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Agenda Item #
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Memorandum
To: Board of Directors
From: Peter Holzmeister
Date: February 28, 2003
Subject: Approval of Certificate of Paticipation issue
1. WHY THIS MATTER IS BEFORE THE BOARD
This matter involves adoption of a resolution approving issuance of Certificates of Participation
to fund the IDACORP Energy settlement agreement. Only the Board can adopt a resolution and
only the Board can authorize debt in the amount of$26 Million.
2. HISTORY
The Board has been discussing this matter for several months now. The District entered into an
agreement with IDACORP Energy Inc to terminate the power supply contract. As part of that
settlement agreement, we are required to pay $26 Million to IDACORP Energy by April 4, 2003.
We have decided to fund that obligation by issuing Certificates of Participation. We retained the
services of bond counsel, a financial advisor, and an underwriter to help develop the COP issue.
3. NEW INFORMATION
Attached is a resolution for your consideration. The resolution adopts by reference key
documents that implement the COP issue. Those documents are an Installment Purchase
Agreement, a Trust Agreement, a Purchase Contract, a Preliminary Official Statement and a
Continuing Disclosure Agreement. These documents are also attached for your review.
A COP is very much like a bond. However, a COP involves a relationship with the Truckee
Donner Public Utility District Financing Corporation, so that organization will also meet and
adopt a set of documents. These documents are very similar to documents adopted by the
Board to issue our previous COPs. They are very legalistic, prepared by people whose
expertise is in issuing COPs.
We will have consultants attend the meeting on March 5 to describe what these various
documents do.
4. RECOMMENDATION
I recommend that the Board adopt the resolution authorizing the execution and delivery of an
Installment Purchase Agreement and a Trust Agreement and certain other actions in connection
therewith.
Stradling Yocca Carlson & Ranth
Draft of 02/18/03
RESOLUTION NO. _
OF THE
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
A RESOLUTION OF THE BOARD OF DIRECTORS
AUTHORIZING THE EXECUTION AND DELIVERY OF AN
INSTALLMENT PURCHASE AGREEMENT AND A TRUST AGREEMENT
AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Truckee-Donner Public Utility District, a public utility district duly
organized and existing under and pursuant to the Constitution and laws of the State of California
(the "District"), including the Public Utility District Act, Section 15501 et seq. of the Public
Utilities Code of the State of California (the "Public Utilities Code") is authorized under
provisions of the Constitution and laws of the State of California, including without limitation,
Section 16431 of the Public Utilities Code, to dispose of and acquire certain equipment and
facilities as the District may determine is necessary or proper;
WHEREAS, the District has previously entered into a certain $26 million settlement
obligation of the District owing to Idacorp Energy L.P. (`°Idacorp"), as evidenced by that certain
promissory note of the District issued to Idacorp dated January 3, 2003 (the "Settlement
Obligation"), and proposes to refinance the Settlement Obligation by authorizing and directing
the execution and delivery of certificates of participation (the "Certificates") evidencing
fractional interests in the installment payments to be made by the District to the Truckee-Donner
Public Utility District Financing Corporation (the "Corporation") under the Installment Purchase
Agreement described below;
WHEREAS, in the judgment of this Board it is for the best interest of the District to enter
into the Installment Purchase Agreement described below in order to refinance the Settlement
Obligation;
WHEREAS, by prior action, the Board approved forms of the Installment Purchase
Agreement and Trust Agreement described below and took other actions related to the execution
and delivery of the Certificates;
WHEREAS, revised forms of such Installment Purchase Agreement and Trust
Agreement are now presented to this Board for approval;
WHEREAS, a majority of the Board of Directors of the District (the "Board")
constituting a quorum for the transaction of business, is present, as required by Section 16071 of
the Public Utilities Code; and
WHEREAS, all acts, conditions and things required by the Constitution and law of the
State of California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the financing authorized hereby do exist, have happened
and have been performed in regular and due time, form, and manner as required by law, and the
District is now duly authorized and empowered, pursuant to each and every requirement of law,
DocssF136125Q\22925.0000
to consummate such financing for the purpose, in the manner and upon the terms herein
provided;
NOW, THEREFORE the Board of Directors of the Truckee-Donner Public Utility
District does hereby resolve as follows:
Section 1. Installment Purchase Agreement. The form of Installment Purchase
Agreement, dated as of March 1, 2003, between the District and the Truckee-Donner Public
Utility District Financing Corporation (the "Corporation"), presented to this meeting and on file
with the Clerk of the Board of the District, is hereby approved. In accordance with Section
16033 of the Public Utilities Code, the President of the Board (the "President") is hereby
authorized and directed, for and in the name and on behalf of the District, to sign the Installment
Purchase Agreement, and in accordance with Section 16115 of the Public Utilities Code, the
Clerk of the District (the "Clerk") is hereby authorized to countersign the Installment Purchase
Agreement, and both the President and the Clerk are hereby authorized and directed to deliver to
the Corporation the Installment Purchase Agreement in substantially said form, with such
changes therein as the President may require or approve, such approval to be conclusively
evidenced by the execution and delivery thereof.
Section 2. Trust Agreement. The form of Trust Agreement, dated as of March 1, 2003,
among the District, the Corporation and the trustee named therein (the "Trustee"), presented to
this meeting and on file with the Clerk, is hereby approved. In accordance with Section 16033 of
the Public Utilities Code, the President is hereby authorized and directed, for and in the name
and on behalf of the District, to sign the Trust Agreement, and in accordance with Section 16115
of the Public Utilities Code, the Clerk is authorized and directed to countersign the Trust
Agreement, and both the President and the Clerk are hereby authorized and directed to deliver to
the Corporation and the Trustee the Trust Agreement in substantially said form, with such
changes therein as the President may require or approve, such approval to be conclusively
evidenced by the execution and delivery thereof.
Section 3. Certificates. The Corporation is hereby directed to execute and deliver the
Certificates, in the form and pursuant to the provisions of, the above-described Trust Agreement.
Section 4. Purchase Contract. The Purchase Contract, in substantially the form on file
with the District and, upon execution as authorized below, be and the same is hereby approved.
The General Manager is hereby authorized and directed to execute and deliver the Purchase
Contract with such changes, insertions and omissions as may be approved by the General
Manager, said execution being conclusive evidence of such approval; provided, however, that in
no event shall the principal amount of the Certificates exceed S30,000,000 (except such principal
amount may be increased to provide original issue discount), nor shall the underwriter's discount
(not including original issue discount) exceed 1.0% nor shall the net interest cost of the
Certificates exceed 8%per annum.
Section 5. Preliminary Official Statement. The preparation and distribution of the
Preliminary Official Statement, in the form on file with the District, be and the same is hereby
approved. The General Manager is hereby authorized to sign a certificate pursuant to Rule 15c2-
12 promulgated under the Securities Exchange Act of 1934 relating to the Preliminary Official
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Statement and the President, Vice-President or General Manager is hereby authorized and
directed to execute, approve and deliver the final Official Statement in the form of the
Preliminary Official Statement which, upon execution as authorized below, with such changes,
insertions and omissions as the officer executing said document may require or approve, such
approval to be conclusively evidenced by the execution and delivery thereof. Bear, Stearns &
Co. Inc. is hereby authorized to distribute copies of said Preliminary Official Statement to
persons who may be interested in the initial purchase of the Certificates and is directed to deliver
copies of any final Official Statement to all actual initial purchasers of the Certificates.
Section 6. Continuing Disclosure Agreement. The Continuing Disclosure Agreement in
substantially the form on file with the District and, upon execution as authorized below, be and
the same is hereby approved. The President, Vice-President or General Manager are hereby
authorized and directed to execute and deliver the Continuing Disclosure Agreement with such
changes, insertions and omissions as may be approved by the officer executing the same, said
execution being conclusive evidence of such approval.
Section 7. Attestations. The Clerk is hereby authorized and directed to attest the
signature of the President, Vice President or General Manager, if necessary, and to affix and
attest the seal of the District, as may be required or appropriate in connection with the execution
and delivery of the Installment Purchase Agreement and the Trust Agreement,
Section 8. Other Actions. The President, the Vice-President, the General Manager, the
Clerk and any other proper officer of the District are hereby authorized and directed to do any
and all things and to execute and deliver, and the Clerk is hereby authorized and directed to do
any and all things and to countersign, any and all documents which they may deem necessary or
advisable in order to consummate the sale, execution and delivery of the Certificates by the
Trustee and otherwise to carry out, give effect to and comply with the terms and intent of this
resolution, the Certificates, the Purchase Contract, the Continuing Disclosure Agreement, the
Installment Purchase Agreement and the Trust Agreement. Such actions heretofore taken by
such officers are hereby ratified, confirmed and approved.
