Loading...
HomeMy WebLinkAbout7 Refinancing US Bank Ajeft% .4o7 T71 Memorandum To: Board of Directors From: Mary Chapman, Administrative Services Manager Date: May 16, 2003 SUBJECT: Refinancing the $3,000,000 Line of Credit with US Bank 1. WHY THIS ITEM IS BEFORE THE BOARD The $3,000,000 in bond anticipation notes issued by the District on July 3, 2002 are due to mature on July 3, 2003 and need to be refinanced. 2. HISTORY A year ago, the District entered into an agreement with US bank to borrow $3,000,000 to pay for the second phase of construction of the Donner Lake Water System. The intent was to borrow this money as a bridge loan until permanent financing could be obtained from the California State Revolving Fund. On July 3, 2002, the District issued bond anticipation notes in the amount of $3,000,000 which were purchased by US Bank. These notes are due to mature on July 3, 2003 and need to be paid in full or refinanced. 3. NEW INFORMATION We have been working with representatives from the State regarding the remaining requirements to obtain financing. We currently expect to begin receiving reimbursement in the final quarter of this year. Because of the delay, last month I began discussions with Ron Howell of US Bank to see if the Bank would be willing to refinance the line of credit. He said they would be and Ron is now in the process of receiving credit approval for the refinancing which is actually called a refunding. John Murphy's office has drawn up the refunding documents which extend the maturity date on the $3,000,000 bond anticipation notes to July 3, 2004. The documents include a purchase agreement and a resolution which will have to be adopted by the Board. Additionally, John Murphy will have to issue an opinion letter regarding the transaction. 4. RECOMMENDATION A. That the Board approve the attached "TRUCKEE DONNER PUBLIC UTILITY DISTRICT DONNER LAKE WATER ASSESSMENT DISTRICT NO. 00-1 REFUNDING BOND ANTICIPATION NOTES, SERIES 2003 PURCHASE AGREEMENT" with United States Bank National Association whereby the bank agrees to purchase a refunding bond anticipation note from the District in the amount of$3,000,000. B. Adopt the attached resolution entitled "RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF REFUNDING BOND ANTICIPATION NOTES PURSUANT TO THE PROVISIONS OF THE IMPROVEMENT BOND ACT OF 1915 AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH FOR DONNER LAKE WATER ASSESSMENT DISTRICT NO. 00-1". C. Authorize the Board President and the District Clerk to execute the above described Purchase Agreement and Resolution. $3,000,000 TRUCKEE DONNER PUBLIC UTILITY DISTRICT DONNER LAKE WATER ASSESSMENT DISTRICT NO. 00-1 REFUNDING BOND ANTICIPATION NOTES, SERIES 2003 PURCHASE AGREEMENT , 2003 Board of Directors Truckee Donner Public Utility District P.O. Box 309— 11570 Donner Pass Road Truckee, California 96160 Ladies and Gentlemen: United States Bank National Association(the `Bank"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Purchase Agreement with the Truckee Donner Public Utility District(the"Public Utility District") which, upon acceptance, will be binding upon the Public Utility District and the Bank. This offer is made subject to its acceptance by the Public Utility District on the date hereof, and it is subject to withdrawal by the Bank upon notice delivered to the Public Utility District at any time prior to the acceptance by the Public Utility District. Capitalized terms that are used in this offer and not otherwise defined herein shall have the respective meanings ascribed to them in the Authorizing Resolution(as hereinafter defined). 1. Purchase. Sale and Delivery of the Refunding Bond Anticipation Notes. (a) Subject to the terms and conditions, and in reliance upon the representations, warranties and agreements set forth herein, the Bank agrees to purchase from the Public Utility District, and the Public Utility District agrees to sell to the Bank, Truckee Donner Public Utility District Donner Lake Water Assessment District No. 00-1 Refunding Bond Anticipation Notes, Series 2003 (the"Refunding Bond Anticipation Notes") in an aggregate principal amount of $3,000,000. Each Bond Anticipation Note (a)shall be in substantially the form set forth in the Authorizing Resolution, (b) shall be in a denomination of at least$5,000, (c) shall be dated as of the date of its delivery to the Bank, (d) shall mature on July 3,2004, subject to redemption prior thereto on any date at a redemption price equal to the principal amount thereof and unpaid interest accrued thereon, and (e) shall bear interest from its dated date (payable on the first days of January, April, and July and on the maturity date) at a variable rate equal to 66% of the Bank's Prime Rate (as defined in the Authorizing Resolution). The purchase price for each Refunding Bond Anticipation shall be the principal amount thereof. (b) The Refunding Bond Anticipation Notes shall be issued and secured under the provisions of the Resolution of the Board of Directors of the Public Utility District(the`Board") adopted on May 21, 2003 (the"Authorizing Resolution"). DOCSOCA9673442\22925A008 (c) At or before 11:00 A.M. local time on a business day designated by the Public Utility District(a "Closing Date")the Public Utility District shall deliver(by facsimile transmission promptly followed by delivery of an original or by such other method as may be acceptable to the Bank) to the Bank a Refunding Bond Anticipation Note, in the principal amount equal to an authorized denomination registered in the name of the Bank and duly executed by the officers of the Public Utility District as provided in the Authorizing Resolution; and the Bank shall accept such delivery and pay the purchase price of the Refunding Bond Anticipation Note in same day funds (such delivery and payment being herein referred to as a"Closing"). 2. Representations, Warranties and Agreements of the Public Utility District. The Public Utility District represents, warrants and covenants to and agrees with the Bank that: (a) The Public Utility District is a public agency duly organized and validly existing under the laws of the State of California and has, and at each Closing Date will have, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Purchase Agreement and the Authorizing Resolution and (it) to issue, sell and deliver the Refunding Bond Anticipation Notes to the Bank pursuant to the Authorizing Resolution and as provided herein; (b) The Public Utility District has complied, and at each Closing Date will be in compliance, in all material respects, with all legal requirements that are conditions precedent to the issuance of the Refunding Bond Anticipation Notes; (c) The Board has duly and validly: (i)taken or caused to be taken, all proceedings necessary under the Constitution and laws of the State of California in order to form its Donner Lake Water Assessment District No. 00-1 (the"Assessment District'), to confirm assessments (the "Assessments") on the parcels located within the Assessment District in the respective amounts shown in the report of the Assessment Engineer approved by the Board on May 2, 2001 (the "Engineer's Report"),to cause each of the Assessments to be a valid Lien upon the parcel upon which it was confirmed and to authorize the sale and issuance of the Refunding Bond Anticipation Notes, (it) authorized and approved the execution and delivery of this Purchase Agreement, and (in)authorized and approved the performance by the Public Utility District of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, this Purchase Agreement and the Authorizing Resolution; and the Assessment District has been validly formed, the Assessments have been validly confirmed(to the extent not paid in cash prior to the date hereof) and constitute liens on the respective parcels within the Assessment District, and(assuming due authorization, execution and