Asterisks “*” indicate anticipated action Action is not limited to those designated items

PALOMAR POMERADO HEALTH [PPH] HOSPITAL, EMERGENCY CARE, TRAUMA CENTER IMPROVEMENT AND REPAIR MEASURE BONDS

INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE NOTICE & MEETING AGENDA

Tuesday, December 19, 2006 Conference Room A, Palomar Pomerado Health 12:00 Noon 15255 Innovation Drive, San Diego, California Lunch for Committee Members & Invited Guests Only

Time Target

I. CALL TO ORDER and ROLL CALL .......................................................................................... ..............5 12:00N

II. INFORMATION ITEM(S) ............................................................................................................. ................5 12:05P

III. OATH OF OFFICE....................................................................................................................... ..............5 12:10P A. New Members: Marguerite Jackson Dill, PhD, RN, FAAN; George Kung, MD B. Re-appointed Members (as of July 1, 2006): Steve Friar, Kathy Leech-McKinney

IV. PUBLIC COMMENTS.................................................................................................................. ..............5 12:15P (5 minutes allowed per speaker, with a cumulative total of 15 minutes per group – for further details & policy, see Request for Public Comments notices, available in the meeting room)

V. * MINUTES – ICOC Meeting – March 28, 2006 (Attachment A) .............................................. ..............5 12:20P

VI. DISCUSSION AGENDA.............................................................................................................. ................ ...........

REPORTS

A. Identification of Officers Appointed Pursuant to Independent Citizens’ Oversight Committee (ICOC) Procedures, Policies & Guidelines......................................................... ..............5 12:25P

B. Notification to Members Dill and Kung of ICOC Membership Classes Pursuant to ICOC Procedures, Policies & Guidelines........................................................................................ ..............5 12:30P

PRESENTATIONS

A. Review of the Duties & Roles of the ICOC (Attachment B) Kathleen A. Leak, Esq., Bond Counsel, PPH/Orrick, Herrington & Sutcliffe LLP ................. ............20 12:35P

B. District Expenditure Report for FYE June 30, 2006 (Attachment C) Bob Hemker, CFO, PPH ....................................................................................................... ............45 12:55P

C. *Annual Report of the Committee to the PPH Board Steve Yerxa, Chair, ICOC ..................................................................................................... ............15 1:40P

VII. BOARD MEMBER COMMENTS/AGENDA ITEMS FOR NEXT MEETING ............................... ..............5 1:55P

VIII. FINAL ADJOURNMENT ............................................................................................................. ................ 2:00P

NEXT MEETING: TUESDAY, SEPTEMBER 27, 2007, 3:00 P.M.

CONFERENCE ROOM A, PALOMAR POMERADO HEALTH 15255 INNOVATION DRIVE, SAN DIEGO, CA

NOTE: If you have a disability, please notify us 72 hours prior to the event so that we may provide reasonable accommodations.

Distribution: George Kung, MDSteve Yerxa, Chair Ed LehmanBob Wells, Vice-Chair Kathy Leech McKinneyJohn McIver, Secretary Margaret MoirWilliam Corwin Marguerite Jackson Dill, PhD, RN, FAAN Bob Hemker, CFO, PPHStephen Friar Tanya Howell, Scribe

Other packets to: PPH Board of Directors; PPH Board Finance Committee; League of Women Voters

ATTACHMENT AMINUTES 03-28-06

PARTICIPANT ROSTER

PALOMAR POMERADO HEALTH HOSPITAL, EMERGENCY CARE, TRAUMA CENTER IMPROVEMENT AND REPAIR MEASURE BONDS

INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE

Palomar Pomerado North County Health Development, Conference Room, 642 East Grand Avenue, Escondido, CA

PARTICIPANTS MEETING DATES 7/12/05

10/5/05

3/28/06

MEMBERS

WILLIAM L. CORWIN (AT LARGE) P P P

STEPHEN FRIAR (AT LARGE) P P P

LEE HUMAN, MD (PHYSICIAN) E E E

JERRY KAUFMAN, MPT (BUSINESS ORG) - SECRETARY P P E

EDWARD R. LEHMAN (SR CITIZENS’ ORG) P P P

JOHN MCIVER (AT LARGE) P P P

KATHY LEECH MCKINNEY (AT LARGE) P P P

MARGARET MOIR (AT LARGE) P P P

BOB WELLS (TAXPAYERS’ ORG) – VICE CHAIR P P E

STEPHEN P. YERXA (AT LARGE) - CHAIR P P P

DISTRICT SUPPORT STAFF

BOB HEMKER, CFO P P P

TANYA HOWELL, EXECUTIVE ASST – SCRIBE P P P

GUESTS KATHLEEN LEAK, BOND COUNSEL ORRICK, HERRINGTON & SUTCLIFFE P

[P = Present E = Excused A = Absent]