Section 9. Settlement Obligation. The General Manager is directed to take actions
necessary to cause a portion of the proceeds of the Certificates to be used to refinance and satisfy
the Settlement Obligation.
Section 10. Effective Date. This resolution shall take effect immediately upon its
adoption.
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PASSED AND ADOPTED this 5`h day of March, 2003 by the following majority vote of
the Board, as required by Section 16072 of the Public Utilities Code:
AYES:
NOES:
ABSENT:
TRUCKEE-DONNER PUBLIC UTILITY
DISTRICT
By
President
ATTEST:
District Clerk
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Stradling Yocca Carlson & Rauth
Draft of 02/18/03
INSTALLMENT PURCHASE AGREEMENT
by and between
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
and
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION
Dated as of March 1, 2003
relating to
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2003A
AND TAXABLE SERIES 2003B
DOCSSF\35477v7A22925.0006
INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT, made and entered into as of March I,
2003 by and between IRUCKEE-DONNER PUBLIC UTILITY DISTRICT, a public utility district
duly organized and existing under and by virtue of the laws of the State of California (the"District'),
and TRUCKEE-DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION, a
nonprofit public benefit corporation duly organized and existing under and by virtue of the laws of
the State of California (the"Corporation").
WITNESSETH:
WHEREAS, the District proposes to refinance a certain settlement obligation of the District
owing to Idaeorp Energy L.P. in the amount of$26 million (the "Settlement Obligation");
WHEREAS, the Corporation has agreed to assist the District in refinancing the Settlement
Obligation;
WHEREAS, the District is authorized by Division 7 of the Public Utilities Code of the State
of California, including but not limited to Section 16431 to dispose of and acquire property;
WHEREAS, the District and the Corporation propose to provide for the refinancing of the
Settlement Obligation by entering into this Installment Purchase Agreement and authorizing and
directing the execution and delivery of certificates of participation evidencing fractional interests in
the installment payments to be made by the District to the Corporation hereunder;
WHEREAS, the District and the Corporation have duly authorized the execution of this
Agreement;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to
have been performed precedent to and in connection with the execution and delivery of this
Installment Purchase Agreement do exist, have happened and have been performed in regular and
due time, forin and manner as required by law, and the parties hereto are now duly authorized to
execute and enter into this Installment Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
ARTICLE I
DEFINITIONS
Section LI. Definitions. Unless the context otherwise requires, the terms defined in this
section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any
report or other document mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the
terms defined herein. Unless the context otherwise requires, all capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the Trust Agreement.
DOCSSR35477v7A22925.0006
Accountant's Report
The term "Accountant's Report" means a report signed by an Independent Certified Public
Accountant.
Adjusted Revenues
The tern "Adjusted Revenues" mean, for any Fiscal Year, the Revenues during such Fiscal
Year, less, for purposes of determining compliance with Section 6.13 and conditions for the
execution of Bonds or Contracts, any Payment Agreement Receipts taken into account in calculating
Debt Service pursuant to the definition thereof, plus, for the purposes of determining compliance
with Section 6.13 hereof only, the amounts which the District has authorized to be deposited in the
Revenue Fund from the Rate Stabilization Fund as of the one hundredth day following the end of
such Fiscal Year or twelve month period to pay Operation and Maintenance Costs and/or Debt
Service.
Adjusted Net Revenues
The term "Adjusted Net Revenues" means, for any Fiscal Year, the Adjusted Revenues for
such Fiscal Year less Operation and Maintenance Costs for such Fiscal Year.
Agreement
The term "Agreement" means this Agreement, by and between the District and the
Corporation, dated as of March 1, 2003, as originally executed and as it may from time to time be
amended or supplemented in accordance herewith.
Assumed RBI-based Rate
The term "Assumed RBI-based Rate" means, as of any date of calculation, an assumed
interest rate equal to ninety percent (90%) of the average RBI during the twelve (12) calendar months
immediately preceding the month in which the calculation is made.
Bonds
The term "Bonds" means all bonds, notes or similar obligations (but not including Contracts)
of the District, the principal of and interest on which are payable from Net Revenues on a parity with
the Installment Payments.
Business Dav
The term"Business Day" means a day other than: a Saturday or Sunday or a day on which (i)
banks located in the city in which the principal corporate trust office of the Trustee is located are not
required or authorized to remain closed, and (ii) on which The New York Stock Exchange is not
closed.
Certificates
The term "Certificates' means the $ _ aggregate principal amount of Truckee-
Donner Public Utility District Revenue Certificates of Participation, Series 2003A and Taxable
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Series 2003B, executed and delivered on behalf of the District and at any time Outstanding pursuant
to the Trust Agreement.
Continuing Disclosure Agreement
The term "Continuing Disclosure Agreement" shall mean that certain Continuing Disclosure
Agreement between the District and the dissemination agent named therein dated the date of
execution and delivery of the Certificates, as originally executed and as it may be amended from time
to time in accordance with the terms thereof.
Contracts
The tern "Contracts" means this Installment Purchase Agreement and all contracts of the
District the Parity Installment Payments under which are payable from Net Revenues on a parity with
the obligations of the District to make payments under this Agreement excluding contracts entered
into for operation and maintenance of the Electric System.
Corporation
The term "Corporation" means the Truckee-Donner Public Utility District Financing
Corporation, a nonprofit public benefit corporation duly organized and existing under and by virtue
of the laws of the State of California.
Date of Operation
The term "Date of Operation" means, with respect to any uncompleted component Parity
Project, the estimated date by which such uncompleted component Parity Project will have been
completed and, in the opinion of an engineer, will be ready for operation by or on behalf of the
District.
Debt Service
The tern "Debt Service"means, for any Fiscal Year, the sum of:
(1) the interest on all outstanding Bonds, payable during such Fiscal Year (except to the
extent that such interest is capitalized);
(2) that portion of the principal amounts of all outstanding serial Bonds maturing in such
Fiscal Year;
(3) that portion of the principal amounts of all outstanding term Bonds required to be
prepaid or paid in such Fiscal Year; and
(4) that portion of the Parity Installment Payments required to be made during such
Fiscal Year (except to the extent the interest evidenced and represented thereby is
capitalized);
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provided that, as to any such Bonds or Parity Installment Payments bearing or comprising interest at
other than a fixed rate, the rate of interest used to calculate Debt Service shall,for all purposes, be
assumed to bear interest at a fixed rate equal to the higher of
Of the actual rate on the date of calculation, or if the Bonds or Parity Installment
Payments are not yet outstanding, the initial rate (if established and binding),
(ii) if the Bonds or Parity Installment Payments have been outstanding for at least
twelve months, the average rate over the twelve months immediately
preceding the date of calculation, and
(iii) (I) if interest on the Bonds or Parity Installment Payments is excludable from
gross income under the applicable provisions of the Code, the most recently
published Bond Buyer 25 Bond Revenue Index (or comparable index if no
longer published) plus fifty (50) basis points, or (2)if interest is not so
excludable, the interest rate on direct United States Treasury obligations with
comparable maturities plus fifty (50) basis points;
and provided further that if any series or issue of such Bonds or Parity Installment Payments have
twenty-five percent (25%) or more of the aggregate principal amount of such series or issue due in
any one year, Debt Service shall be determined for the Fiscal Year of determination as if the
principal of and interest on such series or issue of such Bonds or Parity Installment Payments were
being paid from the date of incurrence thereof in substantially equal annual amounts over a period of
thirty (30) years from the date of calculation;
and provided further that, as to any such Bonds or Parity Installment Payments or portions thereof
bearing no interest but which are sold at a discount and which discount accretes with respect to such
Bonds or Parity Installment Payments or portions thereof, such accreted discount shall be treated as
interest in the calculation of Debt Service;
and provided further that the amount on deposit in a debt service reserve fund on any date of
calculation of Debt Service shall be deducted from the amount of principal due at the final maturity
of the Bonds and Contracts for which such debt service reserve find was established and in each
preceding year until such amount is exhausted;
and provided further that Debt Service shall be reduced by an amount equal to earnings on any
reserve fund (including the Reserve Fund) transferred to the corresponding debt service find
(including the Interest Fund created under the Trust Agreement);
