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RCU) JUL2C 11

BOARD OF EDUCATION PACIFIC GROVE UNIFIED SCHOOL DISTRICT

RESOLUTION NO 894

PROVIDING FOR THE ISSUANCE AND SALE OF GENERAL OBLIGATION BONDS 2006 ELECTION SERIES E IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED

$7780000

WHEREAS a special bond election was duly and regularly held in the Pacific Grove Unified School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section I paragraph (b) of the California Constitution) for the purpose of submitting a general obligation bond measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate principal amount of $42000000 (the General Obligation Bonds) and more than 55 of the votes cast at said election were in favor of the issuance of the General Obligation Bonds and

WHEREAS the Board of EducatiOn of the District is authorized to provide for the issuance and sale of any series of the General Obligation Bonds on behalf of the District under the prov1sions of Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and

WHEREAS the District has previously caused to be 1ssued and sold $34220000 of the General Obligation Bonds and

WHEREAS the American Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54 A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received an allocation for the year 2010 to issue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7 780000 and

WHEREAS the Board of Trustees wishes at this time to initiate proceedings for the issuance of Series E Bonds under the Bond Law in the aggregate principal amount of not to exceed $7780000 as provided in this Resolution which shall constitute the Qualified School ConstructiOn Bonds for wh1ch the District has received an allocation for the year 2010 middot

NOW THEREFORE the Board of Education of the District hereby finds determines declares and resolves as follows

Section 1 Bond Authorization The Board of Education (the Board) hereby authorizes the issuance a series of General Obligation Bonds in the aggregate principal amount of not to exceed $7780000 (the Series E Bonds) The Series E Bonds shall be issued under the Bond Law for the purpose of raising money to finance educational facilities for which the General Obligatwn Bonds have been authorized under the Bond Measure

Section 2 Paying Agent Agreement The Series E Bonds shall be issued upon the terms and conditions set forth in the Paying Agent Agreement between the District and US Bank National Association as paying agent (the Paying Agent) in substantially the form on file with the Clerk of the Board together with any changes therein or modifications thereof which are approved by the Superintendent or the Assistant Superintendent Business Services (each an Authorized Officer) whose execution thereof shall be conclusive evidence of the approval of any such changes or modifications An Authorized Officer is directed to authenticate and execute the final form of the Paying Agent Agreement in the name and on behalf of the District

Section 3 Material Provisions of Series E Bonds The Series E Bonds are authorized to be issued in the form of current interest bonds capital apprectation bonds or convertible capital appreciation bonds or any combination thereof Interest on the Series E Bonds shall be payable or shall compound on February I and August I in each year commencing February I 2012 and principal of the Series E Bonds shall be payable on August I in each year commencing August I 2012 or as otherwise provided in the Paying Agent Agreement The Series E Bonds shall be subject to redemption in accordance with the redemption provisions set forth in the Paying Agent Agreement The Series E Bonds may be issued in whole or in part as term bonds which are subject to mandatory sinking fund redemption on August I in any year in lieu of having a principal maturity in such year

Section 4 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to JPMorgan Chase Bank NA or another financial institution designated by an Authorized Officer (the Bank) The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least I 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In accordance with Section 15146 of the California Education Code the Board has determined to sell the Series E Bonds at a negotiated sale for the following reasons (i) the District has selected the Bank through a process based on consideration of the qualifications and cost of services (ii) the Bank is familiar with the financial condition and operations of the District and (iii) a negotiated sale provides more flexibility to choose the time and date of the sale which is advantageous in a volatile munictpal bond market

Section 5 Professional Services Estimated Financing Costs Dale Scott amp Co has previously been engaged as financial advisor to the District and Jones Hall A Professional Law Corporation has previously been engaged as bond counsel to the District The estimated costs of issuance associated with the bond sale are less than 2 of the principal amount of the Series E Bonds which include the fmancial advisor bond counsel fees rating agency fees paying agent fees and Bank fees The costs of issumg the Bonds shall be paid in accordance with a custodial agreement to be entered into between the Distnct and US Bank National Association as custodian

Section 6 Building Fund The District hereby directs the Auditor-Controllerffreasurer-Tax Collector of the County of Monterey (the County Treasurer) to establish hold and maintain a fund to be known as the Pacific Grove USD Building Fund 2006 Election Series E (the Building Fund) which the County Treasurer shall maintain as a separate account distinct from all other funds of the County and the District Upon the issuance of the Series E Bonds a portion of the proceeds of sale thereof shall be transferred to the County Treasurer to be credited to the Building Fund Amounts on deposit in the Building Fund shall be expended by the District solely for the construction reconstruction rehabilitation or replacement of school facilities including the furnishing and equippmg of school facilities for which the Series E Bond proceeds are authorized to be expended under the Bond Measure All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Section 7 Security for the Series E Bonds The Series E Bonds are general obligations of the District payable from the levy of ad valorem taxes upon all property within the District subject to taxation by the District without limitation as to rate or amount for the payment of the Series E Bonds and the interest thereon The District hereby directs the County to levy on all the taxable property in the District in addition to all other taxes a continuing direct and ad valorem tax annually during the period the Series E Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Series E Bonds when due which moneys when collected shall be placed in the Debt Service Fund as set forth in Section 8

The principal of and interest on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof shall be liable thereon In no event are the principal of and interest on the Series E Bonds payable out of any funds or properties of the District other than ad valorem taxes levied upon all taxable property in the District

The Series E Qualified School Construction Bonds are further secured by and payable from bond subsidy payments received by the District

Section 8 Establishment of Debt Service Fund The District hereby directs the County Treasurer to establish hold and maintain a fund to be known as the Pacific Grove USD General Obligation Bond Debt Service Funds 2006 Election Series E (the

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Debt Service Fund) to be maintained by the County Treasurer as a separate account distinct from all other funds of the County and the District All taxes levied by the County as directed by the District herein for the payment of the principal of and interest on the Series E Bonds shall be deposited m the Debt Service Fund by the County Treasurer promptly upon apportionment of said levy The District hereby irrevocably pledges the Debt Service Fund for the payment of the principal of and interest on the Series E Bonds when and as the same become due

Section 9 Limited Duties of County Indemnification The County (including its officers agents and employees) shall undertake only those duties of the County under this Resolution which are specifically set forth in this Resolution and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligations shall be read into this Resolution against the County (including its officers agents and employees) The District further agrees to indemnify defend and save the County (including its officers agents and employees) harmless against any and all liabilities costs expenses damages and claims which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

Section 10 Execution of Documents The Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in this Resolution any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on h1s or her behalf in the case such officer is absent or unavailable

Section 11 Effective Date of Resolution This Resolution shall take effect from and after the date of its passage and adoption

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

RCU) JUL2C 11

BOARD OF EDUCATION PACIFIC GROVE UNIFIED SCHOOL DISTRICT

RESOLUTION NO 894

PROVIDING FOR THE ISSUANCE AND SALE OF GENERAL OBLIGATION BONDS 2006 ELECTION SERIES E IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED

$7780000

WHEREAS a special bond election was duly and regularly held in the Pacific Grove Unified School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section I paragraph (b) of the California Constitution) for the purpose of submitting a general obligation bond measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate principal amount of $42000000 (the General Obligation Bonds) and more than 55 of the votes cast at said election were in favor of the issuance of the General Obligation Bonds and

WHEREAS the Board of EducatiOn of the District is authorized to provide for the issuance and sale of any series of the General Obligation Bonds on behalf of the District under the prov1sions of Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and

WHEREAS the District has previously caused to be 1ssued and sold $34220000 of the General Obligation Bonds and

WHEREAS the American Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54 A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received an allocation for the year 2010 to issue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7 780000 and

WHEREAS the Board of Trustees wishes at this time to initiate proceedings for the issuance of Series E Bonds under the Bond Law in the aggregate principal amount of not to exceed $7780000 as provided in this Resolution which shall constitute the Qualified School ConstructiOn Bonds for wh1ch the District has received an allocation for the year 2010 middot

NOW THEREFORE the Board of Education of the District hereby finds determines declares and resolves as follows

Section 1 Bond Authorization The Board of Education (the Board) hereby authorizes the issuance a series of General Obligation Bonds in the aggregate principal amount of not to exceed $7780000 (the Series E Bonds) The Series E Bonds shall be issued under the Bond Law for the purpose of raising money to finance educational facilities for which the General Obligatwn Bonds have been authorized under the Bond Measure

Section 2 Paying Agent Agreement The Series E Bonds shall be issued upon the terms and conditions set forth in the Paying Agent Agreement between the District and US Bank National Association as paying agent (the Paying Agent) in substantially the form on file with the Clerk of the Board together with any changes therein or modifications thereof which are approved by the Superintendent or the Assistant Superintendent Business Services (each an Authorized Officer) whose execution thereof shall be conclusive evidence of the approval of any such changes or modifications An Authorized Officer is directed to authenticate and execute the final form of the Paying Agent Agreement in the name and on behalf of the District

Section 3 Material Provisions of Series E Bonds The Series E Bonds are authorized to be issued in the form of current interest bonds capital apprectation bonds or convertible capital appreciation bonds or any combination thereof Interest on the Series E Bonds shall be payable or shall compound on February I and August I in each year commencing February I 2012 and principal of the Series E Bonds shall be payable on August I in each year commencing August I 2012 or as otherwise provided in the Paying Agent Agreement The Series E Bonds shall be subject to redemption in accordance with the redemption provisions set forth in the Paying Agent Agreement The Series E Bonds may be issued in whole or in part as term bonds which are subject to mandatory sinking fund redemption on August I in any year in lieu of having a principal maturity in such year

Section 4 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to JPMorgan Chase Bank NA or another financial institution designated by an Authorized Officer (the Bank) The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least I 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In accordance with Section 15146 of the California Education Code the Board has determined to sell the Series E Bonds at a negotiated sale for the following reasons (i) the District has selected the Bank through a process based on consideration of the qualifications and cost of services (ii) the Bank is familiar with the financial condition and operations of the District and (iii) a negotiated sale provides more flexibility to choose the time and date of the sale which is advantageous in a volatile munictpal bond market

Section 5 Professional Services Estimated Financing Costs Dale Scott amp Co has previously been engaged as financial advisor to the District and Jones Hall A Professional Law Corporation has previously been engaged as bond counsel to the District The estimated costs of issuance associated with the bond sale are less than 2 of the principal amount of the Series E Bonds which include the fmancial advisor bond counsel fees rating agency fees paying agent fees and Bank fees The costs of issumg the Bonds shall be paid in accordance with a custodial agreement to be entered into between the Distnct and US Bank National Association as custodian

Section 6 Building Fund The District hereby directs the Auditor-Controllerffreasurer-Tax Collector of the County of Monterey (the County Treasurer) to establish hold and maintain a fund to be known as the Pacific Grove USD Building Fund 2006 Election Series E (the Building Fund) which the County Treasurer shall maintain as a separate account distinct from all other funds of the County and the District Upon the issuance of the Series E Bonds a portion of the proceeds of sale thereof shall be transferred to the County Treasurer to be credited to the Building Fund Amounts on deposit in the Building Fund shall be expended by the District solely for the construction reconstruction rehabilitation or replacement of school facilities including the furnishing and equippmg of school facilities for which the Series E Bond proceeds are authorized to be expended under the Bond Measure All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Section 7 Security for the Series E Bonds The Series E Bonds are general obligations of the District payable from the levy of ad valorem taxes upon all property within the District subject to taxation by the District without limitation as to rate or amount for the payment of the Series E Bonds and the interest thereon The District hereby directs the County to levy on all the taxable property in the District in addition to all other taxes a continuing direct and ad valorem tax annually during the period the Series E Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Series E Bonds when due which moneys when collected shall be placed in the Debt Service Fund as set forth in Section 8

The principal of and interest on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof shall be liable thereon In no event are the principal of and interest on the Series E Bonds payable out of any funds or properties of the District other than ad valorem taxes levied upon all taxable property in the District

The Series E Qualified School Construction Bonds are further secured by and payable from bond subsidy payments received by the District

Section 8 Establishment of Debt Service Fund The District hereby directs the County Treasurer to establish hold and maintain a fund to be known as the Pacific Grove USD General Obligation Bond Debt Service Funds 2006 Election Series E (the

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Debt Service Fund) to be maintained by the County Treasurer as a separate account distinct from all other funds of the County and the District All taxes levied by the County as directed by the District herein for the payment of the principal of and interest on the Series E Bonds shall be deposited m the Debt Service Fund by the County Treasurer promptly upon apportionment of said levy The District hereby irrevocably pledges the Debt Service Fund for the payment of the principal of and interest on the Series E Bonds when and as the same become due

Section 9 Limited Duties of County Indemnification The County (including its officers agents and employees) shall undertake only those duties of the County under this Resolution which are specifically set forth in this Resolution and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligations shall be read into this Resolution against the County (including its officers agents and employees) The District further agrees to indemnify defend and save the County (including its officers agents and employees) harmless against any and all liabilities costs expenses damages and claims which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

Section 10 Execution of Documents The Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in this Resolution any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on h1s or her behalf in the case such officer is absent or unavailable

Section 11 Effective Date of Resolution This Resolution shall take effect from and after the date of its passage and adoption

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Section 1 Bond Authorization The Board of Education (the Board) hereby authorizes the issuance a series of General Obligation Bonds in the aggregate principal amount of not to exceed $7780000 (the Series E Bonds) The Series E Bonds shall be issued under the Bond Law for the purpose of raising money to finance educational facilities for which the General Obligatwn Bonds have been authorized under the Bond Measure

Section 2 Paying Agent Agreement The Series E Bonds shall be issued upon the terms and conditions set forth in the Paying Agent Agreement between the District and US Bank National Association as paying agent (the Paying Agent) in substantially the form on file with the Clerk of the Board together with any changes therein or modifications thereof which are approved by the Superintendent or the Assistant Superintendent Business Services (each an Authorized Officer) whose execution thereof shall be conclusive evidence of the approval of any such changes or modifications An Authorized Officer is directed to authenticate and execute the final form of the Paying Agent Agreement in the name and on behalf of the District

Section 3 Material Provisions of Series E Bonds The Series E Bonds are authorized to be issued in the form of current interest bonds capital apprectation bonds or convertible capital appreciation bonds or any combination thereof Interest on the Series E Bonds shall be payable or shall compound on February I and August I in each year commencing February I 2012 and principal of the Series E Bonds shall be payable on August I in each year commencing August I 2012 or as otherwise provided in the Paying Agent Agreement The Series E Bonds shall be subject to redemption in accordance with the redemption provisions set forth in the Paying Agent Agreement The Series E Bonds may be issued in whole or in part as term bonds which are subject to mandatory sinking fund redemption on August I in any year in lieu of having a principal maturity in such year

Section 4 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to JPMorgan Chase Bank NA or another financial institution designated by an Authorized Officer (the Bank) The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least I 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In accordance with Section 15146 of the California Education Code the Board has determined to sell the Series E Bonds at a negotiated sale for the following reasons (i) the District has selected the Bank through a process based on consideration of the qualifications and cost of services (ii) the Bank is familiar with the financial condition and operations of the District and (iii) a negotiated sale provides more flexibility to choose the time and date of the sale which is advantageous in a volatile munictpal bond market