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Independent Citizens’ Oversight Committee Meeting Minutes – Tuesday, March 28, 2006

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AGENDA ITEM/PURPOSE DISCUSSION/RECOMMENDATION ACTION/COMMENTS

I. CALL TO ORDER & ROLL CALL

Meeting called to order at 3:02 p.m. by Chair Steve Yerxa. See roster for attendance.

II. INFORMATION ITEM(S) • Chair Steve Yerxa replied to the letters of inquiry received at the October 2005 meeting from Messrs. Robroy Fawcett & Jeff Switzer (Attachment A)

• Assistant to the ICOC Tanya Howell is working with the PPH Webmaster to create an appropriate link on the site for posting of the schedule, agendas & minutes of the ICOC

• Assistant Tanya Howell distributed the following items to the membership: o Petty cash funds distribution and expense vouchers for mileage to previous ICOC

meetings o Minutes with attachments from October 5, 2005, ICOC meeting o Letters from Chair Steve Yerxa to public letters of inquiry referenced above o Draft biographical sketches of ICOC membership for review & approval o Current ICOC Contact List o Letter from Lee Human, M.D. (referenced in Agenda item IV.A.)

• PMC North Campus o PPH closed on the land o The City approved the zoning changes for rights & entitlements o There is a Development Agreement with the City, which includes extending

Citracado Parkway for access o There is also a Memorandum of Understanding (MOU) with the City regarding

changes being made on the current PMC campus and plans for downtown Escondido Early-stage evaluations of properties on Valley Boulevard are being done as

PPH would require rights to both sides of the road for it to be closed to meet current plans

o The District Board Finance Committee is reviewing the relocation of Supply Chain Services and the Warehouse to Escondido to begin to reallocate local sales tax The Development Agreement with the City allocates $13M in cash plus an

approximate $6-7M in local tax reallocations to pay for infrastructure upgrades along Citracado Parkway

• ICOC minutes o October minutes were reviewed & approved by District Board at their March 13,

2006, meeting o Future distribution:

First draft to Chair Steve Yerxa To Committee members after Chair approval To PPH Finance Committee for review To consent agenda at District Board meeting To next scheduled ICOC meeting agenda

• ICOC Web posting to be worked out prior to Annual Meeting • Minutes of this meeting will be drafted, reviewed by Chair, then forwarded to the District Board via the April 25, 2006, Finance Committee meeting

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Independent Citizens’ Oversight Committee Meeting Minutes – Tuesday, March 28, 2006

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AGENDA ITEM/PURPOSE DISCUSSION/RECOMMENDATION ACTION/COMMENTS

• Jerry Kaufman’s resignation was reported to the District Board o Bob Hemker confirmed with bond counsel the propriety of the resignation o John McIver’s nomination by the ICOC as replacement—both as Secretary and

Business Organization representative—was also reported to the District Board o As the membership remains at the required number of nine, no further action is

required III. PUBLIC COMMENTS There were no public comments

IV. DISCUSSION AGENDA

REPORTS

A. RESIGNATION OF LEE HUMAN, M.D.

• Lee Human, M.D., submitted a letter of intent to resign, based on scheduling conflicts (Attachment B) o Resignation discussed and accepted o Leaves a vacancy on the ICOC, specifically a “Required Member” who is either a

nurse or a physician o Vacancy also requires replacement of member, as required membership shall be

NLT nine (9) Eight (8) members is still a quorum

o Current applications to be forwarded to the Finance Committee for consideration: Two applications recently received will be included if they meet the

nurse/physician requirement Applications from first round of applicants who met the nurse/physician

requirement

• Dr. Human’s resignation will be reported to the District Board via the Board Finance Committee, with a recommendation that the vacancy be posted for nurse/physician applicants only, as all other required and at-large memberships are filled