and provided further that the amount of interest deemed to be payable on or with respect to any
Contract or Bond with respect to which a Payment Agreement is in force shall, so long as the
Qualified Counterparty thereto is not in default thereunder, be based on the net economic effect on
the District expected to be produced by the terms of such Contract or Bond and such Payment
Agreement, including but not limited to the effects that(i) such Contract or Bond would, but for such
Payment Agreement, be treated as an obligation bearing interest at a Variable Interest Rate instead
shall be treated as an obligation bearing interest at a fixed interest rate, and (ii) such Contract or Bond
would, but for such Payment Agreement, be treated as an obligation bearing interest at a fixed
interest rate instead shall be treated as an obligation bearing interest at a Variable Interest Rate; and
accordingly, the amount of interest deemed to be payable on any Contract or Bond with respect to
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which a Payment Agreement is in force shall, so long as the Qualified Counterparty thereto is not in
default thereunder, be an amount equal to the amount of interest that would be payable at the rate or
rates stated in such Contract or Bond plus the Payment Agreement Payments minus the Payment
Agreement Receipts, and for the purpose of calculating Payment Agreement Receipts and Payment
Agreement Payments under such Payment Agreement, the following assumptions shall be made:
(1) Counterparty Obligated to Pay Actual Variable Interest Rate on Variable
Interest Rate Parity Obligations. If the Payment Agreement obligates a Qualified
Counterparty to make payments to the District on the actual Variable Interest Rate on a
Contract or Bond that would, but for the Payment Agreement, be treated as a Variable
Interest Rate Parity Obligation and obligates the District to make payments to the Qualified
Counterparty based on a fixed rate, payment by the District to the Qualified Counterparty
shall be assumed to be made at the fixed rate specified by the Payment Agreement and
payments by the Qualified Counterparty to the District shall be assumed to be made at the
actual Variable Interest Rate on such Contract or Bond, without regard to the occurrence of
any event that, under the provisions of the Payment Agreement, would permit the Qualified
Counterparty to make payments on any basis other than the actual Variable Interest Rate on
such Contract or Bond, and such Contract or Bond shall set forth a debt service schedule
based on that assumption;
(2) Variable Interest Rate Parity Obligations and Payment Agreements Having
the Same Variable Interest Rate Component. If both a Payment Agreement and the related
Contract or Bond that would, but for the Payment Agreement, be treated as a Variable
Interest Rate Parity Obligation include a variable interest rate payment component that is
required to be calculated on the same basis (including, without limitation, on the basis of the
same variable interest rate index), it shall be assumed that the variable interest rate payment
component payable pursuant to the Payment Agreement is equal in amount to the variable
interest rate component payable on such Contract or Bond;
(3) Variable Interest Rate Parity Obligations and Payment Agreements Having
the Different Variable Interest Rate Component. If a Payment Agreement obligates either the
District or the Qualified Counterparty to make payments of a variable interest rate payment
component on a basis different (including, without limitation, on a different variable interest
rate index), from the basis that is required to be used to calculate interest on the Contract or
Bond that would, but for the Payment Agreement, be treated as a Variable Interest Rate
Parity Obligation it shall be assumed:
(a) District Obligated to Make Payments Based on Variable Interest Rate
Index. If payments by the District under the Payment Agreement are based on a
variable interest rate index and payments by the Qualified Counterparty are based on
a fixed interest rate, payments by the District to the Qualified Counterparty will be
based upon an interest rate equal to the Assumed RBI-based Rate, and payments by
the Qualified Counterparty, to the District will be based on the fixed rate specified by
the Payment Agreement; and
(b) District Obligated to Make Payments Based on Fixed Interest Rate. If
payments by the District under the Payment Agreement are based on a fixed interest
rate and payments by the Qualified Counterparty are based on a variable interest rate
index, payments by the District to the Qualified Counterparty will be based on an
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interest rate equal to the rate that is one hundred and five percent(105%) of the fixed
interest rate specified by the Payment Agreement to be paid by the District, and
payments by the Qualified Counterparty to the District will be based on a rate equal
to the Assumed RBI-based Rate as the variable interest rate deemed to apply to the
Variable Interest Rate Parity Obligation.
(4) Certain Payment Agreements vlay be Disregarded. Notwithstanding the
provisions of subparagraphs (1), (2) and (3) of this definition, the District shall not be
required to (but may at its option) take into account (for the purpose of determining Debt
Service) the effects of any Payment Agreement that has a remaining term of ten (10) years or
less.
District
The term "District" means Truckee-Donner Public Utility District, a public utility district,
duly organized and existing under and by virtue of the laws of the State of California, including the
Law.
Electric General Fund
"Electric General Fund"means the fund by such name established by the District.
Electric System
The term "Electric System" means all properties and assets, real and personal, tangible and
intangible, of the District now or hereafter existing, used or pertaining to the acquisition,
transmission, distribution and sale of electricity, including all additions, extensions, expansions,
improvements and betterments thereto; provided, however, that to the extent the District is not the
sole owner of an asset or property or to the extent that an asset or property is used in part for the
above described electricity purposes, only the District's ownership interest in such asset or property
or only the part of the asset or property so used for electricity purposes shall be considered to be part
of the Electric System.
Electricity Service
The term "Electricity Service' means the electricity distribution service made available or
provided by the Electric System.
Event of Default
The term"Event of Default" means an event described in Section 8.1.
Fiscal Year
The term "Fiscal Year" means the period beginning on January 1 of each year and ending on
the last day of December of such year, or any other twelve-month period selected and designated as
the official Fiscal Year of the District.
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Independent Cert feed Public Accountant
The term `Independent Certified Public Accountant' means any firm of certified public
accountants appointed by the District, each of whom is independent of the District and the
Corporation pursuant to the Statement on Auditing Standards No. I of the American Institute of
Certified Public Accountants.
Independent Financial Consultant
The tern `Independent Financial Consultant' means a financial consultant or firm of such
consultants appointed by the District, and who, or each of whom: (1) is in fact independent and not
under domination of the District; (2) does not have any substantial interest, direct or indirect, with the
District; and (3) is not connected with the District as an officer or employee thereof, but who may be
regularly retained to make reports thereto.
Installment Pa r�nent Date Parity Installment Payment Date
The tern `Installment Payment Date" means the fifth day prior to each Interest Payment
Date, or if said date is not a Business Day, then the preceding Business Day. The term "Parity
Installment Payment Date' means each date on which Parity Installment Payments are scheduled to
be paid by the District under and pursuant to any Contract.
Installment Payments; Parity Installment Payments
The term `Installment Payments" means the Installment Payments scheduled to be paid by
the District under and pursuant hereto. The term "Parity Installment Payments" means the payments
scheduled to be paid by the District under and pursuant to the Contracts.
Insurance Consultant.
The term `Insurance Consultant' means any insurance consultant or firm of insurance
consultants generally recognized to be well qualified in insurance consulting matters relating to
electric utility and other municipal systems, appointed and paid by the District, and who or each of
whom (1) is in fact independent and not under the domination of the District; (2) does not have a
substantial financial interest, direct or indirect, in the operations of the District; (3) and is not
connected with the District as a board member, officer, or employee of the District, but may be
regularly retained to make reports to the District.
Interest Payment Date
The term "Interest Payment Date' means January t and July 1 of each year, commencing
July 1, 2003.
Law
The term "Law" means the Public Utility District Act of the State of California (being
Division 7 of the Public Utilities Code of the State of California, as amended) and all laws
amendatory thereof or supplemental thereto.
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Manager
The term `Manager" means the General Manager of the District, or any other person
designated by the General 'Manager to act on behalf of the General Manager.
Moody's
The term "Moody's"means Moody's Investors Service, or any successor thereto.
Net Proceeds
The term "Net Proceeds" means, when used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award remaining after
payment of all expenses (including attorneys fees) incurred in the collection of such proceeds.
Net Revenues
The term "Net Revenues" means, for any Fiscal Year, the Revenues for such Fiscal Year less
the Operation and Maintenance Costs for such Fiscal Year.
