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CDC - Item 2 - Information Regarding sale Of Tax Allocation Bonds Series0 0 IRL Rosemead Community Development Commission R(DC 8838 East Valley Boulevard, CA 91770 Tel 626.569.2100 Fax 626.307.9218 TO: HONORABLE CHAIRMAN AND MEMBERS ROOSEMEAD COMMUNIT VELOPMENT COMMISSION FROM: lb "EXECUTIVE DIRECTOR DATE: FEBRUARY 23, 2006 RE: INFORMATION REGARDING SALE OF TAX ALLOCATION BONDS SERIES 2006A On February 14, 2006 the Conunission authorized the sale of 2006 Tax Allocation Bonds to refund the Series 1993A Bonds and net the Commission approximately $5 million. Attached are the following documents: the Preliminary Official Statement dated February 15, 2006; the First Supplemental to Indenture; the Escrow Agreement; and the Purchase Contract. RECOMMENDATION No action is required. CDC AGENDA 2/28/06 Item No: 2 E 0 TO: HONORABLE CHAIRMAN AND MEMBERS ROSEMEAD COMMUNIT VELOPMENT COMMISSION tT� FROM: "l✓XECUTIVE DIRECTOR DATE: FEBRUARY 23. 2006 RE: INFORMATION REGARDING SALE OF TAX ALLOCATION BONDS SERIES 2006A On February 14, 2006 the Commission authorized the sale of 2006 Tax Allocation Bonds to refund the Series 1993A Bonds and net the Conunission approximately $5 million. Attached are the following documents: the Preliminary Official Statement dated February 15, 2006; the First Supplemental to Indenture; the Escrow Agreement; and the Purchase Contract. RECOMMENDATION No action is required. gm 9 Rosemead Community Development Commission 8838 East Valley Boulevard, CA 91770 Tel 626.569.2100 Fax 626.307.9218 TO: HONORABLE CHAIRMAN AND MEMBERS ROSEMEAD COMMUNIT DEV OPMENT COMMISSION FROM: G� Fes IIhIVE DIRECTOR , DATE: FEBRUARY 27, 2006 RE: INFORMATION REGARDING SALE OF TAX ALLOCATION BONDS SERIES 2006A Attached is a letter from Eric Scriven summarizing the bond sale on Wednesday, February 23, 2006. Representatives from the financial consultant and bond counsel will be present at the meeting tomorrow evening. CDC AGENDA 2/28/06 Item No: 2 - Supplement 0 0 TO: HONORABLE CHAIRMAN AND MEMBERS ROSEMEAD COMMUNIT DEV OPMENT COMMISSION FROM: �IVE DIRECTOR DATE: FEBRUARY 27, 2006 RE: INFORMATION REGARDING SALE OF TAX ALLOCATION BONDS SERIES 2006A Attached is a letter from Eric Scriven summarizing the bond sale on Wednesday, February 23, 2006. Representatives from the financial consultant and bond counsel will be present at the meeting tomorrow evening. 0 PiperJaffray. .February 24, 2006 Donald Wagner, Interim City Manager Karen Ogawa, Finance Director City of Rosemead 8838 E. Valley Blvd. Rosemead, CA 91770 Dear Mr. Wagner and Ms. Ogawa: 0 345 GIifmn a Sc, Stim2200, San Fmnciw ,G 94104 Td 4159845161 I Tch 415-9843600 I F.:415S9845159 Pq"Jafhay& Co. Sc 1895. Member SIPC and NYSE. We are very pleased to report that yesterday's bond sale went very well. Investor demand for the Rosemead Community Development Commission ( "the Commission ") Series 2006A Tax Allocation Bonds was very strong and Piper Jaffray was able to underwrite the entire bond issue at very competitive interest rates. We are pleased to provide you with this brief summary of the underwriting results and the attached bond cash flows. We will follow -up with a more complete, post -sale report when the transaction closes, March 9, 2006. Reoffering yields for the 2006A Bonds range from 3.15% for bonds maturing in October 2006 to 4.30 % for bonds maturing in October 2022. Overall, the True Interest Cost for this bond issue is a very low 3.95 %. In comparison to other similar new bond issues in the municipal market during the days leading up to yesterday's sale, the Rosemead bond yields are extremely competitive. Low interest rates are critical to the success of this financing for two reasons. First, low interest rates maximize the refunding savings. And second, low interest rates maximize the amount of new money bond proceeds that can be generated. Overall, the key achievements of this financing are as follows: • The refunding component of this issue will save the Commission approximately $180,000 per year in annual debt service payments through October 2018. On a net present value basis, the savings equal a very respectable $537,000 or 5.75% of the par amount of refunded bonds. • The new money component of this issue will provide the Commission with $5.45 million to finance capital improvement projects within Project Area No. 1. 