Section 5 Professional Services Estimated Financing Costs Dale Scott amp Co has previously been engaged as financial advisor to the District and Jones Hall A Professional Law Corporation has previously been engaged as bond counsel to the District The estimated costs of issuance associated with the bond sale are less than 2 of the principal amount of the Series E Bonds which include the fmancial advisor bond counsel fees rating agency fees paying agent fees and Bank fees The costs of issumg the Bonds shall be paid in accordance with a custodial agreement to be entered into between the Distnct and US Bank National Association as custodian

Section 6 Building Fund The District hereby directs the Auditor-Controllerffreasurer-Tax Collector of the County of Monterey (the County Treasurer) to establish hold and maintain a fund to be known as the Pacific Grove USD Building Fund 2006 Election Series E (the Building Fund) which the County Treasurer shall maintain as a separate account distinct from all other funds of the County and the District Upon the issuance of the Series E Bonds a portion of the proceeds of sale thereof shall be transferred to the County Treasurer to be credited to the Building Fund Amounts on deposit in the Building Fund shall be expended by the District solely for the construction reconstruction rehabilitation or replacement of school facilities including the furnishing and equippmg of school facilities for which the Series E Bond proceeds are authorized to be expended under the Bond Measure All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Section 7 Security for the Series E Bonds The Series E Bonds are general obligations of the District payable from the levy of ad valorem taxes upon all property within the District subject to taxation by the District without limitation as to rate or amount for the payment of the Series E Bonds and the interest thereon The District hereby directs the County to levy on all the taxable property in the District in addition to all other taxes a continuing direct and ad valorem tax annually during the period the Series E Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Series E Bonds when due which moneys when collected shall be placed in the Debt Service Fund as set forth in Section 8

The principal of and interest on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof shall be liable thereon In no event are the principal of and interest on the Series E Bonds payable out of any funds or properties of the District other than ad valorem taxes levied upon all taxable property in the District

The Series E Qualified School Construction Bonds are further secured by and payable from bond subsidy payments received by the District

Section 8 Establishment of Debt Service Fund The District hereby directs the County Treasurer to establish hold and maintain a fund to be known as the Pacific Grove USD General Obligation Bond Debt Service Funds 2006 Election Series E (the

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Debt Service Fund) to be maintained by the County Treasurer as a separate account distinct from all other funds of the County and the District All taxes levied by the County as directed by the District herein for the payment of the principal of and interest on the Series E Bonds shall be deposited m the Debt Service Fund by the County Treasurer promptly upon apportionment of said levy The District hereby irrevocably pledges the Debt Service Fund for the payment of the principal of and interest on the Series E Bonds when and as the same become due

Section 9 Limited Duties of County Indemnification The County (including its officers agents and employees) shall undertake only those duties of the County under this Resolution which are specifically set forth in this Resolution and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligations shall be read into this Resolution against the County (including its officers agents and employees) The District further agrees to indemnify defend and save the County (including its officers agents and employees) harmless against any and all liabilities costs expenses damages and claims which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

Section 10 Execution of Documents The Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in this Resolution any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on h1s or her behalf in the case such officer is absent or unavailable

Section 11 Effective Date of Resolution This Resolution shall take effect from and after the date of its passage and adoption

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Section 5 Professional Services Estimated Financing Costs Dale Scott amp Co has previously been engaged as financial advisor to the District and Jones Hall A Professional Law Corporation has previously been engaged as bond counsel to the District The estimated costs of issuance associated with the bond sale are less than 2 of the principal amount of the Series E Bonds which include the fmancial advisor bond counsel fees rating agency fees paying agent fees and Bank fees The costs of issumg the Bonds shall be paid in accordance with a custodial agreement to be entered into between the Distnct and US Bank National Association as custodian

Section 6 Building Fund The District hereby directs the Auditor-Controllerffreasurer-Tax Collector of the County of Monterey (the County Treasurer) to establish hold and maintain a fund to be known as the Pacific Grove USD Building Fund 2006 Election Series E (the Building Fund) which the County Treasurer shall maintain as a separate account distinct from all other funds of the County and the District Upon the issuance of the Series E Bonds a portion of the proceeds of sale thereof shall be transferred to the County Treasurer to be credited to the Building Fund Amounts on deposit in the Building Fund shall be expended by the District solely for the construction reconstruction rehabilitation or replacement of school facilities including the furnishing and equippmg of school facilities for which the Series E Bond proceeds are authorized to be expended under the Bond Measure All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Section 7 Security for the Series E Bonds The Series E Bonds are general obligations of the District payable from the levy of ad valorem taxes upon all property within the District subject to taxation by the District without limitation as to rate or amount for the payment of the Series E Bonds and the interest thereon The District hereby directs the County to levy on all the taxable property in the District in addition to all other taxes a continuing direct and ad valorem tax annually during the period the Series E Bonds are Outstanding in an amount sufficient to pay the principal of and interest on the Series E Bonds when due which moneys when collected shall be placed in the Debt Service Fund as set forth in Section 8

The principal of and interest on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof shall be liable thereon In no event are the principal of and interest on the Series E Bonds payable out of any funds or properties of the District other than ad valorem taxes levied upon all taxable property in the District

The Series E Qualified School Construction Bonds are further secured by and payable from bond subsidy payments received by the District

Section 8 Establishment of Debt Service Fund The District hereby directs the County Treasurer to establish hold and maintain a fund to be known as the Pacific Grove USD General Obligation Bond Debt Service Funds 2006 Election Series E (the

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Debt Service Fund) to be maintained by the County Treasurer as a separate account distinct from all other funds of the County and the District All taxes levied by the County as directed by the District herein for the payment of the principal of and interest on the Series E Bonds shall be deposited m the Debt Service Fund by the County Treasurer promptly upon apportionment of said levy The District hereby irrevocably pledges the Debt Service Fund for the payment of the principal of and interest on the Series E Bonds when and as the same become due

Section 9 Limited Duties of County Indemnification The County (including its officers agents and employees) shall undertake only those duties of the County under this Resolution which are specifically set forth in this Resolution and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligations shall be read into this Resolution against the County (including its officers agents and employees) The District further agrees to indemnify defend and save the County (including its officers agents and employees) harmless against any and all liabilities costs expenses damages and claims which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

Section 10 Execution of Documents The Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in this Resolution any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on h1s or her behalf in the case such officer is absent or unavailable

Section 11 Effective Date of Resolution This Resolution shall take effect from and after the date of its passage and adoption

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

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CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

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RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Debt Service Fund) to be maintained by the County Treasurer as a separate account distinct from all other funds of the County and the District All taxes levied by the County as directed by the District herein for the payment of the principal of and interest on the Series E Bonds shall be deposited m the Debt Service Fund by the County Treasurer promptly upon apportionment of said levy The District hereby irrevocably pledges the Debt Service Fund for the payment of the principal of and interest on the Series E Bonds when and as the same become due

Section 9 Limited Duties of County Indemnification The County (including its officers agents and employees) shall undertake only those duties of the County under this Resolution which are specifically set forth in this Resolution and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligations shall be read into this Resolution against the County (including its officers agents and employees) The District further agrees to indemnify defend and save the County (including its officers agents and employees) harmless against any and all liabilities costs expenses damages and claims which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

Section 10 Execution of Documents The Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in this Resolution any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on h1s or her behalf in the case such officer is absent or unavailable

Section 11 Effective Date of Resolution This Resolution shall take effect from and after the date of its passage and adoption

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

PASSED AND ADOPTED this I 6th day of June 20 I I by the followmg vote

AYES s-

NOES _-o--

ABSENT-13

ATIEST

Board of Education ove Unified School

istrict Monterey County California

President of the Board of Education Pacific Grove Unified School

Distnct Monterey County California

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

-2-

Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

-3-

Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

-4-

Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

-5-

ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

-6-

on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Jones Hall

PAYING AGENT AGREEMENT

Relating to the Issuance of

$7780000 Pacific Grove Unified School District

(Monterey County California) Taxable General Obligation Bonds

2006 Election Series E

RGUD JUL 20 11

A ProfessiOnal Law CorporatiOn

(Direct-Pay Qualified School Construction Bonds)

This PAYING AGENT AGREEMENT (this Agreement) dated as of July 1 2010 is between the PACIFIC GROVE UNIFIED SCHOOL DISTRICT a unified school district organ1zed and existing under the laws of the State of California (the District) and U S -BANK NATIONAL ASSOCIATION a national banking association organized and existing under the laws of the United States of America as paying agent (the Paying Agent)

BACKGROUND

1 A special bond election was duly and regularly l)eld in the Pac1fic Grove Umfied School District (the District) on June 6 2006 under the procedures specified in Proposition 39 (Article XIII A Section 1 paragraph (b) of the California Constitution) for the purpose of submitting a ballot measure (the Bond Measure) to the qualified electors of the District authorizing the issuance of general obligation bonds of the District in the aggregate pnnc1pal amount of $42000000 (the Bonds) and 65 60 of the votes cast at sa1d election were in favor of the issuance of the Bonds and

2 The abbreviated form of Bond Measure approved by the voters of the District is as follows

To repair and renovate classrooms schools and educational facilities throughout the Distnct and build new classrooms and educational facilities including science labs and music rooms shall Pacific Grove Unified School District issue $42 million of bonds at the lowest poss1ble interest rate so long as spending is annually reviewed by an independent citizens overs1ght committee and all funds are spent locally and cannot be transferred to the State

3 The District has previously caused to be issued Bonds 1n the aggregate principal amount of $34220000 and

4 The Amencan Recovery and Reinvestment Act of 2009 granted a national allocation of $11 billion to provide for the issuance of qualified school construction bonds (Qualified School Construction Bonds) in accordance with the qualified tax credit bond program set forth in Section 54A of the Internal Revenue Code of 1986 as amended (the Tax Code) and the District has received pursuant to a letter dated January 14 2011 frorn the California Department of Education an allocation for the year 2010 to 1ssue Qualified School Construction Bonds in the aggregate principal amount of not to exceed $7780000 and

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

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Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

5 The Board of Education wishes at th1s time to issue a series of Bonds under the Bond Law 1n the aggregate principal amount of not to exceed $7780000 as provided m this Agreement and Resolution No 894 adopted by the Board of Educat1on on June 16 2011 designated Series E wh1ch shall constitute the Qualified School Construction Bonds for which the District has received an allocation for the year 2010

AGREEMENT

In consideration of the forego1ng and the material covenants hereinafter contained the D1strict and the Paying Agent formally covenant agree and bind themselves as follows

ARTICLE I

DEFINITIONS AUTHORITY

SECTION 101 Definitions The terms defined in th1s Sect1on 1 01 as used and capitalized herein shall for all purposes of this Agreement have the meanings given them below unless the context clearly requires some other meaning

Available Project Proceeds means (i) the proceeds from the sale of the Series E Bonds (i1) less costs of issuing the Series E Bonds paid from proceeds of the sale of the Series E Bonds (not exceeding 2 of the proceeds of the sale thereof) plus (iii) investment earnings on the difference between (i) - (i1)

Bank means JPMorgan Chase Bank NA 1ts successor and ass1gns as orig1nal purchaser of the Series E Bonds on the Closing Date

Board means the Board of Education of the District

Bond Counsel means (a) the firm of Jones Hall A Professional Law Corporation or (b) any other attorney or firm of attorneys nationally recognized for expertise in rendering opimons as to the legality and tax exempt status of secunt1es 1ssued by public entitles

Bond Law means Article 45 of Chapter 3 of Part 1 of Division 2 of T1tle 5 of the Government Code of the State of California commencing with Section 53506 of said Code as in effect on the date of adoption hereof and as amended hereafter middot

Bond Measure means the measure submitted to and approved by more than 55 of the voters under which the issuance of the Bonds has been authorized

Bond Subsidy Payments means with respect to the Series E Bonds the amounts which are payable by the Federal government under Section 6431 of the Tax Code which the District has elected to receive under Sect1on 54AA(g)(1) of the Tax Code

-2-

Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

-18-

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Building Fund means the fund established and held by the Monterey County Office of Education under Section 3 04

Business Day means a day of the year other than a Saturday or Sunday on which banks are not closed 1n the city 1n which the Principal Off1ce of the Paying Agent IS

located

Closing Date means the date upon which there is a physical delivery of the Series E Bonds in exchange for the amount representing the purchase pnce of the Series E Bonds by the Bank

Commitment Letter means the commitment letter issued by the Bank setting forth the terms and conditions upon which the Bank agrees to purchase the Series E Bonds from the Distnct as accepted by the District

Costs of Issuance means all 1tems of expense directly or indirectly payable by or reimbursable to the Distnct and related to the authorization issuance sale and delivery of the Series E Bonds including but not lim1ted to the costs of preparation and reproduction of documents printing expenses filing and recording fees 1n1tial fees and charges of the Pay1ng Agent and 1ts counsel legal fees and charges fees and disbursements of consultants and professionals counsel to the Bank rating agency fees and any other cost charge or fee in connection with the original issuance and sale of the Series E Bonds

County means the County of Monterey a political subdivision of the State of California duly organized and existing under the Constitution and laws of the State of California

County Office means the Monterey County Office of Education

County Treasurer means the Monterey County Treasurer-Tax Collector or any authorized deputy thereof

Debt Service Fund means the fund established and held by the County Office under Section 404

Determination of Disqualification means (a) the enactment of legislation by the Congress of the Umted States of America (b) the promulgation of a non-appealable ruling notice or determmat10n by the Internal Revenue Service or (c) a rendering of a non-appealable ruling or holdmg by a court of competent jurisdiction the effect of which causes the Series E Bonds to lose the1r status as or fail to qualify as Qualified School Construction Bonds or wh1ch reduces defers or eliminates the Bond Subsidy Payments (other than for a reason described in Section 402)

District means the Pacific Grove Unified School District a unified school district organized under the Constitution and laws of the State of California and any successor

Distnct Representative means the Superintendent the Assistant Superintendent for Business of the District or any other person authorized by resolution of the Board to act on behalf of the District w1th respect to this Agreement and the Series E Bonds

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Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

-8-

Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Education Code means the Educat1on Code of the State of California as m effect on the date of adoption hereof and as amended thereafter

Expenditure Period means the expenditure period defined 1n Section 54A(d)(2)(B)(il) of the Tax Code and consists of the penod beg1nning on the Closing Date and endmg on the later of the date which is three years after the Clos1ng Date or such later date 1f any as permitted by the Internal Revenue Serv1ce in response to a request to extend the Expenditure Period

Federal Securities means Umted States Treasury notes bonds bills or certificates of indebtedness or any other obligations the timely payment of which is directly or indirectly guaranteed by the faith and credit of the United States of Amenca

Fiscal Year means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30 both dates inclusive or any other twelveshymonth period selected and designated by the District as its official fiscal year period pursuant to written notice filed with the Paying Agent and the Bank

Interest Payment Date means February 1 2012 and the first day of each succeeding February and August

Outstanding when used as of any particular time with reference to Series E Bonds means all Series E Bonds except (a) Series E Bonds theretofore canceled by the Paying Agent or surrendered to the Paying Agent for cancellation (b) Series E Bonds paid or deemed to have been paid within the meaning of Section 9 02 and (c) Senes E Bonds in lieu of or in substitution for wh1ch other Series E Bonds have been authorized executed issued and delivered by the District under this Agreement