PRESENTATIONS

A. LEGAL ASPECTS OF GO BONDS

B. CLARIFICATION OF THE DUTIES & ROLES OF THE ICOC

Utilizing Attachment C, Kathleen Leak, Esq., Bond Counsel for PPH, from Orrick, Herrington & Sutcliffe, LLP, led a discussion that covered both the legal aspects of the issuance of and distribution of funds derived from General Obligation (GO) Bonds and the duties and roles of the ICOC with regard to those funds. Ms. Leak also acknowledged the team of individuals known as the PPH Financing Team—consisting of PPH staff and consultants from Citigroup, Kaufman Hall and Orrick—who are coordinating the formulation of the Plan of Finance, a component of which is the issuance of GO Bonds • The Constitution of the State of California sets limitations on the use of GO Bonds,

stating that they may only be used to purchase “real property” o No direct legal definition for “real property – consensus over time as to what is or is

not allowed Anything truly portable, ordinary repairs, maintenance costs, supplies or labor are

not generally allowed

• Tanya Howell is to add Kathleen Leak to both the ICOC Contact List and the ICOC emailing group listing

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Independent Citizens’ Oversight Committee Meeting Minutes – Tuesday, March 28, 2006

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AGENDA ITEM/PURPOSE DISCUSSION/RECOMMENDATION ACTION/COMMENTS

Fixtures that are affixed to or become part of the land/building, labor costs, professional fees, real estate closing costs and other costs directly connected to real property acquisition and improvements are generally allowed

• The ICOC is responsible only for oversight of the GO Bonds issued by the PPH District, even if other sources of funding are utilized by the district to complete the various hospital projects o ICOC’s role is to review expenditures after they have been made to confirm GO

Bonds were used appropriately o Once all GO Bonds have been spent, role of ICOC ends

• Annual expense report will be prepared after close of the fiscal year o Annual Report will cover only GO Bonds o Whole picture will be available by putting the Annual Report together with the

District’s Audited Financial Statements • Will the purchase of a new building for the warehouse constitute an appropriate GO

Bond expenditure? As Measure BB was a “hospital & healthcare project” – not just “hospital”, answer would be, “Yes”, contingent on: o Review by Bond Counsel o Review by Financing Team o Warehouse that supports the hospital is technically part of the hospital – if housed

within the physical buildings of the hospital, there would be no doubt as to validity of use

• POM OSP will not be GO financed due to its condo structure – not an “owned asset” of PPH

• Discussion of ICOC Concept o No requirement for healthcare districts to have ICOC – District Board decided it

would be an appropriate aspect of the planning process o Based on the requirement of School Districts to have an ICOC for school bond

issuances o Could not ultimately change a decision made by the District Board, but provides

input for Board consideration regarding possible inappropriate expenditures Committee report made to District Board District Board required to reply to comments – “closes the loop”

o ICOC protects the citizenry o Bond Counsel protects the bond holders o ICOC has access to bond counsel for questions regarding appropriate vs.

inappropriate expenditures Any questions should be made collectively as a body through Bob Hemker’s

office, utilizing the ICOC emailing list • PPH Fiscal Year 2006 ends June 30th, and the external audit is generally completed by

the end of October following FY close

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ATTACHMENT B

PALOMAR POMERADO HEALTH HOSPITAL, EMERGENCY CARE, TRAUMA CENTER IMPROVEMENT AND

REPAIR MEASURE BONDS INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE

PROCEDURES, POLICIES AND GUIDELINES

Section 1. COMMITTEE ESTABLISHED

The Board of Directors (the “Board”) of Palomar Pomerado Health (the “District”) hereby establishes the Independent Citizens’ Oversight Committee (the “Committee”) which shall have the purposes and duties set forth in these Procedures, Policies and Guidelines (the “Guidelines”).

Section 2. PURPOSE

The purpose of the Committee is to ensure that the proceeds of bonds authorized by the “Hospital, Emergency Care, Trauma Center Improvement and Repair Measure” (“Measure BB”), approved by the voters on November 2, 2004 (the “Bond Proceeds”), are expended only for purposes permitted by Measure BB.

Section 3. DUTIES

To carry out its stated purpose, the Committee shall perform the duties specified in this Section 3:

3.1 Review Expenditures. The Committee shall review each annual expenditure report produced by the District in accordance with Measure BB (each, a “District Expenditure Report”) to ensure that (a) Bond Proceeds are expended only for the purposes set forth in Measure BB; and (b) no Bond Proceeds are used for staff or administrator salaries or other operating expenses.