delivery by other parties thereto, where necessary)this Purchase Agreement and the Authorizing Resolution and the Refunding Bond Anticipation Notes will constitute the valid, legal and binding obligations of the Public Utility District enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles; (d) The Public Utility District is not in breach of or default under any applicable law or administrative rule or regulation of the United States or the State of California, or of any department, division, agency or instrumentality of eiiher of them, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Public Utility District is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the Public Utility District of its obligations under this Purchase Agreement and the Authorizing Resolution or 2 DOCSOCA967344�2\22925.0008 the Refunding Bond Anticipation Notes; and compliance with the provisions of each thereof will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the United States or the State of California, or of any department, division, agency or instrumentality of either of them, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the Public Utility District is a party or is otherwise subject or bound; (e) Except for compliance with the blue sky or other states securities law filings, as to which the Public Utility District makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Public Utility District of its obligations under this Purchase Agreement and the Authorizing Resolution and the Refunding Bond Anticipation Notes, have been obtained and are in full force and effect; (t) Each of the Assessments has been duly and lawfully confirmed and (to the extent not paid in cash prior to the date hereof)may be collected in installments under the laws of the State of California and constitutes a valid and legally binding lien on the property on which it has been confirmed; (g) The Authorizing Resolution creates a valid pledge of the unpaid Assessments and the proceeds of obligations that may be issued by the Public Utility District to repay the Refunding Bond Anticipation Notes, subject in all cases to the provisions of the Authorizing Resolution permitting the application thereof for the purposes and on the terms and conditions set forth therein; and said pledge constitutes a lien on and security interest in all of the foregoing; (h) No action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,regulatory agency, public board or body is pending or, to the knowledge of the Public Utility District,threatened against the Public Utility District(i) which would materially adversely affect the ability of the Public Utility District to perform its obligations under this Purchase Agreement, the Authorizing Resolution or the Refunding Bond Anticipation Notes, or(ii) seeking to restrain or to enjoin: (A) the development of any of the land within the Assessment District, (B)the issuance, sale or delivery of the Refunding Bond Anticipation Notes, (C)the application of the proceeds thereof in accordance with the Authorizing Resolution, or(D) the collection or application of the Assessments, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Refunding Bond Anticipation Notes, this Purchase Agreement or the Authorizing Resolution, or(iii) in any way contesting the powers or authority of the Public Utility District with respect to the Refunding Bond Anticipation Notes, this Purchase Agreement and the Authorizing Resolution, or any action of the Public Utility District contemplated by any of said documents; nor is there any action pending or, to the knowledge of the Public Utility District, threatened against the Public Utility District which alleges that interest on the Refunding Bond Anticipation Notes is not excludable from gross income for federal income tax purposes or is not exempt from California personal income taxation; and (i) Any certificate signed by any authorized official of the Public Utility District authorized to do so shall be deemed a representation and warranty to the Bank as to the statements made therein; 3 IX>CSOC9673442122925MO8 3. Conditions to the Obligations of the Bank. The obligations of the Bank to accept delivery of and pay for the Refunding Bond Anticipation Notes on each Closing Date shall be subject, at the option of the Bank, to the accuracy in all material respects of the representations and warranties on the part of the Public Utility District contained herein, as of the date hereof and as of each Closing Date, to the performance by the Public Utility District of its obligations to be performed hereunder at or prior to the applicable Closing Date and to the following additional conditions: (a) At the Closing Date, this Purchase Agreement and the Authorizing Resolution shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Bank, and there shall have been taken in connection therewith, with the issuance of the Refunding Bond Anticipation Notes and with the transactions contemplated thereby and by this Purchase Agreement, all such actions as, in the opinion of Stradling Yocca Carlson& Rauth, a Professional Corporation, Bond Counsel, shall be necessary and appropriate; (b) On the first Closing Date, the Bank shall have received a fee of$3,000 and counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Bank: (1) This Purchase Agreement and the Authorizing Resolution, together with a certificate dated as of the Closing Date of the Secretary of the Public Utility District to the effect that each such document is a true, correct and complete copy of the one duly approved by the Board; (2) The unqualified approving opinion for the Refunding Bond Anticipation Notes, dated the first Closing Date and addressed to the Public Utility District, of Stradling Yocca Carlson&Rauth, a Professional Corporation, Bond Counsel for the Public Utility District, in substantially the form attached hereto as Exhibit A, and a reliance letter from such firm,dated the first Closing Date and addressed to the Bank, to the effect that such approving opinion addressed to the Public Utility District may be relied upon by the Bank to the same extent as if such opinion were addressed to the Bank; (3) A certificate, dated the Closing Date and signed by an authorized representative of the Public Utility District, certifying that(i) the representations and warranties of the Public Utility District contained in Section 2 hereof are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; and (ii) the Public Utility District has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under this Purchase Agreement and the Authorizing Resolution at or prior to the Closing Date; (4) An opinion, dated the Closing Date and addressed to the Bank, of the General Counsel of the Public Utility District, to the effect that (i) to the best of his or her knowledge, no action, suit,proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened which would materially adversely affect the ability of the Public Utility District to perform its obligations under this Purchase Agreement, the Authorizing Resolution or the Refunding Bond Anticipation Notes, or seeking to restrain or to enjoin the issuance of the Refunding Bond Anticipation Notes, or the application of the proceeds thereof in accordance with the Authorizing Resolution, or the collection of the Assessments, or in any way contesting or affecting the validity or enforceability of this Purchase Agreement, the Authorizing Resolution or the Refunding Bond Anticipation Notes, or any action of 4 DOCSOCA967344v2\22925.0008 the Public Utility District contemplated by any of said documents; (it)the Public Utility District is duly organized and validly existing as a public utility district under the Constitution and laws of the State of California, with full legal right, power and authority to perform all of its obligations under this Purchase Agreement and the Authorizing Resolution; (in)the Public