Owner whenever used herein with respect to a Series E Bond means the person in whose name the ownership of such Series E Bond is registered on the Registration Books So long as the Bank is the sole registered owner of the Series E Bonds all references to the Owners shall refer to the Bank

Paying Agent means the Paying Agent appointed by the District and acting as paying agent registrar and authenticating agent for the Series E Bonds its successors and assigns and any other corporation or association which may at any time be substituted in its place as provided in Section 6 01

Principal Office means the office or offices of the Paying Agent for the payment of the Series E Bonds and the admmistrat1on of its duties hereunder as such office or offices are identified 1n a written notice filed with the District by the Paying Agent

Qualified Purposes means the construction rehabilitation or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the Available Project Proceeds as described in Section 54Fa)1) of the Tax Code Expenditures for costs of acquisition of equipment to be used m such portion of the public school facility that is being constructed rehabilitated or repaired with proceeds of the Series E Bonds constitute a Qualified Purpose

Qualified School Construction Bonds means obligations meetmg the requirements of Sections 54A and 54F of the Tax Code

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Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Record Date means the 15th calendar day of the month preceding an Interest Payment Date whether or not such day IS a Business Day

Registration Books means the records mamtained by the Paying Agent for the registration of ownership and transfer of the Series E Bonds under Sect1on 208

Resolution means Resolution No 894 as originally adopted by the Board on June 16 2011 and including all amendments hereto and supplements hereof wh1ch are duly adopted by the Board from time to time in accordance herewith

Series E Bonds means the Pac1fic Grove Umfied School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (DirectshyPay Qualified School Construction Bonds) at any time Outstanding under this Agreement

Tax Code means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date together with applicable proposed temporary and final regulations promulgated and applicable official public guidance published under said Code

Taxable Bond Act means the prov1s1ons of Sect1on 5900 et seq of the California Government Code as in effect on the date hereof and as amended hereafter

Written Request of the District means an instrument in writing signed by a District Representative or by any other officer of the District duly authorized to act on behalf of the District under a written certificate of a District Representative

SECTION 102 Interpretation

(a) Unless the context otherwise indicates words expressed in the singular include the plural and vice versa and the use of the neuter masculine or feminine gender is for convenience only and include the neuter masculine or femmine gender as appropriate

(b) Headings of articles and sections herein and the table of contents hereof are solely for convemence of reference do not constitute a part hereof and do not affect the meaning construction or effect hereof

(c) All references herein to Articles Sections and other subdivisions are to the corresponding Articles Sections or subdivisions of this Agreement the words herein hereof hereby hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article Section or subdivision hereof

SECTION 103 Authonty for th1s Agreement Findings This Agreement IS

entered into under the provisions of the Bond Law The Board hereby certifies that all of the things conditions and acts required to exist to have happened or to have been performed precedent to and in the issuance of the Series E Bonds do exist have happened or have been performed in due and regular time and manner as required by the laws of the State of California and that the amount of the Series E Bonds together w1th all other indebtedness of the District does not exceed any limit prescribed by any laws of the State of California

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ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

-6-

on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

ARTICLE II

THE SERIES E BONDS

SECTION 201 Authorization The Board hereby authorizes the issuance of the Series E Bonds in the pnncipal amount of not to exceed $7780000 under and subject to the terms of Article XIIIA Section 1 paragraph (b) of the California Constitution the Bond Law the Resolution and this Agreement for the purpose of ra1sing money for the acquisition or improvement of educational facilities in accordance with the Bond Measure and to pay the Costs of Issuance This Agreement constitutes a continuing agreement between the District and the Owners of all of the Outstanding Series E Bonds to secure the full and final payment of principal thereof and interest and premium thereon subject to the covenants agreements provisions and conditions herein contained The Series E Bonds are designated the Pacific Grove Unified School Distnct (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

SECTION 202 Terms of Series E Bonds

(a) Form Numbering The Series E Bonds shall be issued as fully registered Bonds Without coupons Series E Bonds shall be lettered and numbered as the Paying Agent may prescribe

(b) Date of Series E Bonds The Series E Bonds shall be dated as of the Closing Date

(c) Maturities Interest The Senes E Bonds shall mature on the dates and in the principal amounts as set forth m the Commitment Letter provided that the final maturity of the Senes E Bonds shall be not later than the final date allowed for Qualified School Construction Bonds under the application provisions of the Tax Code

Each Series E Bond will bear interest from the Interest Payment Date next preceding the date of registration and authentication thereof unless (1) 11 is authenticated as of an Interest Payment Date in which event it will bear interest from such date or (ii) 11 is authenticated prior to an Interest Payment Date and after the close of business on the preceding Record Date in which event it will bear interest from such Interest Payment Date or (1ii) it is authenticated on or before the first Record Date in which event it will bear interest from the dated date of the Series E Bonds provided however that if at the time of authentication of a Series E Bond interest is 1n default thereon such Series E Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon

(d) Payment Interest on the Series E Bonds (including the final interest payment upon matunty or redemption) is payable by check of the Paying Agent mailed to the Owner thereof at such Owners address as it appears on the Registration Books at the close of business on the preceding Record Date provided that at the wntten request of the Owner of at least $1000000 aggregate principal amount of the Series E Bonds which written request is on file With the Paying Agent as of any Record Date interest on such Series E Bonds shall be paid on the succeeding Interest Payment Date to such account as shall be specified in such written request Principal of and premium (1f any)

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on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

on the Senes E Bonds are payable in lawful money of the United States of America upon presentation and surrender at the Pnnc1pal Office of the Pay1ng Agent

(e) Provisions Applicable Wh1le Series E Bonds Owned by Bank Notwithstanding anything herein to the contrary so long as the Series E Bonds are owned by the Bank (1) the Paying Agent shall pay principal of and Interest and redemption premium on the Series E Bonds when due by wire transfer in immediately available funds to the Bank in accordance With such wire transfer instructions as shall be flied by the Bank w1th the Paying Agent from time to t1me (1i) payments of pnnc1pal on the Series E Bonds shall be made without the requirement for presentation and surrender of the Series E Bonds by the Bank provided that principal of the Series E Bonds which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as provided in Section 202(d) and (ui) the Paying Agent shall not be required to give notice to the Bank of the redemption of the Series E Bonds under Section 203(b)

SECTION 2 03 Redemption

(a) No Optional Redemption The Series E Bonds are not subject to optional redemption prior to matunty

(b) Mandatorv Sinking Fund Redemption The Series E Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the Commitment Letter provided however that if some but not all of the Series E Bonds have been redeemed under subsection (c) of this Section the total amount of all future smking fund payments shall be reduced by the aggregate principal amount of the Series E Bonds so redeemed to be allocated among such sinking fund payments on a pro rata basis as set forth in a schedule provided by the District to the Pay1ng Agent and so long as the Series E Bonds are owned by the Bank to the Bank

(c) Extraordinarv Redemptions

(i) Extraordinarv Optional Redemption Upon the occurrence of a Determination of Disqualification the District shall have the option to redeem the Senes E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (A) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

(ii) Extraord1narv Mandatorv Redemption In the event the District fa1ls to expend all of the Available Project Proceeds within the Expenditure Period the Series E Bonds shall be subject to extraordinary mandatory redemption on any Business Day designated by the District wh1ch is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (A) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Penod plus (B) the Early Redemption Premium plus (C) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption A portion of the funds for the payment of the redemption pnce of Bonds redeemed under this

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subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

-18-

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

subsection (c)(ii) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of this subsection (c) the followmg terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Series E Bond redeemed and the Prepayment Factor by (ii) twelve

Calculation Agenr means the Bank so long as it 1s the Owner of a majority in aggregate principal amount of the Outstanding Series E Bonds and otherwise the District or 1ts designee

Discount Rate means the Treasury Rate determined as of the date which is five Busmess Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount With respect to the Senes E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Series E Bonds (w1th any fract1on of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and 1f requested by the District and at the Districts expense shall be verified by an independent certified public accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determmes that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factor means a rate equal to A mmus B where A equals the Treasury Rate determined as of the date of 1ssuance of the Series E Bond and B equals the Treasury Rate determined as of the date which IS five Business Days prior to the redemption date

Treasury Rate means the y1eld on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner havmg a matunty closest in length to the penod from the date such yield is determined to the maturity date of the Series E Bonds

(d) Notice of Redemption The Paying Agent on behalf and at the expense of the District shall mail (by first class mail) notice of any redemption to the respective Owners of any Series E Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 30 but not more than 60 days prior to the date fixed for redemption provided however that ne1ther failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series E Bonds

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Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

-9-

Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Such notice shall state the date of the notice the redemption date the redemption place and the redemption pnce and must designate the numbers of the Series E Bonds to be redeemed and (subject to the provisions of Section 202(e) hereof) shall require that such Series E Bonds be then surrendered at the Principal Off1ce of the Paying Agent identified in such notice for redemption at the redemption price

(e) Part1al Redemption of Bonds If only a portion of any Series E Bond is called for redemption then upon surrender of such Bond the District shall execute and the Paying Agent shall authenticate and deliver to the Owner thereof at the expense of the District a new Series E Bond or Bonds of the same series and matunty date equal in aggregate pnncipal amount to the unredeemed portion of such Series E Bond

(f) Effect of Redemption From and after the date fixed for redemption if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest on the Series E Bonds so called for redemption have been duly provided such Series E Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price Unless otherwise directed in writ1ng by the District the Pay1ng Agent shall cancel and destroy all Series E Bonds redeemed under this Section 203

SECTION 2 04 Form of Senes E Bonds The Series E Bonds the form of the Paying Agents certificate of authentication and registration and the form of assignment to appear thereon shall be substantially 1n the forms respectively w1th necessary or appropriate variations om1ssions and insertions as permitted or required by this Agreement as are set forth 1n Appendix A attached hereto

SECTION 205 Execution of Senes E Bonds The Series E Bonds shall be signed by the facsimile Signature of the President of the Board and shall be attested by the facsimile signature of the Secretary of the Board and the seal of the Board shall be reproduced thereon No Series E Bond 1s valid or obligatory for any purpose or entitled to any security or benefit under this Resolution unless and until the certificate of authentication printed on the Series E Bond is s1gned by the Paying Agent as authenticating agent

The Series E Bonds shall be in substantially the form attached hereto as Appendix A and incorporated herein by this reference allowing those officials executing the Series E Bonds to make the insertions and deletions necessary to conform the Series E Bonds to this Agreement

Only those Series E Bonds beanng a certificate of authentication and registration in the form set forth 1n Appendix A attached hereto executed and dated by the Paying Agent are valid or obligatory for any purpose or entitled to the benefits of this Agreement and such certificate of the Paymg Agent is conclusive evidence that the Series E Bonds so registered have been duly authenticated registered and delivered hereunder and are entitled to the benefits of this Agreement

SECTION 206 Transfer of Senes E Bonds Any Series E Bond may in accordance w1th its terms be transferred upon the Registration Books by the person in whose name it is registered in person or by h1s duly authorized attorney upon surrender of such Series E Bond for cancellation at the Principal Office at the Paying Agent accompanied by delivery of a written Instrument of transfer in a form approved by the

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Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

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payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

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Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

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neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

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CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

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RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Paying Agent duly executed The District may charge a reasonable sum for each new Series E Bond issued upon any transfer

Whenever any Series E Bond or Bonds IS surrendered for transfer the District Will execute and the Paymg Agent Will authenticate and deliver a new Series E Bond or Bonds for like aggregate pnncipal amount No transfer of Series E Bonds IS required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond which has been selected for redemption

SECTION 207 Exchange of Series E Bonds Series E Bonds may be exchanged at the Pnnc1pal Office of the Paying Agent for a like aggregate principal amount of Series E Bonds of the same matunty The District may charge a reasonable sum for each new Series E Bond iSSued upon any exchange (except in the case of any exchange of temporary Series E Bonds for defimt1ve Series E Bonds) No exchange of Series E Bonds is required to be made (a) 15 days prior to the date established by the Paying Agent for selection of Series E Bonds for redemption or (b) with respect to a Series E Bond after it has been selected for redemption

SECTION 208 Registration Books The Paying Agent will keep or cause to be kept sufficient books for the registration and transfer of the Series E Bonds which will at all limes be open to inspection by the District upon reasonable not1ce Upon presentation for such purpose the Paying Agent w1ll under such reasonable regulations as 1tmiddot may prescribe register or transfer the ownership of the Series E Bonds on the Registration Books

ARTICLE Ill

SALE OF SERIES E BONDS APPLICATION OF PROCEEDS

SECTION 301 Sale of Series E Bonds The Board hereby authorizes the negotiated sale of the Series E Bonds to the Bank The Series E Bonds shall be sold to the Bank under the Commitment Letter in substantially the form on file with the Clerk of the Board together with any changes thereto which are approved by a District Representative whose execution thereof shall be conclusive evidence of the approval of such changes The purchase price of the Series E Bonds shall be at least 1 00 of the par amount thereof and the rate of interest on the Series E Bonds shall not exceed 1000 per annum

In the event of a conflict or inconsistency between this Agreement and the Commitment Letter relating to the terms of the Series E Bonds the provisions of the Agreement shall be controlling

The Board has determmed to sell the Series E Bonds at negotiated sale for the following reasons (a) Qualified School Construction Bonds constitute a relatively new instrument that do not have broad appeal in the municipal bond market and (b) negotiating the sale of the Series E Bonds will allow flexibility in designating terms and provisions of the financing which are the most advantageous to the District and its taxpayers

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SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

-11-

SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

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in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

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payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

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Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

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neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

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CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

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RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

SECTION 302 Application of Proceeds of Sale of Senes E Bonds The proceeds of the Series E Bonds shall be paid to the County Treasurer on the Closing Date and shall be applied by the County Treasurer as follows

(a) The County Treasurer shall transfer to the County Office for deposit into the Debt Service Fund an amount equal to the premium (1f any) received by the County Treasurer on the sale of the Series E Bonds and the amount of capitalized Interest on the Senes E Bonds (1f any) which is identified in a Wntten Request of the District filed with the County Treasurer

(b) The County Treasurer shall transfer to US Bank National Association as custodian an amount set forth in a Wntten Request of the District for application to pay Costs of Issuance in accordance w1th Section 305

(c) The County Treasurer shall transfer the remainder of such proceeds to the County Office for deposit into the Bwlding Fund

SECTION 3 03 Estimated Financing Costs The firm of Jones Hall A Professional Law Corporation has previously been engaged to act as the Districts bond counsel and disclosure counsel and the firm of Dale Scott amp Company Inc has previously been engaged to act as the Districts financial advisor in connection with the issuance and sale of the Series E Bonds The estimated costs of issuance associated with the bond sale which includes the fmanc1al advisor and legal counsel fees and Paying Agent fees shall not exceed 20 of the principal amount of the Series E Bonds

SECTION 304 Building Fund The District hereby directs the County Office to establish hold and maintain a fund to be known as the 2006 Election Series E Bwlding Fund which the County Office shall maintain as a separate account distinct from all other funds of the County and the District The proceeds received by the County Office from the sale of the Series E Bonds shall be deposited in the Building Fund to the extent required by Section 3 02(c) to be expended by the Distnct in accordance w1th the Bond Measure and in accordance with the reqwrements of the Tax Code relating to Qualified School Construction Bonds including for payment of Costs of Issuance to the extent not paid out of the Costs of Issuance Custodial Agreement under Section 305 All interest and other gain arising from the investment of amounts deposited to the Building Fund shall be retained in the Building Fund and used for the purposes thereof