3.2 Report of the Committee. The Committee shall prepare and provide to the Board for the Board’s consideration and response and for dissemination to the public an annual report concerning the Committee’s review of each District Expenditure Report. The Committee shall consider the response provided by the Board pursuant to Section 7.4 herein and provide a reply to the Board. Such report and reply shall be reviewed at the next Committee meeting and, as approved, or corrected and amended and approved, be submitted to the Board for inclusion in the Board’s public records in accordance with Section 6.4.

Section 4. COMMITTEE ACTIVITIES

4.1 Power of the Committee. In order to perform the duties set forth in Section 3 hereof, the Committee may engage only in the following activities:

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(a) Receive and review copies of each District Expenditure Report and personally conduct such physical examination of the construction sites as it deems reasonably necessary to verify the expenditures reported therein.

(b) In accordance with Section 6.4, report to the Board any exceptions, discrepancies, issues and/or concerns regarding the use of Bond Proceeds for the Board’s consideration and response and for dissemination to the public.

(c) Review and reply to the Board’s response to any report submitted pursuant to Section 4.1(b) above and provided to the Committee in accordance with Section 7.4.

(d) Submit a final report upon the termination of the Committee’s activities in accordance with Section 10.

Section 5. MEMBERSHIP

5.1 Number. The Committee shall consist of not less than nine members, the exact number to be determined from time to time by the Board, appointed by the Board from a list of candidates who have submitted written applications.

5.2 General Qualification Standards.

(a) To be a qualified member of the Committee, a person must:

(1) be at least 18 years of age and a citizen of the State of California and reside within the boundaries of the District;

(2) not be an employee, official, vendor, contractor or consultant of the District; and

(3) not have an immediate family member who is an employee, official, vendor, contractor or consultant of the District.

(b) If a member fails to meet the applicable qualification standards set forth above at any time during his or her term of service, such member shall be disqualified from service on the Committee and his or her position shall be declared vacant. The Board shall appoint a new person to serve the remainder of the term, in accordance with the appointment process set forth in Section 5.4 below.

5.3 Required Committee Members.

(a) The Committee shall at all times, except during the period of a vacancy, include the following members (collectively, the “Required Members”):

(1) one member who is active in a business organization;

(2) one member who is active in a senior citizens’ organization;

(3) one member who is active in a bona fide taxpayers’ organization; and

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(4) one member who is a nurse or physician.

(b) Any Required Member who resigns from his or her business organization, senior citizens’ organization or bona fide taxpayers’ organization (as applicable) shall be deemed to concurrently resign from the Committee and the position shall be declared vacant. The Board shall appoint a new person to serve the remainder of the term, in accordance with the appointment process set forth in Section 5.4 below.

5.4 Appointment. The Board shall appoint members to the Committee through the following process:

(a) The Board shall solicit applications from the general public through appropriate means as determined by the Board, which may include, without limitation (i) advertisements on the District’s internet web site; (ii) advertisements posted in libraries within the District; (iii) advertisements posted in District hospitals; and (iv) advertisements in newspapers in general circulation within all or part of the District.

(b) If necessary, the Board shall solicit applications from the membership of appropriate local business organizations, senior citizens’ organizations, bona fide taxpayers’ organizations and physician and nursing groups.

(c) The Board or its designee shall review all applications.

(d) The Board’s designee, if any, shall make recommendations to the Board regarding Committee membership.

(e) Following the Board’s review or its designee’s recommendations, as applicable, the Board shall select and appoint members to the Committee and shall designate the Required Members. If fewer than nine applications are initially received, or if no applications are initially received that meet the requirements of one or more of the Required Members, then the Board shall appoint, or take such action as is necessary to allow it to appoint, members of the Committee such that the Committee is composed as required by Section 5 hereof.

5.5 Ethics; Conflicts of Interest. By accepting appointment to the Committee, each member agrees to comply with Articles 4 (commencing with Section 1090) and 4.7 (commencing with Section 1125) of Division 4 of Title 1 of the Government Code and the Political Reform Act of 1974 (Government Code §§ 81000 et seq.). Additionally, each member shall comply with the Committee’s Ethics Policy Statement attached hereto as Attachment A.