Operation and Maintenance Costs
The tern "Operation and Maintenance Costs" means (1) costs spent or incurred for
maintenance and operation of the Electric System calculated in accordance with generally accepted
accounting principles, including (among other things), Purchased Power Costs, fuel expenses, the
expenses of management and repair and other expenses necessary to maintain and preserve the
Electric System in good repair and working order, and including administrative costs of the District,
salaries and wages of employees, employee retirement expenses, overhead, insurance, taxes (if any),
fees of auditors, accountants, attorneys or engineers and insurance premiums, and (2) all other
reasonable and necessary costs of the District or charges (other than Debt Service) required to be
paid by it to comply with the terms of this Agreement or any other Contract or of any resolution or
indenture authorizing the issuance of any Bonds or of such Bonds, but excluding in all cases
(a) depreciation, replacement and obsolescence charges or reserves therefor, (b) amortization of
intangibles or other bookkeeping entries of a similar nature, (c) costs of capital additions,
replacements,betterments, extensions or improvements to the Electric System which under generally
accepted accounting principles are chargeable to a capital account or to a reserve for depreciation,
and (d) charges for the payment of Bonds or Contracts.
Parity Proiect
The term "Parity Project" means any additions, betternents, extensions or improvements
designated by the Board of Directors of the District as a Parity Project, the acquisition and
construction of which is to be paid for with the proceeds of any Contracts or Bonds.
Participating Underwriter
The tern "Participating Underwriter" shall have the meaning ascribed thereto in the
Continuing Disclosure Agreement.
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Payment Agreement
"Payment Agreement" means a written agreement for the purpose of managing or reducing
the District's exposure to fluctuations in interest rates or for any other interest rate, investment, cash
flow, asset or liability managing purposes, entered into either on a current or forward basis by the
District and a Qualified Counterparty in connection with, or incidental to, the issuance or incurrence
of any Contract or Bond, that provides for an exchange of payments based on interest rates, ceilings
or floors on such payments, options on such payments, or any combination thereof or any similar
device.
Payment Agreement Payments
"Payment Agreement Payments" mean the amounts required to be paid periodically by the
District to the Qualified Counterparty pursuant to a Payment Agreement.
Payment Agreement Receipts
"Payment Agreement Receipts" mean the amounts required to be paid periodically by the
Qualified Counterparty to the District pursuant to a Payment Agreement.
Property
The term"Property"means the property described in Exhibit B hereto.
Purchase Price
The tern "Purchase Price" means the principal amount plus interest thereon owed by the
District to the Corporation under the terms hereof as provided in Section 4.1.
Purchased Power Costs
The tern "Purchased Power Costs" means (1) costs associated with any power purchase
contract for capacity and/or energy with respect to the Electric System, excluding any termination
payments due pursuant to any such contract; (2) all costs associated with the transmission of energy
to the Electric System; (3) all costs to schedule energy with respect to the Electric System; and (4)
net payments due under any hedging contract executed by the District to reduce energy or fuel price
risk, excluding any termination payments due pursuant to any such hedging contract.
Qualified CounteWArty
"Qualified Counterparty" means a party (other than the District) who is the other party to a
Payment Agreement and (1) (a) whose senior debt obligations are rated in one of the three (3)highest
rating categories of each of the Rating Agencies then rating the Certificates (without regard to any
gradations within a rating category), or (b) whose obligations under the Payment Agreement are
guaranteed for the entire term of the Payment Agreement by a bond insurer or other institution which
has been or whose debt service obligations have been assigned a credit rating in one of the three
highest rating categories of each of the Rating Agencies then rating the Certificates (without regard
to any gradations within a rating category), and (2) who is otherwise qualified to act as the other
party to a Payment Agreement with the District under any applicable laws.
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Rate Stabilization Fund
The term "Rate Stabilization Fund" means the fund by such name established by the District
pursuant to Resolution No. 9533 of the District.
Rating Agency
The term "Rating Agency" means S&P and Moody's, or any other nationally recognized
securities rating agency as agencies rating the Certificates at the Written Request of the District
delivered to the Trustee.
RBI
"RBI" means the Bond Buyer Revenue Bond Index or comparable index of long-term
municipal obligations chosen by the District, or, if no comparable index can be obtained, eighty
percent (80%) of the interest rate on actively traded thirty (30) year United States Treasury
obligations.
Reserve Requirement
The tern "Reserve Requirement" means, initially S and thereafter shall be equal
to the lesser of such amount and maximum annual Installment Payments in the current or any future
Fiscal Year.
Revenue Fund
The term "Revenue Fund" means all revenue accounts maintained by the District as of the
date of this Agreement which hold Revenues, including accounts numbered 131.10-10 and 136.10-10
of the District but not including accounts numbered 131.10-20 and 136.10-20 of the District,together
with any revenue account created after the date of this Agreement and designated by the Treasurer of
the District as a part of the Revenue Fund,
Revenues
The term "Revenues" means all income, rents, rates, fees, charges and other moneys derived
from the ownership or operation of the Electric System, including, without limiting the generality of
the foregoing,
(1) all income, rents, rates, fees, charges or other moneys derived from the sale,
distribution, furnishing and supplying of electricity or other services,
facilities, and commodities sold, furnished or supplied through the facilities
of the Electric System including standby charges and facility fees allocable to
the Electric System,plus
(2) except as set forth in(z) below, taxes or assessments, if any, the imposition of
which is permitted by law,
(3) the earnings on and income derived from the investment of the amounts
described in clauses (1) and (2) above, the Rate Stabilization Fund and the
general unrestricted funds of the District, and
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(4) Payment Agreement Receipts,
but excluding in all cases
(x) connection fees;
(y) customers' deposits or any other deposits subject to refund until such
deposits have become the property of the District, and
(z) reserves, taxes or assessments specifically pledged to the payment of
debt service with respect to notes, bonds or other obligations of the
District and which reserves, taxes or assessment are not available for
any other purpose of the District.
S&P
The term "S&P" means Standard &Poor's Ratings Group, or any successor thereto.
Settlement Obli ag tion
The term "Settlement Obligation" shall have the meaning given to such term in the recitals to
the Installment Purchase Agreement.
Trust Agreement
The term "Trust Agreement" means the Trust Agreement, dated as of March 1, 2003, by and
between the District, the Corporation and the Trustee, relating to the Certificates, as originally
executed and as it may from time to time be amended or supplemented in accordance with its terms.
Trustee
The term "Trustee" means BNY Western Trust Company, acting in its capacity as Trustee
under and pursuant to the Trust Agreement, and its successors and assigns.
Variable Interest Rate
"Variable Interest Rate" means any variable interest rate or rates to be paid under any
Contract or Bond, the method of computing which variable interest rate shall be as specified in the
applicable Contract or Bond, which Contract or Bond shall also specify either (i) the payment period
or periods or time or manner of determining such period or periods or time for which each value of
such variable interest rate shall remain in effect, and (ii) the time or times based upon which any
change in such variable interest rate shall become effective, and which variable interest rate may,
without limitation, be based on the interest rate on certain bonds or may be based on interest rate,
currency, commodity or other indices.
Variable Interest Rate Parity Obligations
"Variable Interest Rate Parity Obligations"mean, for any period of time, all in accordance
with the definition of Debt Service" set forth in this Section 1.1, any Contract or Bond that bear a
Variable Interest Rate during such period, except that (i) Contracts or Bonds shall not be treated as
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Variable Interest Rate Parity Obligations if the net economic effect of interest rates on particular
payments of the Contracts or Bonds and interest rates on other payments of the same Contracts or
Bonds, as set forth in such Contracts or Bonds, or the net economic effect of a Payment Agreement
with respect to particular Contracts or Bonds,in either case, is to produce obligations that bear
interest at a fixed interest rate, and (ii) Contracts or Bonds with respect to which a Payment
Agreement is in force shall be treated as Variable Interest Rate Parity Obligations if the net economic
effect of the Payment Agreement is to produce obligations that bear interest at a Variable Interest
Rate.
Written Consent of the Corporation or District Wr tten Order of the Corporation or District, Written
Request of the CorRoration or District Written Requisition of the Corporation or District
The terms "Written Consent of the Corporation or District," "Written Order of the
Corporation or District," "Written Request of the Corporation or District," and "Written Requisition
of the Corporation or District" mean, respectively, a written consent, order, request or requisition
signed by or on behalf of(i) the Corporation by its Authorized Representative or (it) the District by
the President of its Board of Directors or its General Manager or by the Secretary of its Board of
Directors or by any two persons (whether or not officers of the Board of Directors of the District)
who are specifically authorized by resolution of the District to sign or execute such a document on its
behalf.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the District. The District makes the following
representations:
(a) The District is a public utility district duly organized and existing under and
pursuant to the laws of the State of California.
