AGREEMENT This ESCROW AGREEMENT, (the "Agreement"), made and entered into as of March 1, 2006, by and between the Rosemead Community Development Commission (the "Commission"), and U.S. Bank National Association, a national banking association organized and existing under the laws of the, United States of America, having a corporate trust office located in Los Angeles, California, and being qualified to accept and administer the trusts hereby created, as successor trustee (the "Trustee") and acting as escrow agent hereunder (in such capacity, the "Escrow Agent"), WITNESSETH: WHEREAS, the Commission has heretofore issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (the "Series 1993 Bonds"), pursuant to the terms of an Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association (as successor to State Street Bank and Trust Company of California, N.A.), as successor trustee; WHEREAS, the Commission has determined to issue its Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Refunding Bonds") in the aggregate principal amount of $14,005,000 pursuant to the terms of a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement"), by and between the Commission and the Trustee; WHEREAS, the Refunding Bonds are being issued for the purpose of providing moneys which will, among other things, be sufficient (together with other moneys and interest earnings thereon) to redeem the Series 1993 Bonds scheduled to mature on October 1, 2006 through October 1, 2018 (the "Refunded Bonds"), on April 10, 2006, at a redemption price equal to 100% of the principal amount of the Refunded Bonds plus accrued interest thereon to the redemption date, such amount hereinafter referred to as the "Redemption Price"; WHEREAS, the First Supplement contemplates the setting aside of a portion of the proceeds of the Refunding Bonds in order to provide for the payment of the Redemption Price of the Refunded Bonds and that such proceeds shall be deposited in a special escrow fund to be created hereunder to be known as the Refunding Escrow to be maintained by the Escrow Agent (the "Refunding Escrow"); and WHEREAS, the Commission has taken action to cause to be issued or delivered to the Escrow Agent for deposit in or credit to the Refunding Escrow certain securities and investments consisting of non-callable direct obligations of, or non-callable obligations guaranteed by, the United States of America (the "Investment Securities"), all as listed on Schedule I attached hereto and made a part hereof, in an amount which, together with income or increment to accrue on such securities, have been certified by The Arbitrage Group, Inc. to be sufficient to pay when and as due the Redemption Price of the Refunded Bonds; NOW, THEREFORE, the Commission and the Escrow Agent hereby agree as follows: DOCSLA1:515201.3 41555-8 WWB/WWB Section 1. Establishment, Funding and Maintenance of Refunding Escrow Notice of Redem tion. (a) Pursuant to the First Supplement, the Commission has caused the Trustee to transfer to the Escrow Agent the sum of $8,317,412.37 from the proceeds of the Refunding Bonds and to release $998,561.87 on deposit in the Reserve Account and $253,053.75 on deposit in the Debt Service Fund under the Original Indenture and transfer to the Escrow Agent the aggregate $1,251,615.62 from such funds. The Escrow Agent hereby accepts and acknowledges receipt of $9,569,027.99 of such monies. The Escrow Agent agrees to establish and maintain until the Redemption Price of the Refunded Bonds has been paid in full a fund designated as the "Refunding Escrow," and to hold the securities, investments and moneys therein at all times as a special and separate trust fund (wholly segregated from all other securities, investments or moneys on deposit with the Escrow Agent). All securities, investments and moneys in the Refunding Escrow are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the payment of the Redemption Price of the Refunded Bonds. (b) The Escrow Agent is hereby further irrevocably instructed to give notice of the redemption of the Refunded Bonds scheduled for redemption on April 10, 2006 at the time and in the manner provided in the Original Indenture in substantially the form attached hereto as Exhibit A and otherwise in conformity with any applicable requirements of the Original Indenture. Section 2. Investment of the Refunding Escrow. (a) The Commission hereby directs the Escrow Agent to accept in the name of the Commission, for the account of the Refunding Escrow, the Investment Securities listed on Schedule I hereto. Except as otherwise provided in this Section, the Escrow Agent shall not reinvest any remaining portion of the Refunding Escrow and shall hold such portion uninvested in the Refunding Escrow. (b) Upon the written direction of the Commission, but subject to the conditions and limitations herein set forth, the Escrow Agent shall purchase substitute Investment Securities with the proceeds derived from the sale, transfer, redemption or other disposition of Investment Securities then on deposit in the Refunding Escrow in accordance with the provisions of this Section 2(b). Such sale, transfer, redemption or other disposition of such Investment Securities then on deposit in the Refunding Escrow and substitution of other Investment Securities of the Commission are permitted hereunder but only by a simultaneous transaction and only if (i) a nationally recognized firm of Independent Certified Public Accountants (the "Independent Certified Public Accountants") or such other qualified firm selected by the Commission shall certify that (A) the Investment Securities to be substituted, together with the Investment Securities which will continue to be held in the Refunding Escrow, will mature in such principal amounts and earn interest in such amounts and, in each case, at such times so that sufficient moneys will be available from maturing principal and interest on such Investment Securities held in the Refunding Escrow together with any uninvested moneys, to make all payments required by Section 3 hereof which have not previously been made, and (B) the amounts and dates of the anticipated payments by the Escrow Agent of the Redemption Price will not be diminished or postponed thereby; and (ii) the Escrow Agent shall receive an DOCSLA1:515201.3 41555-8 WWB/ WWB 3 opinion of nationally recognized bond counsel to the effect that the sale, transfer, redemption or other disposition and substitution of Investment Securities will not adversely affect the exclusion of interest on the Refunding Bonds or the Refunded Bonds from gross income for federal income tax purposes. (c) Upon the written direction of the Commission, but subject to the conditions and limitations herein set forth, the Escrow Agent will apply any moneys received from the maturing principal of or interest or other investment income on any Investment Securities held in the Refunding Escrow, or the proceeds from any sale, transfer, redemption or other disposition of Investment Securities pursuant to Section 2(b) not required for the purposes of said Section, as follows: (1) to the extent such moneys will not be required at any time for the purpose of making a payment required by Section 3 hereof, as shall be certified to the Escrow Agent by a nationally recognized firm of Independent Certified Public Accountants or such other qualified firm selected by the Commission, such moneys shall be paid over to the Commission upon the written direction of the Commission as received by the Escrow Agent, free and clear of any trust, lien, pledge or assignment securing the Refunded Bonds or otherwise existing hereunder, after provision for payment of amounts due the Escrow Agent pursuant to Sections 4 and 11 hereof; and (2) to the extent such moneys will be required for such purpose at a later date, such moneys shall, to the extent practicable and at the written direction of the Commission, be invested or reinvested in Investment Securities maturing at times and in amounts sufficient to pay when due the Redemption Price (provided that (A) the amount of the funds to be realized from time to time from such investment or reinvestment shall be certified by a nationally recognized firm of Independent Certified Public Accountants or such other qualified firm selected by the Commission, and (B) the Commission shall deliver to the Escrow Agent an opinion of nationally recognized bond counsel to the effect that such investment or reinvestment will not adversely affect the exclusion of interest on the Refunding Bonds or the Refunded Bonds from gross income for federal income tax purposes) and interest earned from such investments or reinvestment shall be retained by the Escrow Agent for such purpose. (d) The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Agreement and in full compliance with the provisions hereof. Section 3. Payment and Redemption of the Refunded Bonds. Except as otherwise provided in Section 2, the Commission hereby requests and irrevocably instructs the Escrow Agent to deposit in the Refunding Escrow the principal of and interest on the Investment Securities held for the account of the Refunding Escrow promptly as such principal and interest become due and, subject to the provisions of Section 2 hereof, to transfer amounts from the Refunding Escrow to the Trustee to pay when due the Redemption Price of the Refunded Bonds on April 10, 2006. Upon payment in full of the Redemption Price of the Refunded Bonds, the Escrow Agent shall transfer any moneys or securities remaining in the Refunding Escrow to the Commission after provision for payment of amounts due the Escrow Agent pursuant to Section 4 DOCSLA1:515201.3 41555-8 W W13/ W WB 4 and II hereof, and this Agreement shall terminate. The Refunding Escrow cash flow is set forth in Schedule H attached hereto. Section 4. Fees and Costs. (a) The Commission shall pay to the Escrow Agent from time to time reasonable compensation for all services rendered under this Agreement. The parties hereto agree that the duties and obligations of the Escrow Agent shall be as expressly provided herein, and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. (b) The Commission shall pay to the Escrow Agent additional fees and reimbursements for costs incurred, including but not limited to legal and accountants' services, involving this Agreement. (c) The fees of and the costs incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien against, the Refunding Escrow, except as otherwise provided herein. Section 5. Merger or Consolidation. Any company into which the Escrow Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under this Agreement, shall be the successor of such Escrow Agent without the execution or filing of any paper or any further act, notwithstanding anything herein to the contrary. Section 6. Resignation of Escrow Agent. The Escrow Agent may at any time resign by giving written notice to the Commission of such resignation. The Commission shall promptly appoint a successor Escrow Agent upon receipt of such notice. Resignation of the Escrow Agent will be effective only upon acceptance of appointment of a successor Escrow Agent. If the Commission does not appoint a successor, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, which court may thereupon, after such notice, if required by law, appoint a successor Escrow Agent. After receiving a notice of resignation of an Escrow Agent, the Commission may appoint a temporary Escrow Agent to replace the resigning Escrow Agent until the Commission appoints a successor Escrow Agent. Any such temporary Escrow Agent so appointed by the Commission shall immediately and without further act be superseded by the successor Escrow Agent so appointed. Section 7. Severability. If any section, paragraph, sentence, clause or provision of this Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Agreement. Section 8. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument. DOCSLA1:515201.3 41555-8 WWB/ WWB Section 9. Applicable. Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Section 10. Definitions. Any capitalized term used but not otherwise defined in this Agreement shall have the meaning assigned to such term in the Original Indenture. Section 11. Indemnification. The Commission agrees to indemnify, hold harmless and defend the Escrow Agent and its officers, directors, employees and agents to the maximum extent permitted by law against any and all losses, damages, claims, actions, liabilities, costs and expenses of whatever nature, kind or character (including, without limitation, attorneys' fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent directly or indirectly arising out of or related to the acceptance and performance by the Escrow Agent of its duties hereunder. This indemnification shall apply whether any such claim, suit, investigation, proceeding or action is based upon (i) the interference with or breach of or alleged interference with or alleged breach of any existing contract in connection with the Refunded Bonds, (ii) any untrue statement or alleged untrue statement of a material fact or omission of a material fact required to be stated in any offering document with respect to the Refunded Bonds necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (iii) any other wrongful act or alleged wrongful act of the Commission related to the redemption of the Refunded Bonds; provided, however, that this indemnification shall not cover any losses or expenses, incurred by the Escrow Agent as a result of its negligence or willful misconduct. In addition to the foregoing, the prevailing party in any lawsuit shall be entitled to attorneys' fees and costs incurred in any judgment proceeding to collect or enforce the judgment. This provision is separate and severable and shall survive the merger of this Agreement into any judgment on this Agreement. The agreements of the Commission hereunder shall survive termination of this Agreement. Section 12. Immunities and Liability of Escrow Agent. (a) The Escrow Agent undertakes to perform only such duties as are expressly and specifically set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. (b) The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Agent be liable for any special, indirect or consequential damages, even if the Escrow Agent or the Commission knows of the possibility of such damages. The Escrow Agent shall have no duty or responsibility under this Agreement in the case of any default in the performance of the covenants or agreements contained in the Original Indenture. The Escrow Agent is not required to resolve conflicting demands to money or property in its possession under this Agreement. (c) The Escrow Agent may consult with counsel of its own choice (which may be counsel to the Commission) and the opinion of such counsel shall be full and complete DOCSLA1:515201.3 41555-8 WWB/ WWB 6 authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel. (d) The Escrow Agent shall not be responsible for any of the recitals or representations contained herein or in the Original Indenture, other than recitals or representations specifically made by the Escrow Agent. (e) The Escrow Agent may become the owner of, or acquire any interest in, any of the Refunding Bonds with the same rights that it would have if it were not the Escrow Agent and may engage or be interested in any financial or other transaction with the Commission. (f) The Escrow Agent shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys or securities deposited with it to pay the principal of or interest or premium on the Refunded Bonds. (g) The Escrow Agent shall not be liable for any action or omission of the Commission under this Agreement or the Original Indenture. (h) Whenever in the administration of this Agreement the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be deemed to be conclusively proved and established by a certificate of any authorized representative of the Commission, and such certificate shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or suffered by it under the provisions of this Agreement upon the faith thereof. (i) The Escrow Agent may conclusively rely as to the truth and accuracy of the statements and correctness of the opinions and the calculations provided to it in connection with this Agreement and shall be protected in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document or opinion furnished to the Escrow Agent in connection with this Agreement and reasonably believed by the Escrow Agent to have been signed or presented by the proper party, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. (j) No provision of this Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. Section 13. Termination of Agreement. Upon payment in full of the principal of and interest on the Refunded Bonds and all of the fees and expenses of the Escrow Agent as described above, all obligations of the Escrow Agent under this Agreement shall cease and terminate, except for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Refunded Bonds not presented for payment all sums due thereon and the obligation of the Commission to pay to the Escrow Agent any amounts due and owing to the Escrow Agent hereunder; provided, however, the obligations oft e'Escrow Agent with respect to the payment DOCSLA1:515201.3 41555-8 WWB/ WWB 7 of the Refunded Bonds shall cease and terminate two years after the date on which the same shall have become due as described hereunder and in accordance with the Original Indenture. DOCSLA1:515201.3 41555-8 WWB/ WWB IN WITNESS WHEREOF, the Rosemead Community Development Commission and U.S. Bank National Association, have caused this Agreement to be executed each on its behalf as of the day and year first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION J • By: Authorized Officer ATTEST: By: Secretary U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent By: Authorized Officer DOCSLA1:515201.3 41555-8 WWB/ WWB 9 IN WITNESS WHEREOF, the Rosemead Community Development Commission and U.S. Bank National Association, have caused this Agreement to be executed each on its behalf as of the day and year first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Authorized Officer ATTEST: By: Secretary U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent By: Autho zed Officer DOCSLA1:515201.3 41555-8 W WB/ W W13 9 SCHEDULEI INVESTMENT SECURITIES A description of the Investment Securities is set forth on Exhibits E and G to the Verification Report prepared by The Arbitrage Group, Inc., attached hereto and incorporated herein by reference as though fully set forth herein and made a part hereof, relating to the Refunding Bonds. DOCSLA1:515201.3 41555-8 W WB/ W WB l Exhibit E Computation of Purchase Price of Restricted Acquired Obligations Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Security Date Type Coupon Principal Principal Rate Price Price 04/06/06 U.S. Treasury Bills $9,346,000.00 0.000% 99.66788889% $9,314,960.90 Exhibit G Computation of Purchase Price of Other Acquired Obligations Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Security Coupon Principal Accrued Purchase Date Type Principal Rate Price Price Interest Price 03/31/06 U.S. Treasury Notes $251,000.00 1.500% 99.83593750% $250,588.20 $1,654.95 $252,243.15 SCHEDULE II REFUNDING ESCROW CASH FLOW The cash flow for the Refunding Escrow is set forth on Exhibits D and F to the Verification Report prepared by The Arbitrage Group, Inc., attached hereto and incorporated herein by reference as though fully set forth herein and made a part hereof, relating to the Refunding Bonds. DOCSLA1:515201.3 41555-8 WWB/ WWB1 Exhibit D Receipts from Restricted Acquired Obligations and Proof of Yield Rosemead Community Development Commission Redevelopment Project Area No. I Tax Allocation Bonds, Series 2006A Receipts from Restricted Acquired Date Obligations (1) Present Value of Future Receipts at 03/09/06 Using a Rate of 4.485069% 04/06/06 $9,346,000.00 Purchase Price of Restricted Acquired Obligations $9,314,960.90 $9,314,960.90 (1) U.S. Treasury Bills at a rate of 0.000%. Exhibit F Receipts from Other Acquired Obligations and Proof of Yield Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Present Value of Receipts from Future Receipts Other at 03/09/06 Using Coupon Acquired a Rate of Date Principal Rate Interest Obligations 4.185581% 03/31/06 $251,000.00 1.500% $1,882.50 $252,882.50 $252,243.15 Purchase Price of Other Acquired Obligations $252,243.15 EXHIBIT A FORM OF NOTICE OF REDEMPTION ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS, SERIES 1993A NOTICE IS HEREBY GIVEN pursuant to the terms of the Indenture, dated as of October 1, 1993 (the "Original Indenture'), between the Rosemead Community Development Commission (the "Agency") and U.S. Bank National Association (as successor trustee to State Street Bank and Trust Company of California, N.A.), as Trustee or Agent, that the bonds listed below (the "Bonds") have been selected for redemption on April 10, 2006 (the "Redemption Date") at a redemption price (the "Redemption Price") equal to 100% of the principal amount of such Bonds together with interest accrued to the Redemption Date. CUSIP* Maturity Rate Amount Price Payment of the Redemption Price on the Bonds called for redemption will be paid only upon presentation and surrender thereof in the following manner: If by Mail. (REGISTERED BONDS) If by Mail. (BEARER BONDS) If by Hand or Overnight Mail Bondholders presenting their bonds in person for same day payment must surrender their bond(s) by 1:00 P.M. on the Redemption Date and a check will be available for pick up after 2:00 P.M. Checks not picked up by 4:30 P.M. will be mailed out to the bondholder via first class mail. If payment of the Redemption Price is to be made to the registered owner of the Bond, you are not required to endorse the Bond to collect the Redemption Price. Interest on the principal amount designated to be redeemed shall cease to accrue on and after the Redemption Date. IMPORTANT NOTICE Under the Economic Growth and Tax Relief Reconciliation Act of 2003 (the "Act"), 28% will be withheld if tax identification number is not properly certified. *The Trustee shall not be held responsible for the selection or use of the CUSIP number, nor is any representation made as to its correctness indicated in the Redemption Notice. It is included solely for the convenience of the Holders. By: U.S. Bank National Association as Trustee or Agent Dated: March 8, 2006. DOCSLAI :515201.3 41555-8 WWB/ WWBl MM ® The Arbitrage Group, Inc. $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (Los Angeles County, California) Redevelopment Project Area No. 1 Tax Allocation Ponds Series 2006A No The Arbitrage Group, Inc. 3212 Smith Street Suite 201 Houston, Texas 77006 March 9, 2006 Telephone 713 522 8527 Facsimile 713 522 8471 Rosemead Community Development Commission Rosemead, California Orrick, Herrington & Sutcliffe LLP Los Angeles, California U.S. Bank National Association Los Angeles, California Ambac Assurance Corporation New York, New York www.thearbitragegroup.com Public Financial Management, Inc. Newport Beach, California Piper Jaffray & Co. San Francisco, California $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (Los Angeles County, California) Redevelopment Project Area No.1 Tax Allocation Bonds Series 2006A The Rosemead Community Development Commission (the "Commission") proposes to issue the above referenced bonds (the "Bonds") which are dated March 9, 2006 and will be issued on March 9, 2006. The Bonds consist of $14,005,000 Serial Bonds. A portion of the proceeds of the Bonds will be used to purchase United States Treasury Bills (the "Restricted Acquired Bonds") which together with the United States Treasury Notes to be purchased with other funds (the "Other Acquired Bonds") will be placed in an irrevocable trust together with an initial cash deposit to be used solely to refund that portion of the Commission's Redevelopment Pro- ject Area No. 1 Tax Allocation Bonds, Series 1993A (the "Refunded Bonds") described below: Maturities and Maturities and Sinking Fund Optional Original Amount Sinking Fund Dates to be Redemption Amount to be Dates to be Optionally Date and Series Issued Dated Date Refunded Refunded Redeemed Price 1993A $34,275,000 10-01-1993 $9,335,000 10-01-2006 - 10-01-2006 - 04-10-2006 10-01-2018, 10-01-2018, @ 100% Inclusive Inclusive Arbitrage Compliance Consultants The Arbitrage Group, Inc. Rosemead Community Development Commission March 9, 2006 Page 2 At your request, we have independently verified the arithmetical accuracy of the computations provid- ed to us by Piper Jaffray & Co. which indicate: (1) the sufficiency of the receipts from the Restricted Acquired Bonds and the Other Acquired Bonds together with an initial cash deposit to pay to and at early redemption the principal of and interest on the Refunded Bonds; and, (2) the "yield" on the Bonds. The term "yield," as used herein, means that discount rate which, when used in computing the present value of all payments of principal and interest on an obligation compounded semiannually us- ing a 30/360-day year basis, produces an amount equal to, in the case of the Bonds, the Issue Price to the Public less the cost of bond insurance and surety premium. The original computations, along with certain assumptions and information, were furnished to us by Piper Jaffray & Co. on behalf of the Commission. We have relied solely on the assumptions and in- formation provided to us and have not made any study or evaluation of them, except as noted below. We express no opinion on the reasonableness of the assumptions, or the likelihood that the debt ser- vice requirements of the Refunded Bonds will be paid as described in the accompanying Exhibits. In the course of our engagement, we were furnished by Piper Jaffray & Co. with excerpts from the Official Statement for the Refunded Bonds, the Official Statement for the Bonds and copies of the trade confirmations for the purchase of the Restricted Acquired Bonds and the Other Acquired Bonds. We compared the information contained in the schedules provided by Piper Jaffray & Co. with cer- tain information set forth in such documents with respect to prices, principal payment dates and amounts, interest payment dates and rates, yields, and redemption dates and prices. We found that the information contained in such schedules provided to us by Piper Jaffray & Co. was in agreement with the above-mentioned information set forth in such documents. In our opinion, based on the assumptions and information provided by Piper Jaffray & Co. on behalf of the Commission, the computations in the schedules provided to us are arithmetically accurate. The computations in the accompanying Exhibits prepared by us and the comparable schedules provided to us indicate that: (1) the receipts from the Restricted Acquired Bonds and the Other Acquired Bonds together with an initial cash deposit of $1,823.94 will be sufficient to pay to and at early redemption the principal of and interest on the Refunded Bonds; and, (2) the yield of the Bonds is 4.135451%. The terms of our engagement are such that we have no obligation to update this report or to verify any revised computation because of events and transactions occurring subsequent to the date of this re- port. This report is issued solely for your information and assistance in connection with the issuance of the Bonds. This report is not to be quoted or referred to without our prior written consent. Very truly yours, dv-1 r. Exhibits A. Sources and Uses of Funds B. Escrow Cash Flow C-1. Debt Service Requirements of the Refunded Bonds to Maturity C-2. Debt Service Requirements of the Refunded Bonds to Early Redemption D. Receipts from Restricted Acquired Obligations and Proof of Yield E. Computation of Purchase Price of Restricted Acquired Obligations F. Receipts from Other Acquired Obligations and Proof of Yield G. Computation of Purchase Price of Other Acquired Obligations H. Debt Service Requirements and Proof of Yield on the Obligations 1. Computation of Net Original Issue Premium Exhibit A Sources and Uses of Funds Rosemead Community Development Commission Redevelopment Project Area No. l Tax Allocation Bonds, Series 2006A SOURCES Principal Amount of the Bonds $14,005,000.00 Net Original Issue Premium 316,830.40 Transfer from Prior Debt Service Fund 253,053.75 Transfer from Prior Debt Service Reserve Fund 998,561.87 $15,573,446.02 USES Purchase Price of Restricted Acquired Obligations $9,314,960.90 Purchase Price of Other Acquired Obligations 252,243.15 Initial Cash Deposit 1,823.94 Deposit to Redevelopment Fund 5,454,094.94 Costs of Issuance 218,550.00 Underwriter's Discount 84,030.00 Bond Insurance 204,737.84 Surety Premium 43,005.25 $15,573,446.02 Exhibit B Escrow Cash Flow Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Beginning Cash Date Balance Receipts from Restricted Acquired Obligations Debt Service Requirements of the Ending Refunded Bonds Cash to Early Redemption Balance $254,706.44 $253,053.75 $1,652.69 $9,347,652.69 9,347,652.69 $0.00 03/31/06 $1,823.94 04/01/06 $254,706.44 04/06/06 $1,652.69 04/10/06 $9,347,652.69 $252,882.50 9,346,000.00 $9,598,882.50 $9,600,706.44 Exhibit C-1 Debt Service Requirements of the Refunded Bonds to Maturity Rosemead Community Development Commission Redevelopment Project Area No. I Tax Allocation Bonds, Series 2006A Coupon Date Principal Rate 04/01/06 10/01/06 $515,000.00 5.250% 04/01/07 10/01/07 545,000.00 5.300% 04/01/08 10/01/08 570,000.00 5.300% 04/01/09 10/01/09 600,000.00 5.300% 04/01/10 10/01/10 635,000.00 5.300% 04/01/11 10/01/11 665,000.00 5.300% 04/01/12 10/01/12 700,000.00 5.500% 04/01/13 10/01/13 740,000.00 5.500% 04/01/14 10/01/14 780,000.00 5.500% 04/01/15 10101115 825,000.00 5.500% 04/01/16 10/01/16 870,000.00 5.500% 04/01/17 10/01/17 920,000.00 5.500% 04/01/18 10/01/18 970,000.00 5.500% $9,335,000.00 Debt Service Requirements of the Refunded Bonds Interest to Maturity $253,053.75 $253,053.75 253,053.75 768,053.75 239,535.00 239,535.00 239,535.00 784,535.00 225,092.50 225,092.50 225,092.50 795,092.50 209,987.50 209,987.50 209,987.50 809,987.50 194,087.50 194,087.50 194,087.50 829,087.50 177,260.00 177,260.00 177,260.00 842,260.00 159,637.50 159,637.50 159,637.50 859,637.50 140, 387.50 140,387.50 140,387.50 880,387.50 120,037.50 120,037.50 120,037.50 900,037.50 98,587.50 98,587.50 98,587.50 923,587.50 75,900.00 75,900.00 75,900.00 945,900.00 51,975.00 51,975.00 51,975.00 971,975.00 26,675.00 26,675.00 26,675.00 996,675.00 $3,944,432.50 $13,279,432.50 Exhibit C-2 Debt Service Requirements of the Refunded Bonds to Early Redemption Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Coupon Date Principal Rate Interest 04/01/06 04/10/06 $9,335,000.00 ~Py,JJJ,UUU.Uu $253,053.75 * 12,652.69 $265,706.44 Debt Service Requirements of the Refunded Bonds to Early Redemption $253,053.75 9,347,652.69 $9,600,706.44 * Coupon rates are as shown in the Debt Service Requirements of the Refunded Bonds to Maturity. Exhibit D Receipts from Restricted Acquired Obligations and Proof of Yield Rosemead Community Development Commission Redevelopment Project Area No. I Tax Allocation Bonds, Series 2006A Present Value of Receipts from Future Receipts Restricted at 03/09/06 Using Acquired a Rate of Date Obligations (1) 4.485068% 04/06/06 $9,346,000.00 $9,314,960.90 Purchase Price of Restricted Acquired Obligations $9,314,960.90 (1) U.S. Treasury Bills at a rate of 0.000%. Exhibit E Computation of Purchase Price of Restricted Acquired Obligations Rosemead Community Development Commission Redevelopment Project Area No. I Tax Allocation Bonds, Series 2006A Date Security Type Coupon Principal Rate Principal Price Price 04/06/06 U.S. Treasury Bills $9,346,000.00 0.000% 99.66788889% $9,314,960.90 Exhibit F Receipts from Other Acquired Obligations and Proof of Yield Rosemead Community Development Commission Redevelopment Project Area No. I Tax Allocation Bonds, Series 2006A Coupon Date Principal Rate Receipts from Other Acquired Interest Obligations Present Value of Future Receipts at 03/09/06 Using a Rate of 4.185581% 03/31/06 $251,000.00 1.500% $1,882.50 $252,882.50 $252,243.15 Purchase Price of Other Acquired Obligations $252,243.15 Exhibit G Computation of Purchase Price of Other Acquired Obligations Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Security Coupon Principal Accrued Purchase Date - Type Principal Rate Price Price Interest Price 03/31/06 U.S. Treasury Notes $251,000.00 1.500% 99.83593750% $250,588.20 $1,654.95 $252,243.15 Exhibit H Debt Service Requirements and Proof of Yield on the Bonds Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Present Value of Future Debt Service Payments at Requirements 03/09/06 Using Coupon of the a Rate of Date Principal Rate Interest Bonds 4.135451% 10/01/06 $780,000.00 4.000% $319,380.94 $1,099,380.94 $1,074,418.31 04/01/07 268,996.88 268,996.88 257,563.32 10/01/07 810,000.00 4.000% 268,996.88 1,078,996.88 1,012,205.09 04/01/08 252,796.88 252,796.88 232,344.07 10/01/08 845,000.00 3.250% 252,796.88 1,097,796.88 988,538.18 04/01/09 239,065.63 239,065.63 210,911.45 10/01/09 870,000.00 3.250% 239,065.63 1,109,065.63 958,631.80 04/01/10 224,928.13 224,928.13 190,480.24 10/01/10 900,000.00 3.375% 224,928.13 1,124,928.13 933,345.61 04/01/11 209,740.63 209,740.63 170,495.08 10/01/11 930,000.00 3.500% 209,740.63 1,139,740.63 907,709.47 04/01/12 193,465.63 193,465.63 150,958.03 10/01/12 965,000.00 3.500% 193,465.63 1,158,465.63 885,619.40 04/01/13 176,578.13 176,578.13 132,255.10 10/01/13 1,000,000.00 4.000% 176,578.13 1,176,578.13 863,391.69 04/01/14 156,578.13 156,578.13 112,571.84 10/01/14 1,035,000.00 5.000% 156,578.13 1,191,578.13 839,330.00 04/01/15 130,703.13 130,703.13 90,200.26 10101115 1,090,000.00 5.000% 130,703.13 1,220,703.13 825,359.98 04/01/16 103,453.13 103,453.13 68,531.23 10/01/16 1,145,000.00 5.000% 103,453.13 1,248,453.13 810,268.06 04/01/17 74,828.13 74,828.13 47,580.93 10/01/17 1,200,000.00 4.000% 74,828.13 1,274,828.13 794,202.49 04/01/18 50,828.13 50,828.13 31,023.82 10/01/18 1,250,000.00 4.250% 50,828.13 1,300,828.13 777,897.99 04/01/19 24,265.63 24,265.63 14,216.93 10/01/19 280,000.00 4.000% 24,265.63 304,265.63 174,654.09 04101/20 18,665.63 18,665.63 10,497.36 10/01/20 290,000.00 4.125% 18,665.63 308,665.63 170,073.74 04/01/21 12,684.38 12,684.38 6,847.46 10/01/21 300,000.00 4.125% 12,684.38 312,684.38 165,378.22 04/01/22 6,496.88 6,496.88 3,366.58 Exhibit H Debt Service Requirements and Proof of Yield on the Bonds Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Present Value of Future Debt Service Payments at Requirements 03/09/06 Using Coupon of the a Rate of Date Principal Rate Interest Bonds 4.135451% 10/01/22 315,000.00 4.125% 6,496.88 321,496.88 163,219.49 $14,005,000.00 $4,607,531.10 $18,612,531.10 $14,074,087.31 Principal Amount of the Bonds $14,005,000.00 Bond Insurance (204,737.84) Surety Premium (43,005.25) Net Original Issue Premium 316,830.40 $14,074,087.31 Exhibit I Computation of Net Original Issue Premium Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Coupon Purchase Accrued Original Issue Date Principal Rate Yield Price Price Interest Premium/(Discount) 10/01/06 $780,000.00 4.000% 3.150% 100.467% $783,642.60 $0.00 $3,642.60 10/01/07 810,000.00 4.000% 3.200% 101.207% 819,776.70 0.00 9,776.70 10/01/08 845,000.00 3.250% 3.300% 99.876% 843,952.20 0.00 (1,047.80) 10/01/09 870,000.00 3.250% 3.400% 99.499% 865,641.30 0.00 (4,358.70) 10/01/10 900,000.00 3.375% 3.480% 99.559% 896,031.00 0.00 (3,969.00) 10/01/11 930,000.00 3.500% 3.530% 99.848% 928,586.40 0.00 (1,413.60) 10/01/12 965,000.00 3.500% 3.630% 99.245% 957,714.25 0.00 (7,285.75) 10/01/13 1,000,000.00 4.000% 3.700% 101.961% 1,019,610.00 0.00 19,610.00 10/01/14 1,035,000.00 5.000% 3.750% 109.079% 1,128,967.65 0.00 93,967.65 10101115 1,090,000.00 5.000% 3.830% 109.290% 1,191,261.00 0.00 101,261.00 10/01/16 1,145,000.00 5.000% 3.930% 109.173% 1,250,030.85 0.00 105,030.85 10/01/17 1,200,000.00 4.000% 4.020% 99.814% 1,197,768.00 0.00 (2,232.00) 10/01/18 1,250,000.00 4.250% 4.050% 101.702% 1,271,275.00 0.00 21,275.00 10/01/19 280,000.00 4.000% 4.150% 98.454% 275,671.20 0.00 (4,328.80) 10/01/20 290,000.00 4.125% 4.200% 99.186% 287,639.40 0.00 (2,360.60) 10/01/21 300,000.00 4.125% 4.250% 98.585% 295,755.00 0.00 (4,245.00) 10/01/22 315,000.00 4.125% 4.300% 97.939% 308,507.85 0.00 (6,492.15) $14,005,000.00 $14,321,830.40 $0.00 $316,830.40 fEt opt ,UafK~'NF• BRUCE MCPHERSON SECRETARY OF STATE STATE OF CALIFORNIA BUSINESS PROGRAMS I SPECIAL FILINGS C4LIFORN~P 1500 11th Street, 2nd floor Sacramento, CA 95814 i PO Box 942877 i Sacramento, CA 94277-0001 i 916.653.3984 i www.ss.ca.gov March 1, 2006 M. Kevin Hale, Esq., Attorney Rosemead Financing Authority 8838 East Valley Blvd. Rosemead, CA 91770 The purpose of this letter is to acknowledge the filing in this office of a Notice of a Joint Powers Agreement for Rosemead Financing Authority pursuant to California Government Code Section 6503.5 or 6503.7. This was filed as of February 28, 2006 and assigned file number 1974. In the future, if additional information concerning the Joint Powers is to be reported to the Secretary of State's Office, the Amendment to a Joint Powers Agreement form can be downloaded from our website at www.ss.ca.gov If it is determined that this entity meets the requirements for inclusion on the Statement of Facts Roster of Public Agencies pursuant to Government Code Section 53051, please complete the Statement of Facts form which can be downloaded from the above listed web address and submit it for filing. Sincerely, Special Filings Unit 4 5E~ 'O, .rNF W`~ :PA State of California o T Secretary of State C~l~iOpN~' NOTICE OF A JOINT POWERS AGREEMENT (Government Code Section 6503.5 or 6503.7) Instructions: 1. Complete and mail to: Secretary of State, P.O. Box 942877, Sacramento, CA 94277-0001 (916) 653-3984 2. Include filing fee of $1.00. 