5.6 Term. Committee members shall be divided into three classes, as nearly equal in number as the then total number of members constituting the entire Committee permits, with the term of office of one class expiring each year. At the Committee’s first meeting, members shall draw lots or otherwise select the membership of each class, with the members of one class to serve for an initial term expiring June 30, 2006, members of another class to serve for an initial term expiring June 30, 2007 and members of another class to serve for an initial term expiring June 30, 2008. Each initial term shall commence upon each member’s respective appointment. Each subsequent term shall commence on July 1 and expire on June 30. Subsequent to the initial

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term of one year, two years or three years, as applicable, each class shall serve a term of two years. No Committee member may serve for more than two consecutive terms.

5.7 Removal; Vacancy. The Board may remove any Committee member for failure to perform the duties specified in Section 3 or other cause, including failure to attend Committee meetings, upon the recommendation of the Committee Chair. Upon the removal of a member, his or her seat shall be declared vacant. The Board shall fill any vacancies on the Committee within 90 days from the initial date of such vacancy in accordance with the requirements of Section 5.3 and the appointment process set forth in Section 5.4 hereof.

5.8 Compensation. The Committee members shall not be compensated for their services, but may be reimbursed for their reasonable out of pocket costs incurred in connection with their service on the Committee and previously approved by the Committee Chair.

5.9 Authority of Members. Committee members shall not have the authority to direct staff of the District. With the exception of the District Expenditure Report, which the Committee shall receive concurrently with the Board, the Committee may only receive copies of reports, records and documents that have been previously presented to the Board and which are in the public record unless otherwise directed by the Board. Any requests for such reports, records and documents shall be made in writing to the Secretary of the Board of Directors or the Secretary’s designee.

Section 6. MEETINGS OF THE COMMITTEE

6.1 Regular Meetings. The Committee shall establish a schedule for the date and time of regular meetings to be held at least annually. The Committee shall meet more frequently as it deems reasonably necessary or as requested by the Board. The Committee shall hold an initial organizational meeting within 30 days’ of the Board’s appointment of the Committee as set forth in Section 5.4.

6.2 Location. All meetings shall be held at the administrative offices of the District located at 15255 Innovation Drive, San Diego, California 92128, or other District facilities, or such other public space as designated by the Committee, provided, however, that all meetings shall be held within the District.

6.3 Procedures. All meetings shall be open and public in accordance with the Ralph M. Brown Act, Government Code Sections 54950 et seq. (the “Brown Act”). Meetings shall be conducted according to such procedural rules as the Committee may adopt. Committee members may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. A majority of the number of Committee members shall constitute a quorum for the transaction of any business except adjournment. The Committee shall apply the same standards as used by the Board in giving notice of its meetings. All Committee decisions, including without limitation all decisions regarding reports to the Board, shall be made by a majority vote of those Committee members in attendance.

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6.4 Reports of Committee Meetings. The Secretary of the Committee shall keep or cause to be kept a report of all Committee meetings and shall submit such report, which may be in the form of minutes, initially marked as a “DRAFT,” to the Board within thirty days of the meeting from which such minutes were taken so that the Board may cause such minutes to become part of the Board’s public records and made available on the Board’s web site or other electronic means of communication then in use.

Section 7. DISTRICT SUPPORT AND BOARD REVIEW OF COMMITTEE REPORT

7.1 The District shall provide to the Committee necessary technical and administrative assistance as follows:

(a) preparation of and posting of public notices as required by the Brown Act ensuring that all notices to the public are provided in the same manner as notices regarding meetings of the Board;

(b) provision of a meeting room, including any necessary audio/visual equipment;

(c) preparation and copies of any documentary meeting materials, such as agendas and reports, including oral or recorded presentations by District staff and consultants;

(d) retention of all Committee records and provision of public access to such records; and

(e) in consultation with the Committee Chair, such other support as the Committee Chair and the Board deem necessary.

7.2 District staff may, from time-to-time, attend Committee meetings to explain material provided by the Committee as deemed reasonably necessary by the Committee Chair.

7.3 District staff shall maintain all Committee records and provide public access to such records.

7.4 The Board shall consider any exceptions, discrepancies, issues and/or concerns regarding the use of Bond Proceeds set forth in Committee reports and shall provide a response in writing to the Committee for consideration by the Committee as soon as reasonably possible.

7.5 The District shall not use any Bond Proceeds to provide the support set forth in this Section 7.

Section 8. OFFICERS

The Board shall annually appoint a Committee Chair, Committee Vice-Chair and Committee Secretary. The Committee Vice-Chair shall act as Committee Chair when the Committee Chair is absent. Each such appointment shall expire on June 30 each year (except

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that the initial appointments shall not expire until June 30, 2006). No person shall serve as Committee Chair for more than three consecutive annual terms.