(b) The District has full legal right, power and authority to enter into this
Agreement and carry out its obligations hereunder, to carry out and consummate all other
transactions contemplated by this Agreement, and the District has complied with the provisions of
the Law in all matters relating to such transactions.
(c) By proper action, the District has duly authorized the execution, delivery and
due performance of this Agreement.
(d) The District will not take or, to the extent within its power, permit any action
to be taken which results in the interest paid for the installment purchase of the Property under the
terms of this Agreement being included in the gross income of the Certificate Owners or its assigns
for purposes of federal or State of California income taxation.
(e) The District has determined that it is necessary and proper for District uses
and purposes within the terms of the Law that the District finance the Settlement Obligation in the
manner provided for in this Agreement.
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Section 2.2. Reuresentations and Warranties by the Corporation. The Corporation makes
the following representations and warranties:
(a) The Corporation is a nonprofit public benefit corporation duly organized and
in good standing under the laws of the State of California, has full legal right, power and authority to
enter into this Agreement and to carry out and consummate all transactions contemplated by this
Agreement and by proper action has duly authorized the execution and delivery and due performance
of this Agreement.
(b) The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated will not violate any provision of law, any order of any court or
other agency of government, or any indenture, material agreement or other instrument to which the
Corporation is now a party or by which it or any of its properties or assets is bound, or be in conflict
with, result in a breach of or constitute a default (with due notice or the passage of time or both)
under any such indenture, agreement or other instrument, or result in the creation or imposition of
any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Corporation.
(c) The Corporation will not take or permit any action to be taken which results
in interest paid for the installment purchase of the Property under the terms of this Agreement being
included in the gross income of the Certificate Owners or its assigns for purposes of federal or State
of California income taxation.
ARTICLE III
SALE AND PURCHASE OF THE PROPERTY
Section 3.1. Sale and Purchase of the Property. In consideration for the Corporation's
assistance in financing the Settlement Obligation, the District agrees to sell, and hereby sells, to the
Corporation, and the Corporation agrees to purchase and hereby purchases, from the District, the
Property at the purchase price specified in Section 4.1 hereof and otherwise in the manner and in
accordance with the provisions of this Agreement.
Section 3.2. Purchase and Sale of the Property. In consideration for the Installment
Payments as set forth in Section 4.2, the Corporation agrees to sell, and hereby sells, to the District,
and the District agrees to purchase, and hereby purchases, from the Corporation, the Property at the
purchase price specified in Section 4.1 hereof and otherwise in the manner and in accordance with
the provisions of this Agreement.
Section 3.3. Title. All right, title and interest in each component of the Property shall be
vested in the District upon execution and delivery of this Agreement.
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ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.L Purchase Price.
(a) The Purchase Price to be paid by the District hereunder to the Corporation is
the sum of the principal amount of the District's obligations hereunder plus the interest to accrue on
the unpaid balance of such principal amount from the effective date hereof over the tern hereof,
subject to prepayment as provided in Article VII.
(b) The principal amount of the payments to be made by the District hereunder is
set forth in Exhibit A hereto.
(c) The interest to accrue on the unpaid balance of such principal amount is as
specified in Section 4.2 and Exhibit A hereto, and shall be paid by the District as and constitute
interest paid on the principal amount of the District's obligations hereunder.
Section 4.2. Installment Payments. The District shall, subject to any rights of prepayment
provided in Article VII, pay the Corporation the Purchase Price in installment payments of interest
and principal in the amounts and on the Installment Payment Dates as set forth in Exhibit A hereto.
Each Installment Payment shall be paid to the Corporation in lawful money of the United
States of America. In the event the District fails to make any of the payments required to be made by
it under this section, such payment shall continue as an obligation of the District until such amount
shall have been fully paid; and the District agrees to pay the same with interest accruing thereon at
the rate or rates of interest then applicable to the remaining unpaid principal balance of the
Installment Payments if paid in accordance with their terms.
The obligation of the District to make the Installment Payments is absolute and
unconditional, and until such time as the Purchase Price shall have been paid in full (or provision for
the payment thereof shall have been made pursuant to Article IX), the District will not discontinue or
suspend any Installment Payments required to be made by it under this section when due, whether or
not the Electric System or any part thereof is operating or operable, or its use is suspended, interfered
with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to
reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any party of any agreement for any cause whatsoever.
ARTICLE V
SECURITY
Section 5.L Pledge of Revenues. All Revenues and all amounts on deposit in the
Revenue Fund are hereby irrevocably pledged to the payment of the Installment Payments as
provided herein and the Revenues shall not be used for any other purpose while any of the
Installment Payments remain unpaid; provided that out of the Revenues there may be apportioned
such sums for such purposes as are expressly permitted herein. This pledge, together with the pledge
created by all other Contracts and Bonds, shall constitute a lien on Revenues and, subject to
application of Revenues and all amounts on deposit therein as permitted herein,the Revenue Fund.
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Section 5.2. Allocation of Revenues. In order to carry out and effectuate the pledge and
lien contained herein, the District agrees and covenants that all Revenues shall be received by the
District in trust hereunder and shall be deposited when and as received in a special fund designated as
the `Revenue Fund," which fund includes the accounts described in the definition thereof and which
Fund the District agrees and covenants to maintain and to hold separate and apart from other funds so
long as any Contracts or Bonds remain unpaid. Moneys in the Revenue Fund shall be used and
applied by the District as provided in this Agreement.
The District shall, from the moneys in the Revenue Fund, pay all Operation and Maintenance
Costs (including amounts reasonably required to be set aside in contingency reserves for Operation
and Maintenance Costs, the payment of which is not then immediately required) as such Operation
and Maintenance Costs become due and payable. All remaining moneys in the Revenue Fund
thereafter shall be set aside by the District at the following times for the transfer to the following
respective special funds in the following order of priority; and all moneys in each of such funds shall
be held in trust and shall be applied, used and withdrawn only for the purposes set forth in this
Section.
(a) Installment Payments.rents. Not later than each Installment Payment Date, the
District shall, from the moneys in the Revenue Fund, transfer to the Trustee the Installment Payment
due and payable on that Installment Payment Date. Not later than each Parity Installment Payment
Date, the District shall, from moneys in the Revenue Fund, transfer to the applicable trustee the
Parity Installment Payment due and payable on that Parity Installment Payment Date. The District
shall also, from the moneys in the Revenue Fund, transfer to the applicable trustee for deposit in the
respective payment find, without preference or priority, and in the event of any insufficiency of such
moneys ratably without any discrimination or preference, any other Debt Service in accordance with
the provisions of any Bond or Contract.
(b) Reserve Funds. On or before each Installment Payment Date the District
shall, from the remaining moneys in the Revenue Fund, thereafter, without preference or priority and
in the event of any insufficiency of such moneys ratably without any discrimination or preference,
transfer to the Trustee for deposit in the Reserve Fund and to the applicable trustee for such other
reserve funds and/or accounts, if any, as may have been established in connection with Bonds or
Contracts other than this Agreement, that sum, if any, necessary to restore the Reserve Fund to an
amount equal to the Reserve Requirement; provided, however, that the District may provide for the
Reserve Fund by means other than cash and Permitted Investments pursuant to Section 5.4 of the
Trust Agreement.
(c) Surplus. Moneys on deposit in the Revenue Fund on each Installment
Payment Date not necessary to make any of the payments required above may be expended by the
District at any time for any purpose permitted by law.
Section 5.3. Additional Contracts and Bonds. The District may at any time execute any
Contract or issue any Bonds, as the case may be, in accordance herewith; provided:
(a) The Adjusted Net Revenues for the most recent audited Fiscal Year preceding
the date of adoption by the Board of Directors of the District of the resolution authorizing the
issuance of such Bonds or the date of the execution of such Contract, as the case may be, as
evidenced by both a calculation prepared by the District and a special report prepared by an
Independent Certified Public Accountant or an Independent Financial Consultant on such calculation
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on file with the District, shall have produced a sum equal to at least one hundred twenty percent
(120%) of the Debt Service for such Fiscal Year; or
(b) The estimated Adjusted Net Revenues for the then current Fiscal Year and for
each Fiscal Year thereafter to and including the first complete Fiscal Year after the latest Date of
Operation of any uncompleted Parity Project to be financed from proceeds of such Contracts or
Bonds, as evidenced by both a certificate of the General Manager of the District on file with the
District and a special report prepared by an Independent Certified Public Accountant or an
Independent Financial Consultant, including (after giving effect to the completion of all such
uncompleted Parity Projects) an allowance for estimated Net Revenues for each of such Fiscal Years
arising from any increase in the income, rents, fees, rates and charges estimated to be fixed,
prescribed or received for Electricity Service and which are economically feasible and reasonably
considered necessary based on projected operations for such period, as evidenced by a certificate of
the General Manager on file with the District and a special report prepared by an Independent
Certified Public Accountant or an Independent Financial Consultant, shall produce a sum equal to at
least one hundred twenty percent (120%) of the estimated Debt Service for each of such Fiscal Years,
after giving effect to the execution of all Contracts and the issuance of all Bonds estimated to be
required to be executed or issued to pay the costs of completing all uncompleted Parity Projects
within such Fiscal Years, assuming that all such Contracts and Bonds have maturities, interest rates
and proportionate principal repayment provisions similar to the Contract last executed or then being
executed or the Bonds last issued or then being issued for the purpose of acquiring and constructing
any of such uncompleted Parity Projects.