Utility District has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority,board, agency or commission having jurisdiction which constitute a condition precedent to the confirmation and collection of the Assessments, the issuance of the Refunding Bond Anticipation Notes or the performance by the Public Utility District of its obligations thereunder or under the Authorizing Resolution, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations; and (iv) the Board has duly and validly adopted the resolutions forming the Assessment District, confirming the Assessments, approving this Purchase Agreement and authorizing the sale and issuance of the Refunding Bond Anticipation Notes at meetings of the Board which were called, held and conducted pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and such resolutions are now in full force and effect; (5) A certificate of the Public Utility District dated the first Closing Date, in a form acceptable to Bond Counsel, that the Refunding Bond Anticipation Notes are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; and (6) Such additional legal opinions, certificates, instruments and other documents as the Bank may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the Public Utility District's representations and warranties contained herein and the due performance or satisfaction by the Public Utility District at or prior to the applicable Closing of all agreements then to be performed and all conditions then to be satisfied by the Public Utility District in connection with the transactions contemplated hereby. 4. Conditions of the Public Utility District's Obli ag tions. The Public Utility District's obligations hereunder are subject to the Bank's performance of its obligations hereunder, and are also subject to the following conditions: (a) As of the applicable Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the Public Utility District executing the certificate referred to in Section 3(b)(3)hereof, threatened,to restrain or enjoin the issuance or sale of the Refunding Bond Anticipation Notes or in any way affecting any authority for or the validity of the Refunding Bond Anticipation Notes,this Purchase Agreement or the Authorizing Resolution or the existence or powers of the Public Utility District; and (b) As of the first Closing Date, the Public Utility District shall receive the approving opinion of Bond Counsel referred to in Section 3(b)(2) hereof,dated as of the first Closing Date. 5. Expenses. Whether or not the Refunding Bond Anticipation Notes are delivered to the Bank as set forth herein: (a) The Bank shall be under no obligation to pay, and the Public Utility District shall pay or cause to be paid (out of any legally available funds of the Public Utility District), all expenses incident to the performance of the Public Utility District's obligations hereunder, including, but not limited to, the cost of preparing and delivering the Refunding Bond Anticipation Notes and the other documents referred to herein to the Bank and the fees and disbursements of Bond Counsel, its 5 DOCSOCA967344v2\22925.0008 General Counsel and any financial advisors, assessment engineering consultants, appraisers, accountants, engineers or any other experts or consultants the Public Utility District retained in connection with the Refunding Bond Anticipation Notes as well as the reasonable fees and expenses of counsel to the Bank; and (b) The Public Utility District shall be under no obligation to pay, and the Bank shall pay, all expenses incurred by the Bank in connection with its purchase of the Refunding Bond Anticipation Notes(except those specifically enumerated in paragraph (a) of this Section). 6. Notices. Any notice or other communication to be given to the Public Utility District under this Purchase Agreement may be given by delivering the same in writing to the Public Utility District's General Manager at the address of the Public Utility District set forth above and any notice or other communication to be given to the Bank under this Purchase Agreement may be given by delivering the same in writing to United States Bank National Association, 1420 Fifth, TD-WA-T91N, Seattle,Washington 98101. 7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the Public Utility District and the Bank(including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. 8. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements of the Public Utility District set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on behalf of the Bank(or statements as to the results of such investigations) concerning such representations and statements of the Public Utility District and regardless of delivery of and payment for the Refunding Bond Anticipation Notes. 9. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Public Utility District and shall be valid and enforceable as of the time of such acceptance. 10. No Prior Agreements. .This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Refunding Bond Anticipation Notes for the Public Utility District. 11, Governing Law. This Purchase Agreement shall be governed by the laws of the State of California. 6 no(SOCA967344v2%22925.0008 12. Counterparts. This Purchase Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Very truly yours, UNITED STATES BANK NATIONAL ASSOCIATION By: Its: ACCEPTED: 2003 TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Its: General Manager 7 DOCSOCt967344v2\12925M08 EXHIBIT A FORM OF BOND COUNSEL OPINION 2003 Board of Directors Truckee Donner Public Utility District Truckee, California Re: Truckee Donner Public Utility District Donner Lake Water Assessment District No. 00-1 Refunding Bond Anticipation Notes, Series 2003 Ladies and Gentlemen: We have examined certified copies of proceedings taken by the Truckee Donner Public Utility District(the "Public Utility District") for the issuance of Notes designated "Truckee Donner Public Utility District Donner Lake Water Assessment District No. 00-1 Refunding Bond Anticipation Notes, Series 2003"in an aggregate amount of$3,000,000 (the"Notes") pursuant to the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of the State of California(the"1915 Act"). The Notes are issued for the purpose of providing the means for paying for the work and improvements described in the Public Utility District's Resolution No. and are issued pursuant to the Public Utility District's Resolution No. _(the"Resolution of Issuance"). This examination covers said proceedings down to and including the issuance of the Notes; however, we have made no examination of the ownership or use of the property assessed. In rendering this opinion, we have relied upon certain representations of fact and certifications made by or on behalf of the Public Utility District, the initial purchaser of the Notes and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us. The Notes are dated their date of delivery and mature on the dates and in the amounts set forth in each Note. The Notes bear interest payable on September 1, 2003, December 1,2003, March 1, 2004 and at maturity, at 66% of the rate designated by United States Bank National Association from time to time as its "Prime Rate." Based upon the foregoing and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The Public Utility District has duly authorized the issuance of the Notes, and the Notes constitute legal, valid and binding limited obligations of the Public Utility District enforceable in accordance with their terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or transfer, insolvency or other laws affecting creditors' rights generally, by the application of equitable principles, or by the exercise of judicial discretion in appropriate cases. A-I DOCSOC967344v222925,0008 2. The Notes are issued upon and secured by the unpaid assessments in the Donner Lake Water Assessment District No. 00-1, together with interest thereon; said unpaid assessments,together with interest thereon, constitute a trust fund for the redemption and payment of the principal of the Notes and the interest thereon; the Notes are secured by the moneys in the Redemption Fund established in the Resolution of Issuance and by the aforesaid unpaid assessments; and the Notes are payable, as to both principal and interest, exclusively out of said Redemption Fund. 1 The Resolution of Issuance creates a valid pledge of and lien upon the unpaid assessments and the interest thereon and the moneys in all funds and accounts established pursuant to the Resolution of Issuance,other than the Administrative Expense Fund, including the investments thereof, subject in all cases to the provisions of the Resolution of Issuance permitting the application thereof for the purposes and on the terms and conditions set forth therein. 