3. Do not include attachments, unless otherwise specified. FILE NO. I IL In the office of the Secretary of State of the State of callfornia FEB 2006 (Office Use Only) The name of the agency or entity created under the agreement and responsible for the administration of the agreement is: . Rosemead Financing Authority Mailing Address: 8838 East Valley Boulevard, Rosemead, California 91770 Provide a short title of the agreement if applicable: Joint Exercise of Powers Agreement, dated as of February 1, 2006, by and between the City of Rosemead:and.the Rosemead Community Development Commission The public agencies party to the agreement are: (1) City of Rosemead (2) Rosemead Community Development Commission (3) If more space is needed, continue on a separate sheet and attach it to this form. The effective date of the agreement is: February 1, 2006 Provide a condensed statement of the agreement's purpose or the powers to be exercised: The purpose of this Agreement is to provide for the financing or refinancing of Public Capital Improvement for, and Working Capital Requirements of, any Local Agency through the acquisition by the Authority of such Public capital Improvements, the purchase by the Authority of Obligations of any Local Agency pursuant to Bond Purchase Agreements, the lending of funds by the Authority with a Local Agency. Capitalized terms not defined herein steal have the meanings ascribed thereto in the Jo' rise o Powers Agreement, dated as of February 1, 2006, by and between the City of ~ Rosemead and the Rosemead' February 23. 2006 Date Signature C M. Kevin Hale, Esq., Attorney Typed Name and Title SEC/STATE NP/SF404A (REV. 03/2005) p~ f BRUCE MCPHERSON I SECRETARY OF STATE I STATE OF CALIFORNIA BUSINESS PROGRAMS I SPECIAL FILINGS r C~llfORN~p 1500 11th Street, 2nd floor Sacramento, CA 95814 1 PO Box 942877 1 Sacramento, CA 94277-0001 1 916.653.3984 I www•ss.ca.gov February 27, 2006 M. Kevin Hale, Esq., Attorney Rosemead Financing Authority 8838 East Valley Blvd. Rosemead, CA 91770 The purpose of this letter is to acknowledge the filing in this office of a Statement of Facts for Rosemead Financing Authority pursuant to California Government Code Section 53051. This Statement of Facts was filed as of February 24, 2006. For future updates blank forms can be downloaded from our website at www.ss.ca.gov Sincerely, Special Filings Unit 9E~,L OF TN State of California Secretary of State ~40FON STATEMENT OF FACTS ROSTER OF PUBLIC AGENCIES FILING (Government Code Section 53051) Instructions: 1. Complete and mail to: Secretary of State, P.O. Box 942877, Sacramento, CA 94277-0001 (916) 653-3984 2. A street address must be given as the official mailing address or as the address of the presiding officer. 3. Complete addresses as required. 'FILES In the office 1 the s,i rret aryof State of the tate of Caldomia Z006 (Office Use Only) 4. If you need additional space, please include information on an 8%i X 11 page. New Filing R-1 Update 1-1 Legal name of Public Agency: Rosemead Financing Authority Nature'of Update: New Filing County: Los Angeles Official Mailing Address: 8838 East Valley Boulevard Rosemead California 1770 Name and Address of each member of the governing board: Chairman President or oth .r pr idina Officer (Indicate Title): Chairperson Name: Jay T. lmperial Address: 8838 E. Valley Blvd., Rosemead, CA 91770 Secretary or Irk (Indicate Title): secretary Name: Nina Castruita Address: 8838E Valley Blvd Rosemead P CA 917170 Members: Name: Gary A..Tavlor Name: Margaret Clark Name: John Tran Name: John H. Nunez Name: Date: February 23, 2006 Address: 8838 E. Valleg Blvd._, _Rosemead,. CA 9177 Address: 8838 E. Valley Blvd., Rosemead, CA 9171 Address: 8838 E. Valley Blvd., Rosemead, CA 9177 Address: 8838 E. Valley Blvd., Rosemead, CA 9177 Address: eA. Signature M. Kevin Hale, Esq., Attorney Typed Name and Title SEC/STATE NP/SF 405 (REV. 0312005) 6E/,l OF TH _ 8A State of California W J__.p 0 F Secretary of State 0911FORHI STATEMENT OF FACTS ROSTER OF PUBLIC AGENCIES FILING (Government Code Section 53051) Instructions: 1. Complete and mail to: Secretary of State, P.O. Box 942877, Sacramento, CA 94277-0001 (916) 653-3984 2. A street address must be given as the official mailing address or as the address of the presiding officer. 3. Complete addresses as required. IMMNAL FIED FEB 2 .S 2006 LOS ANGELES, COUNTY CLERIC (Office Use Only) 4. If you need additional space, please include information on an 8'/z X 11 page. New Filing Fx7 Update Legal name of Public Agency: Rosemead Financing Authority Nature of Update: New Filing County: Los Angeles Official Mailing Address: 8838 East Valley Boulevard Rosemead California 1770 Name and Address of each member of the governing board: Chairman Pr id nt or oth r Pr ling Officer (Indicate Title): Chairperson Name: Jay T. Imperial Address: 8838 E. Valley Blvd., Rosemead, CA 91770 Secr tare or Irk (Indicate Title): S or arv Name: Nina Castruita Address: 8838 E. Valley Blvd, Rog-emead, CA 91 Members: Name: Gary A. Taylor Name: Margaret Clark Name: Name: Name: John Tran Jobn H. Nunez Date: February 23, 2006 Address: 8838 E. Valley_ Blvd.. Rosemead, CA 9171 Address: 8838 E. Valley Blvd. , . Rosemead, CA 9177 Address:8838 E. Valley Blvd., Rosemead, CA 9177 Address:8838.E. Valley Blvd., Rosemead, CA 9177 Address: _ Signature M. Kevin Hale, Esq., Attorney Typed Name and Title SEC/STATE NP/SF 405 (REV. 03/2005) $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A INCUMBENCY AND SIGNATURE CERTIFICATE OF THE AUTHORITY The undersigned hereby state and certify: (a) that they are the duly elected or appointed, qualified and acting Chairperson and Secretary of the Rosemead Financing Authority (the "Authority") and as such, are familiar with the facts herein certified and are authorized to certify the same; (b) that the following are now, and have continuously been since February 14, 2006, the duly elected or appointed, qualified and acting members of the Board of Directors of the Authority: Board of Directors Jay T. Imperial, Chairperson Gary A. Taylor, Vice Chairperson Margaret Clark John Tran John H. Nunez (c) that the persons holding the following offices and positions duly appointed thereto and acting therein were on February 14, 2006, and continuing to hold such offices and positions to the date hereof, and the signatures set forth opposite the names of the following persons are the true and correct specimen signatures, or are the genuine signatures, of such persons, each of whom holds the office designated below: Name/Title Jay T. Imperial, Chairperson Karen Ogawa, Treasurer Nina Castruita, Secretary VW7W DOCSLA1:515415.2 41555-8 K35/K35 (d) that, for and on behalf of the Authority, the Treasurer and the Secretary have executed and attested to the Purchase Contract, dated February 23, 2006, by and among the Rosemead Community Development Commission, the Authority and Piper Jaffray & Co., as underwriter. IN WITNESS WHEREOF, we have hereunto set our hands this 9th day of March, 2006. yT~Imperial. hairperson Nina Castruita, Secretary DOCSLA1:515415.2 41555-8 K35/K35 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF THE AUTHORITY I, Jay T. Imperial, Chairperson of the Rosemead Financing Authority (the "Authority") am familiar with the facts herein certified and am authorized and qualified to hereby certify as follows: (a) that the Authority is a joint exercise of powers authority, duly organized and existing under the laws of the State of California, including Articles 1 through 4 (commencing with section 6500) of Chapter 5, Division 7, Title 1 of the California Government Code, and pursuant to a Joint Exercise of Powers Agreement, dated as of February 1, 2006, by and between the City of Rosemead and the Rosemead Community Development Commission (the "Commission"); (b) that Resolution No. 2006-01 of the Authority approving and authorizing the execution and delivery of the Purchase Agreement, dated February 23, 2006, by and among Piper Jaffray & Co., the Authority and the Commission (the "Authority Resolution"), was duly adopted at a meeting of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout; (c) that the Authority Resolution has not been modified, amended or supplemented from the form attached hereto and has not been repealed or rescinded and is in full force and effect; (d) that the representations, warranties and covenants of the Authority contained in the Purchase Agreement are true and correct in all material respects on and as of the date hereof as if made on the date hereof and the Authority has complied with all of the terms and conditions of the Purchase Agreement required to be complied with by the Authority at or prior to the date hereof; and (e) that there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental authority or body, pending or, to the best of the undersigned's knowledge after due inquiry, threatened against the Authority, challenging the creation, organization or existence of the Authority, or the validity of the Purchase Agreement or contesting the authority of the Authority to enter into or perform its obligations under the Purchase Agreement. DOCSLAI :515415.2 41555-8 K35/K35 IN WITNESS WHEREOF, the undersigned has executed this certificate this 9t' day of March, 2006. ROSEMEAD FINANCIN AUTHORITY 441 By: ~J • y T. Imperial, C airperson DOCSLA1:515415.2 41555-8 K35/K35 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A INCUMBENCY AND SIGNATURE CERTIFICATE OF THE COMMISSION The undersigned hereby state and certify: (a) that they are the duly elected or appointed, qualified and acting Chairperson and Secretary, respectively, of the Rosemead Community Development Commission, a public body, corporate and politic, duly organized and existing under and by virtue of the laws of the State of California (the "Commission'), and as such, are familiar with the facts herein certified and are authorized and qualified to certify the same; (b) that the following are now, and have continuously been since February 14, 2006, the duly elected or appointed, qualified and acting members of the Commission: Jay T. Imperial, Chairperson Gary A. Taylor, Vice Chairperson Margaret Clark John Tran John Nunez (c) that the persons holding the following offices and positions and duly appointed thereto and acting therein on February 14, 2006, and continue to hold such offices and positions to the date hereof, and the signatures set forth opposite the names and titles of the following persons are the true and correct specimens, or are the genuine signatures of such persons, each of whom holds the office designated below: Name/Title Signature Jay T. Imperial, Chairperson Donald J. Wagner, Assistant Executive Director Karen Ogawa, Treasurer Nina Castruita, Secretary DOCSLA1:515415.2 41555-8 K35/K35 (d) that for and on behalf of the Commission, the within-named Chairperson and Secretary have executed and attested to the following documents: (i) the First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as Trustee (the "Trustee"); (ii) the Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission, the Trustee and U.S. Bank National Association, as dissemination agent; (iii) the Tax Certificate, dated March 9, 2006, executed by the Commission; (iv) the Escrow Agreement, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as escrow bank; (v) the Official Statement, dated February 23, 2006, relating to the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A; and (vi) the Purchase Contract, dated February 23, 2006, by and among the Commission, the Rosemead Financing Authority and Piper Jaffray & Co., as underwriter; and (e) that the bonds designated the "Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A," dated March 9, 2006, have been executed by the manual or facsimile signatures of the Chairperson and the Secretary of the Commission. DOCSLA1:515415.2 41555-8 K35/K35 2 Dated: March 9, 2006 Jay T. Impenal, Chai erson of the Rosemead Community Development Commission hAV CaaTm~-O, Nina Castruita, Secretary of the Rosemead Community Development Commission DOCSLA1:515415.2 41555-8 K35/K35 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF THE COMMISSION The undersigned hereby states and certifies: (a) that the undersigned, Jay T. Imperial, is the duly appointed, qualified and acting Chairperson of the Rosemead Community Development Commission, a public body, corporate and politic, duly organized and existing under and by virtue of the laws of the State of California (the "Commission"), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that, by all necessary action, the Commission has duly authorized and approved the execution and delivery of the Official Statement, dated February 23, 2006 (the "Official Statement"), relating to $14,005,000 aggregate principal amount of Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"), and the execution and delivery of, and the performance by the Commission of the obligations on its part contained in, the following documents (collectively with the Official Statement, the "Commission Documents"): (i) the First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement"), by and between the Commission and U.S. Bank National Association, as trustee (the "Trustee"); (ii) the Tax Certificate, dated March 9, 2006, executed by the Commission; (iii) the Continuing Disclosure Agreement, dated as of March 1,, 2006, by and among the Commission, the Trustee and U.S. Bank National Association, as dissemination agent; (iv) the Purchase Contract, dated February 23, 2006, by and among the Commission, the Rosemead Financing Authority and Piper Jaffray & Co., as underwriter; (v) the Bonds; and (vi) the Escrow Agreement, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as escrow agent; (c) that the representations, warranties and covenants of the Commission contained in the Commission Documents are true and correct in all material respects as of the date hereof as if made on the date hereof and the Commission has complied with all of the terms and conditions DOCSLA1:515415.2 41555-8 K35/K35 of the Commission Documents required to be complied with by the Commission at or prior to the date hereof; (d) that the information in the Official Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, except therefrom those sections of the Official Statement describing The Depository Trust Company and its Book-Entry-Only System and Ambac Assurance Corporation, and its Insurance Policy and Surety Bond; (e) that no event affecting the Commission has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (f) that the Commission Documents and the Original Indenture are in full force and effect and none has been amended in any respect, except as approved in writing by the Underwriter; (g) that, except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or, to the best of the undersigned's knowledge after due inquiry, threatened against the Commission, challenging the creation, organization or existence of the Commission, or the validity of the Commission Documents or the Original Indenture or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Commission Documents or the Original Indenture or contesting the authority of the Commission to enter into or perform its obligations under any of the Commission Documents, or under which a determination adverse to the Commission would have a material adverse effect upon the financial condition or the revenues of the Commission, or which, in any manner, questions the right of the Commission to use the Pledged Tax Revenues (as defined in the First Supplement) for repayment of the Bonds or affects in any manner the right or ability of the Commission to collect or pledge the Pledged Tax Revenues to the payment of the principal of and interest on the Bonds; and (h) The State of California Department of Housing and Community Development (the "Department") completed its audit of the Rosemead Community Development Commission compliance with statutory housing and housing fund requirements on May 12, 2005. The Commission provided the Department with all relevant information related to the prepayment of a portion of the Commission's Low and Moderate Income Housing Fund obligation through fiscal year 2021-22 in the manner and the amounts set forth in Exhibit A to Commission Resolution 93-27, adopted on October 12, 1993. The final audit report of the Department accepted the Commission's prepayment methodology. DOCSLA1:515415.2 41555-8 K35/K35 2 Capitalized undefined terms used herein shall have the meanings ascribed thereto in the First Supplement. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT C MMISSION By: (/J ,QT. Imperial, C airperson DOCSLA1:515415.2 41555-8 K35/K35 3 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A WRITTEN REQUEST AND REQUISITION NO. 1 OF THE COMMISSION TO THE TRUSTEE To: U.S. BANK NATIONAL ASSOCIATION, as successor trustee (the "Trustee") under that certain Indenture, dated October 1, 1993 (the "Original Indenture"), by and between Rosemead Community Development Commission (formerly known as the Rosemead Redevelopment Agency) (the "Commission") and the Trustee, as supplemented by that certain First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement," together with the Original Indenture, the "Indenture"), by and between the Commission and the Trustee: (a) Pursuant to Section 3.01 of the Indenture, the Commission has caused its $14,005,000 aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds") to be executed, authenticated and issued under the First Supplement and to be delivered to you, as Trustee. The Bonds are dated March 9, 2006, and mature on the dates and in the principal amounts and bear interest at the rates as set forth in the First Supplement. (b) You are hereby authorized and directed to authenticate the Bonds, one bond for each maturity in the aggregate principal amount of such maturity as set forth in the First Supplement, by the manual signature of an authorized officer, to register the Bonds in said principal amounts in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), and on the date hereof, to deliver the Bonds to Piper Jaffray & Co., as the Underwriter of the Bonds (the "Underwriter"), through the facilities of DTC, upon payment to you by the Underwriter of the amount of $13,990,057.31, being the net purchase price of the Bonds, calculated as follows: Principal Amount of Series 2006A Bonds $14,005,000.00 Plus Net Original Issue Premium 316,830.40 Less Underwriter's Discount -84,030.00 Less Premium for the Policy and Fee for the Surety Bond - 247,743.09 Total Net Purchase Price $13,990,057.31 (c) You are hereby requested, pursuant to Section 3.02 of the First Supplement, to deposit or transfer for deposit the proceeds of the Bonds in the amount of $13,990,057.31 in the following accounts: DOCSLA1:515415.2 41555-8 K35/K35 (i) In the Series 2006A Expense Account in the Expense Fund, the amount of $218,550.00; (ii) Transfer to the Commission, from proceeds of the Series 2006A Bonds for deposit into the Redevelopment Fund, the amount of $5,454,094.94; and (iii) In the Escrow Fund, the amount of $8,317,412.37; (d) You are hereby requested to transfer the amount of $998,561.87 from the Reserve Account and the amount of $253,053.75 from the Debt Service Fund established under the Original Indenture, to the Escrow Fund established pursuant to the Escrow Agreement, dated as of March 1, 2006 and, as Escrow Agent under the Escrow Agreement, to cause the redemption and defeasance of that portion of the 1993 Bonds specified in the Escrow Agreement; (e) Pursuant to Section 10.01 of the Indenture, the Commission hereby represents that: (i) the Commission is currently in compliance with Section 6.15 of the Indenture; (ii) the Commission has irrevocably deposited with the Trustee such moneys, securities, documents and other things and issued such irrevocable instructions to the Trustee so that any remaining and continuing applicable requirements of the Internal Revenue Code of 1986, and any regulations promulgated thereunder (the "Code"), with respect to the Series 1993A Bonds, from compliance with which the Commission has not theretofore been relieved under the provisions of this Section 10.01 of the Indenture are ministerial and reportorial in nature; and (iii) the Commission has irrevocably authorized the Trustee and/or another agent satisfactory to the Trustee, and delegated to the Trustee or such agent the authority, to perform such remaining and continuing applicable requirements on the Commission's behalf, and such Trustee has undertaken to do so; (f) You are hereby requested to acknowledge receipt of a certified copy of the Financial Guaranty Insurance Policy No. 25000BE and the original Surety Bond No. SB2229BE from Ambac Assurance Corporation for safekeeping; and (g) You are hereby authorized to disburse from the 2006A Expense Account to the named individuals, firms and corporations for expenses incident to the issuance of the Bond, as described on Schedule A attached hereto the amounts indicated therein. The obligations in the stated amounts have been incurred by the Commission and each item thereof is a proper charge against the 2006A Expense Account. DOCSLA1:515415.2 41555-8 K35/K35 2 Capitalized terms not otherwise defined in this Written Request shall have the meanings ascribed thereto in the First Supplement. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By. ` Ja Imperial, C'Va-irperson DOCSLA1:515415.2 41555-8 K35/K35 SCHEDULE A REQUISITION NO. 1 DISBURSEMENTS FROM 2006A ISSUANCE EXPENSE ACCOUNT Payee Orrick, Herrington & Sutcliffe LLP Orrick, Herrington & Sutcliffe LLP Public Financial Management, Inc PFM Asset Management, LLC U.S. Bank National Association Dorsey & Whitney LLP Purpose Bond Counsel and disbursements Disclosure Counsel and disbursements Financial Advisor fees Investment Advisor fees Trustee and Escrow Agent fees and expenses Trustee's and Escrow Agent's legal counsel fees Not to Exceed Amount* $65,000.00 45,000.00 46,000.00 2,500.00 2,350.00 2,000.00 The Arbitrage Group, Inc. GRC Associates, Inc. Standard & Poor's Rating Services Elabra Verification Agent fees Fiscal Consultant fees Rating Agency Fee - Underlying Printing Fees TOTAL DUE 2,300.00 17,095.90 12,500.00 10,000.00 $204,745.90 *Invoices presented for payment may not be paid in excess of the amount set forth above. DOCSLA1:515415.2 41555-8 K35/K35 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO.1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF MAILING OF SUBORDINATION NOTICES The undersigned hereby certifies as follows: (a) that on December 12, 2005, on behalf of the Rosemead Community Development Commission (the "Commission"), he deposited with the United States Postal Service with certified mailing, letters notifying the following agencies: (i) Los Angeles Consolidated Fire Protection District; and (ii) Los Angeles County Public Library District (the "Pass-Through Agreement Agencies") of the intent of the Commission to subordinate payment to the Pass-Through Agreement Agencies payable under those certain pass-through agreements between the Commission and the Pass-Through Agreement Agencies to the payment of debt service on the above-captioned bonds; (b) that on December 12, 2005, on behalf of the Commission, he deposited with the United States Postal Service with certified mailing, letters notifying the following agencies: (i) El Monte City Elementary School District; (ii) Alhambra Unified School District; (iii) El Monte Union High School District; (iv) Los Angeles County; (v) Los Angeles County Office of Education; (vi) Upper San Gabriel Valley Municipal Water District; (vii) Los Angeles County Sanitation Districts; (viii) Los Angeles County Flood Control District; (ix) Rosemead School District; (x) Garvey School District; (xi) Los Angeles City Community College District; (xii) Pasadena Community College; (xiii) Metropolitan Water District of Southern California; (xiv) Montebello Unified School District; and (xv) Rio Hondo Community College District; (the "Statutory Pass-Through Agreement Agencies," and together with the Pass-Through Agreement Agencies, the "Taxing Agencies") of the intent of the Commission, pursuant to Section 33607.5(e) of the Health and Safety Code of the State of California, to subordinate payment of certain tax increment revenues to the Statutory Pass-Through Agreement Agencies to the payment of debt service on the above-captioned bonds; and DOCSLAI :515415.2 41555-8 K35/K35 (c) that he has received confirmation, as shown in the attached Exhibit A, that such letters were received by the Taxing Agencies. Dated: March 9, 2006 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Assist t a D' c tor of the DFead Id . Ros o unity y Development Commission DOCSLA1:515415.2 41555-8 K35/K35 2 EXHIBIT A SUBORDINATION LETTERS WITH CONFIRMATIONS DOCSLA1:515415.2 41555-8 K35/K35 MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILIVIEdIBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Dr. Jeanette Marro President Pasadena Community College 1570 E. Colorado Blvd. Pasadena, CA 91106 A-2 . 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account No. 812.04 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Dr. Mann:,- On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, ~u Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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Pr~otyou mar arise a daddress on the reverse / d went-= X ~so that w an ret rr R - efcard~o you. eP El Address Atfach hlS~arcl to F back of the mail piece, B. Re rued by ( Hinted Name)j.' ~ Dale o~,Dejiuery or onahe front rfspace=`pem1its: Article Addressedo: D. Is delivery address different from item 17 ❑ Yes If,YES, enter delivery address below: ❑ No O Dr. Jeanette ,:Mann - t President Pasadena Community Colle-e 1570- E. C-olor'ado Blvd. Pasadena,) CA ' 91106 3. Service Type 11 Certified Mail ❑ Express Mail ❑ Regi_,t-red ❑ Return Receipt for Merchandise ❑-lnsurad_fvtail-_ ❑ C.O.D. 4.' Restncted Delivep tZxfra.FeeJ ' ❑ l rs 2. Article Number - - - - _ tTranferfrom servic05"-4 7002 086D 0004 6420 5653 PS Form 3811, Au ust 2D01 9 Domestic Return Receipt ~ - 70~ ~ o is t` _ _ ~ gt MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR. COLINCILMEMBERS: MARGARETCLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Chancellor Darroch Young Los Angeles City Community College District 770 Wilshire Blvd. Los Angeles, Ca 90017 Re: Your Agency's Property Tax Account Nos. 805.04, 805.20 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Chancellor Young: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that.you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP E O w O O O O V• O V• m N m m N m r m N V• M O N CO I N m O ch m O V• (O O N V• r O M CO m Mo n(o Co (OrrmmwwmmmC ooCD C= C r r r r •R a) ~ E > d m .O^.. 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O L > U > m N V y y y m y rn d R .O cu m w T N CD 7 ^ a) C d N p. r Z' C m a) L L M <a -p N N w L N Ca O R > N G C a) m n > ck) O N m 7> N •C L O d N - O O N 7 fn L` a) Q) R C p a ) U ~ -_s ~ N d y m y 7 L N CO u N > d N N ma L6 m m a7 C C 7 'O C Q 2 r O a m 3 4 m U O C 7 a) p E> o O U N a) a C y y O Cn y CO O a) m N N N a y Lm. d U CD 'C N O R N X fa m E a) U d C u m CO M L 7 C r N O m m m a) A y U Z L N m N N R „ d o Q p a N au) m _ m N L m m > 7 d O E N G N EL 7 y a O O C iO O a) rn C > ca p a L• a) C = m m Q J y O a EH OT V y U M m y a) E N a) a) LL a a) a H p a)0 aN a w C m Of N cl) CD O 7 y N N C O d y C R X Q O J a N d N N d w (D 0 C rt a) > y O N L d r a) ..T . U m O y a) E O N O . E m L C G 0 C L1, N ' N U 3 oN L2- ~ " Co C 3 a E Y y ° 0 m 2 i A m a o CL N C l4 7 O' C U m O s Q 7 d T O d C c E V N 7 a y a) m C O R an d C V y O 7 N N C m y a) ~ y y m 'a M y 6) C W N 0 O O N 7 _ a) a O T N a) V O 2 x m a) N U N C N > y d 7 a) :a y m a N (7I aI C > a) m y L E m F- O co C > N •p w C- N N Q a a) to m = C ' y m N m Ja 0) a L r C E O) w a C O (D 7 C m E% C R m E p N . O CO co a) co a) =3 J cm a) (U E O r M O 2 m 0 J a) L a) ~ F- a z 2 z F- d Z W F- $ d LL 00 , 04w N ~'mO 01 n O DAgent so Late cars returhegcar_d fo y©u. N Attachthis1-cardFto the~tiack ofi t}ie n1ailPiece e _ ed b (nP dted` ame) c D e f elroery r= _ - or ors#hefront ifspace its. _ - it _ - 1. Article AAddrCajdd to D Is ,elverya d drffec`nt°i om e m 1 r ❑ Yes If YES ent® deli cwcddress belo _ w: ❑ No Chancellor va. roch Young. - L. Los. Angeles . City GoTnipil, itv --College District 770 Wilshire Blvd. - LOS Angeles, CA 93317 3. Service Type ❑"Certified Mad - Express Mai l ❑ Registered ❑ Return Receipt for Merchandise Insured Mail C.O.D. 4. Restricted Delivery? (Extra Fee) ❑ Yes 2. Article Number - - - - - (Transfer frorrmsenvicelabei)i 7002 0860 0004 6420 5639 PS Form 381 1 , August 2001 Amestlc Retum~Receipt uz a_ ,y _M-1-540 i MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAM CERTIFIED MAIL December 12, 2005 N%ftftoll 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Mr. Jeff Seymore Superintendent El Monte City Elementary School District 3540 N. Lexington Avenue El Monte, CA 91731 Re: Your Agency's Property Tax Account Nos. 473.01, 473.06, 473.07, 473.20 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Seymore: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, 6a 6OW-t- Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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Z a y a) C1 CL w Q O O W a y y « C d C) y C > y pI ` d c y O E a) CO O V M r - to O O (O I` CD N 0 W V I` N aJ > r tO CO W N I- V M N V I- N W I- (M CO CO CO a) C) p o m O O a1 Op (C O y N C) m a N -p y a ' a O LO W N CA I- V N O W( _V M O m as W I: r- C1 , N V CO m CO ti W O m m N CO V' V' CO (D I~ W a C p Q y > EA d U U CO Q) E y w a s O C) m X M M M M M M M M 0 y v V. V V V V V. V V V 0 a) N y 9) O y O C m 0 y C1 d N (CS X a 0 t1 m (t( Q J a rn d r r CL 0 C fU > O. N Z 2 > m G Cf C) W 04 1. C Y L m❑ N Lp r R V y O M CO 0 W CO N M O) W W W M r N 0 C) B Ca . N 0 O 2 O ~ Ca E.- G C LL CD - M c4 a) 3 C L c W W O m M N CO CO V N W N r CO V 0) M v W~ O M CA (CV_ V CD CA V: C~ CA r 't O I~ 7 ~ p C m a •7 3 N y r 'EO w 0 Cl) y > a O m m O N~ to N m I-- to M 0 W r- Ln v v m M N r- h CO m rn O N M M V• LO W I- W 0 O C cL 'T C X a 0 6 0 0 0 0 j a O O O E N - 0 M Cl) Cl) M M V V V V V V v v v V• V (O LO O V ~ C w m C O a 0 = T O d C U p C) p 0 U N m m o> R O Q ~ '(0 E E m aI m y~ 7 rn N 'C o p t ° y 'C y d) a fO a y . N c a> > - o a i -:3 CD - m O JD cn CM a~ > m E m F- m 0 h W O O r N rM V to (D f~ W O) O N M O O O O r r r r r r r . r N N N N Of > y 2-1 O ' 0)-a Ca N L C a i Q m y a C C O N N C C C) L X C .CN E p ; . Cc d to m h CO m O r N m V u) (D I of m 0 CV N N ap C U X N Ca :3 _ y 7 Cu Q CA W J E } . 0 0 0 0 0 0 0 0 c, 0 0 0 0 0 0 0 0 O N N N N N N N N N N N N N N N N N N U ~ O X O (L M U t6 O .0.. = N C: y a) N O O I L J a Z > w C7 N L w (U L p V O N y U - - . f U) _ LL .r... (f} v w N -O .Vi .GE (D C m d O A Sit-WO A-1 /L%OY/~ /Y ❑ went SO Zf13i 1Ne GBiURILI]e C8FCl0<5)1OU. 0 Mach t~aiS ea o fhe b c o the mallpiece, E-~ - ` CDat ~ ceiv d b~ (Pnn# Name) of ~ ivy ' 7 or on the front i# space permits. r- - - . D Is delivery adds dffi e Yfrom drm 1'? 'UMA i 1. Article Addressed to. If YES, enter delivery address belov : Mr. Jeff -.Seyrilore Superintendent El_Monte City Elementary Schoo District 354 N. Lexington Avenue 3. Service Type ❑ Certified Mail Express Mail El Monte, CA - 91731 ❑ Registered Return Receipt for Merchandise ❑ Insured Mail r❑ C.O.D. 4.~Restncted Delivery? (Extra Fer! ❑ 2-Article Number ~(rransferfromsenlice.lanel). 7002 0860 0004 6420 5530 PS Form 381 1 , Auqust 2001 D mastic Return Receipt -T rtr : _-o2-m rsw MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUIJEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Vo.~mead 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Ms. Darline P. Robles Superintendent, County Board of Education Los Angeles County Office of Education 9300 E. Imperial Highway Downey, CA 90242 Re: Your Agency's Property Tax Account Nos. 400.15, 400.21, 400.00, 400.01 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Ms. Robles: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of -the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it fords, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O V Cm V CO N O M N Ld r M N V (m O N O m O M O O O .O CL) N V M W N O O M CO V O C tb In (O O O r N Ld w 00 ap m m (m O O O Cm a) j d - y y R L C C o < r • m y 3 3 F E > N y G (y d ~ CD d N p F CV CD N a d O CO N F P F CR i N N v M LP) P N P:; CO 20 O N r 2 M t2 LO 2 O Cm O m M LO CO O M CD Cm N N 0 mcc m 0 m v~ L aN v . 