0 0 Reoffering yields on the Rosemead Bonds were low for various reasons, including: o A comprehensive pre -sale marketing effort by Piper Jaffray's retail and institutional sales force to alert investors about the pending bond sale Y A credit rating upgrade to'BBB +' by Standard and Poor's Y Municipal bond insurance from Ambac Assurance Corporation o Good market timing Piper Jaffray's ability and willingness to underwrite approximately $3.5 million of unsold bond balances and distribute those bonds to retail investors in the after - market o A well- coordinated and efficient effort by the entire financing team including City staff, bond counsel, financial advisor and redevelopment consultant. Once again, thank you for the opportunity to work with the Commission on the issuance of these bonds. We hope you are pleased with the underwriting results and we look forward to working with you on other financings in the future. Best regards, V� Eric Scriven Managing Director Public Finance Department $14,005,000 Rosemead Community Development Commission Tax Allocation Bonds, Series 2006A Total Issue Sources And Uses Dated 03109/2006 1 Delivered 0310912006 Refunding New Money Issue Bonds Bonds Summary Sources Of Funds Par Amount of Bonds _1.111. _.._. .. _1_111..... 1111...... $8,430,000.00 _ $5,575,000.00 _._ 1111..... $14,005,000.00 ....... .. ............... Transfers from Prior Issue DSR Funds 998,561.87 998,561.87 Reoffering Premium _.......... ____i . _. _.. _. 217,035.25 99,795.15 __. __... ... _... 316,830.40 . _ 1 . .. Transfers fro m Prior Issue Debt Service Funds 253,053.75 7 1... 25 3,053.75 Total Sources $9,898,650.87 $5,674,795.15 $15,573,446.02 Uses Of Funds Deposit to Net Cash Escrow Fund 1131.. ................. __ _....... 9,569,027.99 ........... __. .......... 1313.. 9,569,027.99 ...................... .............. Dep to R edevelop ment Fund _ _ __ _ — 1,287. 73 5,452,807.21 - —3333 5,454,094.94 Deosit to Costs of Issuance Fund p . 3333_ .1..11...1.. ..._..._ ......_ ............_.. 131,551.33 3331 .................. 86,998.67 __...... .............. 218,550.00 ___.._.............. Gross Bond Insurance Pr 12 84,420.08 204,737.84 Discount 3111. 3131__. _.. 50,580.00 1331.. 3311_ 33,450.00 1133... .. 84,030.00 .............. ......._. 1331_ 1313 Surety Bond Fee 25,886.06 17,119.19 43,005.25 Total Uses $9,898,650.87 $5,674,795.15 $15,573,446.02 Rosemead Series 2006A I Issue Summary 1 2232006 1 3:22 PM Piper Jaffray • Co. Pubk Finance Page 1 $14,005,000 Rosemead Community Development Commission Tax Allocation Bonds, Series 2006A i 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°/ 1530% 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 145000.00 109.173% 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 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. 315,000.00 97.939% 308,507.85 Total - - - $14,005,000.00 - - $14,321,830.40 Bid Information Par Amount of Bonds __._. . -. __...... $14,005 ........_. ____. __..._ .........._.. ........ . Reoffering Premium or (Discount) .__ .................. .... ._._...._. .......... __. .... 316,830.40 Gross Production $14,321,830.40 Total Underwriters 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 Co (NIC) 4.01394 True Interest Cost (TIC) 3.9537277% Rosemead Senes 2006A I Issue Summary 1 2232006 1 3:22 PM Piper i Co. Public Finance Page 2 $14,005,000 Rosemead Community Development Commission Tax Allocation Bonds, Series 2006A Net Debt Service Schedule Date Principal Coupon Interest Total P +I Existing D/S Net New D/S 10/01/2006 780,000.00 4.000% 319,380.93 1,099,380.93 1,293,320.00 2,392,700.93 10/01/2007 810,000.00 4.000% 537,993.76 1,347,993.76 1,293,320.00 2,641,313.76 10101/2008 845,000.00 3.250% 505,593.76 1,350,593.76 1,293,320.00 2,643,913.76 10/01/2009 870,000.00 3.250% 478,131.26 1,348,131.26 1,293,320.00 2,641,451.26 10/01/2010 900,000.00 3.375% 449,856.26 1,349,856.26 1,293,320.00 2,643,176.26 10/01/2011 930,000.00 _ 3.500% 419,481.26 1,349,481.26 1,293,320.00 2,642,801.26 10/01/2012 965,000.00 3.500% 386,931.26 1,351,931.26 1,293,320.00 2,645,251.26 10/01/2013 1,000,000.00 4.000% 353,156.26 1,353,156.26 1,293,320.00 2,646,476.26 10/01/2014 1,035,000.00 5.000% 313,156.26 1,348,156.26 1,293,320.00 2 10/01/2015 ........ 