Section 9. AMENDMENT OF GUIDELINES

Any amendment to these Guidelines must be approved by the Board prior to becoming effective.

Section 10. TERMINATION

The Committee shall automatically terminate and disband when all Bond Proceeds have been expended and the Committee has reviewed the final District Expenditure Report. The Committee shall prepare a report summarizing its findings and submit it to the Board as its last official act.

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ATTACHMENT A

INDEPENDENT CITIZENS’ OVERSIGHT COMMITTEE ETHICS POLICY STATEMENT

This Ethics Policy Statement provides general guidelines for Committee members to follow. The guidelines set forth in this Statement are not exhaustive and do not excuse Committee members from existing laws, rules, policies and procedures as well as from concepts that define generally accepted good business practices and professional conduct. Committee members are expected to adhere strictly to the provisions of this Ethics Policy Statement. All capitalized terms used herein shall have the meanings set forth in the Guidelines of the Committee.

POLICY

• CONFLICT OF INTEREST. A Committee member shall not make or attempt to influence a District decision related to any contract funded by Bond Proceeds or any construction project which will benefit a Committee member’s outside employment, business or personal finances or benefit an immediate family member, such as a spouse, child or parent.

• OUTSIDE EMPLOYMENT. A Committee member shall not use his or her position as a Committee member to negotiate future employment with any person or organization that relates to any contract funded by Bond Proceeds or any construction project. A Committee member shall not make or influence a District decision related to any construction project involving the interests of a person with whom the member has an agreement concerning current or future employment or remuneration of any kind. For a period of two years after leaving the Committee, a former Committee member may not represent any person or organization for compensation in connection with any matter pending before the District that, as a Committee member, he or she participated in personally and substantially. Specifically, for a period of two years after leaving the Committee, a former Committee member and the companies and businesses for which the member works shall be prohibited from contracting with the District with respect to: (i) bidding on projects funded by the Bond Proceeds, and (ii) any construction project.

• COMMITMENT TO UPHOLD LAW. A Committee member shall uphold the federal and California Constitutions, the laws and regulations of the United States and the State of California and all other applicable government entities, and the policies, procedures, rules and regulations of the District.

• COMMITMENT TO DISTRICT. A Committee member shall place the interests of the District above any personal or business interests of the member.

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ATTACHMENT C

TA

B A

BOND ISSUANCE

REQUEST OF PALOMAR POMERADO HEALTHREGARDING AUTHENTICATION AND DELIVERY OF BONDS

To: WELLS FARGO BANK, NATIONAL ASSOCIATION, as paying agent (the "PayingAgent") under that certain Paying Agent Agreement, dated as of June 1 , 2005 (the "Paying AgentAgreement"), between Palomar Pomerado Health (the "District") and the Paying Agent.

Pursuant to the Paying Agent Agreement, the District has duly executed and delivered to you$80 000 000 aggregate principal amount of Palomar Pomerado Health General Obligation BondsElection of 2004, Series 2005A (the "Bonds ). The Bonds will mature on the dates and in the years andamounts, and bear interest at the rates, as set forth in Exhibit A attached hereto.

1. Authentication and Delivery of the Bonds. You are hereby authorized and directed toauthenticate the Bonds by signing the certificate of authentication appearing thereon and to deliver theBonds to The Depository Trust Company upon the order of Citigroup Global Markets Inc. (theUnderwriter ), as soon as practical, upon payment to you by the Underwriter of $83 348 850.60 (theAmount Due ), which will be paid to you in immediately available funds. Such amount represents the

purchase price for the Bonds, $83 651 738.55 (the "Purchase Price ), less the premium for the financialguaranty insurance policy (the "Insurance Policy ), $302 887. , which for ease of administration will bepaid on behalf of the District by the Underwriter directly to Ambac Assurance Corporation (theInsurer

The Purchase Price and the Amount Due were computed as follows:

Principal Amount ...............................................,...............Plus: Net original issue premium ................................Less: Underwriter s Discount.......................................

$80 000 000.971 732.55

(319.994.00)

$83 651 738.(302.887.95)

$83 348 850.

Purchase Price ....................................................................Less: Premium for Insurance .......................................

Amount Due .......................................................................