Any amounts remaining on deposit in the Building Fund at the expiration of the Expenditure Period shall be withdrawn therefrom by the County and transferred to the Paying Agent to be applied to pay the redemption price of the Series E Bonds under Section 203(c)

SECTION 3 05 Costs of Issuance Custodial Agreement A portion of the purchase price of the Series E Bonds (in an amount not exceeding 2 of the par amount thereof) shall be paid to U S Bank National Association on the Closing Date to be deposited into a fund to be held and admm1stered for payment of Costs of Issuance pursuant to that certain Costs of Issuance Custodial Agreement in the form on file w1th the Clerk of the Board As provided in said agreement amounts held under said agreement shall be requisitioned by a District Representative to pay Costs of Issuance in accordance with said agreement

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SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

SECTION 306 Taxable Status of the Series E Bonds The Board hereby determines that interest payable on the Senes E Bonds will be subject to federal mcome taxation and that the provisions of the Taxable Bond Act apply to the Series E Bonds At the determmat1on of a District Representative that 11 would be in the best interests of the District to exercise any of the powers granted to 11 under the Taxable Bond Act the District may take any action perm1tted thereunder whether or not such action is otherwise authorized under this Agreement or conflicts w1th any other provision of this Agreement

SECTION 307 Official Actions The President of the Board the Superintendent the Assistant Superintendent Business Services the Clerk of the Board and any and all other officers of the District are each authonzed and directed in the name and on behalf of the District to execute and deliver any and all certificates reqUisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever in th1s Agreement any officer of the District is authorized to execute or countersign any document or take any action such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable

ARTICLE IV

SECURITY FOR THE SERIES E BONDS PAYMENT OF DEBT SERVICE

SECTION 401 Security for the Series E Bonds The Series E Bonds are general obligation bonds of the District and the Board of Supervisors of the County has the power to levy ad valorem taxes upon all property within the District subject to taxation Without limitation of rate or amount for the payment of the Series E Bonds and the interest thereon in accordance with and subject to Sections 15250 and 15252 of the Education Code

The principal of and interest and redemption premium (1f any) on Series E Bonds do not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents or employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents or employees thereof are liable thereon

SECTION 402 Pledge and Application of Bond Subsidy Payments The Series E Bonds are further secured by and_ payable from the Bond Subsidy Payments Promptly upon receipt of any Bond Subsidy Payments the District shall cause such Bond Subsidy Payments to be paid to the County Treasurer for depoSit into the Debt Service Fund

In the event that the Bond Subsidy Payments are offset for certain liabilities the District may have to the federal government including but not limited to past due federal payroll taxes the District acknowledges its obligation to pay from any Distnct funds lawfully available therefor the amount of such offset to be paid by the District to the County Office and deposited in the Debt Service Fund

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SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

-13-

such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

-14-

Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

SECTION 403 Levy of Ad Valorem Property Taxes for Payment of Bonds The Board hereby directs the County to levy ad valorem taxes without limrtation as to rate or amount as provided in Section 15250 of the Educatron Code so as to enable the Drstrict to punctually pay or cause to be paid the principal of and interest on the Series E Bonds in conformity with the terms of the Series E Bonds and of this Agreement Nothing herein contarned prevents the Drstrict from making advances of rts own moneys howsoever derived to any of the uses or purposes permitted by law

In order to provide the benefits to the taxpayers of the District of the Bond Subsidy Payments the Board hereby directs the County to levy an amount of annual ad valorem taxes in each Frscal Year which is sufficient together wrth the amounts held in the Debt Service Fund at the time of such tax levy includrng but not limited to amounts derived from payment of Bond Subsidy Payments to (a) pay interest coming due and payable on the Series E Bonds prior to the receipt of the next tax levy and (b) pay the principal coming due and payable on the Series E Bonds rncludrng prrncipal required to be paid upon the mandatory sinking fund redemption of the Series E Bonds under Section 203(b) prior to the receipt of the next tax levy

SECTION 404 Establishment of Debt Service Fund The District hereby directs the County Office to establish hold and maintarn a fund to be known as the 2006 Election Series E Debt Service Fund which the County Office shall maintain as a separate account distrnct from all other funds of the County and the Distrrct All taxes levied by the County at the request of the District for the payment of the principal of and interest and premium (rf any) on the Series E Bonds shall be deposited in the Debt Service Fund by the County Office promptly upon apportionment of said levy In addition all Bond Subsidy Payments and all amounts which the District rs obligated to pay under Section 4 02 shall be paid to the County Office and be deposited in the Debt Service Fund

The Debt Service Fund is hereby pledged for the payment of the principal of and rnterest on the Series E Bonds when and as the same become due including the principal of any term Series E Bonds required to be paid upon the mandatory sinking fund redemption thereof under Section 203(b) Amounts rn the Debt Servrce Fund shall be transferred by the County Office to the Paying Agent to the extent requrred to pay the principal of and interest and redemption premium (if any) on the Series E Bonds when due In addition amounts on deposit in the Debt Service Fund shall be applied to pay the fees and expenses of the Paying Agent insofar as permrtted by law rncluding specrfically by Sectrons 15232 and 15233 of the Education Code

If after payment in full of the Series E Bonds any amounts remain on deposrt rn the Debt Service Fund the County Office shall transfer such amounts to the General Fund of the District as provrded in Section 15234 of the Education Code

SECTION 405 Investments All moneys held in any of the funds or accounts established wrth the County Office hereunder shall be invested rn accordance wrth the investment policies of the County as such policies exist at the time of investment Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account

All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposrted rn the fund or account from which

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such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

-14-

Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

-18-

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

-19-

assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

such Investment was made and shall be expended for the purposes thereof The District covenants that all investments of amounts depos1ted in any fund or account created by or under this Agreement or otherwise containing proceeds of the Series E Bonds shall be acquired and disposed of at the Fair Market Value thereof For purposes of this Section 4 05 the term Fair Market Value shall mean With respect to any investment the price at which a willing buyer would purchase such investment from a willing seller m a bona f1de arms length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the mvestment IS traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and otherwise the term Fa1r Market Value means the acquisition price in a bona fide arms length transaction (as described above) if (1) the investment is a certificate of deposit that IS acquired in accordance with applicable regulations under the Tax Code (ii) the investment IS an agreement with specifically negotiated withdrawal or reinvestment provis1ons and a specifically negotiated interest rate (for example a guaranteed investment contract a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code or (iii) the investment is a United States Treasury Security - State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt

ARTICLEV

OTHER COVENANTS OF THE DISTRICT

SECTION 501 Punctual Payment The District will punctually pay or cause to be paid the principal of and interest on the Series E Bonds in strict conform1ty with the terms of the Series E Bonds and of this Agreement and it will faithfully observe and perform all of the conditions covenants and requirements of this Agreement and of the Senes E Bonds

SECTION 502 Books and Accounts Financial Statement The District Will keep or cause to be kept proper books of record and accounts separate from all other records and accounts of the District m which complete and correct entries are made of all transactions relating to the expenditure of the proceeds of the Series E Bonds Such books of record and accounts shall at all times during business hours be subject to the inspection of the Paying Agent and the Bank

SECTION 503 Protection of Security and Rights-of Series E Bond Owners The District Will preserve and protect the secunty of the Series E Bonds and the rights of the Senes E Bond Owners and will warrant and defend their rights against all claims and demands of all persons Following the issuance of the Series E Bonds by the District the Series E Bonds shall be incontestable by the District

SECTION 504 Tax Covenants In order to provide assurances that the Series E Bonds will constitute Qualified School Construction Bonds at all times during the term thereof the District hereby makes the following covenants

(a) Allocation of State QSCB Limitation The District has received an allocation of qualified school construction bond authonty for calendar year 2010 in the amount of $7780000 from the Division Director of the School Facilities Planning Division of the State

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Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

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(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Superintendent of Public Instruction included in the transcript for the Senes E Bonds

(b) Des1gnat1on of Senes E Bonds as Qualified School Construction Bonds The District hereby designates the Senes E Bonds as Qualified School Construction Bonds for purposes of Sect1on 54F(a)(3) of the Tax Code The D1strict also hereby irrevocably elects to apply the provisions of Sect1on 6431(f) of the Tax Code to the Series E Bonds and intends that the Series E Bonds be treated as specified tax credit bonds Within the meaning of Section 6431(f)(2) of the Tax Code It is the intent of the District that the Series E Bonds be eligible for direct payment from the United States Department of Treasury of an amount equal to the tax credit

(c) Filing of Forms To Receive Bond Subsidy Payments The District (or the Paying Agent or another third party if appointed in wnting by the District) will within the 45-day period begmning on the date that is 90 days before the next Interest Payment Date file Form 8038-CP or any successor form designated by the federal government requesting payment of the Bond Subsidy Payments with respect to the next interest payment on the Series E Bonds If the Paying Agent or another third party is appointed to ass1st the Distnct by completing and submitting form 8038-CP the District agrees to enter into at the time of such appointment an agreement providing for such serv1ces

(d) Qualified Issuer The District is a local government qualified to issue the Series E Bonds under Section 54F(a)(2) of the Tax Code The District has established and currently operates the vanous public school sites with respect to which the Available Project Proceeds Will be spent

(e) Qualified School Construction Project The District shall assure that all of the Available Project Proceeds will be used for Qualified Purposes in accordance w1th Section 54F(a)(1) of the Tax Code

(f) Compliance with Expenditure Period Limitations The District reasonably expects to expend all of the Available Project Proceeds for Qualified Purposes w1thin the Expenditure Period To the extent that less than 100 of the Available Project Proceeds are expended for Qualified Purposes by the end of the Expenditure Period all nonqualified bonds (as determined under Section 142 of the Tax Code) shall be redeemed within 90 days of the end of the Expenditure Period in accordance w1th the requirements of Section 54A(d)(2)(B) of the Tax Code in the time and manner prescribed by the Tax Code

(g) Binding Commitment to Spend Available Project Proceeds The D1stnct will within six months of the Closing Date enter into a substantial binding obligation to a third party to spend at least 10 of the Available Project Proceeds for Qualified Purposes

-15-

(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

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The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

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thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

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(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

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payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

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Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

(m) Davis-Bacon Act Requtrements The District hereby covenants and agrees to comply wtth the wage rate requirements of Tttle 40 Subtitle II Part A Chapter 31 Subchapter IV of the Umted States Code as such requirements relate to the proceeds of the Series E Bonds

SECTION 505 Records and Accounts The District shall cause to be prepared annually wtthin 180 days after the close of each Fiscal Year so long as any of the Series E Bonds are Outstandtng complete audited financial statements wtth respect to such Ftscal Year showing all revenues and expenditures of the Dtstrict for such Fiscal Year The District shall furnish a copy of such statements to the Paying Agent and the Bank

SECTION 506 No Sovereign Immunity The District does not enjoy any rights of immunity on the grounds of sovereign immumty tn respect of its obligations under this Agreement To the extent the District has or hereafter may acquire under any applicable law any rights to immunity from legal proceedings on the grounds of sovereignty the District hereby waives to the extent permitted by law such rights to immunity for itself in respect of its obligations arising under or related to this Agreement

SECTION 507 Further Assurances The District wtll adopt make execute and deliver any and all such further resolutions instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement and for the better assuring and confirming unto the Owners of the Series E Bonds of the rights and benefits provided in this Agreement

ARTICLE VI

THE PAYING AGENT

SECTION 601 Appointment of Paying Agent U S Bank National Association is hereby appointed to act as Paymg Agent for the Series E Bonds and in such capacity shall also act as registration agent and authentication agent for the Series E Bonds The Paying Agent undertakes to perform such dulles and only such duties as are specifically set forth m thts Agreement and even during the continuance of an event of default with respect to the Series E Bonds no implied covenants or obligattons shall be read into this Agreement against the Paying Agent The Board hereby approves the execution and delivery of a Paying Agent Agreement between the District and the Paying Agent A Distnct Representative is hereby authorized and directed to execute the final form of Paymg Agent Agreement on behalf of the District

The Dtstnct may remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto but any such successor shall be a bank or trust company doing business and having an office in the State of Califorma having a combined capttal (exclusive of borrowed capttal) and surplus of at least $50000000 and subject to supervision or examination by federal or state authority If such bank or trust company publishes a report of condttion at least annually under law or to the requirements of any supervising or examining authonty above referred to then for the purposes of this Section 601 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth tn its most recent report of condition so published

-17-

The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

-18-

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

-19-

assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

-20-

E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

The Paying Agent may at any lime resign by giving written notice to the District and the Series E Bond Owners of such resignation Upon receiving not1ce of such resignation the District shall promptly appo1nt a successor Paying Agent by an Instrument in wriling Any resignation or removal of the Pay1ng Agent and appointment of a successor Paying Agent will become effect1ve upon acceptance of appointment by the successor Pay1ng Agent

SECTION 6 02 Paying Agent May Hold Series E Bonds The Paying Agent may become the owner of any of the Series E Bonds in its own or any other capacity with the same rights it would have 1f it were not Pay1ng Agent

SECTION 603 Liability of Agents The recitals of facts covenants and agreements 1n this Agreement and in the Series E Bonds conslitute statements covenants and agreements of the District and the Paying Agent assumes no responsibility for the correctness of the same nor makes any representations as to the validity or sufficiency of this Agreement or of the Series E Bonds nor shall incur any responsibility in respect thereof other than as set forth in this Agreement The Paymg Agent is not liable in connection With the performance of its duties hereunder except for 1ts own negligence or willful default

In the absence of bad fa1th the Paying Agent may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein upon certificates or opinions furnished to the Paying Agent and conforming to the requirements of this Agreement

The Paying Agent is not liable for any error of judgment made in good faith by a responsible officer in the absence of the negligence of the Pay1ng Agent

No provision of th1s Agreement requ1res the Paying Agent to expend or nsk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of 1ts rights or powers if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it

The Paying Agent may execute any of the powers hereunder or perform any duties hereunder e1ther directly or by or through agents or attorneys and the Paying Agent is not responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder

SECTION 604 Notice to Paying Agent The Paying Agent may rely and is protected in acting or refraining from acting upon any notice resolution request consent order certificate report warrant bond or other paper or document believed by it to be genuine and to have been s1gned or presented by the proper party or proper parties The Paying Agent may consult with counsel who may be counsel to the District with regard to legal questions and the opmion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good fa1th and in accordance therewith

Whenever in the administration of its duties under this Agreement the Paying Agent deems 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

-18-

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

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assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

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suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

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SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

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IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

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APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

thereof is specifically prescnbed in this Agreement) may 1n the absence of bad fa1th on the part of the Paying Agent be deemed to be conclusively proved and established by a cert1f1cate of the District and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Agreement upon the faith thereof but in its discretion the Paying Agent may in lieu thereof accept other evidence of such matter or may require such additional evidence as to 1t may seem reasonable

SECTION 605 Compensation Indemnification The District shall pay to the Paying Agent from time to time reasonable compensation for all services rendered under this Agreement and also all reasonable expenses charges counsel fees and other disbursements including those of their attorneys agents and employees incurred 1n and about the performance of their powers and duties under this Agreement The District further agrees to indemnify the Paying Agent agamst any liabilities which it may mcur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