4. Under existing statutes,regulations, rulings and judicial decisions,interest on the Notes is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, with respect to corporations, such interest may be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of corporations. 5. Interest on the Notes is exempt from State of California personal income taxes. The opinion expressed in paragraph 4 above as to the exclusion from gross income for federal income tax purposes of interest on the Notes is subject to the condition that the Public Utility District complies with all requirements of the Internal Revenue Code of 1986, as amended(the "Code"), that must be satisfied subsequent to the issuance of the Notes to assure that such interest will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Notes to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Notes. The Public Utility District has covenanted to comply with all such requirements. Except as set forth in paragraphs 4 and 5 above, we express no opinion as to any tax consequences related to the Notes. We are admitted to the practice of law only in the State of California and our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction and express no opinion as to the enforceability of the choice of law provisions contained in the Resolution of Issuance. The opinions expressed herein and the exclusion of interest on the Notes from gross income for federal income tax purposes may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Our engagement as Bond Counsel terminates upon the issuance of the Notes and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken(or not taken) or do occur(or do not occur). The Resolution of Issuance and the Tax Certificate permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the exclusion from gross income of interest on the Notes for federal tax purposes if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. A-2 DOCSOCV967344Q2 22925.0008 The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Resolution and the Notes are subject to bankruptcy,insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California. Respectfully submitted, A-3 DOCSOC,967344v2`22925.0008 RESOLUTION NO. RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF REFUNDING BOND ANTICIPATION NOTES PURSUANT TO THE PROVISIONS OF THE IMPROVEMENT BOND ACT OF 1915 AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH FOR DONNER LAKE WATER ASSESSMENT DISTRICT NO. 00-1 WHEREAS, this Board of Directors has taken proceedings under the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code(the"Code"), for the formation of Donner Lake Water Assessment District No. 00-1 (the"Assessment District") and has confirmed an assessment, which assessment and a related diagram were recorded in the office of the Public Utility District Engineer, acting as the Superintendent of Streets, and with the County Recorders of the County of Nevada and the County of Placer; and WHEREAS, a notice of assessment, as prescribed in Section 3114 of the Code,has been recorded with the County Recorders of the County of Nevada and the County of Placer, whereupon the assessment attached as a lien upon the property assessed within the Assessment District as provided in Section 3115 of the Code; and WHEREAS, said proceedings provided that bonds (which might include a loan from the State of California)would be issued pursuant to the Improvement Bond Act of 1915, Division 10 of the Code to represent and be secured by the unpaid assessments on the parcels within the Assessment District; and WHEREAS, the unpaid assessments upon the security of which such bonds are to be issued are not less than $10,000,000 and bonds are now authorized to be issued in a principal amount not less than said amount in order to provide funds for the acquisition of the Donner Lake Water Company's water system and the acquisition and construction of improvements thereto and costs and expenses incidental thereto and for the reimbursement to the Truckee Donner Public Utility District (the"Public Utility District")of amounts advanced by the Public Utility District in connection with the foregoing (collectively,the"Authorized Expenditures"); and WHEREAS, Sections 8745 et seq. of the Code permit this Board of Directors to borrow money on behalf of the Assessment District to provide Rinds to make Authorized Expenditures through the issuance of bond anticipation notes, and to issue bond anticipation notes to refund such bond anticipation notes, in an aggregate principal amount not exceeding the principal amount of bonds authorized to be issued; and WHEREAS, the Public Utility District has previously issued its Donner bake Water Assessment District No. 00-1 Bond Anticipation Notes, Series 2001 (the "Series 2001 Notes") in an aggregate principal amount of$6,980,000: and 1 DOCSOC'967348v 2\2292 5.0008 WHEREAS, the Public Utility District has previously issued its Donner Lake Water Assessment District No. 00-1 Bond Anticipation Notes, Series 2002 (the"Series 2002 Notes") in an aggregate principal amount of$3,000,000; and WHEREAS,the Public Utility District has previously refunded the Series 2001 Notes in an aggregate principal amount of$6,980,000 by issuing its Truckee Donner Public Utility District Donner Lake Water Assessment District Refunding Bond Anticipation Notes, Series 2002(the "2002 Refunding Notes"); and WHEREAS,this Board of Directors deems it necessary and desirable that the Series 2002 Notes be refunded in a principal amount not to exceed $3,000,000 (the"Notes"); and WHEREAS,there has been presented to this Board of Directors the form of a Purchase Agreement(the "Purchase Agreement') between U.S. Bank National Association (the`Bank")and the Public Utility District pursuant to which the Bank will agree to buy the Notes from the Public Utility District; and WHEREAS, this Board of Directors wishes to approve the Purchase Agreement and to authorize the issuance of the Notes and the sale thereof to the Bank on the terms set forth in the Purchase Agreement and approved hereby; NOW, THEREFORE, the Board of Directors of the Truckee Donner Public Utility District HEREBY FIND, DETERMINE, RESOLVE AND ORDER as follows: SECTION 1. Recitals Correct. The above recitals, and each of them, are true and correct. SECTION 2. Definitions. Unless the context otherwise requires, the following terns shall have the following meanings: "1913 Act" means the Municipal Improvement Act of 1913,being Division 12 (commencing with Section 10000) of the California Streets and Highways Code. "1915 Act' means the Improvement Bond Act of 1915, being Division 10 (commencing with Section 8500) of the California Streets and Highways Code. "Administrative Expense Requirement" means an amount, not in excess of the aggregate maximum annual assessment permitted to be levied within the Assessment District, to be specified each year by the Treasurer to be used for Administrative Expenses. "Administrative Expenses"means the ordinary and necessary fees and expenses for determination of the Assessment and administering the levy and collection of the Assessment and servicing, calling and redeeming the Notes, including any or all of the following: the expenses of the Public Utility District in carrying out its duties hereunder(including, but not limited to, annual audits and costs incurred in the levying and collection of the Assessment) including the fees and expenses of its counsel and all other costs and expenses in any way related to the administration of the Assessment District. "Assessment"or"Assessments"means the special assessments levied in the Assessment District in accordance with the 1913 Act and the Resolution of Intention, together with the net proceeds derived from any foreclosure proceedings and interest and penalties thereon. 