(c) This Section 5.3 notwithstanding, Bonds or Contracts may be issued or
incurred to refund outstanding Bonds or Contracts if, after giving effect to the application of the
proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Bonds or
Contracts (outstanding on the date of issuance or incurrence of such refunding Bonds or Contracts,
but excluding such refunding Bonds or Contracts) not being refunded are outstanding.
(d) Nothing herein shall preclude the District from issuing any Bonds or
executing and delivering any Contracts the payments under which are subordinate to any Bonds or
Contracts of the District.
Section 5.4. Investments. All moneys held by the District in the Revenue Fund shall be
invested in Permitted Investments and the investment earnings thereon shall remain on deposit in
such fund, except as otherwise provided herein.
Section 5.5. Allocation to Revenue Fund Instantaneous. Revenues received by the District
shall be deemed instantaneously allocated to the Revenue Fund not withstanding any delay with
respect to the District's accounting therefor.
ARTICLE VI
COVENANTS OF THE DISTRICT
Section 6.1. Compliance with Installment Purchase Agreement and Ancillary Agreements.
The District will punctually pay the Installment Payments in strict conformity with the terms hereof,
and will faithfully observe and perform all the agreements, conditions, covenants and terms
contained herein required to be observed and performed by it, and will not terminate this Agreement
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for any cause including, without limiting the generality of the foregoing, any acts or circumstances
that may constitute failure of consideration, destruction of or damage to the Electric System,
commercial frustration of purpose, any change in the tax or other laws of the United States of
America or of the State of California or any political subdivision of either or any failure of the
Corporation to observe or perform any agreement, condition, covenant or term contained herein
required to be observed and performed by it, whether express or implied, or any duty, liability or
obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or
bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest,
stoma, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo,
strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or
regulations of governmental authorities.
It is expressly understood and agreed by and among the parties to this Agreement that,
subject to Section 10.6 hereof, each of the agreements, conditions, covenants and terms contained in
this Agreement is an essential and material term of the purchase of and payment for the Property and
by the District pursuant to, and in accordance with, and as authorized under the Law.
The District will faithfully observe and perform all the agreements, conditions, covenants and
terms required to be observed and performed by it pursuant to all outstanding Contracts and Bonds as
such may from time to time be executed or issued, as the case may be.
Section 6.2. Against Encumbrances. The District will not make any pledge of or place
any lien on Revenues or the moneys in the Revenue Fund except as permitted hereby. The District
may at any time, or from time to time, issue Contracts and Bonds as permitted herein, or may issue or
incur evidences of indebtedness or incur other obligations, provided that such pledge and lien shall
be subordinate in all respects to the pledge of and lien thereon provided herein.
Section 6.3. Against Sale or Other Disposition of Property. The District will not enter into
any agreement or lease which impairs the operation of the Electric System or any part thereof
necessary to secure adequate Net Revenues for the payment of the Installment Payments, or which
would otherwise impair the rights of the Corporation hereunder or the operation of the Electric
System. Any real or personal property which has become nonoperative or which is not needed for
the efficient and proper operation of the Electric System, or any material or equipment which has
become worn out, may be sold if such sale will not impair the ability of the District to pay the
Installment Payments and if the proceeds of such sale are deposited in the Revenue Fund.
Nothing herein shall restrict the ability of the District to sell any portion of the Electric
System if such portion is immediately repurchased by the District and if such arrangement cannot by
its terms result in the purchaser of such portion of the Electric System exercising any remedy which
would deprive the District of or otherwise interfere with its right to own and operate such portion of
the Electric System.
Section 6.4. Against Competitive Facilities . To the extent permitted by existing law, the
District covenants that it will not acquire, construct, maintain or operate and will not permit any other
public or private agency, corporation, district or political subdivision or any person whomsoever to
acquire, construct, maintain or operate within the boundaries of the District any electric system
competitive with the Electric System.
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Section 6.5. Tax Covenants. Notwithstanding any other provision of this Agreement,
absent an opinion of Special Counsel that the exclusion from gross income of interest with respect to
the Certificates will not be adversely affected for federal income tax purposes, the District and the
Corporation covenant to comply with all applicable requirements of the Code necessary to preserve
such exclusion from gross income and specifically covenants, without limiting the generality of the
foregoing, as follows:
(a) Private Activity. The District and the Corporation will not take or omit to
take any action or make any use of the proceeds of the Certificates or of any other moneys or
property which would cause the Certificates to be "private activity bonds" within the meaning of
Section 141 of the Code.
(b) Arbitrage. The District and the Corporation will make no use of the proceeds
of the Certificates or of any other amounts or property, regardless of the source, or take or omit to
take any action which would cause the Certificates to be "arbitrage bonds" within the meaning of
Section 148 of the Code.
(c) Federal Guarantee. The District and the Corporation will make no use of the
proceeds of the Certificates or take or omit to take any action that would cause the Certificates to be
"federally guaranteed" within the meaning of Section 149(b)of the Code.
(d) Information Reporting.rting. The District and the Corporation will take or cause to
be taken all necessary action to comply with the informational reporting requirements of
Section 149(e)of the Code.
(e) Miscellaneous. The District and the Corporation will take no action
inconsistent with the expectations stated in any Tax Certificate executed with respect to the
Certificates and will comply with the covenants and requirements stated therein and incorporated by
reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the District and the Corporation from issuing
Certificates, the interest with respect to which has been determined by Special Counsel to be subject
to federal income taxation.
Section 6.6. Maintenance and Operation of the Electric System. The District will
maintain and preserve the Electric System in good repair and working order at all times and will
operate the Electric System in an efficient and economical manner and will pay all Operation and
Maintenance Costs as they become due and payable.
Section 6.7. Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or the
funds or accounts created hereunder or on any funds in the hands of the District or the Trustee
pledged to pay the Installment Payments or to the Owners prior or superior to the lien of the
Installment Payments or which might impair the security of the Installment Payments, but the District
shall not be required to pay such claims if the validity thereof shall be contested in good faith.
Section 6.8. Compliance with Contract. The District will neither take nor omit to take
any action under any contract if the effect of such act or failure to act would in any manner impair or
D0CSSF135477v7',22925.0006
adversely affect the ability of the District to pay Installment Payments; and the District will comply
with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by it contained in all other contracts affecting or involving the Electric
System, to the extent that the District is a party thereto.
Section 6.9. Insurance.
(a) The District will procure and maintain or cause to be procured and
maintained insurance on the Electric System with responsible insurers in such amounts and against
such risks (including damage to or destruction of the Electric System) as are usually covered in
connection with facilities similar to the Electric System so long as such insurance is available from
reputable insurance companies and such coverage is available on commercially reasonable terms.
In the event of any damage to or destruction of the Electric System caused by the perils
covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction, repair or
replacement of the damaged or destroyed portion of the Electric System. The District shall begin
such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and
shall continue and properly complete such reconstruction, repair or replacement as expeditiously as
possible, and shall pay out of such Net Proceeds all costs and expenses in connection with such
reconstruction, repair or replacement so that the same shall be completed and the Electric System
shall be free and clear of all claims and liens.