ARTICLE VII

REMEDIES OF SERIES E BOND OWNERS

SECTION 701 Events of Default and Remedies of Series E Bond Owners Generally The following events constitute events of default hereunder

(a) Failure to pay any installment of the principal of any Series E Bonds when due

(b) Failure to pay any installment of interest on the Series E Bonds when due

(c) Failure by the District to observe and perform any of the other covenants agreements or conditions on its part contained 1n this Agreement or in the Series E Bonds if such failure has continued for a period of 30 days after written notice thereof specifying such failure and requiring the same to be remedied has been given to the District by the Paying Agent or the owners of a majority in aggregate principal amount of the outstanding Series E Bonds provided however 1f in the reasonable opinion of the District the failure stated in the notice can be corrected but not within such 30-day period such failure shall not constitute an event of default if the District institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time

(d) The filing by the D1stnct of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or 1f a court of competent jurisdiction shall approve a petition filed w1th or without the consent of the District seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall

-19-

assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

-20-

E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

-21-

If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

assume custody or control of the District or of the whole or any substantial part of 1ts property

Upon the occurrence and during the contmuation of event of default any Senes E Bond Owner has the right for the equal benefit and protection of all Series E Bond Owners similarly situated

(a) by mandamus suit action or proceeding to compel the Distnct and its members officers agents or employees to perform each and every term provision and covenant contained in this Agreement and in the Series E Bonds and to require the carry1ng out of any or all such covenants and agreements of the Distnct and the fulfillment of all duties imposed upon it

(b) by suit action or proceed1ng in eqwty to enjoin any acts or things which are unlawful or the violation of any of the Series E Bond Owners nghts or

(c) upon the happening and continuation of any default by the District hereunder or under the Series E Bonds by suit action or proceeding in any court of competent junsdiction to require the District and its members and employees to account as if 1 and they were the trustees of an express trust

SECTION 702 Remedies Not Exclusive No remedy herein conferred upon the Owners of the Series E Bonds shall be exclusive of any other remedy and that each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or thereafter conferred on the Series E Bond Owners

ARTICLE VIII

AMENDMENT OF THIS AGREEMENT

SECTION 801 Amendments Effective Without Consent of the Owners The parties may amend this Agreement from time to time without the consent of the Owners of the Series E Bonds for any one or more of the following purposes

(a) To add to the covenants and agreements of the District in this Agreement other covenants and agreements to be observed by the District which are not contrary to or Inconsistent with this Agreement as theretofore in effect

(b) To confirm as further assurance any pledge under and to subject to any lien or pledge created or to be created by this Agreement of any moneys securities or funds or to establish any additional funds or accounts to be held under th1s Agreement

(c) To cure any ambiguity supply any omiss1on or cure or correct any defect or inconsistent provision 1n th1s Agreement in a manner which does not materially adversely affect the interests of the Senes

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E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

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If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

E Bond Owners in the opinion of Bond Counsel f1led with the District or

(d) To make such additions deletions or modifications as may be necessary or desirable to assure the qualification of the Series E Bonds as Qualified School Construction Bonds under the Tax Code

SECTION 802 Amendments Effective With Consent of the Owners The parties may amend this Agreement from time to lime for any purpose not set forth in Section 801 w1th the written consent of the Owners of a majority in aggregate pnncipal amount of the Series E Bonds Outstandmg at the time such consent is given

Any of the following amendments of this Agreement may be made only with the prior written consent of the Owners or all Outstanding Bonds (a) a change in the terms of maturity of the principal of any Outstanding Series E Bonds or of any interest payable thereon or a reduction in the principal amount thereof or in the rate of interest thereon (b) a reduction of the percentage of Series E Bonds the consent of the Owners of which is required to effect any such modification or amendment (c) a change in the provisions of Section 701 relating to Events of Default or (d) a reduction in the amount of moneys pledged for the repayment of the Series E Bonds No amendment may be made to the rights or obligations of any Paying Agent without its written consent

ARTICLE IX

MISCELLANEOUS

SECTION 901 Benefits of Resolution Limited to Parties Nothing in this Agreement expressed or implied g1ves any person other than the District the County the Paymg Agent the Bank and the Owners of the Series E Bonds any right remedy claim under or by reason of this Agreement The covenants stipulations promises or agreements in this Agreement are for the sole and exclusive benefit of the Bank and the Owners of the Senes E Bonds

SECTION 902 Defeasance of Series E Bonds

(a) Discharge of Resolution Series E Bonds may be paid by the District 1n any of the following ways provided that the District also pays or causes to be paid any other sums payable hereunder by the District

(i) by paying or causmg to be paid the pnncipal or redemption price of and interest on such Series E Bonds as and when the same become due and payable

(1i) by irrevocably depositing in trust at or before maturity money or securities 1n the necessary amount (as provided in Section 902(c) hereof) to pay or redeem such Series E Bonds or

(11i) by delivering such Series E Bonds to the Paying Agent for cancellation by it

-21-

If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

If the District pays all Outstanding Series E Bonds and also pays or causes to be paid all other sums payable hereunder by the District then and in that case at the election of the District (evidenced by a certificate of a District Representative filed w1th the Paying Agent s1gnifying the intention of the District to discharge all such indebtedness and th1s Agreement) and notwithstanding that any Series E Bonds have not been surrendered for payment th1s Agreement and other assets made under this Agreement and all covenants agreements and other obligations of the D1strict under this Agreement shall cease terminate become void and be completely discharged and satisfied except only as provided in Section 902(b) In that event upon request of the District the Pay1ng Agent shall cause an accounting for such period or periods as may be requested by the District to be prepared and filed with the Distnct and shall execute and deliver to the District all such instruments as may be necessary to evidence such discharge and satisfaction and the Paying Agent shall pay over transfer assign or deliver to the District all moneys or secunties or other property held by 11 under this Agreement which are not required for the payment or redemption of Series E Bonds not theretofore surrendered for such payment or redemption

(b) Discharge of Liability on Series E Bonds Upon the deposit in trust at or before maturity of money or secunties in the necessary amount (as provided in Section 9 02(c) hereof) to pay or redeem any Outstanding Series E Bond (whether upon or prior to its maturity or the redemption date of such Series E Bond) provided that if such Senes E Bond is to be redeemed prior to maturity notice of such redemption has been given as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giv1ng of such notice then all liability of the District in respect of such Series E Bond shall cease and be completely discharged except only that thereafter the Owner tnereof shaii be entitled only to payment of the principal of and interest on such Series E Bond by the District and the District shall remain liable for such payment but only out of such money or secunties deposited with the Paying Agent as aforesaid for such payment provided further however that the provisions of Section 902(d) shall apply in all events

The District may at any time surrender to the Paying Agent for cancellation by it any Senes E Bonds prev1ously issued and delivered wh1ch the District may have acquired in any manner whatsoever and such Series E Bonds upon such surrender and cancellation shall be deemed to be paid and retired

(c) Deposit of Money or Securities with Paying Agent Whenever in this Agreement it is provided or permitted that there be deposited with or held in trust by the Paying Agent money or securities in the necessary amount to pay or redeem any Series E Bonds the money or securities so to be depos1ted or held may include money or securities held by the Paymg Agent in the funds and accounts established under this Agreement and shall be

(i) lawful money of the Umted States of America 1n an amount equal to the principal amount of such Series E Bonds and all unpaid interest thereon to maturity except that in the case of Series E Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption has been g1ven as provided in Section 203 or provision satisfactory to the Paying Agent has been made for the giving of such notice the amount to be deposited or held shall be the principal amount or redemption price of such Senes E Bonds and all unpaid interest thereon to the redemption date or

-22-

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

(i1) Federal Securities (not callable by the issuer thereof prior to maturity) the pnncipal of and interest on which when due 1n the opinion of a certified public accountant delivered to the Distnct will provide money sufficient to pay the principal or redemption price of and all unpaid interest to matunty or to the redemption date as the case may be on the Series E Bonds to be paid or redeemed as such principal or redemption price and interest become due provided that 1n the case of Series E Bonds wh1ch are to be redeemed prior to the maturity thereof notice of such redemption has been given as provided in Section 2 03 or provision satisfactory to the Paying Agent has been made for the giving of such notice

(d) Payment of Series E Bonds After Discharge of Agreement Notwithstanding any provisions of this Agreement any moneys held by the Paying Agent in trust for the payment of the principal or redemption price of or interest on any Series E Bonds and remaining unclaimed for two years after the principal of all of the Series E Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as prov1ded in this Agreement) if such moneys were so held at such date or two years after the date of deposit of such moneys if deposited after sa1d date when all of the Series E Bonds became due and payable shall upon request of the Distnct be repaid to the Distnct free from the trusts created by this Agreement and all liability of the Paying Agent with respect to such moneys shall thereupon cease provided however that before the repayment of such moneys to the District as aforesaid the Paying Agent may (at the cost of the District) first mail to the Owners of all Senes E Bonds which have not been paid at the addresses shown on the Registration Books a notice 1n such form as may be deemed appropriate by the Paying Agent with respect to the Series E Bonds so payable and not presented and with respect to the provisions relating to the repayment to the District of the moneys held for the payment thereof

SECTION 903 Execution of Documents and Proof of Ownership by Senes E Bond Owners Any request declaration or other instrument which this Agreement may require or permit to be executed by Series E Bond Owners may be in one or more instruments of similar tenor and shall be executed by Series E Bond Owners in person or by their attorneys appointed in writing

Except as otherwise herein expressly provided the fact and date of the execution by any Series E Bond Owner or his attorney of such request declaration or other instrument or of such wnting appointing such attorney may be proved by the certificate of any notary public or other off1cer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act that the person signing such request declaration or other instrument or writmg acknowledged to him the execut1on thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer

Except as otherwise herein expressly provided the ownership of registered Series E Bonds and the amount maturity number and date of holding the same shall be proved by the Registration Books

Any request declaration or other mstrument or writing of the Owner of any Series E Bond shall bind all future Owners of such Series E Bond in respect of anything done or

-23-

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

suffered to be done by the District or the Paying Agent in good faith and in accordance therewith

SECTION 9 04 Waiver of Personal Liability No Board member officer agent or employee of the District shall be mdiv1dually or personally liable for the payment of the principal of or interest on the Series E Bonds but nothing herein contained shall relieve any such Board member officer agent or employee from the performance of any official duly provided by law

SECTION 905 Non-Liability of County lndemmficatton Notwithstanding anything stated to the contrary in th1s Agreement the Senes E Bonds are not a debt of the County Including its Board of Supervisors officers officials agents and employees and the County including 1ts Board officers officials agents and employees has no obligation to repay the Series E Bonds Neither the County nor its Board of Supervisors nor any officer official agent or employee of the County shall have any obligation or liability hereunder or in connection with the transactions contemplated hereby other than as specified in the Education Code The Series E Bonds including the interest thereon are payable solely from taxes levied under Section 15250 of the Education Code from the Bond Subsidy Payments and from any amounts which the District is obligated to pay under Section 402 The County has no responsibility and assumes no liability whatsoever arising from the expenditure of the proceeds of the Series E Bonds by the District

middotThe County (including its officers agents and employees) shall undertake only those duties of the County under this Agreement wh1ch are specifically set forth in this Agreement and even during the continuance of an event of default w1th respect to the Series E Bonds no implied covenants or obligations shall be read 1nto this Agreement against the County (including 1ts officers agents and employees)

The District further agrees to indemnify defend and save the County (including 1ts officers agents and employees) harmless against any and all liabilities costs expenses damages and claims wh1ch it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or bad faith

SECTION 906 Waiver of Jury Tnal Agreement for Judicial Reference To the fullest extent permitted by law the Part1es hereby waives their right to trial by jury in any action proceeding andor hearing on any matter whatsoever arising out of or in any way connected with the Series E Bonds this Agreement or any documents relating to the Series E Bonds or this Agreement or the enforcement of any remedy under any law statute or regulation To the extent such waiver is not enforceable the Parties hereby consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure and the judicial referee shall be empowered to hear and determine any and all issues 1n such Reference whether fact or law

SECTION 907 Destruction of Canceled Series E Bonds Whenever in th1s Agreement provision is made for the surrender to the District of any Senes E Bonds which have been paid or canceled under the provisions of th1s Agreement a certificate of destruction duly executed by the Paying Agent shall be deemed to be the eqwvalent of the surrender of such canceled Series E Bonds and the District shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Series E Bonds therein referred to

-24-

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

SECTION 908 Partial Invalidity If any section paragraph sentence clause or phrase of this Agreement shall for any reason be held illegal or unenforceable such holding shall not affect the validity of the remammg portions of this Agreement The District hereby declares that 1t would have adopted this Agreement and each and every other section paragraph sentence clause or phrase hereof and authorized the issue of the Series E Bonds pursuant thereto irrespective of the fact that any one or more sections paragraphs sentences clauses or phrases of this Agreement may be held illegal invalid or unenforceable If by reason of the JUdgment of any court the District IS

rendered unable to perform 1ts duties hereunder all such duties and all of the rights and powers of the District hereunder shall be assumed by and vest m the chief financial off1cer of the District in trust for the benefit of the Series E Bond Owners

SECTION 909 Execution of Documents Eachmiddot District Representative and any and all other officers of the District are each authorized and directed in the name and on behalf of the District to execute and deliver any and all certificates requisitions agreements notices consents warrants and other documents which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance sale and delivery of the Series E Bonds Whenever 1n this Agreement any officer of the District is authorized to execute or countersign any document or take any act1on such execution countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such off1cer is absent or unavailable

-25-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be signed in its name by 1ts duly authorized officers and US BANK NATIONAL ASSOCIATION 1n token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by 1ts duly authorized officer all as of the day and year first above written

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

US BANK NATIONAL ASSOCIATION as Paying Agent

By ______ ~~~~~---------Authorized Officer

-26-

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

IN WITNESS WHEREOF the PACIFIC GROVE UNIFIED SCHOOL DISTRICT has caused this Agreement to be s1gned in its name by its duly authorized officers and US BANK NATIONAL ASSOCIATION in token of its acceptance of the trust created hereunder has caused this Agreement to be signed in its corporate name by its duly authonzed officer all as of the day and year first above wntten

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By ____ ~~~~~~~~-----Assistant Superintendent

Business Services

US BANK NATIONAL ASSOCIATION as Paying Agent

By ~fffy

-26-

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

APPENDIX A

FORM OF SERIES E BOND

REGISTERED BOND NO __

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

$ ___ _

INTEREST RATE ___ per annum

MATURITY DATE DATED DATE

REGISTERED OWNER

PRINCIPAL AMOUNT

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby prom1ses to pay to the Reg1stered Owner named above or registered assigns the Principal Amount on the Matunty Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such Interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond w1ll bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) 1t is authenticated as of a business day following the 15th calendar day of the month Immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 m which event it will bear interest from the Dated Date set forth above

Principal mterest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Paying Agent) initially U S Bank National Association Principal hereof and any redemption prem1um hereon are payable upon presentation and surrender of this Bond at the office of the Pay1ng Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Registered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the wntten request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request IS on file w1th the Paying Agent prior to any Record Date mterest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer

A-1

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

in immediately available funds to such account of a financial institution within the United States of America as spec1f1ed m such written request