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E L r C V r (fl r% O M (m O V V CO X V O I` m N (m N LO M m (o ti m 'C• 'Lt M M N C O O- G C = m CT --6 Q - d r a w (m m O N M M V LO (D ~ O (m O p C X 7 a) O d T _ 3 co M M CM M V V V V V V V V V V V LO LO d R G O ~ E R N d G R co > R O n O E R y D W G O O H y 7 N o co mm m L V y V > a y = y CU CO f` co (m O r N M V L11 CD W (m O N M - CD in a? 10 ' 01 O L O C L_ O O O O r r r r r r r r c N N N N as 0 N D D D ' L R U x _ CD ❑ _ d y O Q L C a O r N_ M V LO O a (m O I'- C d 0 0 0 C) 0 N N N } d O O X R R •O y O U R O y 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C) 0 0 N N N N N N N N N N N N N N N N N N C.) 7 r C f- N a 7 N l d = U O J LL 6 w 04 'dO a R CL C CD L U d 7 Z C d d y a) d O d d ai d U_ CO ~ L 3 m O w cu L CD O y 7 y y C O R > G n d L < C ~ N y rn m CD U) CL O O d C ~ O N y IE a d O R C n CD -0 > ~ d '6 y G (u 7 cm d C CD N O (D Q_ Z of v CO > U LU C <O O d e G d O O) N O O c w Lm m C~ R N _ DD R p y o C O d O R N N 'n M O a) d0 O N C G .0C •O R E d U O L R O d a) a > CD E UL m cu d cm U co C C r d 'C m CT L R y xx m y R c R CD y d L R O d t > ~ y R y L 0 R 0 m n C d O a) a G d a a E EL - R Y d n U_C N ad C O U) d > R CO d L O O C t y O O L !O L ~ O [m > = O O o o w E C LE y y tyi) y cc R O R n aN n R N O C N m f"OO CD N U) ` • O R L 'p d (n O` N R O Y a) m C y R y Co R L (D n .p G y d O C a) > n O E _ O d d a y G O 0 O y y R R' W X C Q O d (D y y cu U d 3 O CD O N .L.. Ir- a) M y > p O d 7 N E O C R y p) O R V w y N E W. i- rn = L C E x .G E p m co E CL) L a) F-- o_ o O o m n r IL your me cl=e On the reverse so that we cam eWr' jhe=card'to you: - y Addressee a ■ Attach this crd to the back of the mailpiece B Received by (Pnnted PJarne) O ateof=Delive , or on the°front rf sp a errrai s 1 e d ~Ait A dre sed of B. Is delivery address drfferent from item 1? OY"- IfYES, 'enter delivery address below : DNO Pls. Darline P. Robles Superintendent, County'Boar'd of Education Los Angeles County Office of 3 Education . Service Type 930 0 E. Impel-i31 13pry. ❑ Certified Mail ❑ Expr-27~, Mail ❑ Registered Return R i Downey, CA 90242 ece p ❑'InsS_red mail ❑ C.O.D:' t for Merchandise Restncfed Delivery? ([a FeeJ~`- ❑ Yes 2 Article~Jumber - ~ ~ - a _ rrerm eceat~ 7002 0862 2204 6420 5561 PS'Fora i$Ugu_ t 2001 Dom vtic Return: eceipt ay MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 A_X ~em ead 8838 E. VALLEY BOULEVARD 6 P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Mr. Timothy Jochem General Manager Upper San Gabriel Valley Municipal Water District 11310 E. Valley Blvd. El Monte, CA 91731 Re: Your Agency's Property Tax Account No. 368.05 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Jochem: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. I pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it fords, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, kicze Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP - O 7 O v 0 N m m N m r- M N v CA N CD O N 0 (3) M CO O V lD O) N `C n O M (O (A C m LOmmm hr`°wwwm°rnOOOCA .n O d E .m.. c 7 N d m t co r rr d m to ~ M 3 ~ E E m N CN 4) 0) U 2 Q' N p L F- E O N C- m V ni Ln I~ Q) N R 1~ r. 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U y m t w W~ O d C +y. c x x Q GJ L M> y Z a> a ) U N o O L E C D fU `O . a y C d L m C d a W O d O N LO Lb O 'V r (n m tb M T '7 O 1~ M > O` d O" p y ' to d C E d a C U + a) C L ;a o CD . . O= m O N v m 0 O 0 O N M LO M O M v aD co W ao co co `co- m 0) 03 0) 0) Q1 O O O E C1 E O CD U 0 o E U U d ~ 2 N E~ C Lm ' it N E . o c . ~ ~ c t5 a 0 LL N" C> y D CV Ea) D C m C y _ a) C N (O U) Z O O d m J m m Q C) Q 'O U 0 L C O m L W N CD 2O mwN . + m - 2 m > r' ` ( ^D a ° ° M Ln C 7 N C C d M CD CD L Q J v h v n N. v 1 r- I ww co v co co v m m m 0) c N .0 U C OOj t n N 0? y W Q Z (O d m m y d w r> rn 3 G C L N L 7 m m > N ~f O p C= M L .7 O 7 m L N a) m C U y = d E O W Q L) N O Q a O 7 0 N . C E a= m r N r H m V d 0 J U d m > N N n Q Z O V' C' W 'R O (O M (O N O aD I~ CO Ln d CO 1- O O M to 0 O 0) M LO 1` m O N fA ' 'D (`u a) d y y CD T' O' d ~ C L m O. N a C m N L ` v .0....LO.. v v (v (.Oi fD fD .n... CV L t/L d L an d v y > L O O y > co j C> m fA ca 0 ai O U) :D (,D) d O 2 Q LO 0 C. x C d a C O U o a) m O y O N C) N G y m m N ((1 ° (a > N L (U N CO O LO [.O f• r W M CO 0 t• n LO X O O 0 M r LO v N O M M° t` m Lo W . + C a) C 7 7 C Q 0 r O a) 0) CD d U O 0 h r O CA O O r N M r} 0 (c (q r CO CA O F"' d w r O C p a) _ cc a) h ` d m fn > 'Q v V' m LD LO LO in Lo LO L() LO LO LO Ln (D n N r E > U O U -p r "O O O « y C p CD d CL U d a) m w O m > "0- In om m m Q d 0 E C O N d (D U E CD d m L O L1 -O m > O y m C X m m+ L y y ID O M O N O M N M CA t~ M CD M M M CA h r d to O O v m m O O LD 1- (O N LO (fl `0- n N Z 'O a) y d a) C a Q = O C 'O Ln C N CO a) a) y a) m N [3) 7 E C O N O' O E O d> e- LO 0 M N n V M N V~ N O h cr M CO 0 L m m O O J y j y m N a) C ' -O O N w r- r- 72 m N C N m O v O ti 0 -O C: Q N M A V co N y d L.L C '6 w y O m C V L M 0 LO M ) - N M Nr v L O (0 C~ co X C M M M M M M M M C ~f 'C 'ct '~t V V p C ( O O) O R C X a O R (y m H m a p J 'p Lo Q m y Q r y _ C C d > d d y > m 4) .O N N LNO d N N C-« m N L r N m O V CD 3 _ _ co Lo CD oo G co CD O CD Cori N 0 0 W v N 000 O N co v m c '6 y O E° 2 to E L C -O c m E LL y CA in U O (D c~ ac) h . r > V (O 1` O M CA (D V• `7 (D CP CY O CA O) r V O 1` y O C vs m .7 qI T. C r 7 > N C a O N MX d 0 t0 N (A r 0 M O b n 0 4 V M M N n N. O m m n r N M co --t LO co C- CO M O C CL j- C C C X 7 G C U (D O d a 7 cL O T O C w ` ° E -p 7 N I co M M M M' v v v v v v v v Ln LO p V F= m I C U O = y .10. > y m O d E W E y m d ` p M C y :3 y a) O d 7 O C m C m m a) " a O m F_ co a) C) O d X m m U m C O" _ 14 T m d y d U- = C r c? y d .O N a) N C> d > m .E N F- m O r w (A ' ( m t ( C co C CL) 0) •C O r N M V LO CD DD m O N M O O O O r r r r r r r r r N N N N iii ~ ` 'C U e C L C O N C m„ m E O d 0 (D I'- w m O r N C7 tt Ll'7 O h CD CA O N 2 m 0 X a) co 2 N - Q J m" + E > 0 0 0 O N O U C N ° . O C p L O d . L L 0 0 0 0 0 0 0 O O O O O O N N N N N N N N N N N N N N N N NN O F- a) d M ` 2 J F- d Z F- O (n O w LL .rr H9 - .Ni w N y o - - O - - - C - O O O - m a- v yompiete itemjj and113 Also eom ie3e P a 8_ig a _ -dem 4if~Restneted R.;-- ry as dd§ired:. ~I Agent ' ~ Pnntryo a,dressm" &erse X drESSe~ so ihatte can3retum he,ca d to ou. Y ■ Attach this Card#o tF~e biCk of the mailpiece, B. eceived by Printed Name, G Dat of D~Iwe or on the~f%t~f~pa cE p~r~mtts. L ti f.Z ~~CJ~_ 3 ~ rticle Addressed to_ D. Is deliv address different from item 17 ❑ Yes - If YES, enter delivery address below: ❑ No ir. Timothy Jochem General Manager # , L Upper San- Gabriel U'Z-Illey . Municipal Water District 11310 E. Valley Blvd. s. Service Type El Monte CA 91731 ❑ Certified Mail ❑ Express Mail ❑ Registered-, ❑ Return ReceiptfnrMerchandise ❑ Ineured-Mail' ❑ C:O.D. Fte tricted Delivery, (Extra Feej ❑ Yes 2. Article Number Transfzrfrom service laeg, 7002 0860 0004 6420 5578 PS Form 3811, Xugu'- st 2001 Domestic Betuin Recd MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Mr. David E. Janssen Chief Administrative Officer Los Angeles County 713 Hall of Administration 500 West Temple Street Los Angeles, CA 90012 Posemead 8838 E. VALLEY BOULEVARD ~ P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account Nos. 001.05, 001.20, 001.53 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Janssen: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, 6L41<_ Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP N Cc m m N V' O N O M N O~ M N m O ni N m O mom O M m M m O O m m o0om T L E In `6 c m aouO omml~r•oo w 00wmmm d o r- 3 F E i 7 r r r r R C O co m y y E v U N y N N (7 q? d ~ O a L ~ a) E O N N c R O N n ' C o O V• O C0 N Q) r (ii (+7 N N v M (ii 1~ T N V' I~ a) CO ) a) O m O r N M (O (D m O m (O cD O co CO O N CO r L U r O y t N 3 m p y m L T O O cc N m d o ~ m O m q fO > m d > y N U N m y f. 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O 7 w m d O a U O O y C ~ m y Q. E N E (a pMj C N O- a) 3 O "a ca O y a) O F y a) U O Xm m acL) ) _ U a) m 7 =f 2) !E rL LL m if1 . g O C > m y O C N a (a y E m F- m - L C O r N M V' (C7 O n M m N N N N O O 0 0 N% m m N t ~"C7" C O w O O m A O N n 0 n " U w N d ~ •N 7 y Q J m m :p w. T E a ( to ) CO N C6 O) O r N M I 0 0 0 O o 0 0 0 0 N N N 0 0O O - O 0 0 0 0 0 0 m ` Cb O X ti C N r O O 7 V m O` N y O N C O L O > CD O L O O ~ O O O ' N N N N N N N N N N N N N N NN N N p F- a. 7 N = y U J I- a. Z H 3 n 0 (n LL .r.. fH .N.. N - a - - - - - 0 0 0 - 6 Q Zr SENDER- COMPLETE ~ Complete ttems_J d93 A-19 omplete A. siq ure ~tem4t~f=Restricted Delivry~is9esired ~i P ❑ g entz X r our~nnaame.and°a_a rsss-onthreyers_e - so that~We call fetu 11 O: you. c d n 7 Att3Pht' --carwto the back of the mail piece B. Re eive by (Pri te me) C D f , or on the front if Spacee mtts_: _ 1. Article Addressed to: D. Is delivery add different from tem 1? Vey c . ` a If YES, enter wery address bolo ❑~No' Mr. David E. Janssen. =Chief Administration 'Officer Los Angeles County 713 Hall of Administration 500 W. Temple Street 3. Service Type LOS Angel'eS CA 90012 ❑ Certified Mail 0 Express Mail ❑-Registered ❑ Return Rec^ pt for Merchandise ❑ Insured Mail ❑ C.O.D. 4 Restricted Delivery? (Extra Fee} ❑ Yes Aiticle Number Transier from service tabep 7022 2 860 2004 6420 5554 .=P PS Form_3817`, August '2001 'Domes~icReturn Receipt _ - 1 o 2595-02-rt-1 5so MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 P0 fnead 8838 E. VALLEY BOULEVARD d P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Los Angeles County Sanitation Districts 1955 Workman Mill Road P.O. Box 4998 Whittier, CA 90607-4998 Re: Your Agency's Property Tax Account No. 066.50 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Sir or Madam: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5; a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993. Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any. additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, sdu<G~.~~T. Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O v m v CO N W M N g~ M N v m m M W CO m N CO m M O O v co m N v 0) - d Cn . :Q . C C C d (D Lo CO CO co I- r- O O N co m m m O O O m = r r r r y d y R L 3 t- C c d T cc ' c E ` d y U R d M d N U d c d L ~ d E O 0 N O ^ - ~6 E c aN d c - L C N N v O CO N 0) I M tf) I~ N N v I~ m^ a) pp p d o . 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N > C R N o 0 C o . - N L O m •N N ca •C 0 rn O O W Cn M 0 N O Q co d X C = m U 0 C C = r$ 0 _ C) O O N C1 ca N 0 0 L CV L() o N > `I d N m D d X v (D a0 LO oD ti L, CD M CO CO v v L` I- LO a v m o v m LO V- N O CD co co ~ N •0 N _ Lf) to O C :d N C C O> •p C Q .2 r O C m O R U) O m 'Cd V LO fD CO n co m 0 L a) N. O F- CC m p O r N Cl N~ v V' v v v CO Ln CO CO CO m CO LL) LD w U') L17 CO r C) 0 d E> U U 0 r O a) ) N N E N y d Co N Co (D cn Q y O i a > m X CD E a) _ n~ c w (/1 C Za M U .O CD R to ` "ffi R d O d Z ' N R d a Q O O y '0 N 4% C d > rn m ` C M O N CO CO N m m P- OD CD M M LX) m N r d co O O v co h LO O m CO r co N LO O v ti N 0 CI? a co a 'O O 0 R d C y d R o O d N ~p W C d > r LO CO ccN Ll V M N v r C'm L` r m M rd t0 ' .m co C d c:) J T 7 0 U 2 N y d E -p O d O N C O N L!') N m v N 0 M O y m O m w O n co 0 O ¢ m E L M Q) R • (D LL O y R R N v LO LO CO ~ m m m 0 N M v v LO (D ti 7 d M M M M M M M M v v v st v v v C' v 'R O a) L Ln 0 m O U M cn C R O a. C C R C X Q 0 y R R a d G J 'O a C O w r a CD d •a N > O L a r d N m m rn N d LO a C .L + d M N v V 3 d d M Lo m [D m N M m m O O M r N 0 0 m CO O M M N 0 O V' N M N r w v m L C0 cu O = E N R C d L '0 C m C LL y m E r m (n 9 N N cD A N > ^ m CO r Cfl m V O Cm m r O R v (fl r O Cl O CO U C ff3 •j d U •0 C 0 O d X O n m N m~ LO CO M OD r.- U') v V• M CO N R d I- I-- O m m 0 N M M v LO L'0 h W m 0 c p a C C X 3 0" C O G Q 7 a O C O o f U N O M M M M M v v v v v v v v v V' LD LO U m O F N E d R a) ? N L CD C R y m ..R+ > R a cn E La 00) C N d O d 7 0 O cu d ~ y d U O E w R CD CD C D d d -0 U > m L a LL O > ID d C m c v LO t` N m 0 N co CD t` co m O r N M O N N N N c N CD d t` ~6 U •C m 0 r d C m Ln '0 > C O d j E E X C E R O O O O r r r r r r r r r R V D A O ' U CD X d d _ y O Q 2 p J C d O ` ' E ` [ C L[) CD W CA O CV A v Ll ) (D C O O O o 0 N N N a) R co O X ~6 O m 0 U R 0 - y d C d 0 > U D w T d 'C d O O O O O O O O O O 0 0 CD 0 0 0 C, 0 N N N N N N N N N N N N N N N N N N C R H - (D a 7 co ` a) 2 O L J F- [l Z L (Z' L I- d0_ O O U N O O O C7 LL U7 w N M... -0 C m 6 a ■ [Cr Att#his carte to the backof piece, v t o mall e B. R' V b r(pted h'a~ 11 C Daia oiD elivery- - C -0r onhe fr f rt spac MEN 7 L 1 ,a' - r_ 1. =11-16 dressed to D I_ =delivery address 7 Brent fro y~gern 11, ❑es` A o If YES~ ter delery addre~ =b°CJ iJ Los Angeles County Sanitation Dist YiCtS 1955 Workman Miii Road P.O._Box 4998 Whittier, 'CA 90607-4998 3. Service Type ❑ Certified Mail ❑ Express ME ii ❑ Reg~stered° ❑ Ft Wr Receipt for Merch-ndise ❑ Insured Mail ❑--COD t Resticted Delhi ery? (Exta Fee) _ ❑ Y s e " Article Number - - - =Tansferfomseniceiaben' 7002 0860 0004 6420 5585 MAYOR: JAY T. IMPERIAL MAYOR PRO TEtd: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 A12_ Clt sesad 8838 E. VALLEY BOULEVARD > P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Los Angeles County Flood Control District 900 Fremont Avenue Alhambra, CA 91803 Re: Your Agency's Property Tax Account Nos. 030.10, 030.70, 030.60, 030.61 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Sir or Madam: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it fmds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax. allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, r Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP M CO O N O M N O F, M N CA y O -It m O V• O M N M O d• CO M N V' f~ O M O M 'D d w G) O O CO co (D h co CO O N M M M O O O M a (D N L N o r m y m C = 3 L- E > . y m ' C N ~ a) 0 aUi Lw Eo m L f- T N C`7 tf) I~ W N V' I~ O Ei N m r m M^ (D c6 E D . O r N M M (D 1~ M O M M CO O M (D M N v v) v (O U M a CD O C r O ~ y y Z:. Z---.~--v ~.N.~v~~~~ .C Cn r C N O N 7 A LA m t O X y to ;C d O o im ;a a p d _ 0 F T d M L = d _ co m M > O a) N y m 04 O y . 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C c :m U O y rA d e+f O N O CO N M M r O CO M M O M I- r - z 'o U) U N n n Q = O y a y 2) N Cy d E rn m co m = n C d d O E + ' d CO O O V co L• LD O M Ln r, (D N to co v r` N d> r M O O N r V' M N V' n N M N Cl M O O d 76 N [1 CD) m •p O d O J O m O d .C) C d d m IS O O ~ d d ~p y C O N u•) N M V' N O CO CO V M O M CO CO t` n O • 'O C p Q y T m U 'n U M d O Q) E N d LL d O -pC-Om Q' N V LO tO CD ti O M M O N M V' V• LO CD r- co d M M M M M M M M V' V' 7 V' V' V' V' V' V' V• +J N CD O C 0 O C - rn m (D d C O H m CL J a H d •(D D y r p_ O y > C O O_ X CL d Q d d d d C`0 0 CD E N 3 d M O M O M N M M CO CO CD M r N 0 0 CD CD O M M N to CD V- N 00 N r O tt M C - yy d r~ E O d d 0 N = C a E •C C M LL CD M N E > M u) O d = N E C d m r O~ O M M CC V' V' O M 'I O M M r V' O n d o C- O N M r Lo M M CO r L 6 V' V' M M N = C O n • O-- U C fA C '5 d ' C U , -p d Q j `Q O Lp d Cn > 10 c:) O d , _ m h C, w M M O N M M d' LO CD r- O M CD M M M M co v V v • ' . „ C X m= O d O d O E C = N E .O R v v v V v v v N. to V U y d m O F O E d m d _ C U y O C = D d C m y m p O y n (p E m A N C 1 4 N d = p O cD D O co d H y d V O d x M d 2 CD - U d C Q) m _ d C? n V" (O C U' N N C n N C > d m E m I- M U > N d Z' Cn h Q d -O N _ C CD h CO M O r N M V' CO CD n O M O r N M R O O O O r r r r r r r r r N N N N Of V N y - N E :6 U M a m C N L M h 'O C C O d (U C N X C m E O ~ d C[] CL) 1~ OD (P O CV Ch to CD I~ Co 6 O N O o o O r m co X (D co O N = w Q J M p a) ` E > r o000OOOOOO00oooN(C>oo N N N N N N N N N N N N N N N N N N v j c° m~ H ° m LL o y 2 o r d o J H d Z m 2' Lr o = N O H CL U) LL - (9 .N.. w N E a v E CD i E, 6) 0 O 2 Q .2 ~ ~ompieie~rterns~~l~and,3 Also complete rtem 4=rrffest d Delve desired. ~ ~ _ s 0^ Agent - ; ■ Pnnt your --and7- Tess on the reverse t ❑ Addressee so thawecan remit the card AC) you. . A y B Received- (nnNaarneWSO ) e f belie-ery Attach-#his-card tWthe back o he mailpiece, o~_on the fra taf spaceits _ ~ 5 tTticle Andre sed to:. D. Is delivery address ereiff offrom ftem 1 i ~'sa... -Yew . If YES, enter deliverySddrjess below: N Los Angeles County Flood contro-1 District 900 Fremont 'Avenue Alhambra, CA 91803 3. Service Type ❑ Certified Mail ❑ Express Mail ❑ RegrsC~red _ ❑ Return Receipt f or Merchandise ❑ Insured Mailer ❑ c O.D.- -yam Restricted Delrveiy? (Extra Feel -4. ❑,yes 2. Article Number - "J T tTransf ro 7002 -IN 2 862 2004 6422 5592 Form 38~ „August 2001 Dome_st c Retain Receipt _ 1025-5-0-4.1-1 Cy MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Posea-te ad 8838 E. VALLEY BOULEVARD a P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Mr. Gilbert Ivy Metropolitan Water District of Southern California P.O. Box 54153 Los Angeles, CA 90054 Re: Your Agency's Property Tax Account No. 315.05 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Ivy: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O st m V' O N m m N O r- M N '7 m CA CA m N :a CO m N CD m M N O v O m N v r-O M O m E aD U) co .f0 CO r f, o 0 w w m m m 0 0 0 m ~ 3 N N L . - =o rrr 3F- y 10 m M E T E> v C) d 0 O R C) rn C N 0 C j (D > U O O .O L F E O N C R v (h 1l) iZ, N V iZ, 'ct O CO N a) I~ ch N N CC6 O C) N 9-74 0 d) O r N M 117 (.D m O M 1D O O M (O (D N 1n ~ r 2 CL O ZT r W 0 . ..'v L rn R c • C) R N O N a m L 2 X L CU O o m ~a CL o cu o° H> o m yN C) m mm L > Q .a ` y m R CN N 0 (A cn m (O O W 1n CO N CO CO M V• 1- d' CO (n CO N N (0 O 1n O V' m g m v m 0 m O N a0 117 N C) C .C C 1n c N C y„ 7 d a y m ti n CO CO CO m m O O r Cl N M M 't E C) > O 3 O O O f0 0 C a r r r r r r r r r r r r O T d ca U N y .0 r 3 d N 0 G a 7 > O E O •O C) o R E U) m c Q fA H G C N cc C7 cc L 0 E M (C 1i] (O CD CO (n C+] N V' N M N fh M (h O a+' O N CZ :s R n 2 o C) O M m a U Q mommcOmmmmmomom~r~ C) d d M m Cl C7 Il Cl (h M P'1 C7 C') M M M Q7 C H y R m 'a R O O Z, Z,Z,.~Z c n ° Cc _ N c CD L CD > cu . 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U •O w ( p 3 Iq m O > E N 0) d U C) N :S N o 0 ca N N O_ N N N C N R j Q f ( C) •C N N N X E > N N U d R R L O. . > O O m C X O) rp C O R a L U w R N L CO v m R > C7 O N O 1n N m m r CO (D M CO CO m ti h ' Z 'O N N Q O Q 3 0 O N ui O C C) - C) w R N C O) O C C N d O E R C) (O O O I' M r ln O m 10 n co N LO (O r- N N> r 10 O a0 N~ "t M N V' r Cl m r n m n R O N C) O. [T R 0 •O O a) O O tU R N N C O d O 1(5 16 N m r-- v N O m m v m O m CO o r- r- a O Q T V N U C1 E to IL w y 'D R (1' R C) N 7 to M10 m h O m m 0 V N M V 'V' m CO ~ (O a M M M O y M M M M C 'V• V' `1i' O n Ef} L N N m C 7 y p rn N X¢ O fl 0 7 N y y • y C • > m N C) 1N O. y r y O ~ M r R C3 V N 3 O M m m m m N M m m CO O M r N a C) O O • C R N y O ' E O" N O co L C O a C m C u" a) OS w E N [p 0 (O 3 N w C) . 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LL N 2 U1 w N L N > N R E m m U > N O «7 C y m • N Q a y = L C (D n a0 m Or N M V 117 (D W m O N M O O O O r r r r r r r r r N N N N Ur C) y tU fa R 'C U O = m C m y 'O w C O C) C O E X .C E O R y fD r (7) O N Ch V 111 CD n op W O N O R 0 X O 3 3- Q J a C > > E CU O O O O N N N } 0 0 0 a 0 0 0 a O 0 C) 0 C) 0 0 0 0 0 C) O X C R O` C) O j d O L O O C) L L N N N N N N (N N N N N N N N N N N N ` 3 O F- (L M = J F- LL Z Q~ H S O 0 U) _ V 00 LL 3 N CD N y U 2 'O CO v CO O O O a ~ u mp~etesrtes 7 2 and 3 AIsO 66mplete W"', ert~ 4 rf Restncte Del very is desired 7- nAtyou name=and a - d ess o tt r ve A. Sicnature - Age X - - e rse hatnfe ❑ A e s canetum the card#o you Aach this tto tt3e back of the mailpiece , ee n B d N ? ' e of Relive , nr~n he front rf space permits ` - ~ 7 Article Nddressedo a _ _ D. Is delivery address d anent frb If YES, enter delivery address below' No M °Gilbert ivy Metropolitan Water'..District of Southern California P.O. Box 54153 73. Service Type Los Angeles, CA 90054 ❑ Cert~ed Mail 0 Express Mail ❑ Registered ❑ Retum Receipt for Merchandise - ❑Insured Mal{ ❑ C.O.D: 3 Restricted Delivery T (Extra Fee) ❑=yes - 2. Article Number JT nsfer from service lae,-q 7002 -0860 0004 6420 566 11 Fi Form 3811, August 2001 Domestic Retum Receipt 3 $ - _ ~ - toz5s~-oz-M-tsao== _ MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARETCLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Pdscme ad 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Ms. Kathy Furnald Superintendent El Monte Union High School District 3537 Johnson Avenue . El Monte, CA 91731 Re: Your Agency's Property Tax Account Nos. 745.02, 745.06, 745.07, 745.20 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Ms. Furnald: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other, indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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Pnntyour name and address706, reverse m- O ane it 0 Addresse So thatyve can reum the card t q u. Re d d e ■ Attac7 thicarddo the ack o h mailpiece, ceive b Printe Name) ate of Delive - _ 1. Article Addw,§s,Pd t©~ - D 1sM-lw rV address ifferent from item ' 1? ❑ YES _ If YES, enter delivery addre`s helo VII: ❑ No HS. Kathy Furnald Superintendent _El Monte' Union: 'School District 3537 Johnson Avenue 3. Service Type El Monte, CA 91731 ❑ Certified Mail ❑ Express Mail ❑ Registered ❑ Return' Receipt for Merchandise Insured Mail ❑ C. D, 4. Restricted Delivery?:(Extra Fee)__ _ . ` - ❑ Yes d Article -Number - - - r - rr,~sterfrom service laeen, 7002 2860 0004 6420 5547 'PS F06Trf'381 1, August 2001 Gdmestlc Retum Receipt u 0259s024,1- i ar MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 ~if~ . Posemead 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Dr: Rose Marie Joyce Superintendent Rio Hondo Community College District 3600 Workman Mill Rd. Whittier, CA 90601 Re: Your Agency's Property Tax Account Nos. 816.04, 816.20 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Dr. Joyce: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently. in-place. on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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Article Aware sed to V - If YES -onter deli tl~~low: No rn / _ 17- tDr. Rose Marie Joyce _ c'v e Superintendent Rio Hondo Community College District 3. SeiviueTypu 3600.Workman 'Mill Rd. ❑ Certified Mail ❑ Express Mail' W1littier, CA 90601 ❑ Registered ❑ Return Receipt for Merchandise n iral lrP i me ii n on n 7002 0860 0004 6420 5684 MAYOR: JAY T. IMPERIAL MAYOR. PRO TEM:- GARY A. TAYLOR COUNCILMEMBERS: MARGARETCLARK JOHN H. NUREZ JOHN TRAN CERTIFIED MAIL December 12, 2005 8838 E. VALLEY BOULEVARD e P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Mr. P. Michael Freeman Fire Chief Los Angeles County Fire Department 1320 North Eastern Avenue _ Los Angeles, CA 90063-3294 Re: Your Agency's Property Tax Account Nos. 007.03, 007.31 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Freeman: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660.,000: In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O V` M 't 0 N W m N w I- M N d' M m y ~ 'a CU O M N CD M M CPO- O V(D M N tt. 1- O M Co M C = ooLnmmcDtioacoaoMMMOOOM 'a E mt o m 1 = 3: r c co y' E> - E E CD d U R O) M C c! 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(o '7 v_ (O M " C O) M r v_ C t~ K y r o U R 7 m ~ r c O (n d cl) 'o o CL) 0 r- Lo N M I Ll') M M w r- Lo v v m M N_ R d I- r- CO M M O N M M tt Ln (D I~ c0 M O p G ~ C C X R 7 IS C U d O d Q > C1 O d C O O 7 N E 'O M M M CO M't st v ~Y' V' 'R '7 'cY V v v m LC) U y d M C O R Y = U O L) y R > O p CL m E V, d M y 7 y N 'C d R C R M d y 'O Ca m (D L) CL) L* [l ii 7 c C7 y d d y 0) d a) _ d > Cn L E R F- m U R > d Z o y y Q a y = c C d Co r co m r O r N rM v Cn (fl r Lp M O N M O O O o r r r r r r N N N N CD O) y 0 v X 'C L C d m C O d ~ = E X E O R LO CD n co m O L r N M! Ln O O r O to c J O O O O O N N N O) 8 R O O X d 2 O y 7 N Q - `7 d > E d d y' O O o 0 0 a 0 0 0 0 0 0 CD CD 0 0 0 0 ` C (6 O` 2 M O co ` O L d O L d L - N N N N N N N N N N N N N N N N N N O 0 F- d r ~ = J F- d Z c F- CL O (n O CO LL b3 .N.. N 0 0 .M.. - 'O CO v E) rn 0 0 0 m a .r_. i 011211""WTVif spaee= pe i s i~ c c I ~ _ ~Z c j - _ D. s delivery- addres different from item 1? E] Yes ~ 1. Article Addressed to If YES, enter delivery addre s belo : O .No Mr: P Michael Freeman. Fire Chief 1072 Los' Angeles County . Fire Dept-:' ) ' 132 0 iJorth Eastern -Avenue . Los Angeles, CA-90063-3294 3. S, -vice Type 0 Certified Mail -0 Express Mall_ 0 Registered ❑ Return Receipt for Merchandise 0 Insured Mail 0 C.O.D. 2. Article Numb'i - ' (Transferfron3servicelabel) 7002 0860 0004 6420 5646 i _ PS Form 3811,.August 2001 Domestic Return Receipt. io25. s oz-t.a-i 40- MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Mr. Fred Hungerford Assistant Library Director Los Angeles County Library District 7400 E. Imperial Highway Downey, CA 90242 ~ f~ - 8838 E. VALLEY BOULEVARD a P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account No. 003.01 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Hungerford: On January 22, 2002, the City Council 'of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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Z 0 I- CO O CO (O o CO O CO LO I-- W O N N N N L X R y N X 0 y >R C R CV O C N 'O y L O ca D7 'a-2: y N V- CO O d 0 y 0 N (D .O C) U t4 o Q a) m CD K d c = y N Z O c _ 0 co _ O O O N d ;s ca H O 7 L o qj j C) N p m x v O a0 (!7 O h n m M m (O V• V• tl ti (n r m (M ai ~ ~ N ca O C y y C O p a C .2 Q ) CO O a; U) E C O m 0 N Cl V' (O O O CO (D (a (CIh at C v v V• V' V' (O (O M (O 0 (O (O (O (O LO (O (O (D W r CD 0 N cc N > R - U R C) N ~ ) > 7 0 3 C ~ N E C) C) N N O ~ N 0 N N y _ 0. > C) a C R C) N E 5 N U L Q O w N O C X R w _ m U R L 7 d C R R C) Z ' y CD d Q O O y 'O N N 4? C d - N ul > y m p• C y d CO O N (0 LO N m m C• O (O M co co m 1- C` d co O O V' M 1.- Ln O O (O I- (D N (O O V' Ih N O w CL C) CL 'O O 0 - R N C N N R ` N y C L 4) ao O Ci > ll (O O O C IL M N V; r N m r1h m Cl m m R a m m Q O (D O 7 y Z .2 ce) C) a) E In a) U- y y N O N R Of 0 co N co m m O N M It V' m CD r- R N V' (O ( X C) CO CO CO M M CO CO CO V' V' V' V' d• V' V' V' V' d• p p u) C) 0 a •O CU cn U m E p Cy C 'O X C O 0• Q R H ~ CL J ' 0 N d c y 0' C) C d 2 C) >m ay a i(Nn a ~ww U) cl) 3d U - N O dl m (O m w (O N M m CO m O M O ' m ' w ) y E _ w E s - 'L -L C " O m m m U) a) V L a~C n C') ( N 00 N co V L co O O m co N(D M V R CD C` O M (3CO V' V' O m V' O m m V0 r r O U Cc C .5 m 2 'O C G - (L) V1 > L 00 C) d x V O I- LO N m r- (O M m m r- LL') V• It m M N 0 C O- m C O' C 0 O G Q O CL T O ` O E U N 3 N 0 (O F' 7 CO M M M M~ V' V' V' V' V' 't V' ( c y N R C O 'Fa E (D -15 N C M cm r> R 0 N d N E R W y pMj C O N O (D '0 w N CD O H y U j O X R R m 0) C) . y c -O m C) 0 R > C) CL a) L LL N R ~ , (7 W N y d C m y C > Q •O (a N m - L C O r` O m O N M V' (O (D I~ W m 0 N M N 04 C) N R CAL L m 0 "O m c j cu E X C cc ca 9 9 9 9 R N O n m ~ o C N A n r o O N L) C: a 7 y J- a D o > E o ) ~ ( M C m v ( 5. 0 0 0 0 0 N N N C) a0 O X R 'p O U co 0 0 C) N C O L O > Cf , C) L~ O L 2 O O O O O O 00 O O O O O O O O O O N N N N N N N N N N N N N N N N N N ` ] C Q F- t- E M IL 3 C) = Z; J E- d Z N F- d (n LL Z v w N .M.. 'O - - - - - - m CL O -LOS -t111ge1e.6 . UOUIILy -`L1Uidiy- L' District 7400 E. Imperial Hwy. Dotcney, CA 90242 jss`differerrtfrom'item 1? u Yes e s beio:v: rho it ❑ Express Mail ❑ Return Receipt for 1.lerchandise ❑ G.O D ?ery? (Extra Feely ❑ Yes MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Dr. Julie Hadden Superintendent Alhambra Unified School District 15 West Alhambra Rd. Alhambra, CA 91801 ~ i q , Posemead 8838 E. VALLEY BOULEVARD e P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account Nos. 713.02, 713.06, 713.07 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Dr. Hadden: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, 1,5)~ g4e7_z1__f_ Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O 'V' M t W N OD M N W r- M N t m CP W W O N W O M W O V (D M N tt Ih O CO CO M C a W LO . (0 (0 CD r- 1-- W co W co M M M O O O M C 3 r r r C O r E a Q1 a ~ ~ .O^.. C~ ~ r ~ N V f~ C O (O N 0~7 N Lii N N O r N M (0 0 r_ M O M LO W O M 0 M N LO r O y t N 3 R = m+aC O` y L N V M M W O (0 t0 M N fD W M-~r r W LO m y rO„ N CO O to O v m V• M v M ~t O LO 0 N W tO 7 2. 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CM m a O_ 'J 7 m M a a N LL - y a a •p O a a) a m a a Q 0 m( L v, a L a U M O` t O w y y C a m X Q O CL O d O 3 w a a y d a a a C G a N 0 a -i a a a) C N 0 d) w y a l0 G ^ m Q y a ` L r 0 d y ca U a V O M C a v, E o E E L c 'E u_ C m 3 C w e M CD fr6 a p y N o C m E T a y (n a (h a > o y a a y C cm d C a c U C X m 7 ) a Q 7 O o -o 0 N E IO C U . - U a ` O o~ E a T a U a Ca Im m m m co m _ O yyE m p M C y y a O N y U m 0 o o T 3 _ C 0• m y U d X M m 2 a, 08 N p) a O. > m =E: coo m - LL ~ . m . a, 5 y C C ~ a U > o N (`a ay ca 0 • M y C O a j a E u E a C C_ O U a S ro 7 y a m Q J O a C . a V- T a) W (a ~ E a 0 ` a C O L 0 a a O a) L L N Z F- 7 7 S U d- LL N O F ...i H CL 0 0 0 O (n O (rT w LL N .M.. a - C- m fl' Goy leYe sterns 1 2 arad 3~Alsom0mP f-Ite rgoeture El Agent ed 3 eye is desired P t i Restracf h awn your_ERame. d dress ntlre=.everse X ❑:address sodfo a Can r6fumhe~card0 you. B. Re ivied by (Printed Name) f to of ei ■ Aach#~rscara ot#teback of the mailPiece, z RAW Y or ont fronts -p , e~rts: D. Is delivery , address d fferent from item 1 0 aes 1. Article Addre ed to: If YES, enter, delivery address belov.,: ❑ No Dr: Juke-HAZ den' Superintendent' alhambra Unified School Dist. 15 West Alhambra Rd 3. Service Type Alhambra, „CA 91801 ❑ Certified Mail ❑ Express Mail ❑ -Registered ❑ Return Receipt for Merchandise ❑ Insured Mail ❑ QO.D.. 4 Restricted Deliver}' eg~ Fee) ❑ Yes ' 2. Article Number 7002 0860 0004 6420 5714 MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A..TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Ms. Virginia Peterson Superintendent Garvey School District 2730 N. Del Mar Avenue Rosemead, CA 91770 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account Nos. 485.01, 485.06, 485.07 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Ms. Peterson: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Garvey School District (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet-the Commission's Pass- Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, 6~,_,_ Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O d• d) '~f M N a(] M N M r M N V' M 0) y (D W N (D 0) M O O V' CO T N V' Ih O M M O O O d a N E N N A 75 C C a) (0 to O (O M t` ~ oo M M oo T d1 O O O y ` a R L 3 N c 3 r r r r a i o E E O 1 0 N N V - _ CD L H C a) a N C. R O N r. C N E R a o c m . v O CO N m I~ If) M N N ('7 tl') 1~ Q) N V' P 00 a) d 0 CT v O r N M t!7 O a) O co to M O co M O N to r . . ~.M ~~~N .M r Z Z L - y 0) p C n N N O . . , . y , N 3 ° (6 o y R p ~ R m a C CD .m.. o > H . a i i`m « to . N m a> cts ui 0 c i R H > U O CL) M M y R O y co (M CD CD (D Lo M C-4 co co 0) N E!. CO O tD O V' C CD O to (0 N CO 0W) co 0 C E N N j p o O a) C 70 r 0 a= 0 N 1- co co co O O O O -L - r- Co r - >0 N N N E r - 7 r c n m m 0 a a p y o f a mo o N p d i E a) y > f0 ` o a~ N C C ` 0 m> t ( 0. x 9 c a p N a CL m Q R 'm In a1 (D Ei (O t(~i (O C`7 N V' N C7 N M M C7 O N co CD L a) U O. •p CD CO co (0 (D co co O to to to O co co r~ r ID co M co co M C`') M M M CM M M M v v v m L N N O a r N R O C N C. _ 7 p r (O N R r a7 a a E ( n o a) ~ o LUN v o J~: c cCD m C7 C`7 (h c7 M (•7 M [h c+] th c7 C) c7 tf) CO V.-. d d C w d p 'a O O U C C N •O ' f [S1 U 0) 0) 6) CA m O m O O O O m 07 O M CO (D (17 C= 'j N N N N N V IL N N N N N N N N N C NI e N .p 'O a) U L a) p ca R (r L R p ~vv.N . •C 7 r In " N CL 0) 7 of v.... Z, Z, v ..r v v v v., v v m y~ o R C E c x c y Z r N E d a "O O O Cc xR (A C' p w R 'p p) 4= r- c o C . m a) y U) C7 W v to M V' (A 10 M 04 N CO CO Q) V' 0) (D d• M dr to • M W - C E N Q N L V L 7 F- d N co M O tD O V3 O tD O to O N O O r r" c! M V' V' to to (0 M ti n MCD O O p C O R U 0) M (D N L O R m w O O Z Z U d 3 (+7 M M M M C7 M m m M M m m (M d' V' V' M R U Q XR ~ L C a Q w f. 3 C m y C a) . . y a o _ 3 h E a W Q Z a 4) o o n N . c P m H CL v m ornvo ~ h c c i m E Q a) ti °p CD p p a l ( otluiaoovl~ tnrnr)m( C m O N V' U) CD w m O N M Lo M co O M n o a) o o D- A d a~ a) c a) m R J' M w n o~ao ciao o~o~ao ao w m m m C 0 o m E M E o E rn (D n c Y a) 0_ > E ` ` E Z. Z, a) ° o aci R R y y U a) ~ d O ti m m a) y 7 R Q C ' 7 t U C N m ~ O O y L CL d J co Q O C T O p y a) (Up ~ U C O a) U CD N L' O H W N Q a) O R C N w 7 C C Z 00 N L Z CO 0 V O a) W O r. ti m O th r C m C O :3 ' W Q1 o R L H y a M r r L . O ~ J Na ~`C~CCCCC(~ooooMM~coM~m~ N U) RU c CM y a rn - j N 3 ~ m L m L 7 w Q V I Z N d N O a) V C R O (a N m 0 C R L d n a) C 00 7 tD 7 O O g O D 0 J M cc o ° c D w o c CD c E (L' ~ I! N y Q W Q L y c..) E C U Q C r 5 a) N 01 y d• N R w m V d U c L > (c N U CD m O O- W Q O V' W Ei O (O M (O d' N O oD r Ei O N L H J H N a1 N ly C CL N n r R y O Z w (D ti a() O M (o CO M M M tD 1- M ~ vv.M.v~ fD (v f~(vC~.N N v vvv~~ > L a m y m y .R O > O C a7 m d• LL. i >T d v R N > a) O F- y O R (R fl) d R C .O •,a U N R On 'C - 'y O 0 tT U R O L U (n - 0 Q to o O w O 6 °3 o c .Z C m R 3° a~ C) N O O. y y -0 (N \ y d N w m CO aD to M r n Q7 M a0 (D V' V' ti h Lo x ov W M V' O ti tD d' N O 6) M M N f-- . N O C y C a) O Q . r O 0 C m 7 U O U) (D . a R O ti r- M 0 0 0 r N M V' to (O CO 1~ w W O tD ( n ~ r N E U ~ _ O p .0 r •O N O 0 m to to (o to (D V' d' V' d' V' CD (D to tD (o ( N y L 0 > E R y ° 4: N N y y O c y> ;a O d) a) a) D. ~ t) C R O) N o R N w E N o n ( 6 C R R L 0 c QC74) o ° rn o xR x 0- c i 0 m t ~ m> Z ' a N O . . c 0 rn CI N N C N a) R y m n O E M O N CO to N a1 T r M (fl M M M 0) ti r- to 0 0 V' M 1~ tD O O to M N tD (D d• N N O N O. a) n "O O J R d 0 C > R ID ID -0 O '0 0 y C a' CD m> r to O M N r- d' M N v_ ~ N 0) 1~ 1` 0) M M (D ca ' rn R a) O 7 y U y E y 0 LL +L O a O R C a O w to N Q) r V' N O M O V' M O m CO M ti- R N V• to to o ti co (A O O N M V' d• M M h co ' V' d• V' V It ' ' ' ' O p Q R CA L ~a a) O . 'C o_ rn N R d . R. X 0 V V V d d co M co M co M co co V O 7 N m y n n m a a) O_ Q N a) w y ~ a) a m tNn n L C L . N d on r N R o U N m C a) E pO d . . Q) E C M 'C LL C cn Q] m 3 0 a) L N of CO co co r N 0 0 co Lo O co Lo N M (n CO m (O co O 0) M N co co d' N M N r M V' M O h ' R a) O 'C O y U Ef} R d .p 'j w E LL a) L N C~ y > d a N O 01 d) r V; (O f~ O M (A CO V' V' O W d l0 K ' v m 1 N to N E w. C C M O' C U C ¢ 7 0- C O E N _ V O ti to N f` t(i co M CO r, H 3 1~ r co 0) m O N M co V' to O r co 0) O ' V' V• V' V' d• V' d' Lo to ' ' p C U? x R cts C O 0) O G R ) O o C U aI 3 y U C R y t V V M M co M M v V U 0 . ` U) T w; O - R rn f1 N E R a) U O c :2 R, C R O a) O m O a U N N > o co N N H' 7 y U a -p rn O> m R L E R 07 > (D 2:1 y c N -0 cts N Q C ) y CL) - L S; O r M m O r N M d' tf) CO r.- M W N N N N - O C C) a) c C O a) C E o R r O O O O r r r r r r r r ~ O N o O r ' o (9 a) N O_ in 3 N ¢ J a C N E a 0 ) V t ( t9 Ln Co r- m m O N c 4 0 0 0 0 0 N N N 0 0 0 0 0 0 } a) i M O X ca C O i O U R O rn a) y _ O > ) y L a) (D 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N p v p f'" a j N N F- d z ~ 0 On O^ "0 E% C U LL_ N3 w N 0 [T D_ VYLIS; enter delivery address below- LJ No 4:' q* z2Is. Virginia Peterson I~ Superintendent _ Garvey-School-District Del i~Iaz,venue a. seu'oeType. ❑ Certified Mall ❑ txpre'ss Mail Rosemead , CA "'91770 ❑ Registered ❑ Return Receipt for Merchandise ❑ Insured Mail ❑ C.O.D. 4.