If such Net Proceeds exceed the costs of such reconstruction, repair or replacement portion of
the Electric System, and/or the cost of the constriction of additions, betterments, extensions or
improvements to the Electric System, then the excess Net Proceeds may be applied in part to the
prepayment of Installment Payments as provided in Article VII and in part to such other fund or
account as may be appropriate and used for the retirement of Bonds and Contracts in the same
proportion which the aggregate unpaid principal balance of Installment Payments then bears to the
aggregate unpaid principal amount of such Bonds and Contracts. If such Net Proceeds are sufficient
to enable the District to retire the entire obligation evidenced hereby prior to the final due date of the
Installment Payments as well as the entire obligations evidenced by Bonds and Contracts then
remaining unpaid prior to their final respective due dates, the District may elect not to reconstruct,
repair or replace the damaged or destroyed portion of the Electric System, and/or not to construct
other additions, betterments, extensions or improvements to the Electric System; and thereupon such
Net Proceeds may be applied to the prepayment of Installment Payments as provided in Article VII
and to the retirement of such Bonds and Contracts.
(b) The District will procure and maintain such other insurance as it shall deem
advisable or necessary to protect its interests and the interests of the Corporation, which insurance
shall afford protection in such amounts and against such risks as are usually covered in connection
with municipal electric systems similar to the Electric System.
(c) Any insurance required to be maintained by paragraph (a) above and, if the
District determines to procure and maintain insurance pursuant to paragraph (b) above, such
insurance, may be maintained under a self-insurance program so long as such self-insurance is
maintained in the amounts and manner usually maintained in connection with electric systems similar
to the Electric System and is, in the opinion of an Insurance Consultant, actuarially sound.
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All policies of insurance required to be maintained herein shall provide that the Corporation
and the Trustee shall be given thirty (30) days written notice of any intended cancellation thereof or
reduction of coverage provided thereby.
Section 6.10. Accountin2Records� Financial Statements and Other Reports. The District
will keep appropriate accounting records in which complete and correct entries shall be made of all
transactions relating to the Electric System, which records shall be available for inspection by the
Corporation, and the Trustee at reasonable hours and under reasonable conditions.
Section 6.11. Protection of SeeuritLand Rights of the Corporation. The District will
preserve and protect the security hereof and the rights of the Corporation to the Installment Payments
hereunder and will warrant and defend such rights against all claims and demands of all persons.
Section 6.12. Pavement of Taxes and Compliance with Governmental Regulations. The
District will pay and discharge all taxes, assessments and other governmental charges which may
hereafter be lawfully imposed upon the Electric System, or any part thereof or upon the Revenues
when the same shall become due. The District will duly observe and conform with all valid
regulations and requirements of any governmental authority relative to the operation of the Electric
System or any part thereof, but the District shall not be required to comply with any regulations or
requirements so long as the validity or application thereof shall be contested in good faith.
Section 6.13. Amount of Rates and Charges. The District shall fix, prescribe and collect
rates and charges for the Electricity Service which will be at least sufficient to yield during each
Fiscal Year Adjusted Net Revenues equal to one hundred twenty percent (120%) of Debt Service for
such Fiscal Year. The District may make adjustments from time to time in such rates and charges
and may make such classification thereof as it deems necessary, but shall not reduce the rates and
charges then in effect unless the Adjusted Net Revenues from such reduced rates and charges will at
all times be sufficient to meet the requirements of this section.
Section 6.14. Collection of Rates and Charges. The District will have in effect at all times
by-laws, rules and regulations requiring each customer to pay the rates and charges applicable to the
Electricity Service and providing for the billing thereof and for a due date and a delinquency date for
each bill.
Section 6.15. Eminent Domain Proceeds. If all or any part of the Electric System shall be
taken by eminent domain proceedings,the Net Proceeds thereof may be applied as follows:
(a) If (1) the District files with the Corporation and the Trustee a certificate
showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by the
District by reason of such eminent domain proceedings, (ii) a general description of the additions,
betterments, extensions or improvements to the Electric System proposed to be acquired and
constructed by the District from such Net Proceeds, and (iii) an estimate of the additional annual Net
Revenues to be derived from such additions, betterments, extensions or improvements, and (2) the
District, on the basis of such certificate filed with the Corporation and the Trustee, determines that
the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net
Revenues resulting from such eminent domain proceedings so that the ability of the District to meet
its obligations hereunder will not be substantially impaired (which determination shall be final and
conclusive), then the District shall promptly proceed with the acquisition and construction of such
additions, betterments, extensions or improvements substantially in accordance with such certificate
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and such Net Proceeds shall be applied for the payment of the costs of such acquisition and
construction, and any balance of such Net Proceeds not required by the District for such purpose
shall be deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds may be
applied by the District in part to the prepayment of Installment Payments as provided in Article VII
and in part to such other fund or account as may be appropriate and used for the retirement of Bonds
and Contracts in the same proportion which the aggregate unpaid principal balance of Installment
Payments then bears to the aggregate unpaid principal amount of such Bonds and Contracts.
Section 6.16. Further Assurances. The District will adopt, deliver, execute and make any
and all further assurances, instruments and resolutions as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance hereof and for the better assuring and
confirming unto the Corporation of the rights and benefits provided to it herein.
Section 6.17. Continuing Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Agreement.
Notwithstanding any other provision of this Agreement, failure of the District to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Owner
of Certificates or Beneficial Owner may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the District to comply
with its obligations under this Section. For purposes of this Section, `Beneficial Owner" means any
person which (a)has the power, directly or indirectly, to vote or consent with respect to, or to dispose
of ownership of, any Certificates (including persons holding Certificates through nominees,
depositories or other intermediaries), or (b) is treated as the owner of any Certificates for federal
income tax purposes."
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 7.1. Prepay. The District may or shall, as the case may be, prepay from the
Net Proceeds as provided herein on any date, all or any part on any Installment Payment Date, of the
principal amount of the unpaid Installment Payments at a prepayment price equal to the sum of the
principal amount prepaid plus accrued interest thereon to the date of prepayment.
Notwithstanding any such prepayment, the District shall not be relieved of its obligations
hereunder, including its obligations under Article IV, until the Purchase Price shall have been fully
paid (or provision for payment thereof shall have been provided to the written satisfaction of the
Corporation).
Section 7.2. Method of Prepayment. Before making any prepayment pursuant to
Section 7.1, the District may, within five (5) days following the event permitting the exercise of such
right to prepay or creating such obligation to prepay, give written notice to the Corporation and the
Trustee describing such event and specifying the date on which the prepayment of the Certificates
will be paid, which date shall be not less than sixty (60) days from the date such notice is given,
unless such prepayment must occur on an Interest Payment Date, in which case such date shall be the
next Interest Payment Date with respect to which notice of prepayment may be timely given pursuant
to the Trust Agreement.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 8.L Events of Default and Acceleration of Maturities. If one or more of the
following Events of Default shall happen,that is to say --
(a) if default shall be made by the District in the due and punctual payment of
any Installment Payment or any Contract or Bond when and as the same shall become due and
payable;
(b) if default shall be made by the District in the performance of any of the other
agreements or covenants required herein by it or in any Contract or Bond to be performed by it, and
such default shall have continued for a period of sixty (60) days after the District shall have been
given notice in writing of such default by the Corporation;
(c) if the District shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States of
America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with
or without the consent of the District seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state therein, or
if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction shall assume custody or control of the District or of the whole or any substantial part of
its property; or
(d) if payment of the principal of any Contract or Bond is accelerated in
accordance with its terms;
then and in each and every such case during the continuance of such Event of Default specified in
clauses (c) and (d) above, the Corporation shall, with the written consent of the Bond Insurer so long
as the Bond Insurance Policy is in full force and effect, and for any other such Event of Default the
Corporation may with the written consent of the Bond Insurer so long as the Bond Insurance Policy
is in full force and effect, and in each and every such case the Corporation, at the written direction of
the Bond Insurer so long as the Bond Insurance Policy is in full force and effect by notice in writing
to the District, shall declare the entire principal amount of the unpaid Installment Payments and the
accrued interest thereon to be due and payable immediately, and upon any such declaration the same
shall become immediately due and payable, anything contained herein to the contrary
notwithstanding. This subsection however, is subject to the condition that if at any time after the
entire principal amount of the unpaid Installment Payments and the accrued interest thereon shall
have been so declared due and payable and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered the District shall deposit with the Corporation a sum
sufficient to pay the unpaid principal amount of the Installment Payments and/or the unpaid payment
of any other Contract or Bond referred to in clause (a) above due prior to such declaration and the
accrued interest thereon, with interest on such overdue installments, at the rate or rates applicable to
the remaining unpaid principal balance of the Installment Payments or such Contract or Bond if paid
in accordance with their terms, and the reasonable expenses of the Corporation, and any and all other
defaults known to the Corporation (other than in the payment of the entire principal amount of the
unpaid Installment Payments and the accrued interest thereon due and payable solely by reason of
such declaration) shall have been made good or cured to the satisfaction of the Corporation and the
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Bond Insurer or provision deemed by the Corporation and the Bond Insurer to be adequate shall have
been made therefor, then and in every such case the Corporation and the Bond Insurer, by written
notice to the District, may rescind and annul such declaration and its consequences; but no such
rescission and annulment shall extend to or shall affect any subsequent default or shall impair or
exhaust any right or power consequent thereon.