2. Receipt for Amount Due. You are hereby requested to accept receipt of the AmountDue from the Underwriter.

3. Disposition of Proceeds. You are further authorized and directed to set aside or transferfrom the proceeds from the sale of the Bonds, the following amounts in accordance with Section 3.02 ofthe Paying Agent Agreement:

(a) For deposit in the Series 2005AMeasure BB Project Fund established pursuant toSection 3.04 of the Paying Agent Agreement, the amount of $80 000 000.00;

(b) For deposit in the Series 2005A Measure BB Funded Interest Account establishedpursuant to Section 3 .06(b) of the Paying Agent Agreement within the Interest and Sinking Fundestablished pursuant to Section 3.06(a) of the Paying Agent Agreement, the amount of$2 141 528.60; and

(c) For deposit in the Series 2005A Measure BB Costs ofIssuance Fund established pursuantto Section 3.05 of the Paying Agent Agreement, the amount of$I 207 322.00.

DOCSSF1 :821826.

Tab A1

4. Receipt for Insurance Policy. You are hereby further requested to receive and hold theInsurance Policy.

DOCSSF1 :821826.4 Tab A2

Dated: July 7, 2005.

PALOMAR POMERADO HEALTH

By: I!l/Robert Hemker

Chief Financial Officer

DOCSSF1:821826 Tab A3

DOCSSF1:821826.

EXHIBIT A

Palomar Pomerado HealthGeneral Obligation Bonds, Election of 2004, Series 2005A

MATURITY SCHEDULE

Maturity Principal Interestust 1 Amount Rate

2006 $ 6 185 000 00%2007 455 0002008 875 0002009 945 0002010 025 0002011 095 0002012 180 0002013 275 0002014 380 0002015 1,470 0002016 590 0002017 715 0002018 845 0002019 985 0002020 130 0002021 280 0002022 445 0002023 615 0002024 790 0002025 980 0002026 180 0002029 775 0002034 785 000

Tab A4

CERTIFICATE OF WELLS FARGO BANK, NATIONAL ASSOCIATION

The undersigned, Wells Fargo Bank, National Association(the "Bank"), does hereby certify that:

1. This Certificate is being provided in connection with the issuance by Palomar PomeradoHealth (the "District") of Palomar Pomerado Health General Obligation Bonds, Election of 2004, Series2005A (the "Bonds ), in the aggregate principal amount of $80 000 000. In connection with the issuance

of the Bonds, the District is entering into that certain Paying Agent Agreement, dated as of June 1 2005(the "Paying Agent Agreement"), between the District and the Bank, as paying agent. Capitalized termsused in this Certificate and not otherwise defined herein shall have the meanings assigned to such terms inthe Paying Agent Agreement.

2. The Bank is duly organized and validly existing as a national banking association in goodstanding under the laws of the United States, having the full power, including trust powers, and authorityto enter into and perform its duties under the Paying Agent Agreement.

The Bank has duly authorized, executed and delivered the Paying Agent Agreement.

4. The Bonds were examined by the Bank and found to be in the form required by thePaying Agent Agreement. Pursuant to Section 2.05 and Section 3.01 of the Paying Agent Agreement, theBonds were authenticated in the name and on behalf of the undersigned by authorized signatories of theundersigned, duly authorized to so authenticate the Bonds, were registered in the name of Cede & Co. , asnominee of The Depository Trust Company ("DTC"), the depository for the Bonds, and were delivered toDTC by the Bank pursuant to the Paying Agent Agreement and the Request of the District, dated the datehereof (the "Request"), and as directed by Citigroup Global Markets Inc. ("Citigroup ), as purchaser of theBonds pursuant to that certain Bond Purchase Agreement, dated June 22, 2005 , among the District, theNorth San Diego County Health Facilities Financing Authority and Citigroup.

5. To the best knowledge of the Bank, after due inquiry, there is no action, suit, proceedingor investigation, at law or in equity, before or by any court or governmental agency, public board or bodypending against the Bank or threatened against the Bank which in the reasonable judgment of the Bankwould affect the existence of the Bank, or in any way contesting or affecting the validity or enforceabilityof the Paying Agent Agreement or contesting the powers of the Bank or its authority to enter into andperform its obligations under the Paying Agent Agreement.