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the fmal matunty thereof and (b) the Paying Agent w1ll pay the principal of and interest on this Bond by wire transfer to the Bank 1n accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on th1s Bond which IS payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a senes of $7780000 of Bonds issued for the purpose of raising money for the acquisition construction and rehabilitation of school facilities and to pay all necessary legal financial engineering and contingent costs in connection therewith under authority of and under the laws of the State of California and the requisite 55 vote of the electors of the District cast at a spec1al bond election held on June 6 2006 upon the question of issuing Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and the Paymg Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond IS a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 of the Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)(1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the Distnct other than the Bond Subsidy Payments and ad valorem taxes lev1ed upon all taxable property m the Distnct

The Bonds of this 1ssue are Issuable only as fully registered Bonds Th1s Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying Agent together With a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Reg1stered Owner as the absolute owner of this Bond for the purpose of receivmg

A-2

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

payment of or on account of pnncipal or Interest and for all other purposes and ne1ther the District nor the Pay1ng Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated matunties

The Bonds are subject to mandatory redemption 1n part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective pnncipal amounts and on August 1 in the respective years as set forth 1n the following table

Sinking Fund Redemption Date

(August 1)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined 1n the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds 1n whole Within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds wh1ch the District elects to redeem plus (ii) the Early Redemption Prem1um plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Penod at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued Interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

A-3

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the pnnc1pal amount of the Bond redeemed and the Prepayment Factor by (il) twelve

Calculation Agenf means the Bank so long as 11 is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determmed as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the Distnct and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that ~B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shail be due

Prepayment Factor means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of ISSuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the matunty date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such not1ce shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate- and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that

A-4

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

neither failure to rece1ve such notice nor any defect 1n any not1ce so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be reqwred to transfer any Bond (a) during the penod established by the Paying Agent for selection of Bonds for redemption or (b) w1th respect to a Bond which has been selected for redemption

Reference is made to the Pay1ng Agent Agreement for a more complete description of the provisions among others w1th respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the Distnct the Paymg Agent and the Registered Owners and the terms and conditions upon which the Bonds are Issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is cert1fied recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been rece1ved that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full fa~th and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be ent1tled to any secunty or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

IN WITNESS WHEREOF the Pacific Grove Umfied School District has caused this Bond to be executed by the facsimile signature of the President of its Board of Education and attested by the facs1mile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

By __________ ~--~-----------Presldent

Board of Education

A-5

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in th1s Bond

Date of Authentication

US BANK NATIONAL ASSOCIATION as Paying Agent

By ____ ~~~~~~--------Authorized Signatory

ASSIGNMENT

For value received the undersigned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Ass1gnee)

the Within Bond and do(es) hereby irrevocably constitute and appoint---------------- =-----------~attorney to transfer the same on the registration books of the Bond Registrar w1th full power of substitution in the premises

Dated ------

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular w1thout alteration or enlargement or any change whatsoever

A-6

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

RCIlD JUl20 middotu

June 27 20lt

CHASEO

~

~ COMNIITNIEN f

$77SOOOO Pacdic Grove Unified School District General Obligation Bonds 2006 Election Series F

4834middot 7389middot0057 2

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

CHASEO

June 27 2011

To the Board of Education of the Pacific Groe Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bond) upon the terms and conditions set forth below

JPMorgan Chase has been the market leader in public finance credit for over 35 years JPMorgan Chase ranks among the largest providers of credit facIJties in the Municipal market today Our deep familiarity with this sector is viewed as a strong benefit by the Municipal clients with whom we do business We believe that Qur experience in providing credit support coupled with our long experience in deal execution will ensure an efficient cost--effective transaction for the District Client refererices are available upon request

Please indicate your acceptance of this Commitment Letter on the attached stgnature page and return an executed copy of this Commitment Letter to the Bank This Commitment Letter will expire at II OOAM PST on June 27 2011 unless un or prior to such time the Bank shall have rece1ved a copy of this Commitment Letter executed by the Issuer and the Placement Agent Notwithstanding timely acceptance of th1s Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definittvc bond documentation and the Bond are executed ani delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Should you have any questions about any aspect of this proposal please do not hesitate to contact me at 415) 315-3968 Thank you and we look forward to wQrking with the Pacific Grove Unified School District and its financing team

Yours sincerely

~ )lt__ - Jack Spillane

Senior Vice President

4834middot7389-0057 2

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

CHASEO June27 2011

RE $7780000 General Obligation Bonds 2006 Election Series E of tbe Pacific Grove Unified Scbool District repaid via revenues derived from the Districts ad volarem tax levy unlimited as to rate or amount

To the Board of Education of the Pacific Grove Unified School District

JPMorgan Chase Bank NA (the Bank) is pleased to present this commitment letter (this Commitment Letter) to purchase the above-referenced bond (the Bonds) upon the terms and conditions set forth below

Please indicate your acceptance of this Commitment Letter on the attached signature page and return an executed copy of this Commitment letter to the Bank no later than 11 00 AM Pacific Time on June 272011 Notwithstanding timely acceptance of this Commitment Letter pursuant to the preceding sentence the commitment herein contained will automatically terminate unless definitive bond doc-umentation is executed and delivered to the Bank on or before July 12 2011 unless the Bank shall agree (in its sole and absolute discretion) to an extension of such date (the Closing Date)

Issuer

Purchaser

Financing Amount

Purchase Price

Purpose of Issue

Form of Bond

Financing Structure

4834-73890057 2

Pacific Grove Unified School District (the District or the Issuer)

JPMorgan Chase Bank NA (the Purchaser)

$7780000

100 of par

Proceeds of the Bond may be used for any Qualified Purpose permitted pursuant to Section 54F(a)(l) ofthe Code

The Bonds will be issued as a single typewritten or printed bond in fully registered form The Bank will take physical delivery of the Bond - no DTC closing or CUSIP will be required

The Bond wi II be structured as a Qualified School Construction Bond under Sections 54A and 54F of the Internal Revenue Code of 1986 as amended (the Code)

The Bond will be structured as direct interest subsidy bond vhich shall entitle the Issuer to receive semi-annual interest subsidy payments directly from the United States Treasury equal to the lesser of (i) the amount of each interest payment on the Bond and (i1) the amount of interest which would have accrued on the Bond if the Bond bore interest

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Term of Bond

Security

Interest Subsidy Rate

Bond Interest Rate

Net Effective Interest Rate

Repayment Structure-

4834-7389-0057 2

at the Interest Subsidy Rate (as defined below) The Issuer shall cause the subsidy payments to be deposited with the Paying Agent upon receipt The Issuer shall be permitted to reduce the amount of the tax levy for such year by the amount of the subsidy payment rece1ved The registered owner of the Bond shall not be entitled to receive any tax credits with respect to the Bond

The Issuer shall deposit in the debt service fund an amount equal to the amount of interest required to make the first interest payment on the Bonds

Up to 16 years provided however the term of the Bond shall not exceed the maximum permitted maturity for qualitied tax credit bonds as established by Treasury Department and published by the Bureau of Public Debt on its Internet Site for State and Local Government Series Security at httpsww_ treasurod1re_ct go (the Qualified Tax Credit Bond Website) on the date of the Issuers acceptance of this Commitment Letter (the middotAcceptance Date) Evidence of the maximum permitted maturity for qualified tax credit bonds on the Acceptance Date is attached as Exhibit A to this Commitment Letter

The Bond will be a general obligation of the Issuer payable from the proceeds of ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property in the Issuer fully sufficient to pay the principal interest and premium If any on the Bond when due

50 l per annum- the Interest Subsidy Rate for qualified tax credit bonds as established by Treasury Department and published on the Qualified Tax Credit Bond Website on the Acceptance Date Evidence of the Interest Subsidy Rate on the Acceptance Date is attached as Exhibit A to this Commitment Letter

50 I per annum Interest shall be payable to the Bank semi-annually on each February I and August I~ over the life of the Bond commencing February 1 2012 and on the last day on which the Bond is outstanding Computations of interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months

000 per annum

The Bond wiJI be structured as a single term bond with mandatory annual sinking fund redemptions to occur on each August 1 according to the schedule below and commencing on August 1 2013 in accordance with the following schedule

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Redemption Provisions

Fair Wage Covenant

Annual Financial Statements

Financing Documentation

Investment Letter

4834-738900572

Year Redemltion Amount

2011 $0 2012 $0 2013 $85000 2014 $125000 2015 $200000

2016 $318000 2017 $390000 2018 $455000 2019 $530000 2020 $595000 2021 $675000

2022 $760000 2023 $855000 2024 $930000 2025 $1020000 2026 $842000

The Bond will not be subject to optional redemption or prepayment by the Issuer priok its stated maturity The Bond shall be subject to extraordinary redemption as described in Exhibit B to this Commitment Letter In the event the Bond (or any portion thereof) is redeemed prior to maturity the Issuer shall be required to pay to the registered owner of the Bond the Redemption Loss Amount described in Exhibit B to this Commitment Letter

The Issuer shall comply with the fair wage provisions of the Davis Bacon Act to the extent required by the American Recovery and Reinvestment Act of2009

Until all amounts owed to the Bank with respect to the Bond have been paid m full the Issuer shall make available to the Bank its annual audited financial statement no later than 180 days after the Issuers applicable fiscal year-end

The financing documentation shall contain standard and customary representations warranties covenants events of defauh and remedies for transactions of this nature The financing documentation shall be prepared by Bond Counsel subject to approval by the Bank and Bank Counsel

The Bank will sign an investment letter indicating that it is either an Accredited Investor within the meaning provided in Regulation D of the Securities Act of 1933 as amended (the Securities Act) or a ~Qualified Institutional Buyer within the meaning provided in

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Conditions Precedent to Closing

CDIAC Fee

Bond Counsel

4834-738900572

Rule 144A of the Securities Act that it has made a full investigation of the security for the Bond and has not relied upon or requested that any disclosure document be prepared by or on behalf of the Issuer and further that it is purchasing the Bond without a present intention to sell any portion thereof to any other person and that any subsequent resale shall be made only in accordance with applicable securities laws

Standard forfinancings of this type including but not limited to

bull Completion of financing documentation satisfactory to the Bank

bull Evidence of QSCB Allocation for $7780000 from the State of California (including extension letters or reallocation reauthorization letters if applicable)

bull Receipt of a certified copy of the 2006 ballot language authorizing the issuance of the Issuers General Obligation Bond

bull Receipt of a certified copy of the 2006 election results

bull Receipt of a copy of the most recent assessedfmarkct valuation for the Pacific Grove Unified School District

bull Absence of any material adverse change in the condition operation or performance of the Issuer since the end of the period reported in the most recent financial statements provided to the Bank

bull Absence of any change in any law rule or regulation (or their interpretation or administration) that may in the sole opinion of the Bank adversely affect the consummation of the financing

bull Delivery to the Bank of a legal opinion of Bond Counsel in a form acceptable to the Bank and its counsel as to the due authorization execution enforceability and validity of this Commitment Letter the bond documentation and the Bond and that the Bond is a ~qualified school construction bond pursuant to Sections 54 A and 54F of the Code and a specified tax credit bond under Section 6431 of the Code

CDIAC Fees in the amount of 15 bps of the par amount of the Bond shall be paid from the Costs of Issuance Fund to the Purchaser (or paid directly to California Debt and Investment Advisory Commission) at closing to reimburse the Purchaser for registration fees assessed by California Debt and Investment Advisory Commission

Jones Hall A Professional Law Corporation 650 California Street 18 Floor San Francisco California 94108

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Bank Counsel

Paying Agent

Fees and Expenses

Interest Rate Lock

Waiver of Jury Trial

Governing Law

Sovereign Immunity

4834-7389-0057 2

Eric R Sender Esq Kutak Rock LLP Suite 2100 Peachtree Center South 225 Peachtree Street NE Atlanta Georgia 30303-1731 Telephone ( 404) 222-4633 Facsimile (404) 222-4654 E-mail ericsenderkutakrockcom

US Bank National Association

The Issuer shall be responsible for reimbursing the Bank for reasonable fees and expenses related to preparation negotiation execution and enforcement of this Commitment Letter the financing documents and any other documentation contemplated hereby or thereby including but not limited to the payment of the fee of Bank Counsel on the Closing Date in the amount of $30000 Upon acceptance of this Commitment Letter any fees incurred by the Bank shall be reimbursed by the Issuer whether or not the financing closes

The Issuer understands that due to the fact that the Bond Interest Rate is determined as of the Acceptance Date it is necessary for the Bank to lock in its cost of funds on such date The Issuer hereby agrees to reimburse the Bank for any rate lock breakage fees incurred by the Bank as a result of tenninating its cost of funding arrangements if the financing does not close by the Closing Date The Issuer acknowledges that it understands that the amount of such rate lock breakage fees wzll vary depending m large part on prevailing interest rares at the time such breakage fees are calculated and under certain market conditions the amount of such rate lock breakage fees owed by the Issuer could be substantial

The Issuer to the extent permitted by law waives any right to have a jury participate in resolving any dispute arising from this transaction To the extent such waiver is unenforceable the Issuer hereby consents to the adjudication of any and all claims pursuant to Judicial Reference as provided in California Code of Civil Procedure Section 638 and the judicial referee shall be empowered to hear and determine any and all issues in such Reference whether fact or law

All aspects of the credit(s) being discussed including this Commitment Letter and any of the financing documents would be governed by the laws of the State of California

The Issuer must represent that it does not posses and will not invoke a claim of Sovereign Immunity for disputes arising out of contractual claims

Credit Approval

Confidentiality

As confirmed on the signature page to this Commitment Letter the Bank has received credit approval for the purchase of the Bond under the terms set forth herein

This Commrtment Letter contains confidential and proprietary structuring and pricing information Except for disclosure on a confidential basis to your accountants attorneys and other professional advisors retained by you in connection with this financing or as may be required by law the contents of this Commitment Letter may not be disclosed in whole or in part to any other person or entity without our prior written consent provided that nothing herein shall restrict disclosure of information relating to the tax structure or tax treatment of the proposed financing as required to comply with applicable Federal income tax rules relating to such disclosure

The Banks obligations under this CommitmentLetter are conditioned upon the fulfillment to the Banks satisfaction of each term and condition contained in this Commitment Letter unless waived by the Bank in writing

We look forward to working with you to complete a successful QSCB financing in order to enhance the futures of students throughout the Pacific Grove Unified School District Please feel free to contact me with any questions about this Commitment Letter

Sincerely

J~ttL Jack Spillane Senior Vice President

Attachment signature page

4834-7389(0572

SIGNATURE PAGE TO COMMITMENT LETTER

CONFIRMATION OF TERMS AAD CONDITIONS

JlMORGAN CHASE BAAX NA By Jack Spillane

t raquo i ~

signature

Senior Vice President Title

ltntl Date 1

APPROVED AND CONSEJTED TO THIS THE ZJDAY OF June 2Gll

Pacific Grove Unified School District

By ~ ltJHr -~ middotf~ Title

4834-73amp9())572

EXHIBIT A

EVIDENCE OF INTEREST SUBISIDY RATE AND MAXIMUM MATURITY ON THE ACCEPTANCE DATE

(See Attached)