1,090,000.00 _.. _. . 0 .....1 0 5.000% _101.1 261,406.26 __.. ........,. 1,351,406.26 1,293,320.00 11.11 11.11... 2,644,726.26 _._ _.1611 10/01/2016 1,145,000.00 5.000% 206,906.26 1,351,906.26 1,293,320.00 2,645,226.26 10/01/2017 1,200,000.00 4.000% 149,656.26 1 9 349,656.26 1,293,320.00 2,642,976.26 10/01/2018 1,250,000.00 4.250% 101,656.26 1 9 351,656.26 1,293,320.00 2,644,976.26 10/01/2019 280,000.00 4.0000/a 48,531.26 328,531.26 2,313,320.00 2,641,851.26 4.125% 37,331.26 327,331.26 2,316,200. 2,643,531.26 _1 0/01/2020 10/01/2021 _ 290,000.00 300,000.00 _ 4.125% 25,368.76 325,368.76 2,315,720.00 _ 2,641,088.76 10/01/2022 315,000.00 4.125% 12,993.76 327,993.76 2,316,880.00 2,644,873.76 10/01/2023 - - - - 2,314,400.00 2,314,400.00 10/01/2024 - - - - 2,313 2,313,280.00 10/01/2025 ................ - 0110.. .......... ................ - - 0011. ............. ............. - 2,313,240.00 0111.. ........ 2,313,240.00 2,314,000.00 2,314,000.00 10/01/2027 - - - - 2,315,280.00 2,315,280.00 10/01/2028 - - - - 2,321,800.00 2,321,800.00 10/01/2029 - - - - 2,318,000.00 2,318,000.00 10/01/2030 - - - - 2,319,160.00 2,319 10/01/2031 - - - - 2,319,720.00 2,319,720.00 10/01/2032 - - - - 2 2,319,400.00 10/01/2033 - - - - 2,317,920.00 2,317,920.00 T $ - $ $ $5 1, 5 61,480.00 $ 70,174,011.09 Rose d Sens 2006A 1 Issue Summary 1 2232006 1 3:22 PM Piper Jaffray & Co. Public Finance Page 3 $8,430,000 Rosemead Community Development Commission Tax Allocation Bonds, Series 2006A Gross Debt Service Comparison Date Principal Coupon Interest New D/S OLD D/S Savings 10/01/2006 650,000.00 4.000% 192,103.40 842,103.40 1,021,107.50 179,004.10 10/01/2007 525,000.00 4.000% 316,362.50 841,362.50 1,024,070.00 182,707.50 10/01/2008 545,000.00 3.250% 295,362.50 840,362.50 1,020,185.00 179,822.50 10/01/2009 560,000.00 3.250% 277,650.00 837,650.00 1,019,975.00 182,325.00 10/01/2010 580,000.00 3.3 839,450.00 1, 023 , 175.00 183,725.00 _ _ 10/01/2011 600,000.00 3.500% 239,875.00 839,875.00 1,019,520.00 179,645.00 10/01/2012 620,000.00 3.500% 218,875.00 838,875.00 1,019,275.00 180,400.00 10/01/2013 650,000.00 4.000 % 197,175.00 847,175.00 1,020,775.00 173,600.00 10/01/2014 670,000.00 5.000% 171,175.00 841,175.00 1,020,075.00 178,900.00 10/01/2015 705,000.00 5.000% ........ ................. 137,675.00 1111.. ................ 842,675.00 . .................. 1,022,175.00 1 1 11.11.01........ 179,500.00 111. ...... 1 . 1 10/01/2016 740,000.00 5.000% 00 102,425.00 ii4i' l 4iK66 .1...........' 842,425.00 1,021,800.00 179 ,375.0. 0 10/01/2017 775,000.00 4.000% 65,425.00 840,425.00 1,023,950.00 183,525.00 10/01/2018 810,000.00 4.250% 34,425.00 844,425.00 1,023,350.00 178,925.00 Total $8,430,000.00 - 52,507,978.40 $10 $13,279,432.50 $2,341,454.10 PV Analysis Summary (Gross to Gross) Gross PV Debt Service Savings ......... ter 11.11....... .................. ............ ........... 1,787,501.96 1111_ 11.7.5..... i Transfers from Pri or Issue Debt Service Fund (253,053.75) _.__._._.... . __. _.., _ Transfers from Prior Issue DSR Fund _ .................. ..........._____. .__....... __.._.__ . _ (998,561.87) 1111 1111... __. _..... __. ........ Contingency or Rounding Amount 1111. .............. ................. _...... ............ 1 287.73 Net Present Value Be nefit $537,174.07 Net PV Benefit / 59,335,000 Refunded Princi 5.754% Net PV Benefit / $8,430,000 Refunding Principal ...._ ........ ............. .. 1111 1 111....... .._ ............ ........... 1111_ ........._ 1111. 1111 1111.... 6.372% ........... 1 .... ..- Refunding Bond Information Refunding Dated Date ................ .............. ___ ._. __. ................. ............... .......... 1111.. _. ___ ......... Refimding Delivery Dale 3/09/2006 Aggregate 1 223/2006 1 3:22 PM Piper i Co. Public Finance Page 0 0 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 DOCSLA 1:509332.6 41555 -5 WWB /WWn 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 DOCSLA1:509332.6 41555 -8 WWB /WWB 9 0 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: -2- DOCS LA I :509332.6 41555 -8 W WB /W W13 0 0 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 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. -3- DOCSI.A 1:509332.6 41555 -8 W W B/ W W B 0 0 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 $5,451,013.40 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 $8,320,493.91 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. 