- Restricted Delivery? (Extra Fee) ❑ Yes 2 Article Number 7002 0860 0004 6420 5622 USPS - Track & Confirm Page 1 of 1 SERM'o Home I Help TriF & Confirm Track & Confirm Search Results Label/Receipt Number: 7002 0860 0004 6420 5622 Status: Delivered Your. item was delivered at 12:31 pm on. December 15, 2005 in ROSEMEAD, CA 91770. A proof of delivery record may be available through your local Post Office for a fee. Additional information for this item is stored in files offline. Track & Confirin Enter Label/Receipt Number. POSTAL INSPECTORS site map contact us government services jobs National & Premier Accounts Preserving the Trust Copyright ©1999-2004 USPS. All Rights Reserved. Terms of Use Privacy Policy http://trkcnfrml .smi.usps.com/PTSIntemetWeb/InterLabellnquiry.do 3/13/2006 MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARET CLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Dr. Amy Enomoto-Perez Superintendent Rosemead School District 3907 N. Rosemead Blvd. #230 Rosemead, CA 91770 Kowmead 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account Nos. 629.01, 629.06, 629.07 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Dr. Enomoto-Perez: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Rosemead School District (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the. "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass- Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. Eric Scriven, Piper Jaffray Bill Bothwell, Orrick, Herrington & Sutcliffe LLP O V M V Co N O M N w ti M N V M M N o M N M O) M (0 O V m M N •t r, O M o M o 0oM T .O 'O -O CU L co c c m couo mcDcD ti(- ooaDoDaDMMM • 7 - ° y ° C ' 3H CD C r r ~ O r i6 CD y C N 0 E U w a) y N O N m a N N aN C. m O m a) pp E m d N c C N O CO N m r Cij C+) N N v c7 t!7 1~ D) N CD co d d p O M O N M Co O M O M Lo W O M M M N Cn r N ~aa a s s~ N N r m CD M U s C d N N O y ~ 0 U) cc L o X y l0 L 0 o N a m is d G . m+ 2 T m O M m M y m (D G> y O N L d N f C O O O m O Cn O N O N .0.. 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El Yes ^ If YES, enter delivery address.belov.,: ; p No Dr. Amy Enomoto-Perez ~uPerintendent j - Posemead_•School District 3 07 4 - Ro`semead'Blvd 4 . . L Rosemead; cA 91770 3. Service Type ❑ Certified Mail ` 0 Express Mail ❑ Registered 0 Return Receipt for Merchandise ❑ Insured Mail ❑ C.O.D. 4. Restricted De ivery4 (Extra Fee) ❑ Ye q Article Number _ (Tmr~sfer from service label) ; 7002 0860 0004 6420 5615 =PS Form 381 1` ; u , A gust 2001 Domestic Return Receipt'- _ MAYOR: JAY T. IMPERIAL MAYOR PRO TEM: GARY A. TAYLOR COUNCILMEMBERS: MARGARETCLARK JOHN H. NUNEZ JOHN TRAN CERTIFIED MAIL December 12, 2005 Mr. Edward Velasquez Superintendent Montebello Unified- School District 123 S. Montebello Blvd. Montebello, CA 90640 Vowmead 8838 E. VALLEY BOULEVARD • P.O. BOX 399 ROSEMEAD, CALIFORNIA 91770 TELEPHONE (626) 569-2100 FAX (626) 307-9218 Re: Your Agency's Property Tax Account Nos. 899.06, 899.07 and Redevelopment Project Area No. 1 of the Community Development Commission of the City of Rosemead Dear Mr. Velasquez: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the "Redevelopment Plan") for the Redevelopment Project Area No. 1 pursuant to Health and Safety Code Section 33333.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a statutorily mandated pass-through of tax increment pursuant to Health and Safety Code Section 33607.5 (the "Pass-Through Payments"). The Community Development Commission of the City of Rosemead (the "Commission") is in full compliance with the requirements of such Section 33607.5. Health and Safety Code Section 33607.5 provides that a redevelopment agency may request that the payments required to be made to taxing entities pursuant to Section 33607.5 be subordinated to loans, bonds or other indebtedness, in accordance with certain procedures set forth in Section 33607.5. Under the provisions of Section 33607.5, a request to subordinate must be accompanied by substantial evidence that the redevelopment agency will have sufficient funds available to pay the debt service on the proposed loans, bonds or other indebtedness and to make the statutory pass-through payments to the affected taxing entity. Within forty-five days of receipt of the request for subordination, the affected taxing entity must either approve or disapprove the request. If the affected taxing entity fails to do either within the forty-five day period, the request is deemed approved and is final and conclusive. An affected taxing entity can only disapprove a requested subordination if it finds, based on substantial evidence, that the redevelopment agency will not be able to pay the debt payments on the proposed loans, bonds or other indebtedness and to pay the statutory pass-through payment required to be paid to the affected taxing entity. The Commission is hereby requesting that the Los Angeles County (the "Taxing Entity") subordinate its statutory Pass-Through Payments to payments on a proposed Commission tax allocation bond issue (the "2006 Bonds"). The Commission has previously issued its Redevelopment Project No. 1, Tax Allocation Bonds, Series 1993A (the "1993 Bonds"). Upon issuance, the 1993 Bonds and the 2006 Bonds will be the only Commission indebtedness to which the Pass-Through payments would then be subordinate. The 2006 Bonds are being issued to finance a portion of the costs of the Project and to refund a portion of the 1993 Bonds. To support the Commission's request for subordination, I am enclosing a document entitled "Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request." This document demonstrates that, with the bond financing currently proposed, tax increment revenues will be sufficient to meet the Commission's Pass-Through Payment obligation to the Taxing Entity, as well as debt service on the 1993 Bonds and the 2006 Bonds. Total aggregate debt service including the 2006 Bonds is constrained by coverage requirements currently in place on the existing 1993 bonds. Therefore, aggregate debt service cannot exceed $2,660,000. In accordance with Health and Safety Code Section 33607.5, these documents provide substantial evidence that the Commission will have sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2005 Bonds and to make the statutory Pass-Through Payments to each Taxing Entity. Accordingly, we request that you approve this subordination request at your earliest convenience. If you need any additional information or if you have any questions, please feel free to call me at (626) 569-2101. I look forward to hearing from you. Sincerely, ~ 6rzc', Bill Crowe City Manager cc: Josh Copenhaver, GRC Associates, Inc. Keith Curry, Public Financial Management, Inc. 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N Q r 0 C CO N W O a L L_ c -O w (p u) L y f~6 O Cp > _ . C m O 'T > 0 j., O ~ 0 N N 'CD ~O •p O 'C CS O y E O > a) . . .O U N : CU r O (6 C p = 0 L 0 l 1 U N O Z C j - = cc r 3 ~ O d . . y y N N :a a C C a y m t N N O C N N N O DO E U R O U CO O N _O • cn E N > w N Cu > O O d y O O w a U CU m o O O N R CU 2 E > o U d C N C6 7 cL u w N O C x N y d lO Z L N y > N O t1 7 p y y rn 2 C N N N > 7 d C E C N O d CD ) N 0 C O O O L O II N O y N ) O - CD ~ w V M N- LL N 'O L C CC LY N Q rn N CO V} . L -O U p! 'O C t4 C a ° y CC " C O J M H O CD y a - aD c a Q E L N N N (n d C L L y d ` L r N COO V o 3 'O y N ° E COD 2 _ N a E L C - "C a=) cm W LL CU m N 0 w C n > - 00 U c 5 0)2 o d ❑ o c y a 0 d N CU C _ X 7 N CO lU T p C C O N E "O Cy F C O O CO C U y O C CO N O) O O_ y y E m rn :2 2) C n O N 7 O CL O O N U CU O o o 0 Cu (6 0 CU C lU O - CO > y N O. L 6 y O L a N C > N (0 E CO F- O) CO Cr > N N Cv C y y D ) L L Q 'O O y a y o C E X C ' y fU O U •C o C C O N C N E O m w CO Cp 0 (6 y 5 Q) y 7 Q J O C N > r-• E w r E M E E 0 J L C a) of O tt L1 7 N = U F- Z 2 F- S n _ N O m L1 - V9 . w N CL MAR. -03' 06 (FRI) 11:40 CITY OF ROSEMEAD 03103/2006 11:26 MkR. -01` O6 (WED) 15:02 K"Voru .wf T. 1WERIAL 323-8873177 CITY OF ROSEMEAD vAYOR PROTEV: GMY A. TATLOR sewn WON4r,Ra: 1IAMARVOLAR9 'JEWN N. NUAEZ JpF1N TRAM Minch 1121305 Ka Fncsidav (323) 887-3177 (Orwffal to folrow by Ce fled Matt) Edward Vtlasquez Sap n iatendent Monteballo (Juified School Distliat 123 Sotrth Montebello Blvd. Mon'tabello, CA 90640-4729 TEL:626-307-9218 FAC5 & OPERS PAM J TEL-626-507-9218 P. 002 PAGE 02 P. 002 9838 E. VALLa=Y BOULEVARD. P.0, BOX 399 ROSI=MEAD. CALSFORNIA 91770 TELEPHONE (0261569-2 100 FAX (626) 307-8218 Pamela T. Johnson Far gee aed Operatiiotrs Assistairt Superintendent Momabello Unified School District 123 South Montebello Blvd. Montebeilo, CA 90640-4729 Re: Yawn .ALgltncy's Property Tax Account Nos. 899.03, 899.06 and 899.07 and Redevelopment pr .iect Area Na_ L of the Community Development Commission of the City of Rosemead Dear Mx. velaquez and Ms. Jobnson: On January 22, 2002, the City Council of the City of Rosemead amended the Redevelopment Plan (the '1Redevelopmeut,Pbm") for the Redevelopment Project Area No. I pursuant do Health and Safety Code Sedion 33339.6(e)(2) eliminating the Redevelopment Plan's January 1, 2004 time limit on the establishment of loans, advances and indebtedness. The adoption of the Redevelopment Plan made your agency eligible for a stirmorily rnaadsted pass-through of tax increment pmmmt to 11Wtb and Safky Code Section 336075 (the "Pass-Through Payrnento. The Community Development Commission of the City of Rosemead (the "Commission") is in full complied with the requi vmenrs of such Section 33607.5. Health and Saf y Code Setition 33607.5 provides that a redevelopment agency may request that tho p%rmenta required to be made'to taxing W ities ptursueut'I: to Sactioa 33607.5 be suborainabed W loans, bonds or other indebtedness, in ateordanee wits certain procedures set forth in Section 33607.5. Under the pxtvisions of Section 33607.5, a request to subordinate must be accompanied by subs aritial evidence that the rede>:velopmeot agency wilt have sufficient Rinds available to pay the debt service on the proposed loans, bonds or other Webtedaes6 and to make the swminry pass-thmugb paymaats to the affected taxing entity, within, forty-five days of receipt of the regnast for 5abardination, the affected taxing entity must tither approve or disapprove the request.. If -the affected taxing entity fails to do either within the forty~ five day period, the request is deemed apptoved and ii; final and conclusive. An affected teaOting entity can only disapprove a requested subordination if it finds, based on substarrdal evidence, that the redevelopment agency will net be able to pay the debt psymerts on the proposed loans, bonds or other MAR.-03'06(FRI) 11:40 CITY OF ROSEMEAD 03/03/2086 11:26 323-BB73177 MAR.-01'06111D) 15:02 CITY OF ROSEMEAD TEL;626-307-9318 indahwdtiess and to pay the stattfory pass tbraugh payment sequined to be paid to the affected taxing entity. The Commission 19 hereby Mquestaxg that 211 apps icable t: Lvk9 entities, including the Montebello Unified school Dishict (thd "District"), subordin8te its sradatory Pass-Through Pfryments to payments on a proposed Commission tax allocation bond WW (the "2006 Bonds")_ By letmr dated DMmmber 12, 2005, this request: ws_s shade to the Diddet and was folln"d by commtmica6ons with my office, which may have o mfu9ed the nature of the request made to the District. The Cmnmission has previously issued its Redevelopment Project Na 1, Tax Aliocation Bonds, Wes 1993A (the "1993 Bonds"). The Commission has priced the 2006 Bonds and experts to issue the 2006 Bonds on M=b 9, 2006. Upon issx ce, the 1993 Roods and the 2006 Bonds wM be the only Commission indebtedness to which the pans-Tbxough peyments would Then be sulwrdicate_ The 2006 Bonds are being issued to finance a portion of the costs of the Project and to rofland a portion of the 1993 Bonds_ To support the Commission's request for subordination i am enclosing a document entitled "Cotnm=iV Commission of the City of Rosemead Redevelopment Project Area. No. 1 Financial Analysis for Subordination request This document demonstrates that with the bond fimclag currently proposed, tax increment revenues wilt be sufficient m meet the CommissionN Pass-Tb=gh Payment obligation TO the DietAM as well as debt service aft she 1993 Bands and the 2006 Bonds. Enclosed also is a draft report entitled "Rosemead Community Commismon, Rosemead Redevelopment Project Area No. 1, Projer-W Tax increment Revenues,- which was prepared by ORC Associates, Inc. and sets forth factual infomation with respect to the Commission's projed area and the assumptions used to demonstrate the sufficicaey of the talc increment revenues. While eef Wn eletaemts of such report may be updated and c=plcted based on nrw information, ORC Associates, Inc. has-advised the Commission that no sack update or completion is expected to change any of the n=bers in the tables smached to the report, in accordance with Health and Safety Code Section 33607.5, these documents provide sohsta,ttial evidence runt the Commimsioa will #tave sufficient tax increment revenues available to pay the debt service on the 1993 Bonds and the 2006 Bonds and to make the statutory Pass-Through Isatym=rts to each toting entity. Accordingly, we reque9t that you approve this subordination request at your earliest convenience by executing the acknowledgment below. if you used any addhiodal information or if you have any questions, please fee] fi= to call me at (626) 569-2101. I look forward to hearing from you Sincerely,. Co. Josh Copenbaver. GRC Associates, inc. Keith Curry, Public Financialmmmumnent, Inc. Eric Setiveu, Piper Jaffrey Bill Batttwell, Orrick, H=1ftgt033 & Sutcliffe LLP TEL:626-307-9218 FACS & OPERS PAM J P. 003 PAGE @3 P. 003 Nupertntendent Mar 09 06 09:06a 6265692303 p.2 A. Si atur " ❑ Agent ❑ Addressee R Ted Na-) C. to of Delivery D. Is delivery address different from item 1? ❑ Yes If YES, enter delivery address below: ❑ No 3. Service type Certified Mail ❑ Evress Mali Registered ❑ Return Receipt for Merchandise _ ❑ Insured Mail [3 C.O.D. 4. Restricted Dellvery7 (Extra Fee) ❑ Yes 2. Article Number 7002 0860 0004 6420 5974 (Transfer from service fabeq Ps Form 3811, August 2001 Domestic Retum Receipt 702595-02-M-7540 ■ Complete Items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. K Print your name and address on the reverse $o that we can return the card to you. ■ Attach this card to the back of the mailpiece,1::::;; or on the front if space permits. 1. Article Addressed to: Ms. Pamela T. Johnson Facilities/operations super. Montebello Unified Sch. Distri 123 S. Montebello Blvd. Montebello, Ca 90640 UNITED STATES POSTAL SERVICE ~Fu' -%5&MWj t y ~ta~ S Permit No. G-10 • Sender: Please print your name, City of Rosemead Attn: Karen ogawa 8838 E. Valley Boulevard Rosemead, Ca 91770 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF FISCAL CONSULTANT AND FINANCIAL ADVISOR The undersigned hereby states and certifies the following: (a) that the undersigned is an authorized representative of GRC Associates, Inc. (the "Fiscal Consultant") and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that the Fiscal Consultant has prepared the Fiscal Consultant Report: "Rosemead Community Development Commission Rosemead Redevelopment Project Area No. 1 Projected Tax Increment Revenues" dated February 7, 2006 (the "Fiscal Consultant Report"), for the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"); (c) that the Fiscal Consultant hereby consents to the use of the Fiscal Consultant Report in the Preliminary Official Statement, dated February 15, 2006 (the "Preliminary Official Statement") and the Official Statement, dated February 23, 2006 (the "Official Statement") relating to the Series 2006A Bonds; (d) that the Fiscal Consultant hereby affirms the accuracy for its purposes of the data in the tables in the Preliminary Official Statement and the Official Statement which references such Fiscal Consultant and any statements and assumptions attributed to the Fiscal Consultant appearing in the Preliminary Official Statement and the Official Statement; and (e) that the Fiscal Consultant hereby affirms the accuracy of all "pass-through" entities and information including, without limitation, contact information, Tax Account Numbers, and its Community Development Commission of the City of Rosemead Redevelopment Project Area No. 1 Financial Analysis for Subordination Request provided to Public Financial Management, as financial advisor and the Commission in connection with the preparation of Pass-Through Subordination Request Letters (the "Subordination Notices") dated on or about December 12, 2005 (and March 1, 2006 in connection with the supplemental letter to Montebello Unified School District) and used in preparing the Subordination Notices. DOCSLA1:515415.2 41555-8 K35/K35 The Fiscal Consultant is delivering this Certificate with the understanding that the Commission and Orrick, Herrington & Sutcliffe LLP will rely in part upon this Certificate in rendering its final opinion with respect to the Bonds. Dated: March 9, 2006 GRC ASSOCIATES, INC. By: zz~ Authorized Representative The undersigned hereby states and certifies the following: (a) that the undersigned is an authorized representative of Public Financial Management, Inc., as financial advisor (the "Financial Advisor") and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; and (b) that the Financial Advisor advised the Commission in connection with the preparation and delivery of the Subordination Notices and hereby confirms the accuracy of the information (but for that provided by the Fiscal Consultant as specified above) contained in and form of the Subordination Notices for their purpose. The Financial Advisor is delivering this Certificate with the understanding that the Commission and Orrick, Herrington & Sutcliffe LLP will rely in part upon this Certificate in rendering its final opinion with respect to the Bonds. Dated: March 9, 2006 By: DOCSLA1:515415.2 41555-8 K35/K35 PUBLIC FINANCIAL MANAGEMENT, INC. 2 Keith Curry, Managing Director The Fiscal Consultant is delivering this Certificate with the understanding that the Commission and Orrick, Herrington & Sutcliffe LLP will rely in part upon this Certificate in rendering its final opinion with respect to the Bonds. Dated: March 9, 2006 GRC ASSOCIATES, INC. By: Authorized Representative The undersigned hereby states and certifies the following: (a) that the undersigned is an authorized representative of Public Financial Management, Inc., as financial advisor (the "Financial Advisor") and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; and (b) that the Financial Advisor advised the Commission in connection with the preparation and delivery of the Subordination Notices and hereby confirms the accuracy of the information (but for that provided by the Fiscal Consultant as specified above) contained in and form of the Subordination Notices for their purpose. The Financial Advisor is delivering this Certificate with the understanding that the Commission and Orrick, Herrington & Sutcliffe LLP will rely in part upon this Certificate in rendering its final opinion with respect to the Bonds. Dated: March 9, 2006 PUBLIC FINANCIAL MANAGEMENT, INC. B Y Keith Curry, Managing Director DOCSLA1:515415.2 41555-8 K35/K35 2 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF MAILING IRS FORM I, Kellie S. Boles, of Orrick, Herrington & Sutcliffe LLP, hereby state and certify that for and on behalf of the Rosemead Community Development Commission, on the date hereof, caused to be mailed via first class certified mail, return-receipt requested, postage prepaid, an Information Return for Tax-Exempt Governmental Obligations (Form 8038-G), to the Internal Revenue Service Center, Ogden, Utah 84201, a true copy of such Information Return is attached hereto. Dated: March 13, 2006 =K4w, ellie S. Boles, Project Manager Orrick, Herrington & Sutcliffe LLP DOCSLA1:515415.2 41555-8 K35/K35 Form 8038-G Information Return for Tax-Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) OMB No. 1545-0720 (Rev. November 2000) ► See separate Instructions. Department of the Treasury Internal Revenue Service Caution: if the issue price is under $100,000, use Form 8038-GC. Re ortin Authority If Amended Return char-4 Ina- ► M 7 Issuer's name 2 Issuer's employer identification number Rosemead Community Development Commission 95 ; 2915072 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 8838 E. Valley Boulevard 3 01 5 City, town, or post office, state, and ZIP code 6 Date of issue Rosemead, California 91770 March 9, 2006 7 Name of issue 8 CUSIP number See Attached 777510 AS7 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative Karen Ogawa, Finance Director of the City of Rosemead ( 626 ) 569-2102 mor-IMMIN e vi Issue ~cnecK a ucaole Doxtes) and enter the issue rice) See instructions and attach schedule 11 ❑ Education . . . . . . . . . . . . . . . . . . 11 12 El Health and hospital . . . . * ~ 12 13 ❑ Transportation . . . . . . . . . . . . . . . . • . . 13 14 El Public safety . . . . . . . . . . . . . . . . . . . . 14 15 ❑ Environment (including sewage bonds) . . . . . . . . . . . . 15 16 El Housing . . . . . . . . . . . . . . . . . . . . . 16 17 ❑ Utilities . . . 17 18 ® Other. Describe ► capital improvements 18 14 321 830 19 If obligations are TANS or RANs, check box ► ❑ If obligations are BANS, check box ► ❑ 20 If obligations are in the form of a lease or installment sale, check box ► ❑ ' Description of Oblinatinns- Cmmnlata fnr tha antira icciin fnr %erhirh *hio F...... :e- L--._ r:,- - ,v1 111 13 ucu i tnCU. (a) Final maturity date (b) Issue price (c) Sta ted re demption e (e) Yield te at maturity 1 maturity averag 21 10 0 2022 $ 14,321,83-0 $ 14,UU-L),UUU 1 7 - ears 4.1354 % US- -1 Roceeds vl Bums Issue pncwain unaerwrliers discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . 22 23 Issue price of entire issue (enter amount from line 21, column (b)) . . 23 14.321.830 24 Proceeds used for bond issuance costs (including underwriters' discount) . 24 302.580 25 Proceeds used for credit enhancement . . . . . . . . . . . , 25 247 743 26 Proceeds allocated to reasonably required reserve or replacement fund 26 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 8 317 412 28 Proceeds used to advance refund prior issues . . . . . . . . 28 29 Total (add lines 24 through 28) . . , , , , . , . , , . 29 30 Nonrefundin proceeds of the issue (subtract line 29 from line 23 and enter amount here) . 30 .867,735 Descri tion of Refunded Bonds (Complete this art only for refunding bonds.) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► 7.3025 ears 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . ► ears 33 Enter the last date on which the refunded bonds will be called . . . ► April 10, 2006 34 Enter the date(s) the refunded bonds were issued ► November 2 1993 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a b Enter the final maturity date of the guaranteed investment contract ► 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the name of the issuer ► and the date of the issue ► 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ► ❑ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . ► ❑ 40 If the issuer has identified a hedge, check box . . . . . . . ' . ► ❑ Under penalties of perjury , I d that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, hey e, c ect, a complete. Sign Here ' March 9, 2006 ' Karen Ogawa, Finance Director Signature of issuer' thorized representative Date Type or print name and title For Paperwork Reduction Notice, see page 2 of the Instructions. Cat. No. 637735 Form 8038-G (Rev. 11-2000) ATTACHMENT TO FORM 8038-G Rosemead Community Development Commission Issuer's EIN # 95-2915072 Part I, Box 7: Rosemead Community Development Commission Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A DOCSLA1:518640.1 41555-8 The Depository Trust Company A subsidiary of The Depository Trust & Clearing Corporation BLANKET ISSUER LETTER OF REPRESENTATIONS [To be Completed by Issuer] R 5 Rosemead Community Development Commission [Name of Issuerl February 23, 2006 (Date] [For Municipal Issues: Underwriting Department-Eligibility; 50th Floor] [For Corporate Issues: General Counsel's Office; 49th Floor] The Depository Trust Company 55 ti'vater Street New York, NY 10041-0099 Ladies and Gentlemen: This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer shall request be made eligible for deposit by The Depository Trust Company ("DTC"). To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance with DTC's Rules with respect to the Securities, Issuer represents to DTC that Issuer will comply with the requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. Note: Schedule. A contains statements that 1TFC believes accu- rately describe L)TC, the method of effecting; book-entry truufe;s of securities distributed though DTC, and cer- tain related matters. Received and Aces SITORY T T CO ZPANY s v. Very truly yours, Rosemead Community Development Commission (Issuer) Bv: --40 )AfN nzed Of ce ' Mature} Don Id J. W gner, sl ant Executive Director rn Name) 8838 E. Valley Boulevard (street Address) Rosemead, California 91770 (Cih,) (State.) (Country) (Zip Code) 400 DTCG The Depository Trust & Clearing Corporation ( 626 ) 569-2102 (Phone Number) dwagner@cityofrosemead.org (E-mail Address) [2/021 SCHEDULE A (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC-bracketed material may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the"Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnershipsnonrinee) or such other name as may be requested by an author- ized representative of DTC. One fully-registered Security certificate will be issued for [each issue of] flue Securities, [each] in the aggregate principal amount of such issue,and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal arnount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the worlds largest depositor; is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the mewling of the New York Bulking Law, a member of the Federal Reser%;e 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 Exchanige. Act of 1934. DTC holds and provides asset servicing for over 2 mullion issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's• participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement arnong 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, clear- ing corporations, and certain other organizations. DTC is a wholly-mviied subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Cleating Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the, New York Stock Exchange., Inc., the American Stock Exchange. LLC, and the National Association of Securities Dealers, Inc. Access to die 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 cor1:)orati.ons that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Nvww.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's .records. The o«niership interest of each actual pur- chaser of each Security (`Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written con.finnation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transac- tion, as well as periodic statements of their holdings, frorn the Direct or Indirect Participant through which the. Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that- use of the book-entry system for the Securities is discontinued. 4.7:o facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are regis- tered in the name of DTC:s partnerslup nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities 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 Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Secuiiti.es are credited, which may or may not be the Beneficial Owrier;s. The Direct and Indirect Participants will rernain responsible for keeping account of their holdings on behalf of their customers. 5. 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 require- ments as may be in effect from time to,time. [Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events NNdth respect to the Securities, "such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For exam- ple, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities 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.] [6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTCs practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on t1e record date (identified in a listing attached to tie Omnibus Proxy). S. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's prac- tice is to credit Direct Participants' accounts upon DTC's receipt of finds and corresponding detail infor- mation from Issuer or Agent, on payable date in accordance Add-i 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 wrill be the responsibility of such Participant and not of DTC [nor its nonh- inee], Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds,. distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants mdll be the responsibility of DTC, and dis- bursement of such payments to the Beneficial Owners will. be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender./Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to [Tender/Remarketing] Agents DTC account.] 1.0. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a suc- cessor securities depository). In that event, Security certificates will be printed and delivered. I2.'I'he information in this section concerning DTC and DTCS book-entry system has been obtained froin sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracv thereof. $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA=NO.1 TAX ALLOCATION BONDS SERIES 2006A CERTIFICATE OF THE TRUSTEE The undersigned, U.S. Bank National Association ("U.S. Bank"), does hereby certify as follows: (a) This Certificate is being provided in connection with the issuance of the Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A in the aggregate principal amount of $14,005,000 (the "Bonds") executed and delivered pursuant to that certain First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement"), between the Rosemead Community Development Commission (the "Commission") and U.S. Bank. (b) U.S. Bank is a national banking association duly organized and validly existing under the laws of the United States of America, has all requisite power, including trust powers, and authority to accept, execute, deliver, and perform all of its obligations as trustee under and pursuant to the First Supplement and the Escrow Agreement, dated as of March 1, 2006, by and between the Commission and U.S. Bank (the "Escrow Agreement"), and to take all actions required of it under the First Supplement, the Escrow Agreement, the Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission, U.S. Bank, as trustee, and U.S. Bank, as dissemination agent (the "Continuing Disclosure Agreement") and the Bonds. (c) The First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement have been duly executed and delivered by an officer of U.S. Bank duly authorized to execute and deliver such documents as evidenced by the Officer's Certificate, Signing Authorities and extracts from the By-Laws of U.S. Bank attached hereto as Exhibit A, and the execution, delivery and performance of the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement have been duly authorized by all necessary action of U.S. Bank. (d) Pursuant to the provisions of the First Supplement, the Bonds were authenticated in the name of and on behalf of the undersigned by an authorized signatory of the undersigned, duly authorized to authenticate the Bonds, as evidenced by the Authorizing Resolution of U.S. Bank referred to in paragraph (c) hereof, were registered and delivered by U.S. Bank pursuant to the First Supplement and the Written Request of the Commission, dated the date hereof, and as directed by the underwriter for the Bonds. (e) U.S. Bank has duly accepted the trusts created pursuant to the First Supplement and the Escrow Agreement; and such acceptance and performance by the Trustee of its obligations under the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement will not contravene the Articles of Association or Bylaws of U.S. Bank or, to the best DOCSLA1:515415.2 41555-8 K35/K35 knowledge of the Trustee, conflict with or constitute a breach of or a default under any law, administrative or governmental regulation, consent, decree, order, indenture, contract or other agreement or instrument to which U.S. Bank is subject or bound or by which any of its assets is bound, and the performance of the obligations of the Trustee under the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement have been duly authorized by all necessary corporate action. (f) To the best knowledge of U.S. Bank, all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter, receipt of which would constitute a condition precedent to the performance by U.S. Bank of its obligations under the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement, have been obtained and are in full force and effect. The undersigned certification does not include compliance with federal and state securities laws. (g) To the best knowledge of U.S. Bank, no litigation is pending or threatened (either in state or federal courts) (i) in any way contesting the existence or trust powers of U.S. Bank, or U.S. Bank's ability to fulfill its obligations under the First Supplement, the Escrow Agreement and the Continuing Disclosure Agreement, (ii) to restrain or enjoin the authentication of the Bonds by U.S. Bank; or (iii) in any way contesting or affecting any authority for the issuance of the Bonds. DOCSLA1:515415.2 41555-8 K35/K35 2 IN WITNESS WHEREOF, U.S. Bank National Association has caused this Certificate to be executed by its officer thereunto duly authorized this 9th day of March, 2006. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: - ~i Auth zed Officer DOCSLA1:515415.2 41555-8 K35/K35 3 U.S. BANK NATIONAL ASSOCIATION AUTHORIZED SIGNER(S) I hereby certify that the following is a true and exact extract of Article VI of the Bylaws presently in effect for U.S. Bank National Association, an association organized and existing under the laws of the United States: ARTICLE VI. CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association, and all other instruments not specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The SecretarX_any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. I further certify that Ward Spooner of U.S. Bank National Association has been duly elected and qualified and now holds the office listed herein, and that the signature of such officer is authentic: Ward Spooner Vice President WILL SIGN: IN WITNESS WHEREOF, I have hereunto set my hand to be affixed hereto this 9th day of March 2006. U.S. Bank National Association By: Vice P esident $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A RECEIPT FOR PURCHASE PRICE The undersigned hereby states and certifies: (a) that the undersigned is an authorized officer of U.S. Bank National Association, as successor trustee (the "Trustee"), under that certain Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Rosemead Community Development Commission (formerly the Rosemead Redevelopment Agency) (the "Commission") and the Trustee, as supplemented by that certain First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and the Trustee, and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that on the date hereof the Trustee did receive from Piper Jaffray & Co., as Underwriter of the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the `Bonds"), in the aggregate principal amount of $14,005,000, the amount of $13,990,057.31, which represents the net purchase price of the aggregate principal amount of the Bonds. Said net purchase price was represented by the Commission to be computed as follows: Principal Amount of Series 2006A Bonds $14,005,000.00 Plus Net Original Issue Premium 316,830.40 Less Underwriter's Discount -84,030.00 Less Premium for the Policy and Fee for the Surety Bond - 247,743.09 Total Net Purchase Price $13,990,057.31 (c) that, pursuant to Section 3.02 of the First Supplement, on the date hereof the Trustee deposited, or transferred for deposit, from the proceeds of the sale of the Bonds, the following sums in the following accounts: (i) In the Series 2006A Expense Account in the Expense Fund, the amount of $218,550.00; (ii) To the Commission, from proceeds of the Series 2006A Bonds for deposit into the Redevelopment Fund, the amount of $5,454,094.94; and (iii) In the Escrow Fund, the amount of $8,317,412.37; DOCSLA1:515415.2 41555-8 K35/K35 (d) that on the date hereof the Trustee did transfer $998,561.87 from the Reserve Account and $253,053.75 from the Debt Service Fund established under the Original Indenture, to the Escrow Fund established pursuant to the Escrow Agreement, dated as of March 1, 2006 (the "Escrow Fund") on deposit with the Trustee; and (e) that on the date hereof the Trustee did receive a certified copy of the Financial Guaranty Insurance Policy No. 25000BE and the original Surety Bond No. SB2229BE from Ambac Assurance Corporation for safekeeping. DOCSLA1:515415.2 41555-8 K35/K35 2 Capitalized terms not otherwise defined in this Receipt shall have the meanings ascribed to thereto in the Indenture. Dated: March 9, 2006 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Autho ' ed Officer DOCSLA1:515415.2 41555-8 K35/K35 3 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A _NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-01 ROSEMEAD COMMUNITY 1 REDEVELOPMENT TAX ALLOCAT-LOP RATE OF INTEREST: $780,000 4.000% Ocit~~r ~',200~ ~l a 21~\O~\ \/\\7NII\O YEA 6 REGISTERED OWNER: E o. PRINCIPAL AMOUN SEVB~4\1~4RI~EI GH' ~ ~USAND DOLLARS THE ROSENC&AMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, d organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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. No. A-02 ROSEMEAD COMMUNITY D REDEVELOPMENT] TAX ALLOCATAON RATE OF INTEREST: $810,000 4.000% r-1, \ OctAr 1,'200 \ \,---\~751\0 V 4 REGISTERED OWNER: E o. PRINCIPAL AMOUNT: EIU "RErEN D\T~ DOLLARS THE ROSElVfi~AD )C6%61UNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLAI :517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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. No. A-03 ROSEMEAD COMMUNITY D REDEVELOPMENT] TAX ALLOCAT-ONE RATE OF INTEREST: 3.250% Oct 1 REGISTERED OWNER: E o. PRINCIPAL AMOUNT: EIG THOUSAND DOLLARS $845,000 2 THE ROSENN AD ~C61hMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-04 $870,000 ROSEMEAD COMMUNITY EVE T C I N REDEVELOPMEN 0. TAX ALLOCATWI 2 0RATE OF INTEREST: TY . T \\\Icu~lp: 3.250% Oct r, 200 5 0 0 REGISTERED OWNER: E o. PRINCIPAL AMOUNT: EIG RED EVE T OUSAND DOLLARS THE ROSE]Cbl~MJNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INT]WEST HEREIN. No. A-05 $900,000 ROSEMEAD COMMUNITY 1 REDEVELOPMENT TAX ALLOCATI-OP RATE OF INTEREST: 3.375% \ Oct6$vr 2011 \ \A*k1`Q1,2Wk \ \,/\\7N51,0 )~E 8 REGISTERED OWNER: E o. AMOUNT ~ED\ US* MJ0LLARS THE ROSEA")COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INT"EST HEREIN. No. A-06 $930,000 ROSEMEAD COMMUNITY DEVE O 1' U, t N REDEVELOPMENT O. TAX ALLOCA N D, 2 06 RATE OF INTEREST: TY T U IP: 3.500% Oct r 201 h, 2 0 5 REGISTERED OWNER: E o. PRINCIPAL AMOUNT: D IRT T SAND DOLLARS THE ROSENI AD~C61aMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du`'y organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-07 $965,000 ROSEMEAD COMMUNITY DE T C I N REDEVELOPMENT O. TAX ALLOCA 2 0 RATE OF INTEREST: TY T U IP: 3.500% Octo r 201 h, 2 7 5 0 G 3 REGISTERED OWNER: Co. PRINCIPAL AMOUNT: D TY- OUSAND DOLLARS THE ROSEN~`~AD~CbMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du yy organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND, IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INT"EST HEREIN. No. A-08 ROSEMEAD COMMUNITY DE REDEVELOPMENT TAX ALLOCAT4ONT RATE OF INTEREST: 4.000% Oct r , 201 REGISTERED OWNER: %E o. < PRINCIPAL AMOUNT: $1,000,000 THE ROSEWAD )COUMUr]ITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America.' The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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. No. A-09 ROSEMEAD COMMUNITY ECC%j d2O I N EDEVELOPMENT X ALLOCATIO. 6~. TA RATE OF INTEREST: $1,035,000 5.000% r\ \ Oct&'~r 1. 2014 \ \MWxVh\'9~29Q6\ \ \/\\77Q51,0 AJ 7 REGISTERED OWNER: E o. AMOUNT:L O tVIDAa N THIRTY "O SAND DOLLARS THE ROSEN")COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND. IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INT"EST HEREIN. No. A-10 ROSEMEAD COMMUNITY DE REDEVELOPMENT TAX ALLOCAT-IQ RATE OF INTEREST: 5.000% %\E r 201 REGISTERED OWNER: o. PRINCIPAL _ lv\„_,TY T AND DOLLARS AMOUNT: O ll~l~ $1,090,000 4 THE ROSENAD JC6MMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duty organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND, IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTFY2EST HEREIN. No. A-11 ROSEMEAD COMMUNITY D REDEVELOPMENT TAX ALLOCAT40 RATE OF - '~4 INTEREST: TY 5.000% Oct r ,.201 REGISTERED OWNER: Co. PRINCIPAL AMOUNT: $1,145,000 2 TY-FIVE THOUSAND DOLLARS THE ROSEN AD~CdMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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. No. A-12 ROSEMEAD COMMUNITY DE REDEVELOPMENT TAX ALLOCAT-IQ OWNER: $1,200,000 RATE OF INTEREST: 7E0. 4.000% REGISTERED 0. 0 PRINCIPAL AMOUNT: THOUSAND DOLLARS THE ROSE AD CbM- MUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, du y organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INVEST HEREIN. No. A-13 ROSEMEAD COMMUNITY DE REDEVELOPMENT TAX ALLOCATE $1,250,000 RATE OF '~4 INTEREST: TY T U IP: 4.250% Octo r 201 h, 2 7 5 8 REGISTERED OWNER: Co. PRINCIPAL AMOUNT: ONB T FIFTY THOUSAND DOLLARS THE ROSENaRAgD C6MMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from. its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLAl :517580.1 UNLESS THIS BOND, IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-14 ROSEMEAD COMMUNITY 1 REDEVELOPMENT TAX ALLOCAT40P RATE OF INTEREST: 4.000% Oct &o Vll REGISTERED OWNER: Co. < AMOUNPRINCIPAL TW"WD ~ V-~ GHT~TPIAYISAND DOLLARS $280,000 3 THE ROSEIV~AD)COMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ('DTC" TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-15 ROSEMEAD COMMUNITY D REDEVELOPMENT TAX ALLOCAT40 RATE OF INTEREST: 4.125% REGISTERED OWNER: %EV PRINCIPAL AMOUNT: T1N07~ E T"T OY SAND DOLLARS $290,000 THE ROSEl AD~CbkMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duty organized and existing under an d pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-16 ROSEMEAD COMMUNITY DE REDEVELOPMENT TAX ALLOCA'40N $300,000 RATE OF INTEREST: TY T U P: 4.125% Octo r 202 h , 2 7 5 9 REGISTERED OWNER: o. PRINCIPAL AMOUNT: THE ROSEN AD JCOMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED 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 INTWST HEREIN. No. A-17 ROSEMEAD COMMUNITY D REDEVELOPMENT TAX ALLOCAT40 $315,000 RATE OF INTEREST: TY T U IP: 4.125% Oct r, 202 , 2 O S7 REGISTERED OWNER: E Co. PRINCIPAL AMOUN THRm""FIFT"01 SAND DOLLARS THE ROSENhhADJCOMMUNITY DEVELOPMENT COMMISSION, a public body, corporate and politic, duly-organized and existing under and pursuant to the laws of the State of California (the "Commission"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Bond (unless this Bond is registered during the period from the 16th day of the month next preceding an interest payment date to and including such interest payment date, in which event it shall bear interest from such interest payment date, or unless this Bond is registered on or before September 15, 2006 in which event it shall bear interest from its Dated Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on October 1, 2006 and semiannually thereafter on April 1 and October 1 in each year. Both the interest hereon and principal hereof are payable in lawful money of the United States of America. The principal (or redemption price) hereof is payable upon surrender hereof at maturity or the earlier redemption hereof at the principal corporate trust office of U.S. Bank National Association, as Trustee, in St. Paul, Minnesota. Interest hereon is payable by check or draft mailed on the interest payment date by first class mail to the person in whose name this Bond is registered at the close of business on the 15th day of the month next DOCSLA1:517580.1 preceding the applicable interest. payment date at such person's address as it appears on the registration books of the Trustee, or upon written request received prior to the 15th day of the month preceding an interest payment date of an owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account designated by such owner within the continental United States. This Bond is one of a duly authorized issue of Rosemead Community Development Commission, Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A (the "Bonds"), limited in aggregate principal amount to $14,005,000, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions), all issued der the provisions of the Community Redevelopment Law of the State of California, as p e ented and amended (the "Law"), and pursuant to the provisions of an Indenture a a o ctober 1, 1993, as supplemented and amended by a First Supplement to tore, ed o March 1, 2006, between the Commission and the Trustee (collectiYeN a de e' nds are equally and ratably secured in accordance with the to s d iti the den and reference is hereby made to the Indenture, to any, in t up e t 1 ere o e Law for a description of the terms on whi onds i e t rovis s ith gard to the nature and extent of the se t provi fo e o a th a e, a to an manner of enforcement of such se urity, f s at m t f s t e egist a wn rs of the Bonds; and all t e t constitute a contr ct beti Bond, and to all e~ hereof, consents provisions of the aN conditions thereof. a of th entur d the L h e a d a in and n iss'o d the e 's o om t' t time of this g i 'o s th of th tee nd his acceptance ees ac e ' ere e e a e recourse to all the v the en e d sh 1 b b d by all the terms and The Bondsr*eIsAk Ao pro~idefiaAds to aid in the financing and refinancing of the Redevelopment Projec Aria Area of the Commission, a duly adopted redevelopment project in the city of Rosem d, C li a, as more particularly described in the Indenture. The Bonds are special obligations a Commission and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Pledged Tax Revenues (as that term is defined in the Indenture and herein called the "Pledged Tax Revenues"), and the Commission is not obligated to pay them except from the Pledged Tax Revenues. The Bonds are equally secured by a pledge of, and charge and lien upon, the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Additional tax allocation bonds payable from the Pledged Tax Revenues may be issued which will rank equally as to security with the Bonds, but only subject to terms and conditions set forth in the Indenture. The Commission hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Indenture when due, there has been created and will be maintained by the Trustee a special fund into which all Pledged Tax Revenues shall be deposited, and as an irrevocable charge the Commission has allocated the Pledged Tax Revenues solely to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and DOCSLA1:517580.1 2 the Commission will pay promptly when due the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds of this issue and all additional tax allocation bonds authorized by the Indenture out of said special fund, all in accordance with the terms and provisions set forth in the Indenture. The Bonds are subject to optional and mandatory sinking fund redemption has provided in the Indenture. As provided in the Indenture; .notice of redemption of this Bond shall be mailed not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof, but failure to receive such notice shall not affect t e sufficiency of such proceedings for redemption. If notice of redemption has been duly en s foresaid and money for payment of the above-described redemption price is held t\b such Bonds shall, on the redemption date designated in such notice In, e d an at the above- described redemption price; and from and after th t so i inte the Bonds so called for redemption shall cease to accrue =Nhis*6 o r of s h hall have no rights in respect thereof except to receiv pa uc ee ti p ' If an event ofd ault, a of d th all t ri cipal of all Bonds may be declared ue aya p e n i s t e m er th the effect provided in the e; ex e t that a Inden r i t ve is such declaration and it cons q e c Xs c' ded b t e ' to d ers t ea twenty- five per cent (25% 1 a V ipal of s e u din . The onds issu bl ly ' ii registered Bonds in the denomination of $5,0 or nt al u t' $5,0 0 t exceeding the principal amount of Bonds maturing at any t' e) The wner f and or Bonds may surrender the same at the above-mentioned 1 t e T tee i exchange for an equal aggregate principal amount of fully registere s oth authorized denominations, in the manner, subject to the conditions and upon t e pa e f the charges provided in the Indenture. This Bond is transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Bond or Bonds, in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Indenture, and upon payment of the charges therein prescribed. The Commission and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. The rights and obligations of the Commission and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture. DOCSLA1:517580.1 3 This Bond is not a• debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, and State nor any of its political subdivisions is liable hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be payable out of any funds or properties other than those of the Commission. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the members of the Commission nor any persons executing the Bonds shall be personally liable on the Bonds by reason of their issuance. This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee. It is hereby certified that all of the acts, conditi have happened or to have been performed precedent to i have happened and have been performed in due ti rm a that the amount of this Bond, together with al o r i bte exceed any limit prescribed by the Con itu '0 0 1 ws excess of the amount of Bonds nemnf ted to be' e n~e h' IN WI ES"~ Commission has aus s Bo and attested by it Secre , Attest: u l 6aruo- Secretary m Nas ired to exist, to ;t~he is Bond do exist, red by law and of ion, does not to o . and is not in imer son DEVELOPMENT r v vow Chairperson DOCSLA1:517580.1 4 This is one of the Bonds described in the within-mentioned Indenture which has been. authenticated and registered on March 9, 2006. U.S. BANK NATIONAL ASSOCIATION, as Trustee B Y AuthorizA-d STATEMENT OF Financial Guaranty' payments due for principal of and Corporation ("Ambac Assur New York, New York, e Ins Insurance Trusteed y suc a sc inspection at th 1 from Ambac 1 Policy shall be acknowledges and in the Policy. P5 o ic`L) with respect to ssu b Am ac Assurance to o New York, y d 'Il h d by such s n v 'lable for ere secured ' to b e under the er of this Bond ce as more fully set forth DOCSLAi :517580.1 5 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto (Social Security or other identifying Number of Assignee ) the within-mentioned registered Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Trustee, with full power of substitution in the premises. Dated: Signature guaranteed: Notice: Sign, by an eligible written on the fac enlargement or any (t must correspond with the name(s) as every particular, without alteration or DOCSLA1:517580.1 6 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A RECEIPT FOR BONDS The undersigned, Piper Jaffray & Co. (the "Underwriter"), hereby acknowledges receipt from U.S. Bank National Association, as successor trustee (the. "Trustee") under that certain Indenture, dated October 1, 1993 (the "Original Indenture"), by and between Rosemead Community Development Commission (formerly known as the Rosemead Redevelopment Agency) (the "Commission") and the Trustee, as supplemented by that certain First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement," together with the Original Indenture, the "Indenture"), by and between the Commission and the Trustee, the Commission's Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds") in the aggregate principal amount of $14,005,000. The undersigned has inspected the specimen of the Bonds and confirms that they have been executed and authenticated in accordance with Section 12.01 of the Indenture and are dated in accordance with, mature on the dates and are to bear interest at the rates provided in the First Supplement, and that the CUSIP number, denomination, amount and interest rate set forth on each such specimen Bond are correct. The undersigned further acknowledges that all of the conditions to its purchase of the Bonds have been fully satisfied or waived and that all opinions, documents and certificates received by the undersigned. regarding the Bonds contemplated by the Purchase Contract relating to the Bonds are satisfactory as to form and substance. Dated: March 9, 2006 PIPER JAFFRAY & CO. By: ~~j4n-" U Authorized Representative DOCSLA1:515415.1 41555-8 Ambac Assurance Corporation One State Street Plaza. New York, NY 10004 212.668.0340 A member ofAmbac Financial Group, Inc. COMMITMENT FOR FINANCIAL GUARANTY INSURANCE Obligor: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, CALIFORNIA REDEVELOPMENT PROJECT AREA NO.1 Commitment Number: 29850 Commitment Date: January 23, 2006 Expiration Date: April 24, 2006 Obligations: $14,405,000` Tax Allocation Bonds, Series 2006, dated February 15, 2006 and maturing October 1 in the years 2006 through 2022, both inclusive. Insurance premium: 1.10% of the total principal and interest due on the Obligations (Fitch Ratings, Moody's Investors Service and Standard & Poor's Credit Markets Services assess separate rating fees which are payable directly to them. Each rating agency will bill separately and all questions regarding the payment of such fees must be addressed to the applicable agency.) Ambac Assurance Corporation ("Ambac"), a Wisconsin Stock Insurance Corporation, hereby commits to issue a Financial Guaranty Insurance Policy (the "Policy") relating to the above- described debt obligations (the "Obligations"), substantially in the form imprinted in this Commitment, subject to the terms and conditions contained herein or added hereto (see conditions set forth herein). To keep this Commitment in effect after the expiration date set forth above, a request for renewal must be submitted to Ambac prior to such expiration date. Ambac reserves the right to refuse wholly or in part to grant a renewal. The Financial Guaranty Insurance Policy shall be issued if the following conditions are satisfied: 1. The documents to be executed and delivered in connection with the issuance and sale of the Obligations shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to make the information contained therein not misleading. 2. No event shall occur which would permit any purchaser of the Obligations, otherwise required, not to be required to purchase the Obligations on the date scheduled for the issuance and delivery thereof. 3. There shall be no material change in or affecting the Obligations (including, without limitation, the security for the Obligations or the proposed debt service structure for the Obligations) or the Subject to change, with Ambac's approval. financing documents or the official statement (or any similar disclosure document) to be executed and delivered in connection with the issuance and sale of the Obligations from the descriptions or schedules thereof heretofore provided to Ambac. 4. The Obligations shall contain no reference to Ambac, the Policy or the financial guaranty insurance evidenced thereby except as may be approved by Ambac. 5. Ambac shall be provided with: (a) Executed copies of all financing documents, the official statement (or any similar disclosure document) and the various legal opinions delivered in connection with the issuance and sale of the Obligations, including, without limitation, the unqualified approving opinion of bond counsel rendered by a law firm acceptable to Ambac. The form of Bond Counsel's approving opinion shall also indicate, if applicable, that the Obligations are exempt from federal income taxation, that the Obligor must comply with certain covenants under and pursuant to the Internal Revenue Code and that the Obligor has the legal power to comply with such covenants. Such opinion of bond counsel shall be addressed to Ambac or, in lieu thereof, a letter shall be provided to Ambac to the effect that Ambac may rely on such opinion as if it were addressed to Ambac. (b) Evidence of a wire transfer in an amount equal to the insurance premium at the time of the issuance and delivery of the Obligations. 6. Unless expressly waived in whole or in part by Ambac, the financing documents and the Official Statement shall contain (a) the terms and provisions provided in Ambac's STANDARD PACKAGE transmitted herewith, and (b) any additional oral or written provisions or comments submitted by Ambac. 7. Ambac shall receive a copy of any insurance policy, surety bond, guaranty or indemnification or any other policy, contract or agreement which provides for payment of all or any portion of the debt, the costs of reconstruction, the loss of business income or in any way secures, ensures or enhances the income stream anticipated to pay the Obligations. 8. Any provisions or requirements of the Purchase Contract or Bond Purchase Agreement referencing Ambac must be sent to the attention of our Closing Coordinator not less than five (5) business days prior to closing. If such provisions or requirements are not received within that time, compliance may not be possible. 9. Review and approval by Ambac at least 5 days prior to the closing of the Escrow Agreement for the defeasance of the applicable Obligations (the "Prior Obligations"). 10. Prior to closing, Ambac must receive certification by an accounting firm acceptable to Ambac that the securities invested are sufficient to pay the Prior Obligations. Upon receipt of this commitment Ambac should be notified which firm will be providing certification. 11. Receipt of an acceptable opinion of counsel addressed to Ambac that the Prior Obligations have been legally defeased. 12. Receipt of an acceptable opinion of counsel addressed to Ambac with regard to the validity and enforceability of the Escrow Agreement. 13. If a forward supply contract is used: (a) Securities delivered to the escrow agreement must be non-callable U.S. Government obligations, which do not mature later than the date needed to pay debt service on the refunded Obligations. (b) The CPA verification must be in form and substance satisfactory to Ambac and must opine that the escrow is sufficient to defease the refunded Obligations whether or not the forward supply contract provider delivers securities to the escrow. (c) The forward supply contract must specify that (i) the purchase price of the securities delivered to the escrow must not exceed the amount of cash received from maturing securities in the escrow, as specified in the verification, and (ii) the maturity value of the securities delivered to the escrow must not be less than the purchase price paid for such securities. (d) The forward supply contract provider shall have no recourse to the escrow upon any failure of the Obligor or escrow agent to perform its obligations under the forward supply contract. Other than the payment of the purchase price for the securities to be delivered pursuant to the forward supply contract, no payments of any other kind may be made from the escrow in respect of the forward supply contract. (e) The forward supply contract provider must be rated at least A by a nationally recognized rating agency. (f) The forward supply contract shall be in form and substance satisfactory to Ambac. 14. One-half of the debt service reserve fund for the Obligations shall be funded with cash and one- half shall be funded with a surety bond to be provided by Ambac. 15. The documents relating to the Obligations shall provide that the Obligor shall annually review, prior to the release of surplus tax increment revenues, tax increment revenues allocable to it under then current redevelopment law that have been received since the inception of the Obligor's redevelopment plan and measure such revenues against the Obligor's then effective cumulative tax increment limitation. If remaining revenues allocable within the plan limit are less than 1.05x all future debt service and other obligations, Ambac shall be immediately notified and all revenues not needed to pay debt service or replenish the debt service reserve fund shall be deposited into a trustee-held escrow account and invested in Defeasance Obligations. Such account shall be sufficient to and shall be s6d to call Obligations or pay debt service without regard to interest earnings thereon. No thstanding anything herein to the contrary, the provisions of this paragraph may be modifie or wai ed with the consent of Ambac. rized Officer Ambac Assurance Corporation One State Street Plaza New York, NY 10004 212.668.0340 A member of Ambac Financial Group, Inc. COMNIITMENT FOR SURETY BOND Obligor: ROSEMEAD COMMUNITY DEVELOPMENT CONMSSION, CALIFORNIA, REDEVELOPMENT PROJECT AREA NO.1 Commitment Number: SB29849 Commitment Date: January 23, 2006 Expiration Date: April 24, 2006 Obligations: $14,405,000* Tax Allocation Bonds, Series 2006, dated February 15, 2006 and maturing October 1, 2022 Surety Amount: $1,440,500* Insurance premium: 3.25% of the surety amount. Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Corporation hereby commits to issue a Surety Bond (the "Commitment") relating to the Debt Service Reserve Fund for the above-described debt obligations (the "Obligations"), substantially in the form attached hereto, subject to the terms and conditions contained herein or added hereto (see conditions set forth herein). To extend this Commitment after the expiration date set forth above, an oral (subsequently confirmed in writing) or written request for renewal must be submitted to Ambac at least one business day prior to such expiration date. Ambac reserves the right to refuse to grant a renewal or may renew this Commitment subject to additional terms and conditions. The Surety Bond (the "Surety") shall be issued if the following conditions are satisfied: 1. Ambac shall receive an opinion of counse 5 - or ultimate obligor stating that the information supplied to actin-or er to ol~tam=the Surety Man andlle documents to be executed and delivered in connection with the issuance and sale of the Obligations do not contain any untrue or misleading statement of a material fact and do not fail to state a material fact required to be stated therein or necessary in order to make the information contained therein not misleading. 2. No event shall occur which would permit any purchaser of the Obligations, otherwise required, not to be required to purchase the Obligations on the date scheduled for the issuance and delivery thereof. 3. There shall be no material change in or affecting the Obligations, the Obligor or ultimate obligor (including, but not limited to, the security for the Obligations or the proposed debt service structure for the Obligations), the Official Statement, if any (or any similar disclosure document), including any financial statements therein contained, the financing documents or any legal opinions to be executed and delivered in connection with the issuance and sale of the Obligations, or any other information . Subject to change, with Ambac's approval. submitted to Ambac in order to obtain the Surety, from the descriptions or schedules thereof heretofore provided to Ambac at any time prior to the issuance of the Obligations and there shall not have occurred or come to the attention of the Obligor or purchaser any material change of fact or law adverse to the interests of Ambac, unless approved by Ambac in writing. 4. Unless expressly waived in whole or in part by Ambac, the financing documents shall contain a) the terms and provisions provided in the Ambac STANDARD PACKAGE transmitted herewith, and b) any provisions or comments given orally by Ambac. 5. Ambac will prepare, and the Obligor will execute, ent n a form (with such revisions of Ambac and the Obligor agree to) contained ~"xi VINIM- Package: 6. NO LATER THAN FIVE (5) BUSINESS DAYS PRIOR TO CLOSING, Ambac shall be provided with: a) the final debt service schedule; and b) proposed copies of all financing documents; and c) the proposed official statement (or any similar disclosure document); and d) the proposed various legal opinions delivered in connection with the issuance and sale of the Obligations, including, without limitation, the unqualified approving opinion of bond counsel rendered by a law firm acceptable to Ambac. The form of bond counsel's approving opinion must be acceptable to Ambac. The form of bond counsel's approving opinion shall indicate that the Obligor must comply with certain covenants under and pursuant to the Internal Revenue Code of 1986, as amended and that the Obligor has the legal power to comply with such covenants. Ambac shall also be provided with executed copies of all financing documents, including but not limited to the Official Statement (or any similar disclosure document) and the various legal opinions rendered. The executed opinion of bond counsel shall be addressed to Ambac or in lieu thereof, a letter shall be provided to Ambac to the effect that Ambac may rely on such opinion as if it were addressed to Ambac and such letter shall be delivered with an executed opinion; and e) any provisions of the Purchase Contract or Bond Purchase Agreement referencing Ambac or the Obligor of the Surety in general. If such provisions are not received in a timely manner or if provisions are inserted in the Purchase Contract or Bond Purchase Agreement without Ambac's knowledge, compliance with such provisions may not be possible; and f) a letter from bond counsel or counsel to the purchaser or otherwise from another counsel acceptable to Ambac to the effect that the financing documents, the Official Statement (or any similar disclosure document) and the various legal opinions executed and.delivered in connection with the issuance and sale of the Obligations, are substantially in the forms previously submitted to Ambac for review, with only such amendments, modifications or deletions as may be approved by Ambac; and g) a copy of any insurance policy, surety bond, guaranty or indemnification or any other policy, contract or agreement which provides for payment of all or any portion of the debt, the costs of reconstruction, the loss of business income or in any way secures, ensures or enhances the income stream anticipated to pay the Obligations. 7. Evidence of wire transfer of an amount equal to the payment for the Surety at the time of the issuance and delivery of the Obligations. (8. An opinion addressed to Ambac by counsel acceptable to Ambac that the Guaranty Agreement is a legal, valid and binding obligation of the Obligor thereof, enforceable in accordance with its terms. 9. The escrow agreement, in form and substance acceptable to Ambac, for the complete defeasance of the applicable Obligations (the "Prior Obligations"). 10. Certification by a nationally recognized accounting firm, pre-approved by Ambac, that the securities invested are sufficient to pay the Prior Obligations. 11. Ambac must receive an opinion of Counsel acceptable to Ambac that the Prior Obligations have been legally defeased. 12. A draft opinion of bond counsel or special tax counsel acceptable to Ambac, addressed to Ambac, and a telecopy of the executed opinion on the day of closing (to the attention of your closing coordinator) to the effect that the refunding and escrow are in full compliance with all applicable Federal arbitrage regulations. 13. Funds held by the Escrow Trustee for the payments of the refunded Obligations must be held as cash fully insured by or the Federal Deposit Insurance Corporation or invested in direct obligations of the United States of America. 14. Ambac must receive, at least five (5) business days prior to closing, a draft opinion of Obligor's counsel or escrow agent's counsel, -and a telecopy of the executed opinion on the day of closing (to the attention of your closing coordinator) regarding the validity, binding nature and enforceability of the escrow agreement. 