4834-7gt89-1)057 2

Qualified ax Credit Bond Rates

T reasurvDirect

Qualified Tax Credit Bond Rates Sectaon 54 A of the Internal Revenue Code IRC) provades rules for the ISsuance and use of qualified tax cred1t bonds tnclu~ing new clean renewable energy bonds qualified energy conservation bonds quahfied zone academy bonds and qualified school construction bonds For rates on clean renewable energy bonds tssued under Section 54 of the IRC check our CRE PE9~middot

SEARCH HISTORICAL QTCB RATES

From Date

2011

Perm1tted Smkmg_Fund Yield- The max1mum penrutted y1eld for the sbullnklng Fund expected to be used to repay the 1ssue under sect1on 54A(d)(4)(C) of the IRC The permitted Sinking fund y1eld is equal to 110 of the long-term adJusted applicable federal rate (AFR) compounded semiannually The permitted smk1ng fund y1eld is updated monthly

These rates will normally be published by 1000 am ET each federal business day

For more mforrnat1on on qualified tax credit bonds call the Internal Revenue Serv1ces Offtce of Assoc1ate Chief Counsel (Financial Institutions amp Products) at (202) 622middot3980

httpswwwtreasurydirectgovGA-SLSLGSselectQTCDatehtm

Page I of 1

6272011

SIGNATURE PAGE TO COMMITMENT LETTER

CONFIRMATION OF TERMS AAD CONDITIONS

JlMORGAN CHASE BAAX NA By Jack Spillane

t raquo i ~

signature

Senior Vice President Title

ltntl Date 1

APPROVED AND CONSEJTED TO THIS THE ZJDAY OF June 2Gll

Pacific Grove Unified School District

By ~ ltJHr -~ middotf~ Title

4834-73amp9())572

EXHIBIT A

EVIDENCE OF INTEREST SUBISIDY RATE AND MAXIMUM MATURITY ON THE ACCEPTANCE DATE

(See Attached)

4834-7gt89-1)057 2

Qualified ax Credit Bond Rates

T reasurvDirect

Qualified Tax Credit Bond Rates Sectaon 54 A of the Internal Revenue Code IRC) provades rules for the ISsuance and use of qualified tax cred1t bonds tnclu~ing new clean renewable energy bonds qualified energy conservation bonds quahfied zone academy bonds and qualified school construction bonds For rates on clean renewable energy bonds tssued under Section 54 of the IRC check our CRE PE9~middot

SEARCH HISTORICAL QTCB RATES

From Date

2011

Perm1tted Smkmg_Fund Yield- The max1mum penrutted y1eld for the sbullnklng Fund expected to be used to repay the 1ssue under sect1on 54A(d)(4)(C) of the IRC The permitted Sinking fund y1eld is equal to 110 of the long-term adJusted applicable federal rate (AFR) compounded semiannually The permitted smk1ng fund y1eld is updated monthly

These rates will normally be published by 1000 am ET each federal business day

For more mforrnat1on on qualified tax credit bonds call the Internal Revenue Serv1ces Offtce of Assoc1ate Chief Counsel (Financial Institutions amp Products) at (202) 622middot3980

httpswwwtreasurydirectgovGA-SLSLGSselectQTCDatehtm

Page I of 1

6272011

EXHIBIT A

EVIDENCE OF INTEREST SUBISIDY RATE AND MAXIMUM MATURITY ON THE ACCEPTANCE DATE

(See Attached)

4834-7gt89-1)057 2

Qualified ax Credit Bond Rates

T reasurvDirect

Qualified Tax Credit Bond Rates Sectaon 54 A of the Internal Revenue Code IRC) provades rules for the ISsuance and use of qualified tax cred1t bonds tnclu~ing new clean renewable energy bonds qualified energy conservation bonds quahfied zone academy bonds and qualified school construction bonds For rates on clean renewable energy bonds tssued under Section 54 of the IRC check our CRE PE9~middot

SEARCH HISTORICAL QTCB RATES

From Date

2011

Perm1tted Smkmg_Fund Yield- The max1mum penrutted y1eld for the sbullnklng Fund expected to be used to repay the 1ssue under sect1on 54A(d)(4)(C) of the IRC The permitted Sinking fund y1eld is equal to 110 of the long-term adJusted applicable federal rate (AFR) compounded semiannually The permitted smk1ng fund y1eld is updated monthly

These rates will normally be published by 1000 am ET each federal business day

For more mforrnat1on on qualified tax credit bonds call the Internal Revenue Serv1ces Offtce of Assoc1ate Chief Counsel (Financial Institutions amp Products) at (202) 622middot3980

httpswwwtreasurydirectgovGA-SLSLGSselectQTCDatehtm

Page I of 1

6272011

Qualified ax Credit Bond Rates

T reasurvDirect

Qualified Tax Credit Bond Rates Sectaon 54 A of the Internal Revenue Code IRC) provades rules for the ISsuance and use of qualified tax cred1t bonds tnclu~ing new clean renewable energy bonds qualified energy conservation bonds quahfied zone academy bonds and qualified school construction bonds For rates on clean renewable energy bonds tssued under Section 54 of the IRC check our CRE PE9~middot

SEARCH HISTORICAL QTCB RATES

From Date

2011

Perm1tted Smkmg_Fund Yield- The max1mum penrutted y1eld for the sbullnklng Fund expected to be used to repay the 1ssue under sect1on 54A(d)(4)(C) of the IRC The permitted Sinking fund y1eld is equal to 110 of the long-term adJusted applicable federal rate (AFR) compounded semiannually The permitted smk1ng fund y1eld is updated monthly

These rates will normally be published by 1000 am ET each federal business day

For more mforrnat1on on qualified tax credit bonds call the Internal Revenue Serv1ces Offtce of Assoc1ate Chief Counsel (Financial Institutions amp Products) at (202) 622middot3980

httpswwwtreasurydirectgovGA-SLSLGSselectQTCDatehtm

Page I of 1

6272011

EXHIBITS

REDEMPTIONLOSS OF INTEREST SUBSIDY

Redemptions Events Upon Determination of Disqualification

(a) Optional Redemption Except as otherwise provided in Paragraph (b) below the Bond shall not be subject to optional redemption or prepayment prior its stated maturity

(b) Extraordinary Redemptions

(i) Upon the occurrence of a Determination of Disqualification the Issuer shall have the option to redeem the Bond in whole within 90 days of the occurrence of the Determination of Disqualification

(ii) If on the date that is three years from the date of issuance of the Bond (or if an extension has been obtained as provided in Section 54A(dX2)(B)(iii) of the Code the last date of such extension) it is determined that the Issuer has expended less than 100 percent of the available project proceeds (as defined in Section 54A(eX4) of the Code) for one or more Qualified Purposes~ (as defined in 54F(aXI) of the Code the Issuer shall within 90 days after the end of such period redeem a portion of the Bond in an amount to be determined in the same manner as the amount of nonqualified bonds required to be redeemed under Section 142 of the Internal Revenue Code (the Redemption Amount)

(iii) In connection with any extraordinary redemption of the Bond pursuant to paragraph (b Xi) or (b Xii) the Issuer shall pay to the register owner of the Bond an amount with respect to the Bond (or portion thereof) redeemed equal to the sum of the present values of the Average Lost Monthly Interest Income for each month falling in the period from the redemption date to the Maturity Date (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate (the Redemption Loss Amount) The foregoing computation shall be made by the Calculation Agent and if requested by the Issuer and at the Issuers expense shall be verified by an independent certified public accountant reasonably acceptable to the Issuer and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B Ill the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Redemption Loss Amount shall be due hereunder The Issuer acknowledges that il understands that the amount of the Redemption Loss Amount will vary depending in large part on prevailing Treasury Rates at the time of such redemption and under certain market conditions the amount of such Redemptwn Loss Amount owed by the Issuer could be substantial The Issuer shall give notice of such redemption to the registered owner of the Bond in writing by registered or certified mail return receipt requested at leastten Business Days prior to the redemption date

(c) Definitions

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve ( 12)

Calculation Agent means JPMorgan Chase Bank NA so long as it IS the regigttered owner of the Bond and otherwise the Issuer or its designee

4834middot7389-0057 2

Determination of Disqualificationmiddotmiddot means (a) legislation enacted by the Congress of the United States of America (b) a ruling notice or determinauon by the IRS or (c) a non-appealable ruling or holding by a court of competent jurisdiction the effect of which causes the Bond to lose its status as or fail to qualifY as a Qualified School Construction Bond under Section 54F of the Code or a Specified Tax Credit Bond under Section 6431 of the Code

Discount Rate means the Treasury Rate determined by the Calculation Agent as of the date which is five Business Days prior to the redemption date

IRS mean the Internal Revenue Service of the United States Department of Treasury

Prepayment Factor means a rate equal to A minus middotB where middotA equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Discount Rate

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bond

4834-7389-00572

R -1

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

$7780000 -

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

INTEREST RATE

5 01 per annum

MATURITY DATE

August 1 2026 -

DATED DATE

July 12 2011

REGISTERED OWNER JPMORGAN CHASE BANK NA

PRINCIPAL AMOUNT SEVEN MILLION SEVEN HUNDRED EIGHTY THOUSAND -DOLLARS

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby promises to pay to the Registered Owner named above or registered assigns the Principal Amount on the Maturity Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond will bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) it is authenticated as of a business day following the 151

h calendar day of the month immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 in which event it will bear interest from the Dated Date set forth above

Principal interest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Pay1ng Agent) initially US Bank National Association Principal hereof and any redemption premium hereon are payable upon presentation and surrender of this Bond at the office of the Paying Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Reg1stered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the written request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request is on file with the Paying Agent prior to any Record Date interest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request

Page 1 of7 SPECIMEN

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the final matunty thereof and (b) the Paying Agent will pay the principal of and mterest on this Bond by wire transfer to the Bank in accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on this Bond which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a series of $7780000 of Bonds issued for the purpose of raising money for the acquisition conStruction and rehabilitation of school facilities and __ lt~o~p~a~~----necessary legal financial engineering and contingent costs in connection there middot under authority of and under the laws of the State of California and the requisite 55 ~teo~f~th~e~_ electors of the District cast at a special bond election held on June 6 2006 upon the ques 1on o issu1ng Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and ttie Paying Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond is a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 ofJhe Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)( 1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the District other than the Bond Subsidy Payments and ad valorem taxes levied upon all taxable property in the District

The Bonds of this issue are issuable only as fully registered Bonds This Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying middotAgent together with a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Registered Owner as the absolute owner of this Bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes and neither the District nor the Paying Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated maturities _

Page 2 of7

The Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following table

Sinking Fund Redemption Date

(August 1l

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined in the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds which the District elects to redeem plus (ir) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve

Page 3 of7

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

Determination of Disqualificationmiddotmiddot means (a) legislation enacted by the Congress of the United States of America (b) a ruling notice or determinauon by the IRS or (c) a non-appealable ruling or holding by a court of competent jurisdiction the effect of which causes the Bond to lose its status as or fail to qualifY as a Qualified School Construction Bond under Section 54F of the Code or a Specified Tax Credit Bond under Section 6431 of the Code

Discount Rate means the Treasury Rate determined by the Calculation Agent as of the date which is five Business Days prior to the redemption date

IRS mean the Internal Revenue Service of the United States Department of Treasury

Prepayment Factor means a rate equal to A minus middotB where middotA equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Discount Rate

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bond

4834-7389-00572

R -1

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

$7780000 -

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

INTEREST RATE

5 01 per annum

MATURITY DATE

August 1 2026 -

DATED DATE

July 12 2011

REGISTERED OWNER JPMORGAN CHASE BANK NA

PRINCIPAL AMOUNT SEVEN MILLION SEVEN HUNDRED EIGHTY THOUSAND -DOLLARS

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby promises to pay to the Registered Owner named above or registered assigns the Principal Amount on the Maturity Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond will bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) it is authenticated as of a business day following the 151

h calendar day of the month immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 in which event it will bear interest from the Dated Date set forth above

Principal interest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Pay1ng Agent) initially US Bank National Association Principal hereof and any redemption premium hereon are payable upon presentation and surrender of this Bond at the office of the Paying Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Reg1stered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the written request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request is on file with the Paying Agent prior to any Record Date interest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request

Page 1 of7 SPECIMEN

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the final matunty thereof and (b) the Paying Agent will pay the principal of and mterest on this Bond by wire transfer to the Bank in accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on this Bond which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a series of $7780000 of Bonds issued for the purpose of raising money for the acquisition conStruction and rehabilitation of school facilities and __ lt~o~p~a~~----necessary legal financial engineering and contingent costs in connection there middot under authority of and under the laws of the State of California and the requisite 55 ~teo~f~th~e~_ electors of the District cast at a special bond election held on June 6 2006 upon the ques 1on o issu1ng Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and ttie Paying Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond is a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 ofJhe Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)( 1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the District other than the Bond Subsidy Payments and ad valorem taxes levied upon all taxable property in the District

The Bonds of this issue are issuable only as fully registered Bonds This Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying middotAgent together with a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Registered Owner as the absolute owner of this Bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes and neither the District nor the Paying Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated maturities _

Page 2 of7

The Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following table

Sinking Fund Redemption Date

(August 1l

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined in the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds which the District elects to redeem plus (ir) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve

Page 3 of7

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

R -1

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

TAXABLE GENERAL OBLIGATION BOND 2006 ELECTION SERIES E

$7780000 -

(DIRECT-PAY QUALIFIED SCHOOL CONSTRUCTION BONDS)

INTEREST RATE

5 01 per annum

MATURITY DATE

August 1 2026 -

DATED DATE

July 12 2011

REGISTERED OWNER JPMORGAN CHASE BANK NA

PRINCIPAL AMOUNT SEVEN MILLION SEVEN HUNDRED EIGHTY THOUSAND -DOLLARS

The PACIFIC GROVE UNIFIED SCHOOL DISTRICT (the District) located in Monterey County California (the County) for value received hereby promises to pay to the Registered Owner named above or registered assigns the Principal Amount on the Maturity Date each as stated above and interest thereon calculated on a 30360 day bas1s until the Principal Amount is paid or provided for at the Interest Rate stated above such interest to be paid on February 1 and August 1 of each year commencing February 1 2012 (the Interest Payment Dates) This Bond will bear interest from the Interest Payment Date next preceding the date of authentication hereof unless (a) it is authenticated as of a business day following the 151

h calendar day of the month immediately preceding any Interest Payment Date (each a Record Date) and on or before such Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (b) it is authenticated on or before January 15 2012 in which event it will bear interest from the Dated Date set forth above

Principal interest and redemption premium (if any) are payable in lawful money of the United States of America to the person in whose name this Bond is registered (the Registered Owner) on the Bond registration books maintained by the paying agent (the Pay1ng Agent) initially US Bank National Association Principal hereof and any redemption premium hereon are payable upon presentation and surrender of this Bond at the office of the Paying Agent Interest hereon is payable by check mailed by the Paying Agent on each Interest Payment Date to the Reg1stered Owner of this Bond by first-class mail at the address appearing on the Bond registration books at the close of business on the preceding Record Date provided however that at the written request of the registered owner of Bonds in an aggregate principal amount of at least $1000000 which written request is on file with the Paying Agent prior to any Record Date interest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request