2 DOCSOCA967348v2\22925,0008 "Assessment District" means Donner Lake Water Assessment District No. 00-1 of the Public Utility District. "Assessment Installment" means the annual portion of the assessment required to amortize the Notes plus pay the Administrative Expenses placed on the property tax bills of property owners within the Assessment District. "Bank' means U.S. Bank National Association. "Bond Counsel" means an attorney or a firm of attorneys, selected by the Public Utility District, of nationally recognized standing in matters pertaining to the tax treatment of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bond Year"means the one year period or shorter period ending each year on July 3, or such other date as may be specified by the Public Utility District in the Tax Certificate. "Business Day" means any day of the year other than a Saturday, Sunday, a day on which the New York Stock Exchange is closed or any day on which the Public Utility District is not open for business. "Clerk' means the Clerk of the Public Utility District or his or her designee. "Default Rate"means the Bank's Prime Rate. "Interest Payment Date"means the first days of September, 2003, December, 2003 and March, 2004, and the Maturity Date. "Maturity Date"means July 3,2004. "Note"means a Truckee Donner Public Utility District Donner Lake Water Assessment District No. 00-1 Refunding Bond Anticipation Note, Series 2003 issued pursuant to this Resolution. "Note Register"means the books which the Treasurer shall keep or cause to be kept pursuant hereto on which the registration and transfer of the Notes shall be recorded. "Office" means the principal office of the Public Utility District, currently located at 11570 Donner Pass Road, Truckee, California 96160. "Owner" means, with respect to any Note, the person shown as the owner thereof in the Bond Register. "Prime Rate" means the rate of interest from time to time publicly announced by the Bank as its"Prime Rate." The Bank may lend to its customers at rates that are at above or below the Prime Rate. For purposes of determining any interest rate which is based on the Prime Rate such interest rate shall change on the effective date of any change in the Prime Rate. "Public Utility District"means the Truckee Donner Public Utility District. "Tax Certificate"means the Tax Certificate delivered upon the issuance of the Notes. 3 DOCS00969348v2�22925.0008 "Tax:Code" means the Internal Revenue Code of 1986, as amended. "Treasurer' means the Treasurer of the Public Utility District or his or her designee. SECTION 3. Form of Purchase Agreement. The Purchase Agreement is approved in substantially the form presented to this Board of Directors; and the President of the Board of Directors or the General Manager of the Public Utility District is authorized and directed, for and in the name of the Public Utility District and on its behalf, to execute the Purchase Agreement and deliver it to the Bank in substantially the form approved by this Resolution with such changes therein as the President of the Board of Directors or the General Manager may approve as being in the best interests of the Public Utility District, such approval to be conclusively evidenced by his execution and delivery of the Purchase Agreement. SECTION 4. Issuance of Notes. The issuance of the Notes and the sale thereof to the Bank in accordance with the terms of the Purchase Agreement and this Resolution,in such amounts (provided that the aggregate principal amount thereof shall not exceed $3,000,000)and on such dates as the General Manager of the Public Utility District shall determine to be necessary or convenient in order to provide funds with which to pay the Series 2002 Notes, is hereby authorized; and, in connection therewith, the General Manager and each other officer of the Public Utility District is authorized to take any and all actions and to execute and deliver any and all documents as may be necessary or convenient to effect the same. The Notes shall be payable from the sources hereinafter described on a parity with the 2002 Refunding Notes. SECTION 5. Terms of Notes. (a) The Notes shall be designated"Truckee Donner Public Utility District Donner Lake Water Assessment District No. 00-1 Refunding Bond Anticipation Notes, Series 2003" and shall be issued as fully registered Notes, without coupons, in substantially the form attached hereto as Exhibit A in denominations of at least$5,000. The aggregate principal amount of Notes that may be issued and outstanding render this Resolution shall not exceed $3,000,000. (b) Each Note shall be dated as of the date of its issuance, shall mature on the Maturity Date and shall bear interest(calculated on the basis of a 360-day year comprised of twelve 30-day months) at an annual rate equal to 66% of the Bank's Prime Rate. (c) Interest on the Notes shall be payable on each Interest Payment Date. Such interest may be paid, at the option of the Public Utility District, by a check made payable to the Bank or by the delivery to the Bank of additional Notes in a principal amount equal to such interest. (d) The principal of the Notes shall be payable upon presentation and surrender thereof at the Office of the Public Utility District. (e) The Notes are subject to redemption at the option of the Public Utility District,in whole or in part, on any day at a redemption price equal to the principal amount thereof plus interest accrued thereon to the date of redemption. The Public Utility District shall give the Bank notice of such redemption by facsimile transmission at least five days in advance of the proposed redemption date. If such notice of redemption has been duly given and if the amount necessary for the redemption of the Notes to be so redeemed is available for that purpose,then the Notes, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable; 4 DOCSOCA967348v2,22925.0008 and upon presentation and surrender of such Notes at the Office of the Public Utility District,the redemption price of such Notes shall be paid to the Bank; and after the date fixed for redemption, the Notes shall cease to bear further interest. SECTION 6. Execution and Authentication. The Notes shall be signed on behalf of the Public Utility District by the manual or facsimile signature of the Treasurer and by the manual or facsimile signature of the Clerk in their capacity as officers of the Public Utility District, and the seal of the Public Utility District(or a facsimile thereof) shall be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the Clerk. In case any one or more of the officers who shall have signed or sealed any of the Notes shall cease to be such officer before the Notes so signed and sealed have been authenticated and delivered, such Notes shall nevertheless be valid and may be issued as if the person who signed or sealed such Notes had not ceased to hold such office. SECTION 7. Registration Exchange or Transfer. The registration of any Note may, in accordance with its terms,be transferred upon the Note Register by the person in whose name it is registered, in person or by his or her duly authorized attorney,upon surrender of such Note