15. IF A FORWARD SUPPLY CONTRACT IS USED: a) Securities delivered to the escrow agreement must be non-callable U.S. Government obligations which do not mature later than the date on which needed to pay debt service on the refunded Obligations. b) The CPA verification must be in a form and substance satisfactory to Ambac and must opine that the escrow is sufficient to be defease the refunded Obligations whether or not the forward supply contract provider delivers securities to the escrow. c) The forward supply contract must specify that (a) the purchase price of the securities delivered to the escrow must not exceed the amount of cash received from maturing securities in the escrow, as specified in the verification, and (b) the maturity value of the securities in the escrow must not be less than the purchase price paid for such securities. d) The forward supply contract provider shall have no recourse to the escrow upon any failure of the Obligor or escrow agent to perform its obligations under the forward supply contract. Other than the payment of the purchase price for the securities to be delivered pursuant to the forward supply contract, no payments of any other kind may be made from the escrow in respect to the forward supply contract. A e) The forward supply contract pro t,117 must be at least A by a nationally recognized rating agency. f) The forward supply contract shal in form and substance satisfactory to Ambac. The MCGmw-HH1 ompam,, STANDARD &POOR'S March 7, 2006 Ambac Assurance Corporation One State Street Plaza 15th FL New York, NY 10004 Attention: Ms. Yolanda Ortiz, Insurance Coordinator 55 Water Street, 38th Floor New York, NY 10041.0003 tel 212 438.2074 reference no.: 758992 Re: $14,005,000 Rosemead Community Development Commission (Los Angeles County, California), Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A, dated: Date of Deliyery, due:_ October 1, 2006-2022, (POLICY #25111BE) Dear Ms. Ortiz: Standard & Poor's has reviewed the rating on the above-referenced obligations. After such review, we have changed the rating to "AAA" from "BBB+". The rating reflects our assessment of the likelihood of repayment of principal and interest based on the bond insurance policy your company is providing. Therefore, rating adjustments may result from changes in the financial position of your company or from alterations in the documents governing the issue. The rating is not investment, financial, or other advice and you should not and cannot rely upon the rating as such. The rating is based on information supplied to us by you but does not represent an audit. We undertake no duty of due diligence or independent verification of any information. The assignment of a rating does not create a fiduciary relationship between us and you or between us and other recipients of the rating. We have not consented to and will not consent to being named an "expert" under the applicable securities laws, including without limitation, Section 7 of the Securities Act of 1933. The rating is not a "market rating" nor is it a recommendation to buy, hold, or sell the obligations. This letter constitutes Standard & Poor's permission to you to disseminate the above-assigned rating to interested parties. Standard & Poor's reserves the right to inform its own clients, subscribers, and the public of the rating. Standard & Poor's relies on the issuer and its counsel, accountants, and other experts for the accuracy and completeness of the information submitted in connection with the rating. This rating is based on financial information and documents we received prior to the issuance of this letter. Standard & Poor's assumes that the documents you have provided to us are final. If any subsequent changes were made in the final documents, you must notify us of such changes by sending us the revised final documents with the changes clearly marked. Ms. Yolanda Ortiz Page 2 March 7, 2006 Standard & Poor's is pleased to be of service to you. For more information please visit our website at www.standardandpoors.com. If we can be of help in any other way, please contact us. Thank you for choosing Standard & Poor's and we look forward to working with you again. Sincerely yours, Standard & Poor's Ratings Services a division of The McGraw-Hill Companies, Inc. ak [19-Jan-2006] Summary: Rosemead Community Development Commision, CA; Tax Sec... Pagel of 3 STANDARD RAT 1' N G S D 1 R E C -r &POOWS RESEARCH Summary: Rosemead Community Development Commision, CA; Tax Secured, Tax Increment Publication date: 19-Jan-2006 Primary Credit Analyst: Robert Williams, San Francisco 415-371-5070; robert williams(a)standardandpoors.com Secondary Credit Analyst: David G Hitchcock, New York (1) 212-438-2022; david hitchcock(a)standardandpoors.com Credit Profile US$14.5 mil Tax alloc bnds due 10/01/2022 BBB+ Sale date: 15-FEB-2006 UPGRADED To From $34.275 mil. Rosemead Cmmnty Dev Comm (Proj Area #1) Tax Alloc BBB+ BBB OUTLOOK: STABLE Rationale Standard & Poor's Ratings Services raised its rating to 'BBB+'.from 'BBB' on Rosemead Community Development Commission (formerly known as Rosemead Redevelopment Agency), Calif.'s series 1993 tax-allocation bonds (TABs) and assigned its'BBB+' rating to the commission's 2006 TABs, reflecting good tax base growth and the stability of Southern California Edison Co. (SCE; 'BBB+' issuer credit rating), a major presence in the project area. Other factors include: • Low city wealth levels and a relatively small tax base; • Reliance on unitary tax revenues, which account for 25% of pledged revenues, distributed by the county but attributable to the SCE property; and • A history of some declines in taxable assessed value (AV) prior to the recent healthy tax base appreciation. Tempering factors include: • An established residential, commercial, and industrial tax base well situated within the greater Los Angeles economy; • Moderate tax base concentration, excluding unitary revenue generated from the SCE property; • A low volatility ratio of 0.09, indicating a mature project area that is less sensitive to fluctuations in the value of the tax base; • Adequate 1.25x coverage of maximum annual debt service (MADS); and • An adequate 1.25x additional bonds test and fully funded debt service reserve. The bonds are secured by incremental tax revenues from Redevelopment Project Area No. 1, net of the 20% low- and moderate-income housing set asides. Proceeds of the 2006 bonds will be used to refund a portion of the series 1993 debt and fund approximately $4.3 million in additional capital projects within the http://Www.ratingsdirect.com/AppsIRD/controller/Article?id=488526&type=&outputType... 1/19/2006 [19-Jan-2006] Summary: Rosemead Community Development Commision, CA; Tax Sec... Page 2 of 3 project area. The City of Rosemead is located about 12 miles east of downtown Los Angeles. Median household income levels for the city are below average, at 87% of the national and 77% of the state levels, and are much lower on a per capita basis (indicative of large households), at only 54% of both the state and nation. The 511-acre, almost fully developed Project Area No. 1 consists of a mix of commercial (29% of total AV) and industrial (9.6%) uses as well as a significant residential area (44.6%). The project area's AV has fluctuated over the last 10 years, with some declines during the 1990s that led to decreased debt service coverage, but has grown 46% (a strong 9.9% per year) over the last four years to $370.7 million in fiscal 2006. This recent growth is due to redevelopment activity, as well as healthy turnover and reassessment of existing properties, residential properties in particular. The volatility ratio of base year AV to total AV is very low, at 0.09, reflecting the maturity of the project area and relatively low sensitivity of pledged increment to fluctuations in total AV. While property taxpayer concentration is moderate--the top 10 taxpayers account for 20.8% of total and 22.3% of incremental AV, with 8.0% of total and 8.6% of incremental AV (secured and unsecured) attributable to the single largest taxpayer, a commercial property-reliance on unitary tax revenues attributable to the large SCE property remains significant. Based on projected 2006 pledged revenues, which include tax increment generated from individually taxed parcels as well as unitary revenues distributed by the county, unitary revenues from SCE totaled $1.2 million and account for 25.3% of total pledged revenues. Pursuant to legislation enacted in 1986 and 1987, utility property is assessed by the State Board of Equalization and distributed to each taxing jurisdiction within the county equal to the amount distributed in the previous year plus growth or, in the event of a countywide decline in state- assessed utility property, adjusted downward on a pro-rata basis. Since fiscal 1993, utility-related unitary revenues have declined 23% countywide due to privatization of some utility properties, as well as a decline in value associated with telecommunication utilities. While there is some risk of continued declines in countywide valuation of utility properties, distribution of the unitary tax to the agency is not directly reliant on the health or creditworthiness of SCE alone. Coverage of future MAIDS after the current issuance, based on 2006 projected net revenues, is adequate at 1.25x. The agency pays prior lien pass-through payments to two underlying taxing agencies equal to a combined 21.1 % of the tax increment. [However, there is no prior lien of state housing set-aside requirements, as the low and moderate housing requirement was prefunded from bond proceeds through 2023.] Additional bonds may not be issued on parity with these bonds unless net tax increment revenues cover the new MAIDS of 1.25x. Outlook The stable outlook reflects the recent healthy trend in property valuations, which should continue to support adequate debt service coverage. The outlook also anticipates the relative stability of the county- distributed unitary tax associated with SCE utility property within the project area, keeping coverage of maximum and actual annual debt service coverage above 1.25x. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process. Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the rating, it receives no payment for doing so, except for subscriptions to its publications. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. http://www. ratingsdirect.com/AppsIRD/controller/Article?id=488526&type=&outputType 1/19/2006 [19-Jan-2006] Summary: Rosemead Community Development Commision, CA; Tax Sec... Page 3 of 3 Copyright ©1994-2006 Standard i£ Poor's, a division of The McGraw-Hill Companies. All Rights Reserved. Privacy Notice http://www.ratingsdirect.com/AppsIRD/controller/Article?id=488526&type=&outputType 1/19/2006 Ambac Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, New York 10004 Financial Guaranty Insurance Policy Telephone: (212) 668-0340 Obligor: ROSEMEAD COMMUNITY DEVELOPMENT Policy Number: CONMSSION 25111BE (LOS ANGELES COUNTY, CALIFORNIA) Obligations: $14,005,000 Redevelopment Project Area: No. 1 Tax Allocation Bonds, Premium: $204,737.84 Series 2006A, dated their Date of Delivery and maturing on October 1 in the years 2006 through 2022, both inclusive. The Trustee is U.S. Bank National Association, Los Angeles, California. Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New Yo , trustee, or its successor (the "Insurance Trustee"), for the benefir of the Holders, that portion of the principal of and i t o t above-described obligations (the "Obligations") which shall become Due for Payment but shall be unpaid by re n o No a in t by the Obligor. Ambac will make such payments to the Insurance Trustee within one (1) b s day fol ing r to notification to Ambac of Nonpayment. Upon a Holder's presentation and surrender to the Insu nc Tr t e of such aid ig bons or related coupons, uncanceled and in bearer form and free of any adverse claim, th ns a e ee t dis urse th Holder the amount of principal and interest which is then Due for Payment but is np i Up n uch i u ement, mba ha become the owner of the surrendered Obligations and/or coupons and shall e illy ub o red o 11 o tl r ah to a ent thereon. In cases where the Obligations are issued in r ere form, h In r nc t e is 1 disburs in al to Holder only upon presentation and surrender to the Insura Trust e the unp i O li at n, n n e d and ft fa adve e claim, together with an instrument of assignment for satisfac to ba • d h I u ee y exe ut y th Holder or such Holder's duly authorized repre ntative, o s to pe i ow er p o su b o to re stered 1 t e e f Ambac or its nominee. The Insura us a shall s urs intere t o Hold o a e t e O 11 ati n o p u rese carton to the Insurance Trustee of p of rh t claiman i th person en 'tied tot p e of i re t n t e Ob ' ti a d livery to the Insurance Trustee of a instru n o \gn nt,' o sa 'sfactory A ac d t I u ante Tru ly xecuted by the Holder or such Holde ' d a ri d e e entative, t ns erri to a rig r such ation to receive the interest in respecr of w is t ns ra a dis Bement m de. c a e u a e to of the Holders' rights to payment on regisrered O lig s to he exten -an sura ce is urs en s a e. In the event that a trustee or payi ent fo th O ligatio has nori a ha a y ment of principal of or interest on an Obligation which has becom Due for me and hi to a H de b or on behalf of the Obligor has been deemed a preferential transfer and thereto a reco a ed om the o der p rs nt to he nited States Bankruptcy Code in accordance with a final, nonappealable order of a court f c e nt juris iction, su h r will be entitled to payment from Ambac to the extent of such recovery if sufficient fence of t e ise avai ble. Ob n other n (i) the Obligor or (ii) any person whose obligations constitute the As used herein, the term "Holder mee Jan ers underlying security or source of pent h igations who, at the time of Nonpayment, is the owner of an Obligation or of e a coupon relating to an Obligation. s he in, "Due for Payment", when referring to the principal of Obligations, is when the scheduled maturity date or manda demption date for the application of a required sinking fund installment has been reached and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by application of required sinking fund installments), acceleration or other advancement of maturity; and, when referring to interest on the Obligations, is when the scheduled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in full of all principal of and interest on the Obligations which are Due for Payment. This Policy is noncancelable. The premium on this Policy is not refundable for any reason, including payment of the Obligations prior to maturity. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment. In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. JRpN~E .Coq ~ P; ~p0.POGgr C, •.41 tc nY7 •t Y •`.O~ President r. Effective Date: March 9 2006 THE BANK OF NEW YORE acknowledges that it has agreed to perform the duties of Insurance Trustee under this Policy. Form No.: 2B-0012 (1/01) A- 9285 Secre Authorized Re tarive Authorized Officer of Insurance Trustee Ambac Endorsement Policy for: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION (LOS ANGELES COUNTY, . CALIFORNIA) In the event that c s C rpora 'o were under the Policy oul b u o ve ge by Association, estab ' I rd su t e law f e Sta Attached to and forming part of Policy No.: 25000BE Ma~ch 9, Nothing herein contained shall be eld to er, waive or extend any of the terms, conditions, provisions, agreements or limitations of the above mention o ' other than as above stated. In Witness Whereof, Ambac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the countersignature of its duly authorized representative. Ambac Assurance Corporation -000 f`C / t ~K~~MM . 0 President \.'ti~w'yeo ' i Secret Authorized R]?tive Form No.: 2B-0015 (7/97) Ambac Assurance Corporation One State Street Plaza, 15th Floor New York, New York 10004 Telephone: (212) 668-0340 GUARANTY AGREEMENT GUARANTY AGREEMENT dated as of March 9, 2006 by and between ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, a public body corporate organized and existing under the laws. of the State of California (the "Obligor"); and AMBAC ASSURANCE CORPORATION ("Ambac"), a Wisconsin domiciled stock insurance corporation. WITNESSETH: WHEREAS, the Obligor has issued its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A, of which $23,095,000 is outstanding as of the date hereof, and has or will issue $14,005,000 in aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (collectively, the "Obligations"); and WHEREAS, Ambac will issue its Surety Bond (the "Surety Bond"), substantially in the form set forth in Annex A to this Agreement, guaranteeing certain payments by the Obligor subject to the terms and limitations of the Surety Bond; and WHEREAS, to induce Ambac to issue the Surety Bond, the Obligor has agreed to pay the premium for such Surety Bond and to reimburse Ambac for all payments made by Ambac under the Surety Bond from Legally Available Funds, all as more fully set forth in this Agreement; and WHEREAS, the Obligor understands that Ambac expressly requires the delivery of this Agreement as part of the consideration for the execution by Ambac of the Surety Bond; and NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and of the execution of the Surety Bond, the Obligor and Ambac agree as follows: ARTICLE I DEFINITIONS; SURETY BOND Section 1.01. Definitions. Except as otherwise expressly provided herein or unless the context otherwise requires, the terms. which are capitalized herein shall have the meanings specified in Annex B hereto. Section 1.02. Sure 1y Bond. (a) Ambac will issue the Surety Bond in accordance with and subject to the terms and conditions of the Commitment. (b) The maximum liability of Ambac under the 'Surety Bond and the coverage and term thereof shall be subject to and limited by the Surety Bond Coverage and the terms and conditions of the Surety Bond. (c) Payments made under the Surety Bond. will reduce the Surety Bond Coverage to the extent of that payment, provided that the Surety Bond Coverage shall be automatically reinstated to the extent of the reimbursement of principal by the Obligor of any payment made by Ambac. Ambac shall notify the Trustee in writing no later than the fifth (5th) day following the reimbursement by the Obligor that the Surety Bond has been reinstated to the extent of such reimbursement. Section 1.03. Premium. In consideration of Ambac agreeing to issue the Surety Bond hereunder, the Obligor hereby agrees to pay or cause to be paid from Legally Available Funds the premium set forth in the Commitment. Section 1.04. Certain Other Expenses. The Obligor will pay all reasonable fees and disbursements of Ambac's counsel related to any modification of this Agreement or the Surety Bond. ARTICLE H REIMBURSEMENT OBLIGATIONS OF OBLIGOR AND SECURITY THEREFORE Section 2.01. Reimbursement for Payments Under the Surety Bond and Expenses. (a) The Obligor will reimburse Ambac, from Legally Available Funds within the Reimbursement Period, without demand or notice by Ambac to the Obligor or any other person, to the extent of each Surety Bond Payment with interest on each Surety Bond Payment from and including the date made to the date of the reimbursement by the Obligor at the Effective Interest Rate. The Obligor agrees that it shall make monthly level principal repayments for each Surety Bond Payment during the Reimbursement Period. Interest on each Surety Bond Payment shall be paid monthly during the Reimbursement Period. To the extent that interest payments due hereunder are not paid on a monthly basis, or are not paid as each principal repayment is made, interest shall accrue on such unpaid amounts at a rate equal to the Effective Interest Rate. (b) The Obligor also agrees to reimburse Ambac, from Legally Available Funds, immediately and unconditionally upon demand for all reasonable expenses incurred by Ambac in connection with the Surety Bond and the enforcement by Ambac of the Obligor's obligations under this Agreement together with interest on all such expenses from and including the date which is 30 days from the date a statement for such expenses is received by the Obligor incurred to the date of payment at the rate set forth in subsection (a) of this Section 2.01. Section 2.02. Allocation of Payments. Ambac and the Obligor hereby agree that each repayment of principal received by Ambac from or on behalf of the Obligor as a reimbursement to Ambac as required by Section 2.01(a) hereof shall be applied to reinstate all or a portion of the Surety Bond Coverage to the extent of such repayment. Any interest payable pursuant to Section 2.01(a) hereof shall not be applied to the reinstatement of any portion of the Surety Bond Coverage. Section 2.03. Security for Payments; Instruments of Further Assurance. To the extent, but only to the extent, that the Indenture pledges to the Owners or the Trustee therefor, or grants a security interest or lien in or on any collateral property, revenue or other payments ("Collateral and Revenues") in order to secure the Obligations or provide a source of payment for the Obligations, the Obligor hereby grants to Ambac a security interest in or lien on, as the case may be, and pledges to Ambac all such Collateral and Revenues as security for payment of all amounts due hereunder, which security interest, lien and/or pledge created or granted under this Section 2.03 shall be subordinate only to the interests of the Owners and any Trustee therefor in such Collateral and Revenues. The Obligor agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all financing statements, if applicable, and all other further instruments as may be required by law or as shall reasonably be requested by Ambac for the perfection of the security interest,. if any, granted under this Section 2.03 and for the preservation and protection of all rights of Ambac under this Section 2.03. 2 Section 2.04. Unconditional Obligation. The obligations of the Obligor hereunder are absolute and unconditional and will be paid or performed strictly in accordance with this Agreement, irrespective of (a) any lack of validity or enforceability of, or any amendment or other modification of, or waiver with respect to the Indenture or the Obligations; (b) any exchange, release or nonperfection of any security interest in property securing the Obligations or this Agreement or any obligations hereunder; (c) any circumstances which might otherwise constitute a defense available to, or discharge of, the Obligor with respect to the Obligations; (d) whether or not such obligations are contingent or matured, disputed or undisputed, liquidated or unliquidated. ARTICLE III EVENTS OF DEFAULT; REMEDIES Section 3.01. Events of Default. The following events shall constitute Events of Default hereunder: (a) The Obligor shall fail to pay to Ambac any amount payable under Sections 1.04 and 2.01 hereof and such failure shall have continued for a period in excess of the Reimbursement Period; (b) Any material representation or warranty made by the Obligor hereunder or under the Indenture or any statement in the application for the Surety Bond or any report, certificate, financial statement or other instrument provided in connection with the Commitment, the Surety Bond or herewith shall have been materially false at the time when made; (c) Except as otherwise provided in this Section 3.01, the Obligor shall fail to perform any of its other obligations under this Agreement, provided that such failure continues for more than thirty (30) days after receipt by the Obligor of notice of such failure to perform; (d) The Obligor shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, paying agent, custodian, sequestrator or similar official for the Obligor or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take action for the purpose of effecting any of the foregoing; or (e) An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Obligor, or of a substantial part of its property, under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency or similar law or (ii) the appointment of a receiver, paying agent, custodian, sequestrator or similar official for the Obligor or for a substantial part of its property; and such proceeding or petition shall continue 3 undismissed for sixty (60) days of an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for thirty (30) days. Section 3.02. Remedies. If an Event of Default shall occur and be continuing, then Ambac may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due under this Agreement or any related instrument and enforce any obligation, agreement or covenant of the Obligor under this Agreement; provided, however, that Ambac may not take any action to direct or require acceleration or other early redemption of the Obligations or adversely affect the rights of the Owners. All rights and remedies of Ambac under this Section 3.02 are cumulative and the exercise of any one remedy does not preclude the exercise of one or more of the other available remedies. ARTICLE IV SETTLEMENT Ambac shall have the exclusive right to decide and determine whether any claim, liability, suit or judgment made or brought against Ambac, the Obligor or any other party on the Surety Bond shall or shall not be paid, compromised, resisted, defended, tried or appealed, and Ambac's. decision thereon, if made in good faith, shall be final and binding upon the Obligor. An itemized statement of payments made by Ambac, certified by an officer of Ambac, or the voucher or vouchers for such payments, shall be prima facie evidence of the liability of the Obligor, and if the Obligor fails to reimburse Ambac, pursuant to subsection (b) of Section 2.01 hereof, upon the receipt of such statement of payments, interest shall be computed on such amount from the date of any payment made by Ambac at the rate set forth in subsection (a) of Section 2.01 hereof. ARTICLE V NUSCELLANEOUS Section 5.01. Computations. All computations of premium, interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Section 5.02. Exercise of Rights. No failure or delay on the part of Ambac to exercise any right, power or privilege under this Agreement and no course of dealing between Ambac and the Obligor or any other party shall operate as a waiver of any such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which Ambac would otherwise have pursuant to law or equity. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances, or constitute a waiver of the right of the other party to any other or further action in any circumstances without notice or demand. Section 5.03. Amendment and Waiver. Any provision of this Agreement may be amended, waived, supplemented, discharged or terminated only with the prior written consent of the Obligor and Ambac. The Obligor hereby agrees that upon the written request of the Trustee, Ambac may make or consent to issue any substitute for the Surety Bond to cure any ambiguity or formal defect or omission in the Surety Bond which shall meet the requirements of Section 5.07 (4)(c) of the Indenture and which does not materially change the terms of the Surety Bond nor adversely affect the rights of the Owners, and this 4 Agreement shall apply to such substituted Surety Bond. Ambac agrees to promptly deliver to the Obligor and to the company or companies, if any, rating the Obligations, a copy of such substituted Surety Bond. Section 5.04. Successors and Assigns; Descriptive Headings. (a) This Agreement shall bind, and the benefits thereof shall inure to, the Obligor and Ambac and their respective successors and assigns; provided, that the Obligor may not transfer or assign any or all of its rights and obligations hereunder without the prior written consent of Ambac. (b) The descriptive headings of the various provisions of this Agreement are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. Section 5.05. Other Sureties. If Ambac shall procure any other surety to reinsure the Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and assigns, so as to give to it a direct right of action against the Obligor to enforce this Agreement, and "Ambac," wherever used herein, shall be deemed to include such reinsuring surety, as its respective interests may appear. Section 5.06. Signature on Bond. The Obligor's liability shall not be affected by its failure to sign the Surety Bond nor by any claim that other indemnity or security was to have been obtained nor by the release of any indemnity, nor the return or exchange of any collateral that may have been obtained. Section 5.07. Waiver. The Obligor waives any defense that this Agreement was executed subsequent to the date of the Surety Bond, admitting and covenanting that such Surety Bond was executed pursuant to the Obligor's request and in reliance on the Obligor's promise to execute this Agreement.' Section 5.08. Notices, Requests, Demands. Except as otherwise expressly provided herein, all written notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been given or made when actually received, or in the case of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a party hereto, when sent, addressed as specified below or at such other address as either of the parties hereto or the Trustee may hereafter specify in writing to the others: If to the Obligor: Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Attention: Chairperson If to the Trustee: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Attention: Corporate Trust Services Reference: Rosemead Development Commission- If to Ambac: Ambac Assurance'Corporation One State Street Plaza, 19th Floor New York, New York 10004 Attention: General Counsel Section 5.09. Survival of Representations and Warranties. All representations, warranties and obligations contained herein shall survive the execution and delivery of this Agreement and the Surety Bond. Section 5.10.' Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State. Section 5.11. Counterparts. This Agreement may be executed in any number of copies and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument. Complete counterparts of this Agreement shall be lodged with the Obligor and Ambac. Section 5.12. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 6 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Attest: By: i 0r1•,1. Title: Secretary Title: t;Vairp4tson AMBAC ASSURANCE CORPORATION Attest: By: Title: Assistant Secretary Title: Vice President and Assistant General Counsel IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. Attest: Title: Secretary ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: Title: Chairperson AM 3AC ASSURANCE CORPORATION Attest• I By: F~v Title: s stant Se etary Title: Vice P ident and Assistant General Counsel 7 ANNEX A SURETY BOND SURETY BOND Ambac Assurance Corporation Statutory Office: c/o CT Corporation 44 East Mifflin Street Madison, Wisconsin 53703 Administrative Office: One State Street Plaza New York, New York 10004 Telephone: (212) 668-0340 Policy No. SB2229BE Ambac Assurance Corporation ("Ambac"), in consideration of the payment of the premium and subject to the terms of this Surety Bond, hereby unconditionally and irrevocably guarantees the full and complete payments which are to be applied to payment of principal of and interest on the Obligations (as hereinafter defined) and which are required to be made by or on behalf of the Rosemead Community Development Commission (California) (the "Obligor") to U.S. Bank National Association, Los Angeles, California (the "Trustee"), as such payments are due by the . Obligor but shall not be so paid pursuant to the Indenture of the Obligor,- dated as of October 1, 1993, as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 and all Supplemental Indentures as defined therein (the "Indenture"), by and between the Obligor and the Trustee, authorizing the issuance of $14,005,000 in aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A, dated their. date of delivery and securing payment of those outstanding Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A (collectively, the "Obligations") of said Obligor and providing the terms and conditions for the issuance of said Obligations; provided that the amount available at any particular time to be paid to the Trustee under the terms hereof shall not exceed the Surety Bond Coverage, defined herein as the lesser of $1,323,238.13 or the Reserve Account Requirement for the Obligations, as that term is defined in the Indenture (the "Reserve Requirement"). The Surety Bond Coverage shall be reduced and may be reinstated from time to time as set forth herein. 1. As used herein, the term "Owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Trustee, the Obligor or any designee of the Obligor for such purpose. The term "Owner" shall not include the Obligor or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment of the Obligations. 2. Upon the later of (i) one (1) day after receipt by the General Counsel of Ambac of a demand for payment in the form attached hereto as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment due as required by the Indenture has not been made to the Trustee; or (ii) the payment date of the Obligations as specified in the Demand for Payment presented by the Trustee to the General Counsel of Ambac, Ambac will make a deposit of funds in an account with the Trustee or its successor, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage. 3. Demand for Payment hereunder may be made by prepaid telecopy, telex, or telegram of the executed Demand for Payment c/o the General Counsel of Ambac. If a Demand for Payment made hereunder does not, in any instance, conform to the terms and conditions of Gs Surety Bond, Ambac shall give notice to the Trustee, as promptly as reasonably practicable that such Demand for Payment was not effected in accordance with the terms and conditions of this Surety Bond and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was not effected in accordance with this Surety Bond, the Trustee may attempt to correct any such nonconforming Demand for Payment if, and to the extent that, the Trustee is entitled and able to do so. 4. The amount payable by Ambac under this Surety Bond pursuant to a Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond. Coverage shall be reduced automatically to the extent of each payment made by Ambac hereunder and will be reinstated to the extent of each reimbursement of Ambac by the Obligor pursuant to Article H of the Guaranty Agreement, dated as of March 9, 2006 (the "Guaranty Agreement"), by and between Ambac and the Obligor; provided, that in no event shall such reinstatement exceed the,Surety Bond Coverage. Ambac will notify the Trustee, in writing within five (5) days of such reimbursement, that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant to the Guaranty Agreement and such reinstatement shall be effective as of the date Ambac gives such notice. The notice to the Trustee will be substantially in the form attached hereto as Attachment 2. The Surety Bond Coverage shall be automatically reduced to the extent that the Reserve Requirement for the Obligations is lowered or.reduced pursuant to the terms of the Indenture. 5. Any service of process on Ambac may be made to Ambac or the office of the General Counsel of Ambac and such service of process shall be valid and binding as to Ambac. During the term of its appointment, General Counsel will act as agent for the acceptance of'service of process and its offices are located at One State Street Plaza, New York, New York 10004, Telephone: (212) 668-0340. 6. This Surety Bond is noncancelable for any reason. The term of this Surety Bond shall expire on the earlier of (i) October 1, 2022 or (ii) `the date on which the Obligor, to the satisfaction of Ambac, has made all payments required to be made on the Obligations pursuant to the Indenture. The premium on this Surety Bond is not refundable for any reason, including the payment prior to maturity of the Obligations. 7. This Surety Bond shall be governed by and interpreted under the laws of the State of Wisconsin, and any suit hereunder in connection with any payment may be brought only by the Trustee within one year after (i) a Demand for Payment, with respect to such payment, is made pursuant to the terms of this Surety Bond and Ambac has failed to make such payment or (ii) payment would otherwise have been due hereunder but for the failure on the part of the Trustee to deliver to Ambac a Demand for Payment pursuant to the terms of this Surety Bond, whichever is earlier. 8. In the event that Ambac were to become insolvent, any claims arising under this Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. Forth No.: 2B-0009-C (7/97) 2 IN WITNESS WHEREOF, Ambac has caused this Surety Bond to be executed and attested on its behalf this 9' day of March, 2006. Ambac Assurance Corporation First~fce President Form No.: 2B-0009-C (7197) 3 Attachment 1 Surety Bond No. SB2229BE DEMAND FOR PAYMENT ,20_ Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: General Counsel Reference is made to the Surety Bond No. SB2229BE (the ".