Page 1 of7 SPECIMEN

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the final matunty thereof and (b) the Paying Agent will pay the principal of and mterest on this Bond by wire transfer to the Bank in accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on this Bond which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a series of $7780000 of Bonds issued for the purpose of raising money for the acquisition conStruction and rehabilitation of school facilities and __ lt~o~p~a~~----necessary legal financial engineering and contingent costs in connection there middot under authority of and under the laws of the State of California and the requisite 55 ~teo~f~th~e~_ electors of the District cast at a special bond election held on June 6 2006 upon the ques 1on o issu1ng Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and ttie Paying Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond is a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 ofJhe Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)( 1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the District other than the Bond Subsidy Payments and ad valorem taxes levied upon all taxable property in the District

The Bonds of this issue are issuable only as fully registered Bonds This Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying middotAgent together with a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Registered Owner as the absolute owner of this Bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes and neither the District nor the Paying Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated maturities _

Page 2 of7

The Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following table

Sinking Fund Redemption Date

(August 1l

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined in the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds which the District elects to redeem plus (ir) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve

Page 3 of7

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

So long as this Bond is owned by JPMorgan Chase Bank N A (the Bank) the following shall apply (a) this Bond is not required to be presented and surrendered to the Paying Agent for payment at any time prior to the final matunty thereof and (b) the Paying Agent will pay the principal of and mterest on this Bond by wire transfer to the Bank in accordance with the wire transfer instructions provided by the Bank to the Paying Agent from time to time provided that principal on this Bond which is payable at maturity shall be made only upon presentation and surrender hereof at the Office of the Paying Agent as set forth in the preceding paragraph

This Bond is one of a series of $7780000 of Bonds issued for the purpose of raising money for the acquisition conStruction and rehabilitation of school facilities and __ lt~o~p~a~~----necessary legal financial engineering and contingent costs in connection there middot under authority of and under the laws of the State of California and the requisite 55 ~teo~f~th~e~_ electors of the District cast at a special bond election held on June 6 2006 upon the ques 1on o issu1ng Bonds in the amount of $42000000 and under a resolution of the Board of Education of the District adopted on June 16 2011 and ttie Paying Agent Agreement dated as of July 1 2011 (the Paying Agent Agreement) between the District and the Paying Agent This Bond and the issue of which this Bond is a part are payable as to both principal and interest from the proceeds of the levy of ad valorem taxes on all property subject to such taxes in the District which taxes are unlimited as to rate or amount

The District has designated this Bond as a Qualified School Construction Bond for purposes of Section 54F(a)(3) of the Internal Revenue Code of 1986 (the Tax Code) This Bond is further payable from and secured by a pledge of and lien on amounts which are payable by the Federal government under Section 6431 ofJhe Internal Revenue Code of 1986 as amended (the Tax Code) which the District has elected to receive under Section 54AA(g)( 1) of the Tax Code (the Bond Subsidy Payments)

The principal of and interest and redemption premium if any on this Bond does not constitute a debt of the County the State of California or any of its political subdivisions other than the District or any of the officers agents and employees thereof and neither the County the State of California any of its political subdivisions nor any of the officers agents and employees thereof shall be liable hereon Except for amounts which the District is obligated to pay under Section 402 of the Paying Agent Agreement in no event shall the principal of and interest and redemption premium if any on this Bond be payable out of any funds or properties of the District other than the Bond Subsidy Payments and ad valorem taxes levied upon all taxable property in the District

The Bonds of this issue are issuable only as fully registered Bonds This Bond is exchangeable and transferable at the office of the Paying Agent by the Registered Owner or by a person legally empowered to do so upon presentation and surrender hereof to the Paying middotAgent together with a request for exchange or an assignment signed by the Registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent all subject to the terms limitations and conditions provided in the Paying Agent Agreement Any tax or governmental charges shall be paid by the transferor The District and the Paying Agent may deem and treat the Registered Owner as the absolute owner of this Bond for the purpose of receiving payment of or on account of principal or interest and for all other purposes and neither the District nor the Paying Agent shall be affected by any notice to the contrary

The Bonds are not subject to optional redemption prior to their respective stated maturities _

Page 2 of7

The Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following table

Sinking Fund Redemption Date

(August 1l

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined in the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds which the District elects to redeem plus (ir) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve

Page 3 of7

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

The Bonds are subject to mandatory redemption in part by lot at a redemption price equal to 100 of the principal amount thereof to be redeemed without premium in the aggregate respective principal amounts and on August 1 in the respective years as set forth in the following table

Sinking Fund Redemption Date

(August 1l

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 (Maturity)

Principal Amount To Be Redeemed

$ 85000 125000 200000 318000 390000 455000 530000 595000 675000 760000 855000 930000

1020000 842000

Upon the occurrence of a Determination of Disqualification (as such term is defined in the Paying Agent Agreement) the District shall have the option to redeem the Series E Bonds in whole within 90 days of the occurrence of the Determination of Disqualification at a redemption price equal to the sum of (i) the principal amount of the Series E Bonds which the District elects to redeem plus (ir) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Series E Bonds called for redemption

In the event the District fails to expend all of the Available Project Proceeds within the Expenditure Period (as such terms are defined in the Paying Agent Agreement) the Bonds are subject to extraordinary mandatory redemption on any Business Day designated by the District which is not more than 90 days following the Expenditure Period at a redemption price equal to the sum of (i) the principal amount of the unexpended Available Project Proceeds as of the last day of the Expenditure Period plus (ii) the Early Redemption Premium plus (iii) accrued interest to the redemption date on the principal amount of the Bonds called for redemption Funds for the payment of the redemption price of Bonds redeemed under this subsection (b) shall be derived from amounts transferred to the Paying Agent by the County Treasurer from the Building Fund

For purposes of the foregoing redemption provisions the following terms have the following respective meanings

Average Lost Monthly Interest Income means the amount determined by dividing (i) the product of the principal amount of the Bond redeemed and the Prepayment Factor by (ii) twelve

Page 3 of7

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

Calculation Agenr means the Bank so long as it is the Owner of a majority in aggregate principal amount of the Outstanding Bonds and otherwise the District or its designee

Discount Rate means the Treasury Rate determined as of the date which is five Business Days prior to the applicable repayment or redemption date

Early Redemption Premium means an amount with respect to the Series E Bonds (or portion thereof) redeemed equal to the sum of the present values of the Average lost Monthly Interest Income for each month falling in the period from the redemption date to the maturity date of the Bonds (with any fraction of a month counted as a month) discounted from the end of each such month to the redemption date at the Discount Rate The Early Redemption Premium shall be calculated by the Calculation Agent and if requested by the District and at the Districts expense shall be verified by an Independent Certified Public Accountant reasonably acceptable to the District and the Calculation Agent If the Calculation Agent or accountant as the case may be determines that B in the definition of Prepayment Factor is equal to or greater than A in the definition of Prepayment Factor then no Early Redemption Premium shall be due

Prepayment Factot means a rate equal to A minus B where A equals the Treasury Rate determined as of the date of issuance of the Bond and B equals the Treasury Rate determined as of the date which is five Business middot Days prior to the redemption date

Treasury Rate means the yield on the United States Treasury bill note or bond selected by the Calculation Agent in a commercially reasonable manner having a maturity closest in length to the period from the date such yield is determined to the maturity date of the Bonds

The Paying Agent shall give notice of the redemption of the Bonds at the expense of the District Such notice shall specify (a) that the Bonds or a designated portion thereof are to be redeemed (b) the numbers of the Bonds to be redeemed (c) the date of notice and the date of redemption (d) the place or places where the redemption will be made and (e) descriptive information regarding the Bonds including the dated date interest rate and stated maturity date Such notice shall further state that on the specified date there becomes due and payable upon each Bond to be redeemed the portion of the principal amount of such Bond to be redeemed together with interest accrued to said date the redemption premium if any and that from and after such date interest with respect thereto shall cease to accrue and be payable

Notice of redemption- shall be by registered or otherwise secured mail or delivery service postage prepaid to the registered owners of any Bonds designated for redemption at their addresses appearing on the Bond registration books in every case at least 30 days but not more than 60 days prior to the redemption date provided that neither failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds

Neither the District nor the Paying Agent will be required to transfer any Bond (a) during the period established by the Paying Agent for selection of Bonds for redemption or (b) with respect to a Bond which has been selected for redemption

Page 4 of7

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

Reference is made to the Paying Agent Agreement for a more complete description of the provisions among others with respect to the nature and extent of the security for the Bonds of this series the rights duties and obligations of the District the Paying Agent and the Registered Owners and the terms and conditions upon which the Bonds are issued and secured The owner of this Bond assents by acceptance hereof to all of the provisions of the Paying Agent Agreement

It is certified recited and declared that all acts and conditions required by the Constitution and laws of the State of California to exist to be performed or to have been met precedent to and in the issuing of the Bonds in order to make them legal valid and binding general obligations of the District have been performed and have been met in regular and due form as required by law that payment in full for the Bonds has been received that no statutory or constitutional limitation on indebtedness or taxation has been exceeded in issuing the Bonds and that due provision has been made for levying and collecting ad valorem property taxes on all of the taxable property within the District in an amount sufficient together With the Bond Subsidy Payments and other amounts held for that purpose to pay principal and interest when due and for levying and collecting such taxes the full faith and credit of the District are hereby pledged

This Bond shall not be valid or obligatory for any purpose and shall not be entitled to any security or benefit under the Paying Agent Agreement until the Certificate of Authentication below has been manually signed by the Paying Agent

Page 5 of7

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

IN WITNESS WHEREOF the Pacific Grove Unified School District has caused this Bond to be executed by the facsimile signature of the President of its Board of ducation and attested by the facsimile signature of the Secretary of its Board of Education all as of the date stated above

Attest

Secretary Board of Education

PACIFIC GROVE UNIFIED SCHOOL DISTRICT

$-~-~~~~~ By ____ L~~~~~~--~~-----

President Board of Education

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds described in the Paying Agent Agreement referred to in this Bond

Date of Authentication July 12 2011

US BANK NATIONAL ASSOCIATION as Paying Agent

By-----~~-77il_Q~=---lt~J--middot --Authonzed Signatory

Page 6 of7

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

ASSIGNMENT

For value received the undersrgned do(es) hereby sell assign and transfer unto

(Name Address and Tax Identification or Social Security Number of Assignee)

the within Bond and do(es) hereby irrevocably constitute and appoint--------------=shy----------attorney to transfer the same on the registration books of the Bond Registrar with full power of substitution in the premises

Dated

Signature Guaranteed

Note Signature(s) must be guaranteed by an eligible guarantor institution

Note The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever

Page 7 of7

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

JONES HALL

July 12 2011 650 Cahforma Street

18th Floor

San Franc1sco CA 94108

t 415 391 5780

f 415 391 5784

Board of Education Pacific Grove Unified School District 435 Hillcrest Avenue Pacific Grove California 93950

OPINION $7780000 Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds)

Members of the Board of Education

We have acted as bond counsel to the Pacific Grove Unified School District (the District) in connection with the issuance by the District of its Pacific Grove Unified School District (Monterey County California) Taxable General Obligation Bonds 2006 Election Series E (Direct-Pay Qualified School Construction Bonds) in the aggregate principal amount of $7780000 (the Bonds) under Article 45 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the Bond Law) and under a resolution of the Board of Education (the Board) of the District adopted on June 16 2011 (the Bond Resolution) and a Paying Agent Agreement dated July 1 2011 between the District and U S Bank National Association (the Paying Agent Agreement) We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion

As to questions of fact material to our opinion we have relied upon representations of the Board contained in the Bond Resolution and Pay1ng Agent Agreement and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation

Under the Bond Resolution and Paying Agent Agreement the District has pledged certain funds for the payment of principal of premium (if any) and interest on the Bonds when due including (i) ad valorem taxes levied by Monterey County (the County) upon the property in the District and (ii) the Bond Subsidy Payments (as defined below)

www toneshall corr

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

Board of Educabon Pactftc Grove Umfied School Dtstnct July 12 2011 Page 2

Based upon the foregoing we are of the opmion under existing law as follows

1 The District is duly created and validly extsting as a school district with the power to issue the Bonds and to perform ~s obligations under the Bond Resolution the Paying Agent Agreement and the Bonds

2 The Bond Resolution and Paying Agent Agreement have been duly adopted by the Board and constttute the valid and binding obligations of the District enforceable against the District in accordance with their terms

3 Pursuant to the Bond Law the Bond Resolution and Paying Agent Agreement create a valid lien on funds pledged by the Bond Resolution and Paying Agent Agreement for the security of the Bonds

4 The Bonds have been duly authorized executed and issued by the District and are valid and binding general obligations of the District and the Board of Supervisors of the County is obligated under the laws of the State of California to cause to be levied an ad valorem tax without limit as to rate or amount upon the taxable property in the District for the payment when due of the principal of and interest on the Bonds

5 The Bonds constitute qualified school construction bonds within the meaning of Section 54F of the Internal Revenue Code of 1986 as amended (the Tax Code) The District has irrevocably elected to apply the provisions of Section 6431 (f) of the Tax Code to the Bonds and the Bonds are specified tax credit bonds (Qualified Bonds) eligible for the cred~ payable by the Federal government under Section 6431 (f) of the Tax Code (the Bond Subsidy Payments) The opinions set forth in the preceding sentence are subject to the condition that the District shall comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order for the Bonds to be treated as Qualified Bonds and continue to be eligible for the Bond Subsidy Payments The District has covenanted to comply w~h each such requirement Failure to comply with certain of such requirements may result in a delay or forfeiture of all or a portion of the Bond Subsidy Payments and may cause the Bonds to cease to be treated as Qualified Bonds either prospectively from the date of determination or retroactively to the date of issuance of the Bonds We express no opinion regarding the procedures regarding and availabil~y of funds wtth respect to the payment of the Bond Subsidy Payments by the Federal government nor do we express any opinion regarding other federal tax consequences arising with respect to the Bonds

5 The interest on the Bonds is e~mpt from personal income taxation imposed by the State of California

The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Resolution may be subject to bankruptcy insolvency reorganization moratonum and other similar laws affecting cred~ors rights heretofore or hereafter enacted and may also be subject to the exercise of judtcial discretion in appropriate cases

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

Board of Educat1on Pac1fic Grove Umf1ed School D1stnct July 12 2011 Page 3

To ensure compliance w1th reqUirements imposed by the IRS we inform you that any US federal tax advice contained herein (a) is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was wntten to support the promotion or marketing of the Bonds Each taxpayer should seek advice based on that taxpayers particular circumstances from an independent tax advisor

Respectfully submitted

s~ A Professional law Corporation

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE

PACIFIC GROVE UNIFIED SCHOOL DISTRICT (Monterey County California)

Taxable General Obligation Bonds 2006 Election Series E

(Direct-Pay Qualified School Construction Bonds)

PRINCIPAL AMOUNT

- $7780000

MATURITY SCHEDULE

MATURITY DATE

August 1 2026 _

INTEREST RATE

5 01 per annum

• 2011-0356 Pacific Grove Unified School District - RESOLUTION
• 2011-0356 Pacific Grove Unified School District - PAYING AGENT AGREEMENT
• 2011-0356 Pacific Grove Unified School District - commitment
• 2011-0356 Pacific Grove Unified School District - Specimen
• 2011-0356 Pacific Grove Unified School District - MATURITY SCHEDULE