6. The proceeds received from the sale of the Bonds have been deposited or disbursed in thefollowing amounts in accordance with Section 3.02 of the Paying Agent Agreement and the Request:

(a) For deposit in the Series 2005A Measure BB Project Fundestablished pursuant to Section 3.04 of the Paying Agent Agreement, the amount of$80 000 000;

(b) For deposit in the Series 2005A Measure BB Funded InterestAccount established pursuant to Section 3 .06(b) of the Paying Agent Agreement withinthe Interest and Sinking Fund established pursuant to Section 3.06(a) of the Paying AgentAgreement, the amount of$2 141 528.60; and

(c) For deposit in the Series 2005A Measure BB Costs ofIssuanceFund established pursuant to Section 3.05 of the Paying Agent Agreement, the amount of

207 322.00.

DOCSSFI :821826. Tab A5

IN WITNESS WHEREOF, WELLS FARGO BANK, NATIONAL ASSOCIATION, as PayingAgent, has caused this Certificate to be executed by one of its officers thereunto duly authorized this 7thday of July, 2005.

WELLS FARGO BANK, NATIONAL ASSOCIATION

~ -

Authorized Officer

DOCSSF1:821826Tab A5

PROJECT FUND

TRUST ACCOUNT RECAP

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COST OF ISSUANCE

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REQUISITION NO.

Series 2005A Measure BB Costs of Issuance Fund

The undersigned, Robert Hemker, hereby certifies as follows:

1. I am the Chief Financial Officer of Palomar Pomerado Health, a local health care districtduly organized and existing under and pursuant to the laws of the State of California (the "District"

2. Pursuant to the provisions of that certain Paying Agent Agreement, dated as of June 12005 (the "Paying Agent Agreement"), between the District and Wells Fargo Bank, National Associationas paying agent (the "Paying Agent"), I am an Authorized District Representative (as such term is definedin the Paying Agent Agreement) and I am delivering this Requisition on behalf of the District. Allcapitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms inthe Paying Agent Agreement.

3. The undersigned hereby requests that the Paying Agent pay from the Series 2005AMeasure BB Costs of Issuance Fund created pursuant to Section 3.05 of the Paying Agent Agreement theamounts specified in Schedule I hereto to the persons identified in Schedule I.

4. The undersigned, acting on behalf of the District, hereby certifies that: (a) obligations inthe amounts set forth in Schedule I attached hereto have been incurred by the District and are presentlydue and payable; (b) each item is a proper charge against the Series 2005A Measure BB Costs of IssuanceFund; and (c) each item has not been previously paid from the Series 2005A Measure BB Costs ofIssuance Fund.

Dated: July 7, 2005.

PALOMAR POMERADO HEALTH

1fL-...By:Chief Financial Officer

DOCSSFI :821826Tab C1

Schedule I

Requisition No.

Series 2005A Measure BB Costs of Issuance Fund

Name and Address Payment Nature of Paymentof Party to be Paid Amount Expenditure Instructions

Palomar Pomerado Health $833 832. Reimbursement for prior Wire per wireSan Diego , California payment of costs of instructions

issuance listed on previouslySchedule I- forwarded

Squire, Sanders & Dempsey LLP. $ 20 000. Disclosure Counsel See attachedOne Maritime Plaza Services InVOICeSan Francisco, California 94111

Orrick, Herrington & Sutcliffe LLP $275 000. Bond Counsel Fees See attached405 Howard Street InVOICeSan Francisco, California 94105

Orrick, Herrington & Sutcliffe LLP $ 10 000. Authority Counsel Fees See attached405 Howard Street InVOICeSan Francisco , California 94105

Wells Fargo Bank, National Association 050. Paying Agent Fees, See attached

707 Wilshire Boulevard. , 17th Floor including fees for Paying InVOICeLos Angeles , California 90017 Agent Counsel

- Invoices and supporting documentation for costs of issuance listed on Schedule I- Ion file with PalomarPomerado Health.

-- Invoices provided to Palomar Pomerado Health and Wells Fargo Bank, National Association, as payingagent only.

DOCSSF1:821826.4Tab C2

Schedule 1-

Schedule I

Requisition No.

Series 2005A Measure BB Costs of Issuance Fund

Palomar Pomerado Health District Counsel Services

Palomar Pomerado Health Financial Advisor Services

Palomar Pomerado Health Auditor Fees

Payment to County of San Diego for Costs of Measure BB Election

DOCSSFI :821826.

$266 322.

$390 000.

$ 27 510.

$150 000.

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DRAW REQUISITIONS

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$27,486,716.74 - refund of $3,283.26 from seller

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EXPENDITURES PENDING

REIMBURSEMENT - CEQA

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