`Surety Bond") issued by Ambac Assurance Corporation ("Ambac"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. The Trustee hereby certifies that: (a) Payment by the Obligor to the Trustee was due on [a date not less than one (1) day prior to the applicable payment date for the Obligations] under the Indenture attached hereto as Exhibit A, in an amount equal to $ (the "Amount Due"). The Amount Due is payable to the Owners of the Obligations on (b) $ . has been deposited in the [fund/account] from moneys paid by the Obligor or from other funds legally available to the Trustee for payment to the Owners of the Obligations, which amount is $ less than the Amount Due (the "Deficiency"). (c) The Trustee has not heretofore made demand under.the Surety Bond for the Amount Due or any portion thereof. The Trustee hereby requests that payment of the Deficiency (up to but not in excess of the Surety Bond Coverage) be made by Ambac under the Surety Bond and directs that payment under the Surety Bond be made to the following account by bank wire transfer of federal or other immediately available funds in accordance with the terms of the Surety Bond: [Trustee] By: _ Its: For your protection California law requires the following to appear on this form: "Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison. " [Trustee's Account] Fofm No.: 2B-OOO9-C (7/97) 4 Attachment 2 Surety Bond No. SB2229BE NOTICE OF REINSTATEMENT [Trustee 20_ [Address] Reference is made to the Surety Bond No. SB2229BE (the "Surety Bond") issued by Ambac Assurance Corporation ("Ambac"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond unless the context otherwise requires. Ambac hereby delivers notice that it is in receipt of payment from the Obligor pursuant to Article H of the Guaranty Agreement and as of the date hereof the Surety Bond Coverage is $ , subject to a reduction as the Reserve Requirement for the Obligations is lowered or reduced pursuant to the terms of the Indenture. AMBAC ASSURANCE CORPORATION Attest: Title: By: Title: Farts No.: 2B-M9-C (7/97) 5 ANNEX B DEFINITIONS . For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, all capitalized terms shall have the meaning as set out below. "Agreement" means this Guaranty Agreement. "Ambac" has the same meaning as set forth in the first paragraph of this Agreement. "Collateral and Revenues" has the same meaning as set forth in Section 2.03 hereof. "Commitment" means the Ambac Commitment for Surety Bond in the form attached hereto as Annex C. "Debt Service Payments" means those payments required to be made by the Obligor which will be applied to payment of principal of and interest on the Obligations. "Effective Interest Rate" means the lesser of the Reimbursement Rate or the maximum rate of interest permitted by then applicable law; provided, however, that the Effective Interest Rate shall in no event be less than the average interest rate on the Obligations. "Event of Default" shall mean those events of default set forth in Section 3.01 of this Agreement. "Indenture" means an Indenture, dated October 1, 1993, by and between the Obligor, as successor to the Rosemead Redevelopment Agency, and the Trustee, as successor to State Street Bank and Trust Company of California, N.A., as trustee, as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006, by and between the Obligor and Trustee, and all Supplemental Indentures as defined therein. "Legally Available Funds" means Pledged Tax Revenues (as defined in the Indenture) legally available to the Obligor for the payment of its obligations, hereunder. "Obligations" has the same meaning as set forth in the second paragraph of this Agreement. "Obligor" has the same meaning as set forth in the first paragraph of this Agreement. "Owners" means the registered owner of any Obligation as indicated in the books maintained by the Trustee, the Obligor or any designee of the Obligor for such purpose. The term "Owner" shall not include the Obligor or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment for the Obligations. "Reimbursement Period" means, with respect to a particular Surety Bond Payment, the period commencing on the date of such Surety Bond Payment and ending 12 months following such Surety Bond Payment. "Reimbursement Rate" means Citibank's prime rate plus two (2) percent per annum, as of the date of such Surety Bond Payment, said "prime rate" being the rate of interest announced from time to time by Citibank, New York, New York, as its prime rate. The rate of interest shall be calculated on the basis of a 360 day year. "State" means the State of California. "Surety Bond" means the surety bond issued by Ambac substantially in the form attached to this Agreement as Annex A. "Surety Bond Coverage" means the amount available at any particular time to be paid to the Trustee under the terms of the Surety Bond, which amount shall never exceed $1,323,238.13. "Surety Bond Payment" means an amount equal to the Debt Service Payment less (i) that portion of the Debt Service Payment paid by the Obligor, and (ii) other funds legally available to the Trustee for payment to the Owners, all as certified by the Trustee as provided in section 5.07 (4) of the Indenture. in a demand for payment rendered pursuant to the terms of the Surety Bond. "Trustee" means U.S. Bank National Association, Los Angeles, California. 10 ANNEX C COMMITMENT 11 Ambac Assurance Corporation One State Street Plaza New York, NY 10004 212668.0340 A member of Ambac Financial Group, Inc. CONUMTMEENT FOR SURETY BOND Obligor: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION, CALIFORNIA, REDEVELOPMENT PROJECT AREA NO.1 Commitment Number: SB29849 Commitment Date: January 23, 2006 Expiration Date: April 24, 2006 Obligations: $14,405,000 Tax Allocation Bonds, Series 2006, dated February 15, 2006 and maturing October 1, 2022 Surety Amount: $1,440,500+ Insurance premium: 3.25% of the surety amount. Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Corporation hereby commits to issue a Surety Bond (the "Cortlmitment") relating to the Debt Service Reserve Fund for the above-described debt obligations (the "Obligations"), substantially in the form attached hereto, subject to the terms and conditions contained herein or added hereto (see conditions set forth herein). To extend this Commitment after the expiration date set forth above, an oral (subsequently confirmed in writing) or written request for renewal must be submitted to Ambac at least one business day prior to such expiration date. Ambac reserves the right to refuse to grant a renewal or may renew this Commitment subject to additional terms and conditions. The Surety Bond (the "Surety") shall be issued if the following conditions are satisfied: 1. Ambac shall receive an opinion of counsel or a certificate of an officer of the Obligor or ultimate obligor stating that the information supplied to Ambac in order to obtain the Surety and the documents to be executed and delivered in connection with the issuance and sale of the Obligations do not contain any untrue or misleading statement of a material fact and do not fail to state a material, fact required to be stated therein or necessary in order to make the information contained therein not misleading. 2. No event shall occur which would permit any purchaser of the Obligations, otherwise required, not to be required to purchase the Obligations on the date scheduled for the issuance and delivery thereof. There shall be no material change in or affecting the Obligations, the Obligor or ultimate obligor (including, but not limited to, the security for the Obligations or the proposed debt service structure for the Obligations), the Official Statement, if any (or any similar disclosure document), including any financial statements therein contained, the financing documents or any legal opinions to be executed and delivered in connection with the issuance and sale of the Obligations, or any other information Subject to change, with Amhac's approval. submitted to Ambac in order to obtain the Surety, from the descriptions or schedules thereof heretofore provided to Ambac at any time prior to the issuance of the Obligations and there shall not have occurred or come to the attention of the Obligor or purchaser any material change of fact or law adverse to the interests of Ambac, unless approved by Ambac in writing. 4. Unless . expressly waived in whole or in part by Ambac, the financing documents shall contain a) the terms and provisions provided in the Ambac STANDARD PACKAGE transmitted herewith, and b) any provisions or comments given orally by Ambac. 5. Ambac will prepare, and the Obligor will execute, a Guaranty Agreement in the form (with such revisions of Ambac and the Obligor agree to) contained in the Standard Package. 6. NO LATER MAN FIVE (5) BUSINESS DAYS PRIOR TO CLOSING, Ambac shall be provided with: a) the final debt service schedule; and- b) proposed copies of all financing documents; and c) the proposed official statement (or any similar disclosure document); and d) the proposed various legal opinions delivered in connection with the issuance and sale of the Obligations, including, without limitation, the unqualified approving opinion of bond counsel rendered by a law firm acceptable to Ambac. The form of bond counsel's approving opinion must be acceptable to Ambac. The form of bond counsel's approving opinion shall indicate that the Obligor must comply with certain covenants under and pursuant to the Internal Revenue Code of 1986, as amended and that the Obligor has the legal power to comply with such covenants. Ambac shall also be provided with executed copies of all financing documents, including but not limited to the Official Statement (or any similar disclosure document) and the various legal opinions rendered. The executed opinion of bond. counsel shall be addressed to Ambac or in lieu thereof, a letter shall be provided to Ambac to the effect that Ambac may rely on such opinion as if it were addressed to Ambac and such letter shall be delivered with an executed opinion; and e) any provisions of the Purchase Contract or Bond Purchase Agreement referencing Ambac or the Obligor of the Surety in general. If such provisions are not received in a timely manner or if provisions are inserted in the Purchase Contract or Bond Purchase Agreement without Ambac's knowledge, compliance with such provisions may not be possible; and f) a letter from bond counsel or counsel to the purchaser or otherwise from another counsel acceptable to Ambac to the effect that the financing documents, the Official Statement (or any similar disclosure document) and the various legal opinions executed and delivered in connection with the issuance and sale of the Obligations, are substantially in the forms previously submitted to Ambac for review, with only such amendments, modifications or deletions as may be approved by Ambac; and g) a copy of any insurance policy, surety bond, guaranty or indemnification or any other policy, contract or agreement which provides for payment of all or any portion of the debt, the costs of reconstruction, the loss of business income or in any way secures, ensures or enhances the income stream anticipated to pay the Obligations. Evidence of wire transfer of an amount equal to the payment for the Surety at the time of the issuance and delivery of the Obligations. An opinion addressed to Ambac by counsel acceptable to Ambac that the Guaranty Agreement is a legal, valid and binding obligation of the Obligor thereof, enforceable in accordance with its terns. The escrow agreement, in form and substance acceptable to Ambac, for the complete defeasance of the applicable Obligations (the "Prior Obligations"). 10. Certification by a nationally recognized accounting firm, pre-approved by Ambac, that the securities invested are sufficient to pay the Prior Obligations. 11. Ambac must receive an opinion of Counsel acceptable to Ambac that the Prior Obligations have been legally defeased. 12. A draft opinion of bond counsel or special tax counsel acceptable to Ambac, addressed to Ambac, and a telecopy of the executed opinion on the day of closing (to the attention of your closing coordinator) to the effect that the refunding and escrow are in full compliance with all applicable Federal arbitrage regulations. 13. Funds held by the Escrow Trustee for the payments of the refunded Obligations must be held as cash fully insured by or the Federal Deposit Insurance Corporation or invested in direct obligations of the. United States of America. 14. Ambac must receive, at least five (5) business days prior to closing, a draft opinion of Obligor's counsel or escrow agent's counsel, and a telecopy of the executed opinion on the day of closing (to the attention of your closing coordinator) regarding the validity, binding nature and enforceability of the escrow agreement. 15. IF A FORWARD SUPPLY CONTRACT IS USED: a) Securities delivered to the escrow agreement must be non-callable U.S. Government obligations which do not mature later than the date on which needed to pay debt service on the refunded Obligations. b) The CPA verification must be in a form and substance satisfactory to Ambac and must opine that the escrow is sufficient to be defease the refunded Obligations whether or not the forward supply contract provider delivers securities to the escrow. c) The forward supply contract must specify that (a) the purchase price of the securities delivered to the escrow must not exceed the amount of cash received from maturing securities in the escrow, as specified in the verification, and (b) the maturity value of the securities in the escrow must not be less than the purchase price paid for such securities. d) The forward supply contract provider shall have no recourse to the escrow upon any failure of the Obligor or escrow agent to perform its obligations under the forward supply contract. Other than the payment of the purchase price for the securities to be delivered pursuant to the forward supply contract, no payments of any other kind may be made from the escrow in respect to the forward supply contract. n e) The forward supply contract f) The forward supply contract SURETY BOND Statutory Office: c/o CT Corporation 44 East Mifflin Street Madison, Wisconsin 53703 Ambac Assurance Corporation Administrative Office: One State Street Plaza New York, New York 10004 Telephone: (212) 668-0340 Policy No. SB2229BE Ambac Assurance Corporation ("Ambac"), in consideration of the payment of the premium and subject to the terms of this Surety Bond, hereby unconditionally and irr vocably guarantees the full and complete payments which are to be applied to payment of c a of and interest on the Obligations (as hereinafter defined) and which are required (-,,b or on behalf of the Rosemead Community Development Commission (C a) ( i r") to U.S. Bank National Association, Los Angeles, California ( `T st a pa a is are due by the Obligor but shall not be so paid pursuant to en o e bli r, da d s of October 1, 1993, as amended and supplemented. b a it t u ple t o In n at d s of March 1, 2006 and all Supplemental Inde Arff~s s de 1 e A den an between the Obligor and the Trustee, a th zing is e o 0 0 n gre t rm 'pal amount of Redevelopment Pro'ect No. 1 ca 'o o e ' 006A, d t it date of delivery and se aymen f ose u standi d 1 t e 1 Tax Allocation Bond , Sen s 1 o cti y the" h 41 Obl r 'd' the terms and co i ' s f is I at any particular ti e e i to Bond Coverage, d fined ein Requirement for the blig n , Requirement"). The Sure o time as set forth herein. prove mg ce o O ti a at amount available T tee e th e e not exceed the Surety s less o , 2 or the Reserve Account as a is d fi in the Indenture (the "Reserve Pvera a shall a ced and may be reinstated from time to 1. As used herein, the erm Offer" shall mean the registered owner of any Obligation as indicated in the books maint ' by the Trustee, the Obligor or any designee of the Obligor for such purpose. The term "Owner" shall not include the Obligor or any person or entity whose obligation or obligations by agreement constitute the underlying security or source of payment of the Obligations. 2. Upon the later of (i) one (1) day after receipt by the General Counsel of Ambac of a demand for payment in the form attached hereto as Attachment 1 (the "Demand for Payment"), duly executed by the Trustee certifying that payment due as required by the Indenture has not been made to the Trustee; or (ii) the payment date of the Obligations as specified in the Demand for Payment presented by the Trustee to the General Counsel of Ambac, Ambac will make a deposit of funds in an account with the Trustee or its successor, sufficient for the payment to the Trustee, of amounts which are then due to the Trustee (as specified in the Demand for Payment) up to but not in excess of the Surety Bond Coverage. 3. Demand for Payment hereunder may be made by prepaid telecopy, telex; or telegram of the executed Demand for Payment c/o the General Counsel of Ambac. If a Demand for Payment made hereunder does not, in any instance, conform to the terms and conditions of this Surety Bond, Ambac shall give notice to the Trustee, as promptly as reasonably practicable that such Demand for Payment was not effected in accordance with the terms and conditions of this Surety Bond and briefly state the reason(s) therefor. Upon being notified that such Demand for Payment was not effected in accordance with this Surety Bond, the Trustee may attempt to correct any such nonconforming Demand for Payment if, and to the extent that, the Trustee is entitled and able to do so. 4. The amount payable by Ambac under this Surety Bond pursuant to a Demand for Payment shall be limited to the Surety Bond Coverage. The Surety Bond Coverage shall be reduced automatically to the extent of each payment made by Ambac hereunder and will be reinstated to the extent of each reimbursement of Ambac by the Obligor pursuant to Article H of the Guaranty Agreement, dated as of March 9, 2006 (the "Guaranty Agreement"), by and between Ambac and the Obligor; provided, that in no event shall such reinstatement exceed the Surety Bond Coverage. Ambac will notify the Trustee, in writing within five. (5) days of such reimbursement, that the Surety Bond Coverage has been reinstated to the extent of such reimbursement pursuant to the Guaranty Agreement and such reinstatement shall be effective as of th to Ambac gives such notice. The notice to the Trustee will be substantially in the Medot~oe eto as Attachment 2. The Surety Bond Coverage shall be automatically re u e that the Reserve Requirement for the Obligations is lowered or redusu th Indenture. 5. Any service of process on Counsel of Ambac and such servic term of its appointment, Generof-C and its offices are locat~ 668-0340. 6. earlier Sure n lable r on the of (i obe 1, 02 or e t o Ambac, has made pa s req 'r be n The premium on this urety d ' no re for maturity of the Obligati0 of the General c. During the vi a of process ;le one: (212) $SSure~,,11116-nd shall expire , to the satisfaction of ursuto the Indenture. on, including the payment prior to 7. This Surety Bon sWl eNgkerne y and interpreted under the laws of the State of 8. In the event that Ambac were to become insolvent, any claims arising under this Surety Bond would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California. Wisconsin, and any suit h eund i onnection with any payment may be brought only by the Trustee within one year affe i Demand for Payment, with respect to such payment, is made pursuant to the terms of this Surety Bond and Ambac has failed to make such payment or (ii) payment would otherwise have been due hereunder but for the failure on the part of the Trustee to deliver to Ambac a Demand for Payment pursuant to the terms of this Surety Bond, whichever is earlier. Form No.: 28-0009-C (7/97) 2 IN WITNESS WHEREOF, Ambac has caused this Surety Bond to be executed and attested on its behalf this 9u' day of March, 2006, Ambac Assurance Corporation B H_ . First(fce President 0 Forth No.: 2B-OW9-C (7/97) 3 Attachment 1 Surety Bond No. SB2229BE DEMAND FOR PAYMENT Ambac Assurance Corporation One State Street Plaza New York, New York 10004 Attention: General Counsel ,20 Reference is' made to the Surety Bond No. SB2229BE (the "Surety Bond") issued by Ambac Assurance Corporation ("Ambac"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond uAl e context otherwise requires. The Trustee hereby certifies that: (a) Payment by the Obligor (1) day prior to the applicable pa t 4 as Exhibit A, in an amount eq to $ to the Owners of the O aatio son (b) Obligor or from Obligations, whi( (c) The Due or any portion less than one tached hereto die is payable e fromrysaid by the nt to e Owners of the the Surety Bond for the Amount The Trustee here rue t t payment of the Deficiency (up to but not in excess of the Surety Bond Coverage) be made y bac under the Surety Bond and directs that payment under the Surety Bond be made t following account by bank wire transfer of federal or. other immediately available funds in accordance with the terms of the Surety Bond: [Trustee] By: - Its: For your protection California law requires the following to appear on this form: "Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison. " [Trustee's Account] Form No.: 2B-M9-C (7/97) 4 Attachment 2 Surety Bond No. SB2229BE NOTICE OF REINSTATEMENT [Trustee ] [Address] ,20_ Reference is made to the Surety Bond No. SB2229BE (the "Surety Bond") issued by Ambac Assurance Corporation ("Ambaa"). The terms which are capitalized herein and not otherwise defined have the meanings specified in the Surety Bond s the context otherwise requires. Ambac hereby delivers notice that, it is in re ip o yme m bligor pursuant to Article II of the Guaranty Agreement and the to e the ure nd Coverage is $ subject to a reduc ' a e Re fir h Obligations is lowered or reduced pursuant to thens of th e a D Attest: Title: Form No.: 2B=0009-C (7/97) 5 0 0 R I C March 9, 2006 Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213-629-2020 fax 213-612-2499 WWW.ORRICK.COM Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Rosemead Community Development Commission (the "Commission") of $14,005,000 aggregate principal amount of bonds designated Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"), issued pursuant to the provisions of the Community Redevelopment Law of the State of California (being Part I of Division 24 of the Health and Safety Code of the State of California), as amended, and a Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and U.S. Bank National Association, as successor in interest to State Street Bank and Trust Company of California, N.A., as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement to Indenture," together with the Original Indenture, the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate of the Commission, dated the date hereof (the "Tax Certificate"), opinions of counsel to the Commission, the Trustee, certificates of the Commission, the Trustee, and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, the defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is DOCSLA1:518266.1 41555-8 0 R R I C K Rosemead Community Development Commission March 9, 2006 Page 2 expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions 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. Our engagement with respect to the Bonds has concluded with their issuance, 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 Commission. 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 second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture 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 Bonds 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 Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, 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 redevelopment agencies in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds 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 Bonds constitute valid and binding limited obligations of the Commission. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Commission. The Indenture creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Pledged Tax Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in any DOCSLAI :518266.1 41555-8 O R R I C K Rosemead Community Development Commission March 9, 2006 Page 3 fund or account established pursuant to the Indenture, except the Rebate Fund, subject' to the provisions of the Indenture permitting the application thereof for the purposes and upon the terms and conditions set forth in the Indenture. 3. The Bonds are not a lien or charge upon the funds or property of the Commission except to the extent of the aforementioned pledge. Neither the faith and credit nor the taxing power of the State of California or of any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. The Bonds are not a debt of the City of Rosemead, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Commission. 4. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds 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 ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE LLP per DOCSLA1:518266.1 41555-8 0 ® R R I C K March 9, 2006 Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017.5855 tel 213-629-2020 fax 213-612-2499 WWW.ORRICI(.COM Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Ladies and Gentlemen: We have acted as disclosure counsel to the Rosemead Community Development Commission (the "Agency"), as the issuer on this date of $14,005,000 aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). In that connection, we have reviewed a printed copy of the official statement of the Commission, dated February 23, 2006, with respect to the Series 2006A Bonds (the "Official Statement"), the Purchase Contract, dated February 23, 2006 (the "Purchase Contract"), among the Commission, the Rosemead Financing Authority and Piper Jaffray & Co., as underwriter (the "Underwriter"), certificates and opinions of the Commission, the Authority, the County of San Diego and others, and we have made such investigations of law as we have deemed appropriate as a basis for the conclusion hereinafter expressed. We have not reviewed any electronic version of the Official Statement, and assume that any such version is identical in all respects to the printed version. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement. In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including, without limitation, any representations and legal conclusions regarding the due authorization, issuance, delivery, validity and enforceability of the Series 2006A Bonds and the exclusion of interest thereon from gross income for federal income tax purposes, and the legality, validity and enforceability of the First Supplement, the Master Pledge Agreement, the Second Supplement, and any laws, documents or instruments that may be related to the issuance, payment or security DOCSLA1:518265.1 41555-8 0 0 R R I C K Rosemead Community Development Commission March 9, 2006 Page 2 of the Series 2006A Bonds. We have assumed that all records, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the Commission, to assist it in part of its responsibility with respect to the Official Statement, we participated in conferences with representatives of the Commission and the Authority and their respective counsel, Public Financial Management, Inc., as financial advisor, GRC Associates, Inc., as fiscal consultant, the Underwriter and others, during which the contents of the Official Statement and related matters were discussed. Based on our participation in the above-mentioned conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon and on the records, documents, certificates, opinions and matters mentioned above, we advise-you as a matter of fact and not opinion that, during the course of our role as disclosure counsel with respect to the Series 2006A Bonds, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such role which caused us to believe that the Official Statement as of its date (except for any CUSIP numbers, financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about feasibility, valuation, appraisals, absorption, real estate or environmental matters, any information about the Bond Insurer or the Insurance Policy, DTC or its book-entry system, or Appendices A, C, E and G, included or referred to therein, which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view) 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. By acceptance of this letter you recognize and acknowledge that: (i) the preceding paragraph is not an opinion but in the nature of negative observations based on certain limited activities performed by specific lawyers in our firm in our role as disclosure counsel; (ii) the scope of those activities performed by us were inherently limited and do not purport to encompass all activities that the Commission or the Authority may be responsible to undertake; (iii) those activities performed by us rely on third party representations, warranties, certifications and opinions, including and primarily, representations, warranties and certifications made by the Commission and the Authority, and are otherwise subject to the conditions set forth herein; and (iv) this letter may not be sufficient for or appropriate to your purposes. DOCSLA1:518265.1 41555-8 o R R I C K Rosemead Community Development Commission March 9, 2006 Page 3 This letter is furnished by us as disclosure counsel. Our engagement with respect to this matter has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other parry to whom it is not specifically addressed. & SUTCLIFFE LLP DOCSLA1:518265.1 41555-8 0 ® R R I C K March 9, 2006 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213-629-2020 JGX 2?3-612-2490 WWW.ORRICK.COPP Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, California 94104 Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Ladies and Gentlemen: We have acted as disclosure counsel to the Rosemead Community Development Commission (the "Commission"), as the issuer on this date of $14,005,000 aggregate principal amount of Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"). In that connection, we have reviewed a printed copy of the official statement of the Commission, dated February 23, 2006, with respect to the Bonds (the "Official Statement"), the Purchase Contract, dated February 23, 2006 (the "Purchase Contract"), among the Commission, the Rosemead Financing Authority and Piper Jaffray & Co., as underwriter (the "Underwriter"), certificates and opinions of the Commission, the Authority, the City of Rosemead and others, and we have made such investigations of law as we have deemed appropriate as a basis for the conclusion hereinafter expressed. We have not reviewed any electronic version of the Official Statement, and assume that any such version is identical in all respects to the printed version. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Official Statement. In arriving at the conclusion hereinafter expressed, we are not expressing any opinion or view on, and with your permission are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein, including, without limitation, any representations and legal conclusions regarding the due authorization, issuance, delivery, validity and enforceability of the Bonds and the exclusion of interest thereon from gross income for federal income tax purposes, and the legality, validity and enforceability of the Indenture, and any laws, documents or instruments that may be related to the issuance, payment or security of the..Bonds. We have assumed that all records, documents, certificates and opinions that we have reviewed, and the signatures thereto, are genuine. DOCSLA1:518342.1 41555-8 O R R I C K Piper Jaffray & Co. March 9, 2006 Page 2 We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. In our capacity as disclosure counsel to the Commission, to assist it in part of its responsibility with respect to the Official Statement, we participated in conferences with representatives of the Commission, the Authority and the City and their respective counsel, Public Financial Management, Inc., as financial advisor, GRC Associates, Inc., as fiscal consultant, the Underwriter and others, during which the contents of the Official Statement and related matters were discussed. Based on our participation in the above-mentioned conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon and on the records, documents, certificates, opinions and matters mentioned above, we advise you as a matter of fact and not opinion that, during the course of our role as disclosure counsel with respect to the Bonds, no facts came to the attention of the attorneys in our firm rendering legal services in connection with such role which caused us to believe that the Official Statement as of its date (except for any CUSIP numbers, financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about feasibility, valuation, appraisals, absorption, real estate or environmental matters, any information about the Bond Insurer or the Insurance Policy, DTC or its book-entry system, or Appendices A, C, E and G, included or referred to therein, which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view) 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. This letter is furnished by us as disclosure counsel. No attorney-client relationship has existed or exits between our firm and the Underwriter in connection with the Bonds or by virtue of this letter. Our engagement with respect to this matter has terminated as of the date hereof, and we disclaim any obligation to update this letter. This letter is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Very truly ORRICK, & SUTCLIFFE LLP DOCSLA1:518342.1 41555-8 0 0 R R I C K March 9, 2006 U.S. Bank National Association 633 W. Fifth Street, 24th Floor Los Angeles, California 90071 Ambac Assurance Corporation One State Street Plaza New York, New York 10004 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 rel 213-629-2020 fax 213-612-2499 WWW.ORRICK.COM Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (Defeasance Opinion) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Rosemead Community Development Commission (the "Commission") of $14,005,000 aggregate principal amount of bonds designated Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Refunding Bonds"). A portion of the proceeds of the Refunding Bonds will be applied to refund that portion of the Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 1993A scheduled to mature on October 1, 2006 through October 1, 2018 (the "Bonds"). The Bonds were issued pursuant to an Indenture, dated as of October 1, 1993 (the "Indenture"), by and between the Commission and State Street Bank and Trust Company of California, N.A. (predecessor in interest to U.S. Bank National Association), as successor trustee. This opinion is being provided in connection with defeasance of the Bonds pursuant to Article X of the Trust Agreement. The Series 1993 Bonds scheduled to mature on October 1, 2033 remain outstanding under the Indenture. In such connection, we have reviewed portions of the Trust Agreement, an escrow agreement, dated as of March 1, 2006 (the "Escrow Agreement"), between the Commission and U.S. Bank National Association, as escrow agent (the "Escrow Agent"), a report by The Arbitrage Group, Inc., certified public accountants, verifying the accuracy of certain computations relating to the escrow and the Bonds (the "Verification Report"), a Written Request and Requisition No. 1 of the Commission to the Trustee dated March 9, 2006 (the "Order"), and such other documents and matters to the extent we deemed necessary to render the opinion set forth herein. DOCSLAI:518409.1 41555-8 MKH/MKH 0 O R R I C K U.S. Bank National Association Ambac Assurance Corporation March 9, 2006 Page 2 The opinion expressed herein is based on an analysis of existing laws, regulations, rulings and court decisions and covers certain matters not directly addressed by such authorities. Such opinion 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. We express no opinion as to the effect of any bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other laws relating to or affecting creditors' rights. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Commission. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof and the certifications and representations made in connection with the subscription for certain United States Treasury Obligations - State and Local Government Series. We have further assumed compliance by all parties with all covenants and agreements contained in such documents. In rendering the following opinion, we have made no independent calculations or verifications concerning the actual deposit of the amounts and obligations specified in the Escrow Agreement, the outstanding principal amount of the Bonds, the principal or redemption price and interest requirements with respect to the Bonds, the adequacy of the amounts deposited pursuant to the Escrow Agreement and the investment income thereon to pay such principal or redemption price and interest requirements when due, or the accuracy of any of the numbers, computations, assumptions or conclusions contained in the Verification Report, but with respect to all such matters have relied solely upon, and assumed, the accuracy of the Verification Report, the representations in the Escrow Agreement and related certificates. We have also assumed that the deposit required to be made to the Escrow Fund established pursuant to the Escrow Agreement has been made, that all other instructions set forth in the Trust Agreement, the Order and the Escrow Agreement have been complied with, and that provision satisfactory to the Trustee has been irrevocably made with respect to the giving of notice of. redemption of the Bonds. Certain actions (including, without limitation, investment or reinvestment of any cash in the Escrow Fund now or hereafter arising or substitution of any investments in the Escrow Fund) may be taken under the circumstances and subject to the terms and conditions set forth in the Escrow Agreement. No opinion is expressed herein if any such change occurs or action is taken or omitted other than with our advice and approval. DOCSLA1:518409.1 41555-8 MKH/MKH 00 R R I C K U.S. Bank National Association Ambac Assurance Corporation March 9, 2006 Page 3 Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that (i) the pledge of the Pledged Tax Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the Agency under the Indenture with respect to all such Bonds, shall cease and terminate, except as expressly provided in Section 10.01 of the Indenture, and the holders of such Bonds are entitled to payment of the principal or redemption price of and interest on such Bonds only out of the money or securities deposited with the Escrow Agent for the payment of such Bonds, and (ii) based upon the matters set forth in the Order, the refunding of the Bonds as provided in the Escrow Agreement will not, in and of itself, cause interest on the Bonds to be included in gross income for federal income tax purposes. However, we have not undertaken to review facts and circumstances relating to the tax status of interest on the Bonds except for the effect of such refunding as aforesaid, and we express no opinion about whether interest on the Bonds is excluded from gross income for federal income tax purposes. This letter is furnished by us as bond counsel. No attorney-client relationship has existed or exists between our firm and the addressees of this letter in connection with the Bonds or by virtue of this letter, and we disclaim any obligation to update this letter. This letter is delivered to the addressees hereof solely for their benefit in connection with the defeasance of the Bonds and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by owners of Refunding Bonds or by any other party to whom it is not specifically addressed. SUTCLIFFE LLP DOCSLAI:518409.1 41555-8 MKH/MKH WALLIN, KRESS, REISMAN & KRANITZ LAW OFFICES 2800 TWENTY-EIGHTH STREET, SUITE 315 SANTA MONICA, CALIFORNIA 90405-6205 TELEPHONE (310) 450-9582 FACSIMILE (310) 450-0506 March 9, 2006 Rosemead Community Development Commission 8838 E. Valley Boulevard Rosemead, California 91770 Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, California 94104 Orrick, Herrington & Sutcliffe LLP 777 S. Figueroa Street, Suite 3200 Los Angeles, California 90017 Re: Rosemead Community Development Commission Redevelopment Project Area No. '1 Tax Allocation Bonds Series 2006A Ladies and Gentlemen: We have acted as counsel to the Rosemead Community Development Commission (formerly known as the Rosemead Redevelopment Agency, the "Commission") in connection with the sale of its Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Series 2006A Bonds"). The Series 2006A Bonds are being issued pursuant to Resolution No. 2006-02, adopted by the Commission on February 14, 2006 (the "Bond Resolution"), the Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Commission and State Street Bank and Trust Company of California, N.A., as predecessor trustee to U.S. Bank National Association, as trustee (the "Trustee"), as amended and supplemented by a First Supplement to Indenture, dated as of March 1, 2006 (as amended, the "Indenture") between the Commission and the Trustee. In that connection we have examined originals or copies certified or otherwise identified to my satisfaction of the Issuing Documents, as defined below, the Tax Certificate dated as of the date hereof (the "Tax Certificate"), the Continuing Disclosure Agreement for the Series 2006A Bonds, dated as of March 1, 2006 (the "Continuing Disclosure Agreement") by and among the Commission, the Trustee and U.S. Bank National Association, as dissemination agent, the Escrow Agreement, dated as of March 1, 2006 (the "Escrow Agreement") between the Commission and the Trustee in its capacity as escrow bank under the Escrow Agreement, and the Official Statement of the Commission, dated February 23, 2006 (the "Official Statement") relating to the Series 2006A Bonds. The Indenture, the Continuing Disclosure Agreement and the Escrow Agreement are WALLIN, KRESS, REISMAN & KRANITZ, LLP . LAW OFFICES Rosemead Community Development Commission Piper Jaffray & Co. Orrick, Herrington & Sutcliffe LLP March 9, 2006 Page 2 collectively referred to herein as the "Issuing Documents." Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Issuing Documents. Based on the foregoing, we are of the opinion that: (i) The Commission is a public body, corporate and politic, duly organized and validly existing under the laws of the State. (ii) The Issuing Documents have been duly authorized, executed and delivered by the Commission and, assuming due authorization, execution and delivery by the other parties thereto, constitute the valid, legal and binding obligations of the Commission enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. (iii) The Bond Resolution has been duly adopted at a meeting of the governing body of the Commission, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout. The Bond Resolution is in full force and effect, has not been modified, amended or rescinded and constitutes the valid and binding obligation of the Commission enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought. (iv) The execution and delivery of the First Supplement, the Continuing Disclosure Agreement, the Escrow Agreement, the Tax Certificate, the Purchase Contract and the Official Statement and compliance with the provisions of the Issuing Documents, under the circumstances contemplated thereby, (a) to the best of my knowledge based on inquiry deemed sufficient by me for the purpose of this opinion, do not and will not in any material respect conflict with or constitute on the part of the Commission a breach of or default under any agreement or other instrument to which the Commission is a party or by which it is bound, and (b) do not and will not in any material respect constitute on the part of the Commission a violation, breach of or default under any existing law, regulation, court order or consent decree to which the Commission is subject. (v) The Official Statement has been duly authorized by the governing body of the Commission and executed on its behalf by an authorized officer of the Commission. WALLIN, KRESS, REISMAN & KRANITZ, LLP LAW OFFICES Rosemead Community Development Commission Piper Jaffray & Co. Orrick, Herrington & Sutcliffe LLP March 9, 2006 Page 3 (vi) 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 date hereof for the Commission to adopt the Bond Resolution, to enter into or to perform its obligations under the Issuing Documents. (vii) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or threatened against the Commission, challenging the creation, organization or existence of the Commission, or the validity of the Series 2006A Bonds or the Issuing Documents or seeking to restrain or enjoin the repayment of the Series 2006A Bonds or in any way contesting or affecting the validity of the Series 2006A Bonds or the Issuing Documents or any of the transactions referred to therein or contemplated thereby or contesting the authority of the Commission to enter into or perform its obligations under any of the Series 2006A Bonds or the Issuing Documents, or which, in any manner, questions the right of the Commission to issue or to use the Pledged Tax Revenues for repayment of the Series 2006A Bonds or affects in any manner the right or ability of the Commission to enter into the Series 2006A Bonds or to collect or pledge the Pledged Tax Revenues for repayment of the Series 2006A Bonds. (viii) Based upon examinations which we have made and our discussions in conferences with certain officials of the Commission and others with respect to the Official Statement and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement (including the Appendices attached thereto), nothing has come to my attention which would lead me to believe that the Official Statement (other than financial and statistical data therein and incorporated therein by reference, and other than information relating to the Bond Insurer or its Insurance Policy or Surety Bond, DTC or its Book-Entry System, and the information provided by the Underwriter for inclusion in the Official Statement, as to which no opinion is expressed) contains an 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. Very truly yours, WALLIN, I I N & KRANITZ LLP Peter L. Wallin 00RSEY DORSEY _ \J=.1 T !E`! LLP March 9, 2006 Rosemead Community Development Commission Rosemead, California Piper Jaffray & Co. San Francisco, California Re: Rosemead Community Development Commission Redevelopment Project No. 1 Tax Allocation Bonds Series 2006A Ladies and Gentlemen: We have acted as counsel for U.S. Bank National Association, a national banking association (the "Trustee") in connection with the execution by the Trustee in its capacity as Trustee of the First Supplement to Indenture, dated as of March 1, 2006 (the "Supplemental Indenture"), by and between the Rosemead Community Development Commission (the "Commission") and the Trustee, as Trustee relating to the above-captioned Bonds. The Supplemental Indenture supplements the Indenture, dated as of October 1, 1993 (the "Original Indenture"), by and between the Agency and State Street Bank and Trust Company of California, N.A. (the "Original Trustee") as predecessor trustee to the Trustee. We are generally familiar with the Articles of Association and the Bylaws of the Trustee and are also familiar with the corporate proceedings of the Trustee with regard to its authorization, execution and delivery of- (i) the Supplemental Indenture, (ii) the Escrow Agreement (as defined in the Supplemental Indenture), and (iii) the Continuing Disclosure Agreement, executed and entered into as of March 1, 2006, by and among the Commission and the Trustee in its capacities as Trustee and Dissemination Agent. The documents in (i), (ii) and (iii) of the preceding sentence are referred to herein, collectively, as the "Agreements." The Original Indenture and the Supplemental Indenture are referred to herein, collectively, as the "Indenture." Capitalized terms used herein shall have the respective meanings ascribed to them in the Indenture, except as otherwise defined herein. We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In such review, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with originals of all documents submitted to us as copies. Where questions of fact material to our opinions expressed below were not established independently, we have relied upon statements of officers of the Trustee as contained in their certificates. DORSEY & WHITNEY LLP ° WWW.DORSEY.COM • T 949.932.3600 ° F 949.932.3601 38 TECHNOLOGY DRIVE • IRVINE, CALIFORNIA 92618-5310 USA CANADA EUROPE ASIA s'`9 OORSSY Based upon the foregoing, we are of the opinion that: 1. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America with trust powers. 2. The Trustee has all requisite corporate power, authority and legal right to execute and deliver the Agreements and to perform its obligations thereunder and under the Original Indenture, and has taken all necessary corporate action to authorize the execution and delivery of the Agreements and the performance of its obligations thereunder. 3. The Trustee has duly authorized, executed and delivered the Agreements. Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Agreements and the Original Indenture are the legal, valid and binding agreements of the Trustee, enforceable in accordance with their terms against the Trustee. 4. The Trustee has duly authenticated the Bonds in its capacity as Trustee under the Indenture. The opinions set forth above are subject to the following qualifications and exceptions: (a) the opinions are subject to the effect of any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application affecting creditors' rights; and (b) the opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). Our opinions expressed above are limited to the laws of the State of California and the federal laws of the United States of America. We have assumed for purposes of this opinion letter that the Original Indenture was duly authorized, executed and delivered by the Original Trustee and was the legal, valid and binding agreement of the Original Trustee, enforceable in accordance with its terms against the Original Trustee. The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent. Very truly yours, 6V L DORSEY & WHITNEY LLP Ambac Assurance Corporation One State Street Plaza NewYork, NY 10004 212.668.0340 Fax: 212.509.9190 A member of theAmbac Financial Group, Inc. March 9, 2006 Rosemead Community Development Commission 8838 East Valley Boulevard Rosemead, CA 91770 Piper Jaffray & Co. 345 California Street Ambac San Francisco, CA 95104 U.S. Bank National Association 633 West Fifth Street Los Angeles, cA 90071 Ladies and Gentlemen: Public Financial Management, Inc. 660 Newport Center Drive Newport Beach, CA 92660 Orrick, Herrington & Sutcliffe LLP 777 South Figeuroa Street Los Angeles, CA 90017 This opinion has been requested of the undersigned, a Vice President and an Assistant General Counsel of Ambac Assurance Corporation, a Wisconsin stock insurance corporation ("Ambac Assurance"), in connection with the issuance by Ambac Assurance of a certain Financial Guaranty Insurance Policy and Endorsement thereto (the "Policy") and a certain Surety Bond (the "Surety"), each effective as of the date hereof. The Policy insures $14,005,000 in aggregate principal amount of the Rosemead Community Development Commission, Los Angeles County, California (the "Obligor"), Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2006A, dated their date of delivery (the "Obligations"), and the Surety guarantees payment of an amount not to exceed $1,323,238.13 to fund the Reserve Requirement (as defined in the Surety) established in connection with the Obligations. In connection with my opinion herein, I have examined the Policy, the Surety and such statutes, documents and proceedings as I have considered necessary or appropriate under the circumstances to render the following opinion, including, without limiting the generality of the foregoing, certain statements contained in the Official Statement of the Obligor dated February 23, 2006 relating to the Obligations (the "Official Statement") under the headings "BOND INSURANCE" and "APPENDIX G - FORM OF BOND INSURANCE POLICY". Based upon the foregoing and having regard to legal considerations I deem relevant, I am of the opinion that: Ambac Assurance is a stock insurance corporation duly organized and validly existing under the laws of the State of Wisconsin and duly qualified to conduct an insurance business in the State of California. 2. Ambac Assurance has full corporate power and authority to execute and deliver the Policy and the Surety, and the Policy and the Surety have been duly authorized, executed and delivered by Ambac Assurance and constitute legal, valid and binding obligations of Ambac Assurance enforceable in accordance with their terms, except to the extent that the enforceability (but not the validity) of such obligations may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or enactment now or hereafter enacted affecting the enforcement of creditors' rights. 3. The execution and delivery by Ambac Assurance of the Policy and the Surety will not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, conflict with or result in a breach of any of the terms, conditions or provisions of the Certificate of Authority, Articles of Ambac Incorporation or By-Laws of Ambac Assurance, or any restriction contained in any contract, agreement or instrument to which Ambac Assurance is a party or by which it is bound or constitute a default under any of the foregoing. 4. Proceedings legally required for the issuance of the Policy and the Surety have been taken by Ambac Assurance and licenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally required for the enforceability of the Policy and the Surety have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceability of the Policy or the Surety. The statements contained in the Official Statement under the heading "BOND INSURANCE", insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements describe Ambac Financial Group, Inc. (the "Company") and Ambac Assurance, fairly and accurately describe the Company and Ambac Assurance. 6. The form of the Policy contained in t "APPENDIX G - FORM OF BOND complete copy of the form of the Policy. ie Official Statement under the heading INSURANCE POLICY" is a true and The opinions expressed herein are solely for your benefit, and may not be relied upon by any other person. Very truly yours, 1-21~ Dwight Kwa Vice President and Assistant General Counsel /kd 25000be 0 ® R R ! C K ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 tel 213-629-2020 fax 213-612-2499 WWW.ORRICK.COM March 9, 2006 U.S. Bank National Association 633 W. Fifth Street, 24' Floor Los Angeles, California 90071 Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Ladies and Gentlemen: In connection with the delivery of the above-referenced bonds (the "Bonds") we have delivered our final legal opinion concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the issuer of the Bonds. You may rely on said opinion as though the same were addressed to you, as trustee, but solely for the benefit of, and as if you were one of, the holders of the Bonds. No attorney-client relationship has existed or exists between the addressees of this letter and our firm in connection with the Bonds or by virtue of this letter. Very truly ours, ORRICK, HE & SUTCLIFFE LLP DOCSLA1:518267.1 41555-8 0 R R I C K March 9, 2006 Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, California 94104 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 ie( 213-629-2020 jax 213-612-2499 WWW.ORRICK.COM Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Ladies and Gentlemen: In connection with the delivery of the above-referenced bonds (the "Bonds") we have delivered our final legal opinion concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the issuer of the Bonds. You may rely on said opinion as though the same were addressed to you. No attorney-client relationship has existed or exists between the addressees of this letter and our firm in connection with the Bonds or by virtue of this letter. Very ORR] i SUTCLIFFE LLP DOCSLA1:518267.1 41555-8 0 ® R R ! C K March 9, 2006 Ambac Assurance Corporation One State Street Plaza New York, New York 10004 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 SOUTH FIGUEROA STREET SUITE 3200 LOS ANGELES, CA 90017-5855 te( 213-629-2020 fax 213-612-2499 WWW.ORRICI<.COM Re: Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Ladies and Gentlemen: In connection with the delivery of the above-referenced bonds (the "Bonds") we have delivered our final legal opinion concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the issuer of the Bonds. You may rely on said opinion as though the same were addressed to you; provided, however, that we give no opinion with respect to the tax status of amounts, if any, that may be paid to you (by subrogation or otherwise) with respect to interest paid by you to the bondholders. No attorney-client relationship has existed or exists between the addressees of this letter and our firm in connection with the Bonds or by virtue of this letter. SUTCLIFFE LLP DOCSLA1:518267.1 41555-8 Very truly yours, $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A CLOSING MEMORANDUM This memorandum summarizes the procedures to be followed in completing the issuance of Rosemead Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A (the "Bonds"), and the redemption of a portion of said Commission's Tax Allocation Bonds, Series 1993A (the "Prior Bonds"). Time: Pre-closing: Wednesday, March 8, 2006 Conference Room: G-33 at 2:00 p.m. (PST) Closing: Thursday, March 9, 2006 Conference Room: G-33 at 8:30 a.m. (PST) Place: Orrick, Herrington & Sutcliffe LLP 777 South Figueroa Street, Suite 3200 Los Angeles, California 90017 Parties Rosemead Community Development Commission (the "Commission") Rosemead Financing Authority (the "Authority") City of Rosemead (the "City") Wallin, Kress, Reisman & Kranitz LLP ("Commission Counsel") Orrick, Herrington & Sutcliffe LLP ("Bond Counsel" and "Disclosure Counsel") Piper Jaffray & Co. (the "Underwriter") U.S. Bank National Association (the "Trustee" and "Escrow Agent") Dorsey & Whitney LLP ("Trustee's Counsel") Ambac Assurance Corporation ("Ambac" or "Insurer") DOCSLA1:515415.2 41555-8 K35/K35 GRC Associates, Inc. (the "Fiscal-Consultant") Public Financial Management, Inc. (the "Financial Advisor") The Arbitrage Group, Inc. (the "Verification Agent") Part I PRE-CLOSING EXECUTED DOCUMENTS TO BE DEPOSITED WITH BOND COUNSEL The documents listed on the Transcript of Proceedings attached hereto and incorporated herein by reference will be executed in advance of the Closing by the respective parties thereto and, except as otherwise indicated, six (6) signed copies or executed counterparts of each of the documents listed shall be deposited in escrow with Bond Counsel at the aforementioned place of Closing not later than Tuesday, March 7, 2006. On Wednesday, March 8, 2006, at 2:00 p.m. (Pacific), a pre-Closing conference will be held to confirm that all documents are on hand, in proper form and properly executed. Unless otherwise specified, all documents will be dated the date of the Closing. Responsibility for preparing, assembling or delivering the documents is indicated in parentheticals. Part II CLOSING DISTRIBUTION OF DOCUMENTS AND FUNDS All of the documents deposited pursuant to Part I hereof and all funds deposited as hereinafter set forth will be deemed to have been made in escrow until delivery of such documents and funds at the Closing has been made. At the Closing, the following steps are to be taken concurrently: 1. The Underwriter will pay to the Trustee immediately available funds in the amount of $13,990,057.31 (representing $14,005,000 aggregate principal amount of the Series 2006A Bonds, plus net original issue premium of $316,830.40, less an underwriter's discount of $84,030.00 and less the premium for the Policy and fee for the Surety Bond relating to the Series 2006A Bonds in the amount of $247,743.09, which the Underwriter will wire directly to Ambac). 2. The Trustee will release, and the Underwriter will receive, the Series 2006A Bonds (duly executed and authenticated) through the facilities of The Depository Trust Company in New York, New York by telephone; and DOCSLA1:515415.2 41555-8 K35/K35 2 3. The Trustee will comply with the Written Request and Requisition No. 1 of the Commission regarding the proceeds of the Series 2006A Bonds, the transfer and deposit of funds relating to the Prior Bonds and related matters. DOCSLA1:515415.2 41555-8 K35/K35 3 $14,005,000 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BONDS SERIES 2006A TRANSCRIPT OF PROCEEDINGS A. AUTHORIZING DOCUMENTS 1. Resolution No. 2006-02, entitled "Resolution of the Rosemead Community Development Commission Authorizing the Issuance of Not to Exceed $16,000,000 of the Commission's Redevelopment Project Area No.I Tax Allocation Bonds, Series 2006A and the Execution and Delivery of a First Supplement to Indenture, a Bond Purchase Agreement, a Continuing Disclosure Agreement and an Official Statement, and Approving the a Preliminary Official Statement in Connection Therewith and Authorizing Related Actions" adopted on February 14, 2006, certified by the Secretary of the Commission as of the closing date. (Bond Counsel) 2. Resolution No. 2006-04, entitled "Resolution of the City Council of the City of Rosemead Approving the Issuance and Sale of Not to Exceed $16,000,000 Aggregate Principal Amount of Rosemead Community Development Commission Redevelopment Area Project No. 1, Tax Allocation Bonds, Series 2006A" adopted on February 14, 2006, certified by the Clerk of the City as of the closing date. (Bond Counsel) 3. Resolution No. 2006-01, entitled "Resolution of the Rosemead Financing Authority Authorizing the Execution and Delivery of a Purchase Contract by and among the Rosemead Community Development Commission, the Rosemead Financing Authority and the Underwriter Named Therein and Action Related Thereto" adopted on February 14, 2006, certified by the Secretary of the Authority, as of the closing date. (Bond Counsel) 4. Resolution No. 2006-03, entitled "Resolution of the Rosemead Community Development Commission (the "Commission") Authorizing the Execution and Delivery of a Joint Exercise of Powers Agreement with the City of Rosemead" adopted on February 14, 2006, certified by the Secretary of the Commission as of the closing date. (Bond Counsel) Resolution No. 2006-05, entitled "Resolution of the City Council of the City of Rosemead (the "City") Authorizing the Execution and Delivery of a Joint Exercise of Powers Agreement With the Rosemead Community Development Commission" adopted on February 14, 2006, certified by the Clerk of the City as of the closing date. (Bond Counsel) DOCSLA1:515415.2 41555-8 K35/K35 6. Joint Exercise of Powers Agreement, together with Authority Bylaws certified by the Secretary of the Authority. (Bond Counsel) B. BASIC LEGAL DOCUMENTS 7. Original Indenture, dated as of October 1, 1993, by and between the Commission (or its predecessor) and U.S. Bank National Association (or its predecessor), as Trustee (the "Trustee"), certified by the Secretary of the Commission as of the closing date. (Bond Counsel) 8. First Supplement to Indenture, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as Trustee (the "Trustee"). (Bond Counsel) 9. Continuing Disclosure Agreement, dated as of March 1, 2006, by and among the Commission, the Trustee and U.S. Bank National Association, as dissemination agent. (Disclosure Counsel) 10. Tax Certificate, dated March 9, 2006, executed by the Commission. (Bond Counsel) C. DOCUMENTS RELATING TO THE SALE OF THE BONDS 11. Acknowledgement of Receipt of Report of Proposed Debt Issuance from California Debt and Investment Advisory Commission ("CDIAC"), together with Report. (Bond Counsel) 12. Preliminary Official Statement, dated February 15, 2006. (Disclosure Counsel) 13. Certificate Regarding Preliminary Official Statement, pursuant to Rule 15c2-12 of the Securities and Exchange Commission. (Disclosure Counsel) 14. Purchase Contact, dated February 23, 2006 by and among the Commission, the Authority and the Piper Jaffray & Co. (the "Underwriter"). (Disclosure Counsel) 15. Official Statement, dated February 23, 2006. (Disclosure Counsel) 16. Certificate of Mailing Report of Final Sale to CDIAC, together with Report. (Bond Counsel) D. DOCUMENTS RELATING TO DEFEASANCE OF THE SERIES 1993 BONDS 17. Escrow Agreement, dated as of March 1, 2006, by and between the Commission and U.S. Bank National Association, as escrow agent (the "Escrow Bank"). (Bond Counsel) DOCSLA1:515415.2 41555-8 K35/K35 2 18. Verification Report, dated as of March 9, 2006 (Verification Agent), together with copy of the confirmation showing purchase of escrow securities. (Escrow Agent) E. CLOSING DOCUMENTS RELATING TO THE AUTHORITY 19. Initial Notice as to Joint Powers Agreement, stamped to reflect the filing with the California Secretary of State and the County of Los Angeles. (Bond Counsel) 20. Statement of Facts Roster of Public agencies Filing, stamped to reflect the filing with the California Secretary of State. (Bond Counsel) 21. Incumbency and Signature Certificate of the Authority. (Bond Counsel) 22. Certificate of the Authority. (Bond Counsel) F. CLOSING DOCUMENTS RELATING TO THE COMMISSION 23. Incumbency and Signature Certificate of the Commission. (Bond Counsel) 24. Certificate of the Commission. (Bond Counsel) 25. Written Request and Requisition No. 1 of the Commission to the Trustee. (Bond Counsel) 26. Certificate of Mailing of Subordination Notices. (Bond Counsel) 27. Certificate of Fiscal Consultant and Financial Advisor. (Bond Counsel) 28. Certificate of Mailing Information Return for Tax-Exempt Governmental Obligations (Form 8038-G), to the Internal Revenue Service, together with Form 8038-G. (Bond Counsel) 29. Copy of DTC Blanket Issuer Letter of Representations. (Bond Counsel) G. CLOSING DOCUMENTS RELATING TO THE TRUSTEE 30. Certificate of the Trustee, together with excerpts from the Bylaws and Incumbency Certificate. (Bond CounseUTrustee) 31. Receipt for Purchase Price. (Bond Counsel) 32. Specimen Bonds. (Bond Counsel) H. CLOSING DOCUMENTS RELATING TO THE UNDERWRITER 33. Receipt and Certificate of Underwriter. (Bond Counsel) DOCSLA1:515415.2 41555-8 K35/K35 3 I. CLOSING DOCUMENTS RELATING TO THE INSURER 34. Commitment of Ambac Assurance Corporation for Municipal Bond Insurance. (Ambac) 35. Commitment of Ambac Assurance Corporation for Debt Service Reserve Surety Bond. (Ambac) 36. Rating Letters of Standard & Poor's Ratings Services. (Ambac) 37. Specimen Insurance Policy. (Ambac) 38. Specimen Surety Bond. (Ambac) 39. Certificate of the Insurer. (Ambac) J. LEGAL OPINIONS 40. Final Opinion of Orrick, Herrington & Sutcliffe LLP, as Bond Counsel. 41. Disclosure Counsel Opinions of Orrick, Herrington & Sutcliffe LLP. 42. Opinion of Wallin, Kress, Reisman & Krantz LLP, as Counsel to the Commission. 43. Opinion of Trustee's Counsel. 44. Opinion of Insurer's Counsel. 45. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Trustee. 46. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Underwriter. 47. Reliance Letter of Orrick, Herrington & Sutcliffe LLP to the Insurer. K. MISCELLANEOUS 48. Closing Memorandum. 49. Interested Parties List. DOCSLA1:515415.2 41555-8 K35/K35 4 ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Redevelopment Project Area No. 1 Tax Allocation Bonds, Series 2006A Issuer Rosemead Community Development Commission City of Rosemead 8838 E. Valley Blvd. Rosemead, CA 91770 Fax: (626) 307-9218 Bill Crowe* bcrowe@cityofrosemead.org City Manager and Executive Director of Commission Donald J. Wagner dwagner@cityofrosemead.org Interim City Manager and Asst. Executive Director of Commission Karen Ogawa kogawa@cityofrosemead.org Finance Director and Treasurer of Commission Nina Castruita ncastruita@cityofrosemead org City Clerk and Secretary of Commission Issuer..'s Counsel 7771 Distribution List 9: (626) 569-2101 W: (626) 569-2102 2: (626) 569-2121 W: (626) 569-2171 Wallin, Kress, Reisman & Kranitz LLP 2800 28"' Street, Suite 315 Santa Monica, CA 90405-6211 Fax: (310) 450-0506 Peter Wallin, Esq. pwallin@wkrklaw.com 9: (310) 450-9582 x-214 * Resigned, effective February 21, 2006. DOCSLA 1:509464.1 41555-8 Bon&Disclosure Counsel Orrick, Herrington & Sutcliffe LLP 777 South Figueroa Street, Suite 3200 Los Angeles, CA 90017-5855 Fax: (213) 612-2499 William W. Bothwell, Esq. wbothwell@orrick.com M. Kevin Hale, Esq. khale@orrick.com Winnie Tsien, Esq. wtsien@orrick.com Kellie S. Boles kboles@orrick.com Project Manager 9: (213) 612-2403 9: (213) 612-2356 9: (213) 612-2336 W: (213) 612-2171 Financial Advisor Public Financial Management, Inc. 660 Newport Center Drive, Suite 750 Newport Beach, CA 92660-6408 Fax: (949) 721-9437 Keith Curry curryk@pfm.com 2: (949) 721-9422 Managing Director Diana Hu hud@pfm.com 9: (949) 721-9422 Consultant GRC Associates, Inc. 500 S. Kramer Blvd, Suite 365 Brea, CA 92821 Fax: (714) 985-2885 Stephen Copenhaver scopenhaver@grcassoc.com Josh Copenhaver Jcopenhaver2006@ kellogg. northwestern. edu John Oshimo joshimo@grcassoc.com W: (714) 985-2880 W: (714) 985-2880 9: (714) 985-2880 2 DOCSLA1:509464.1 41555-8 Underwriter Piper Jaffray & Co. 345 California Street, Suite 2200 San Francisco, CA Fax: (415) 984-5149 Eric J. Scriven Vice President eric.j.scriven@pjc.com 9: (415) 984-3652 Steven J. Gortler Assistant Vice President Trustee' - steven.j.gortler@pjc.com 9: (714) 984-5163 U.S. Bank National Association 633 W. Fifth Street, 24th Floor Los Angeles, CA 90071 Fax: (213) 615-6197 Ward A. Spooner Vice President ward.spooner@usbank.com 9: (213) 615-6013 II: Trustee's CWinsel Dorsey & Whitney LLP 38 Technology Drive Irvine, CA 92618 Fax: (949) 932-3601 Dennis Wong, Esq. Wong.dennis@dorseylaw.com 2: (949) 932-3659 Insurer - Ambac Assurance Corporation One State Street Plaza New York, NY 10004 Fax: (212) 208-3404 Leslie Coleman Closing Coordinator Ted Molin lcoleman@ambac.com tmolin@ambac.com 3 9: (212) 208-3285 W (212) 208-3361 Fax (212) 208-9190 DOCSLAl :509464.1 41555-8 Yeri icdtion A ent The Arbitrage Group, Inc. 14040 Red Elephant Lane Tuscaloosa/Buhl, AL 35446 Fax: (205) 330-8212 Russell E.. Moore rmoore@thearbitrageroup. com 9 (205) 330-8211 Printer Elabra 480 Gate 5 Road, Suite 300 Sausalito, CA 94965 Tim Kelly service@elabra.com 9 (888) 935-2272 DOCSLA1:509464.1 41555-8