for cancellation at the office of the Public Utility District, accompanied by delivery of a written instrument of transfer in a form acceptable to the Treasurer and duly executed by the Noteowner or his or her duly authorized attorney. SECTION 8. Note Register. The Treasurer will keep or cause to be kept, at the Office of the Public Utility District, sufficient books for the registration and transfer of the Notes; and, upon presentation for such purpose, shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Note Register,Notes as herein provided. The Public Utility District may treat the Owner of any Note whose name appears on the Note Register as the absolute Owner of such Note for any and all purposes, and the Public Utility District shall not be affected by any notice to the contrary. The Public Utility District may rely on the address of the Owner as it appears in the Note Register for any and all purposes. It shall be the duty of the Noteowner to give written notice to the Treasurer of any change in the Owner's address so that the Note Register may be revised accordingly. SECTION 9. Mutilated Lost Destroyed or Stolen Notes. If any Note shall become mutilated, the Public Utility District shall execute and deliver a new Note of like tenor, date, maturity and principal amount in exchange and substitution for the Note so mutilated, but only upon surrender to the Treasurer of the Note so mutilated. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Treasurer; and, if such evidence is satisfactory to the Treasurer and, if indemnity satisfactory to the Public Utility District shall be given,the Public Utility District, at the expense of the Noteowner, shall execute and deliver a new Note of like tenor and maturity, numbered and dated as the Treasurer shall determine in lieu of and in substitution for the Note so lost, destroyed or stolen. Any Note issued in lieu of any Note alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Notes issued hereunder. The Treasurer shall not treat both the original Note and any replacement Note as being outstanding Notes for the purpose of determining the principal amount of Notes which may be executed, authenticated and delivered or for the purpose of determining any percentage of Notes outstanding hereunder, but both the original and replacement Note shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Note to replace a Note which has been mutilated, lost, destroyed or stolen, and which has matured or is about 5 D0CS0C\967348v2%22925.0008 f to mature,the Treasurer may make payment with respect to such Note upon receipt of indemnity satisfactory to it and the Public Utility District. 1, SECTION 10. Funds and Accounts. There have been previously created and established the and accounts the Public Utility District agrees and following funds and accounts, which fiords covenants to maintain so long as any Notes are Outstanding hereunder. All moneys in such funds f and accounts shall be accounted for separately and apart from all other accounts, funds,money or other resources of the Public Utility District and shall be allocated, applied and disbursed solely to c the uses and purposes hereinafter set forth herein. F (a) the Donner Lake Water Assessment District No. 00-1 Improvement Fund(the "Improvement Fund"); (b) the Donner Lake Water Assessment District No. 00-1 Assessment Fund(the "Assessment Fund"); (c) the Donner Lake Water Assessment District No. 00-1 Administrative Expense Fund (the"Administrative Expense Fund"); and (d) the Assessment District No. 00-1 Redemption Fund (the "Redemption Fund"), in which there shall be established and created a Principal Account, an Interest Account and a Prepayment Account. The Treasurer may establish such additional funds, accounts or subaccounts of the funds or accounts listed above as he or she deems necessary or prudent to further his or her duties pursuant to this Resolution. SECTION 11. Application of Note Proceeds. The Treasurer shall transfer the proceeds received for the sale of the Notes to the Series 2002 Redemption Fund for immediate application to the payment of the outstanding Series 2002 Notes. SECTION 12. Assessment Fund. Upon receipt of moneys constituting Assessment Installments,the Treasurer shall deposit such moneys into the Assessment Fund. On or prior to each Interest Payment Date,the Treasurer shall transfer moneys on deposit in the Assessment Fund in the amounts set forth in the following Sections, in the following order of priority, to: (a) the Administrative Expense Fund, an amount sufficient to make the amount therein equal to the Administrative Expense Requirement; (b) the Interest Account of the Redemption Fund, an amount sufficient to make the Interest Payment on the next succeeding Interest Payment Date for the Notes; and (e) the Principal Account of the Redemption Fund,the remaining amount, if any. Fetid. Amounts on deposit in the Administrative SECTION 13. Administrative Fxpense Expense Fund shall be applied by the Treasurer to the payment of Administrative Expenses. SECTION 14. Redemption Fund. The principal of and interest on the Notes shall be paid from the Redemption Fund. Moneys in the Interest Account shall be used for the payment of interest on the Notes as the same becomes due. Moneys in the Principal Account shall be used for the 6 D0CS0C7967348v2 22925.0008 i payment of the principal of the Notes on or before the Maturity Date. At the maturity of the Notes, and after all principal and interest then due on any outstanding Notes has been paid or provided for, moneys in the Redemption Fund shall be transferred to the Assessment Fund. i SECTION 15. PrepaLment Account Prepayments. Moneys set aside in the Prepayment s Account shall be used solely for the purpose of redeeming Notes and shall be applied on the s applicable redemption date to the payment of principal of the Notes to be redeemed upon presentation and surrender of such Notes. F Upon receiving any prepayment of an Assessment, the Treasurer shall deposit that portion, if any, of the prepayment representing accrued interest owing on the Notes to the Interest Account of the Redemption Fund. The remaining portion of the prepayment is to be retained in the Prepayment the next date for which proper notice of redemption Account and shall be used to redeem Notes on can be given. SECTION 16. Covenants. So long as any of the Notes are Outstanding and unpaid, the Public Utility District makes the following covenants with the Owners under the provisions of the 1913 Act,the 1915 Act and this Resolution(to be performed by the Public Utility District or its sary, convenient and desirable to proper officers, agents or employees),which covenants are neces secure the Notes and tend to make them more marketable; provided, however, that said covenants do not require the Public Utility District to expend any funds or moneys other than the Assessments: (a) Punctual Payment; Covenant Against Encumbrances. The Public Utility District covenants that it will receive all Assessment Installments in trust and will, consistent with the provisions hereof, deposit the Assessment Installments in the Redemption Fund, and the Public Utility District shall have no beneficial right or interest in the amounts so deposited except as provided by this Resolution. All such Assessment Installments shall be disbursed, allocated and applied solely to the uses and purposes herein set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the Public Utility District. The Public Utility District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Note issued hereunder on the date, at the place and in the manner set forth in the Notes and in accordance with this Resolution to the extent Assessments and interest earnings transferred to the Redemption Fund are available therefor,and that the payments into the Redemption Fund will be made, all in strict conformity with the terms of the Notes and this Resolution, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and of the Notes issued hereunder. The Public Utility District will not mortgage or otherwise encumber,pledge or place any charge upon any of the Assessment Installments, and will not issue any obligation or security superior to the Notes,payable in whole or in part from the Unpaid Assessments. (b) Issuance of Obligations to Pay Notes. If sufficient Assessment Installments or other moneys are not legally available therefor, the Public Utility District shall issue notes,bonds or other evidences of indebtedness, payable from Assessment Installments, at a time and in an amount sufficient, together with other moneys as are available therefor to pay the principal of and interest on the Notes on or before the Maturity Date. The Public Utility District shall use the proceeds of any such notes, bonds or other evidences of indebtedness to pay the Notes. 