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. -4- DOCSLA 1:509332.6 41555 -8 W W 13 /W W B 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. Dated Date The term "Dated Date" means with respect to Series 2006A Bonds the date of initial issuance and delivery thereof. -5 DOCSLAL509332.6 41555 -8 W W I3/ W W D o • 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. I 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 "A1" 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. 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 -6- DOCS LA I :509332.6 41555 -8 WWB /WWB 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 (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 -7- DOCSLA I :509332.6 41555 -8 W WB/W WB 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. -8- DOCSLA 1:509332.6 41555 -8 WWB/WWB r � (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 Redevelopment 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 -9- DOCSLA L 509332.6 41555 -8 W W B/ W W B i • 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 Guarantv 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. (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. -10- DOCS LA I :509332.6 41555 -8 WW13 /WWB (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 DOCS LA I :509332.6 41555 -8 W W B/W W B 0 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 coining 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. -12- DOCSLA1:509332.6 41555 -8 W W B/ W W B • • 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 XIV 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. -13- DOCSLA1:5093316 41555 -8 W WB /W WB r] 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. -14- DOCSIA I :509332.6 41555 -8 W W B/ W W B Ll 9 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 I: Authorized Officer Attest: Secretary U.S. BANK NATIONAL ASSOCIATION, as Trustee C Authorized Officer -15- DOCSLA 1:509332.6 41555 -8 WWB /WWB APPENDIX A [Form of Series 2006A Bond[ No. A -I ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION REDEVELOPMENT PROJECT AREA NO. 1 TAX ALLOCATION BOND, SERIES 2006A RATE OF INTEREST: MATURITY DATE: DATED DATE: CUSIP: % October 1, March _, 2006 Registered Owner: CEDE & Co. Principal Amount: DOLLARS 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 DOCSLA 1:509332.6 41555 -8 W W B/ W W B A -1 0 0 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. I 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. DOCSLAI:509332.6 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. DOCSLA1:509332.6 41555 -8 W W BI W W B A -3 L 0 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 an Chairperson Attest: Secretary DOCSI,AI:509332.6 41555 -8 W WB /W WB 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 RED Authorized Signatory DOCSLAL509332.6 41555 -8 WWn /WWn A-5 • BONDINSURANCE M 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 DOCSLA I :509332.6 41555 -8 wWB/W WB A -6 E 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. DOCSLAI 509332.6 41555 -8 W W B/ W W B A -7 9 0 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 DOCSLAI: 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: DOCSLAI: 515201.3 41555 -8 WWB /WWB 0 0 Section 1. Establishment, Funding and Maintenance of Refunding Escrow; Notice of Redemption (a) Pursuant to the First Supplement, the Commission has caused the Trustee to transfer to the Escrow Agent the sum of $8,320,493.91 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 $9,572,109.53 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 DOCSLAI: 515201.3 41555 -8 WWB/ WWB 3 0 9 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 WWB/ WWB 4 0 9 and 1 I hereof, and this Agreement shall terminate. The Refunding Escrow cash flow is set forth in Schedule II 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. n0051.A1: 515201.3 41555 -8 WWB/ WWB 5 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 Ate (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 DOCSLA I :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. 