7 DOCSOC907348v2,22925.0008 S Y } (c) Books and Accounts. The Public Utility District will keep proper books of record and accounts, separate from all other records and accounts of the Public Utility District,in which complete and correct entries shall be made of all transactions made by its Treasurer hereunder. Such c books of record and accounts shall at all times during business hours and upon reasonable prior r notice be subject to the inspection of the Owners of not less than ten percent(10%) of the principal amount of the Notes then outstanding or their representatives authorized in writing. (d) Tax Covenants. Notwithstanding any other provision of this Resolution, absent an f opinion of Bond Counsel that the exclusion from gross income of interest on the Notes will not be adversely affected for federal income tax purposes by reason of the Public Utility District's failure to comply with all applicable requirements of the Tax do so,the Public Utility District covenants to Code, necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows: Private Activity. The Public Utility District will not take or omit to take any action or make any use of the proceeds of the Notes or of any other moneys or property which would cause the Notes to be"private activity bonds" within the meaning of Section 141 of the Tax Code. Arbitrage. The Public Utility District will make no use of the proceeds of the Notes or of any other amounts or property,regardless of the source, or take or omit to take any action which would cause the Notes to be"arbitrage bonds" within the meaning of Section 148 of the Tax Code. Federal Guarantee. The Public Utility District will make no use of the proceeds of the Notes or take or omit to take any action that would cause the Notes to be"federally guaranteed" within the meaning of Section 149(b) of the Tax Code. Information Reporting. The Public Utility District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Tax Code. Miscellaneous. The Public Utility District will take no action inconsistent with its expectations stated in the Tax Certificate and will comply with the covenants and requirements stated therein and incorporated by reference herein. Without limiting the generality of the foregoing, the Public Utility District agrees that there shall be paid from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Tax Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Notes from time to time, In particular, the Public Utility District shall pay to the United States Treasury, (X) Not later than 60 days after the end of(A)the fifth Bond Year, and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebate Requirement calculated as of the end of such Bond Year; and (Y) Not later than 60 days after the payment of all the Notes, an amount equal to 100% of the Rebate Requirement calculated as of the end of such applicable Bond Year, computed in accordance with Section 148(f) of the Code. This covenant shall survive payment in full or defeasance of the Notes. 8 DocsoCI�)67348v2v229'5M008 SECTION 17. Collection of the Administrative Ex ense Re uirements The Public Utility District covenants that it will collect annually an amount specified by the Treasurer to be the Administrative Expense Requirement,which amount will be expressed as a percentage of the annual ' nses. The Administrative Expense levy of Assessment Installments,to pay for Administrative Expe Requirement so collected shall not exceed the amount specified in the Engineer's Report. SECTION 18. Event of Default. Any one or more of the following events shall constitute an "event of default": i s (a) Default in the due and punctual payment of the principal of any Note when and as the # same shall become due and payable; I (b) Default in the due and punctual payment of the interest on any Note when and as the same shall become due and payable; or (c) Default by the Public Utility District in the observance of any of the agreements, olution or in the Notes contained, and the continuation conditions or covenants on its part in this Res of such default for a period of thirty (30) days after the Public Utility District shall have been given er,provided that if within thirty (30) days the Public notice in writing of such default by any Own default and diligently pursues elimination thereof, such Utility District has commenced curing of the period shall be extended to permit such default to be eliminated. SECTION 19. Remedies of Owners. Following the occurrence of an event of default, any fit and protection of all Owners similarly situated: Owner shall have the right for the equal bene (a) By mandamus or other suit or proceeding at law or in equity to enforce his or her rights against the Public Utility District and any of the members, officers and employees of the Public Utility District, and to compel the Public Utility District or any such members,officers or employees to perform and carry out their duties under the 1913 Act or the 1915 Act and their agreements with the Owners as provided in this Resolution; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (c) By a suit in equity to require the Public Utility District and its members, officers and employees to account as the trustee of an express trust. Nothing in this Resolution, or in the Notes, shall affect or impair the obligation of the Public Utility District, which is absolute and unconditional,to pay the interest on and principal of the Notes to the respective owners of the Notes at the Maturity Date, as herein provided, out of the Assessments pledged for such payment, or affect or impair the right of action,which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Notes and in this Resolution. A waiver of any default of breach of duty or contract by any Owner shall not affect any ntract, or impair any rights or remedies on any such subsequent default or breach of duty or co subsequent default or breach. No delay or omission by any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners 9 uocSoc,9(,7348v2�22925.0008 { by the 1913 Act or the 1915 Act or by this Resolution may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the Public Utility District and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the 1913 Act, the 1915 Act or any other law. SECTION 20. Provisions Constitute Contract Successors. The provisions of this Resolution shall constitute a contract between the Public Utility District and the Noteowners and the provisions hereof shall be construed in accordance with the laws of the State of California. SECTION 21. Further Assurances-, Incontestability. The Public Utility District will 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 Resolution, and for the better assuring and confirming unto the Owners of the Notes of the rights and benefits provided in this Resolution. After the sale and delivery of the Notes by the Public Utility District,the Notes shall be incontestable by the Public Utility District. SECTION 22. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Resolution, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable,the remainder of this Resolution and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Resolution and the Notes shall remain valid and the Noteowners shall retain all valid rights and benefits accorded to them under the laws of the State of California. SECTION 23. General Authorization. The officers of the Public Utility District(including, but not limited to the General Manager, the Clerk, and the Treasurer) are hereby respectively authorized to do and perform from time to time any and all acts and things consistent with this Resolution necessary or appropriate to carry the same into effect. SECTION 24. Liberal Construction. This Resolution shall be liberally construed to the end that its purpose may be effected. No error, irregularity, informality and no neglect or omission herein or in any proceeding had pursuant hereto which does not directly affect the jurisdiction of the Public Utility District Board of Directors shall void or invalidate this Resolution or such proceeding or any part thereof, or any act or determination made pursuant thereto. SECTION 25. Notice. Any notices required to be given to the Public Utility District with respect to the Notes for this Resolution shall be mailed, first class, or personally delivered to the General Manger at Truckee Donner Public Utility District, 11570 Donner Pass Road, Truckee, California 96160, and all notices to the Bank shall be mailed, first class, or personally delivered to the Bank at U.S. Bank National Association, 1420 Fifth, TD-WA-T91N, Seattle, Washington 98101. 10 DOCSOC967348v2\22925,0008 } f SECTION 26. Action on Next Business Day. If the date for making any payment or the last s date for performance of any act or the exercising of any right, as provided in this Resolution, is not a Business Day, such payment, with no interest accruing for the period from and after such nominal date,may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided therefore in this Resolution. ADOPTED and APPROVED by the Board of Directors of the Truckee Donner Public Utility c District on May 21, 2003. ; TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: President of the Board of Directors ATTEST: Clerk of the Board of Directors I1 D0CS0C\967348v2\22925,0009 EXHIBIT A [FORM OF FACE OF NOTE] 4 UNITED STATES OF AMERICA I STATE OF CALIFORNIA x NUMBER TRUCKEE DONNER PUBLIC UTILITY DISTRICT s DONNER LAKE WATER ASSESSMENT DISTRICT NO. 00-1 REFUNDING BOND ANTICIPATION NOTE, SERIES 2003 MATURITY ISSUANCE DATE DATE July 3, 2004 -- REGISTERED OWNER: DOLLARS PRINCIPAL AMOUNT: Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the California Streets and Highways Code(the"Act")and Resolution No. _ (the"Resolution of Issuance") adopted by the Board of Directors of the Truckee Donner Public Utility District(the "Public Utility District') on the 21" day of May, 2003,the Public Utility District will, out of the redemption fund for the payment of the Notes issued upon the unpaid portion of assessments made for the acquisition, work, and improvements more fully described in proceedings taken pursuant to Resolution No. 2001-04 (the "Resolution of Intention") adopted by the of the Public Utility District on the 12th day of February,2001,pay to the registered owner named above, on the Maturity Date indicated above,the principal sum stated above in lawful money of the United States of America, all as provided for in the Resolution of Issuance. In like manner,the Public Utility District will pay interest on this Note at the Prime Rate(as defined in the Resolution of Issuance) of U.S.Bank National Association on the first days of September, 2003, December,2003 and March, 2004, and on the Maturity Date set forth above. The principal hereof is payable at the Office of the Public Utility District, and the interest hereon is payable by check mailed by first class mail,postage prepaid to the owner hereof at the owners address as it appears on the records of the Treasurer of the Public Utility District or, at the option of the Public Utility District, by the issuance of additional Notes and the delivery thereof to the Bank. This Note will bear interest after maturity at the Default Rate (as defined in the Resolution of Issuance)provided it is presented at maturity and payment hereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay the same. THE PUBLIC UTILITY DISTRICT HAS DECLARED AND DETERMINED IN THE RESOLUTION OF INTENTION THAT,PURSUANT TO SECTION 8769 OF THE A-1 DOCSOCA967348v2122925.0008 s>' t_ IMPROVEMENT BOND ACT OF 1915,IT WILL NOT OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS FROM THE PUBLIC UTILITY DISTRICT TREASURY TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE PUBLIC i UTILITY DISTRICT, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION : THEREOF IS PLEDGED TO THE PAYMENT OF THE NOTES. THE NOTES ARE SPECIAL OBLIGATIONS OF THE PUBLIC UTILITY DISTRICT PAYABLE SOLELY FROM THE g SOURCES DESCRIBED IN THE RESOLUTION OF ISSUANCE. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF FULLY SET FORTH AT THIS PLACE. IN WITNESS WHEREOF,the Truckee Donner Public Utility District has caused this Note to be signed in facsimile by its Treasurer of said Public Utility District and attested to by its Clerk, and has caused its corporate seal to be reproduced in facsimile hereon, all as of the date set forth hereinabove. TRUCKEE DONNER PUBLIC UTILITY DISTRICT [SEAL] Treasurer ATTEST: Clerk A-2 DOCSOC961343v2\22925.0008 [FORM OF BACK OF NOTE] This Note is one of several Notes issued by the Public Utility District under the Act and the Resolution of Issuance for the purpose of providing means for paying for the improvements described in the proceedings; and it is secured by the moneys in the redemption fund and by the the payment of those improvements, and, including unpaid portion of certain assessments made for principal and interest, is payable exclusively out of said fund. or This Note or any portion of it may be redeemed and paid in dance at least five daysn ohueebY s in part, at the option of the Public Utility District,on any date, by giving s r hereof at the owner's address as it appears on e facsimile transmission to the registered owne registration books of the Treasurer of the Public Utility District, at the principal amount called for redemption together with accrued interest to the date of redemption. This Note is transferable by the registered owner hereof, in person or by the owner's attorney duly authorized in writing, at the office of the Treasurer of the Public Utility District, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Note. Upon such transfer a new registered Note or Notes of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. Notes shall be registered only in the name of an individual (including joint owners), a corporation, a partnership, or a trust. The Public Utility District and its Treasurer may treat the owner hereof, as shown on the Note register kept by its Treasurer, as the absolute owner for all purposes; and the Public Utility District shall not be affected by any notice to the contrary. The Resolution of Issuance is incorporated by reference herein and by acceptance hereof the registered owner assents to said terms and conditions. [FORM OF ASSIGNMENT] ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto TAX I.D. #: the within Note and doe(es)hereby irrevocably constitute and appoint attorney to transfer the same on the Note Register with full power of substitution in the premises. Date: SIGNATURE GUARANTEED: NOTE: The signature(s)to this Assignment must correspond with the name(s) as written on the face of the within Note in every particular, without alteration or enlargement or the signature(s) must be guaranteed by an eligible any change whatsoever and guarantor. A-3 DOCSOCA967348v2\22925 0008