0) 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 of the Escrow Agent with respect to.the payment DOCSI.A I :515201.3 41555 -8 WWB/ WWn 7 0 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. DOCSLA 1:515201.3 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 ATTEST: Secretary 0 Assistant Executive Director U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent an Authorized Officer DOCS I.A I :515201.3 41555 -8 WWB/ WWB 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. DOCSLAI: 515201.3 41555 -8 WWB/ WWBI 0 E SCHEDULEII 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 filly set forth herein and made a part hereof, relating to the Refunding Bonds. Docsi.A i 5152013 41555 -8 WWB/ WWBI 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 I, 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* Maturitv 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. DOCSLA1:515201.3 41555 -8 WW13/ WW131 $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 DOCKA 1:515200.4 41555 -8 W W 9/ W W U $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 DOCSI.A 1:515200.4 41555 -8 W WB /W WB 2 • 0 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 DOCSLA 1:515200.4 41555 -8 WWB /WWB 3 • 1 0 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; DOCSLA 1:515200.4 41555 -8 W WB/W WB 4 0 0 (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 DOCSLA 1:515200.4 41555 -8 WWB /WWB 5 0 0 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 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 -5 w W B/W W B 6 0 0 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 DOCSLA 1:515200.4 41555 -8 WWB /WWB 7 0 0 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 (c) At or prior to the Closing, the Underwriter shall receive the following: ROCS 1,A I :515200.4 41555 -8 W W B/ W W 13 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 DOCSLA 1:515200 4 41555 -8 W WB /W WB 9 0 • 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 W WB /W WB 10 0 0 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. DOCSLAI: 515200.4 41555 -8 WWB /WWB r i 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] DOCSLAI 515200.4 41555 -8 WWB/WWB 12 0 0 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. Very truly yours, PIPER JAFFRAV & CO. IC Authorized Representative Accepted and agreed to as of the date first written above: ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION Attest: Authorized Officer Secretary ROSEMEAD FINANCING AUTHORITY S Attest: Authorized Officer By: Secretary DOCSLA1:515200.4 41555 -8 WWB /WWB 13 . Price reflects an assumed par call on October 1, 2016. DOCSLAI:515200.4 41555 -8 W W B/W W 6 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. DOCSLAI:515200.4 41555 -8 W W B/W W 6 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 DOCSLA1:515200.4 41555 -8 W W B/ W W B A- I 0 0 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, ETC 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 & SUTCLIFFELLP DOCSLA 1:515200.4 41555 -8 WWB /WWB A -2 0 0 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 (the "Commission ") in connection with its 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 "), a First Supplement to Indenture, dated as of March 1, 2006 (the "First Supplement') between the Commission and U.S. Bank National Association, as trustee (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') between the Commission and the Trustee, 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 First Supplement, the Continuing Disclosure Agreement and the Escrow Agreement are 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: DOCSLAI: 515200.4 41555 -8 W W B/ W W 13 C -1 (i) The Commission is a public body, corporate and politic, duly organized and validly existing under the laws ofthe 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 Issuing Documents 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 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 DOCSLA 1:515200.4 41555 -8 W WB /W WB C-2 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, 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, DOCSLA1:515200.4 41555 -8 W W B/W W B WALLIN, KRESS, REISMAN & KRANITZ LLP C -3