Section 8.2. Application of Funds Upon Acceleration. upon the date of the declaration of
acceleration as provided in Section 8.1, all Revenues thereafter received shall be applied in the
following order-
First, to the payment, without preference or priority, and in the event of any insufficiency of
such Revenues ratably without any discrimination or preference, of the fees, costs and
expenses of the Corporation and Trustee, if any, including reasonable compensation to its
accountants and counsel;
Second, to the payment of the Operation and Maintenance Costs; and
Third, to the payment of the entire principal amount of the unpaid Installment Payments and
the unpaid principal amount of all Bonds and Contracts and the accrued interest thereon, with
interest on the overdue installments at the rate or rates of interest applicable to the Installment
Payments and such Bonds and Contracts if paid in accordance with their respective terms.
Section 8.3. Other Remedies of-the-Corporation. The Corporation shall have the right
with the written consent of the Bond Insurer so long as the Bond Insurance Policy is in full force and
effect and shall at the direction of the Bond Insurer so long as the Bond insurance Policy is in full
force and effect:
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the District or any director, officer or employee thereof, and to compel the
District or any such director, officer or employee to perform and carry out its or his duties under the
Law and the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Corporation; or
(c) by suit in equity upon the happening of an Event of Default to require the
District and its directors, officers and employees to account as the trustee of an express trust.
Notwithstanding anything contained herein, the Corporation shall have no security interest in
or mortgage on the Property, the Electric System or other assets of the District, and no default
hereunder shall result in the loss of the Property, the Electric System or other assets of the District.
Section 8.4. Non-Waiver. Nothing in this article or in any other provision hereof shall
affect or impair the obligation of the District, which is absolute and unconditional, to pay the
Installment Payments to the Corporation at the respective due dates or upon prepayment from the Net
Revenues, the Revenue Fund and the other funds herein pledged for such payment, or shall affect or
impair the right of the Corporation, which is also absolute and unconditional, to institute suit to
enforce such payment by virtue of the contract embodied herein.
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A waiver of any default or breach of duty or contract by the Corporation shall not affect any
subsequent default or breach of duty or contract or impair any rights or remedies on any such
subsequent default or breach of duty or contract. No delay or omission by the Corporation to
exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any
such right or remedy or shall be construed to be a waiver of any such default or breach of duty or
contract or an acquiescence therein, and every right or remedy conferred upon the Corporation by the
Law or by this article may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Corporation.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or
determined adversely to the Corporation or the Bond Insurer, the District, the Bond Insurer and the
Corporation shall be restored to their fonner positions, rights and remedies as if such action,
proceeding or suit had not been brought or taken.
Section 8.5. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Corporation is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity or by statute or otherwise and may be exercised without exhausting and
without regard to any other remedy conferred by the Law or any other law.
If any remedial action is discontinued or abandoned, the Trustee, the Bond Insurer and
Certificate Owners shall be restored to their former positions.
ARTICLE IX
DISCHARGE OF OBLIGATIONS
Section 9.1. Discharge of Obligations.
(a) When all or any portion of the Installment Payments shall have become due
and payable in accordance herewith or a written notice of the District to prepay all or any portion of
the Installment Payments shall have been filed with the Trustee; and
(b) there shall have been deposited with the Trustee at or prior to the Installment
Payment Dates or date (or dates) specified for prepayment, in trust for the benefit of the Corporation
or its assigns and irrevocably appropriated and set aside to the payment of all or any portion of the
Installment Payments, sufficient moneys and non-callable Permitted Investments, issued by the
United States of America and described in clause (a) of the definition thereof, the principal of and
interest on which when due will provide money sufficient to pay all principal, prepayment premium,
if any, and interest of such Installment Payments to their respective Installment Payment Dates or
prepayment date or dates as the case may be; and
(c) provision shall have been made for paying all fees and expenses of the
Trustee,
then and in that event, the right, title and interest of the Corporation herein and the
obligations of the District hereunder shall, with respect to all or such portion of the Installment
Payments as have been so provided for, thereupon cease, terminate, become void and be completely
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discharged and satisfied (except for the right of the Trustee and the obligation of the District to have
such moneys and such Permitted Investments applied to the payment of such Installment Payments).
In such event, upon request of the District the Trustee shall cause an accounting for such
period or periods as may be requested by the District to be prepared and tiled with the District and
shall execute and deliver to the District all such instruments as may be necessary or desirable to
evidence such total or partial discharge and satisfaction, as the case may be, and, in the event of a
total discharge and satisfaction, the Trustee shall pay over to the District, after payment of all
amounts due the Trustee pursuant to the Trust Agreement, as an overpayment of Installment
Payments, all such moneys or such Permitted Investments held by it pursuant hereto other than such
moneys and such Permitted Investments as are required for the payment or prepayment of the
Installment Payments, which moneys and Permitted Investments shall continue to be held by the
Trustee in trust for the payment of the Installment Payments and shall be applied by the Trustee to
the payment of the Installment Payments of the District.
ARTICLE X
MISCELLANEOUS
Section 10.1. Liability of District Limited to Revenues. Notwithstanding anything
contained herein, the District shall not be required to advance any moneys derived from any source
of income other than the Revenues and the Revenue Fund for the payment of amounts due hereunder
or for the performance of any agreements or covenants required to be performed by it contained
herein. The District may, however, advance moneys for any such purpose so long as such moneys
are derived from a source legally available for such purpose and may be legally used by the District
for such purpose.
The obligation of the District to make the Installment Payments is a special obligation of the
District payable solely from the Net Revenues, and does not constitute a debt of the District or of the
State of California or of any political subdivision thereof in contravention of any constitutional or
statutory debt limitation or restriction.
Section 10.2. Benefits of Installment Purchase Agreement Limited to Parties. Nothing
contained herein, expressed or implied, is intended to give to any person other than the District, the
Bond Insurer or the Corporation any right, remedy or claim under or pursuant hereto, and any
agreement or covenant required herein to be performed by or on behalf of the District or the
Corporation shall be for the sole and exclusive benefit of the other party.
Section 10.3. Successor Is Deemed Included in all References to Predecessor. Whenever
either the District or the Corporation is named or referred to herein, such reference shall be deemed
to include the successor to the powers, duties and functions that are presently vested in the District or
the Corporation, and all agreements and covenants required hereby to be performed by or on behalf
of the District or the Corporation shall bind and inure to the benefit of the respective successors
thereof whether so expressed or not.
Section 10.4. Waiver of Personal Liability. No director, officer or employee of the District
shall be individually or personally liable for the payment of the Installment Payments, but nothing
contained herein shall relieve any director, officer or employee of the District from the performance
of any official duty provided by any applicable provisions of law or hereby.
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DOCSSF,3547 7 v7\22925.0006
Section 10.5. Article and Section Headings, Gender and References. The headings or titles
of the several articles and sections hereof and the table of contents appended hereto shall be solely
for convenience of reference and shall not affect the meaning, construction or effect hereof, and
words of any gender shall be deemed and construed to include all genders. All references herein to
"Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections,
subdivisions or clauses hereof; and the words "hereby", "herein," "hereof," "hereto," "herewith" and
other words of similar import refer to this Agreement as a whole and not to any particular article,
section, subdivision or clause hereof.
Section 10.6. Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the District or the Corporation
shall be contrary to law, then such agreement or agreements, such covenant or covenants or such
portions thereof shall be null and void and shall be deemed separable from the remaining agreements
and covenants or portions thereof and shall in no way affect the validity hereof. The District and the
Corporation hereby declare that they would have executed this Agreement, and each and every other
article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact
that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof
or the application thereof to any person or circumstance may be held to be unconstitutional,
unenforceable or invalid.
Section 10.7. Assignment. This Agreement and any rights hereunder may be assigned by
the Corporation, as a whole or in part, without the necessity of obtaining the prior consent of the
District.
Section 10.8. Net Contract. This Agreement shall be deemed and construed to be a net
contract, and the District shall pay absolutely net during the term hereof the Installment Payments
and all other payments required hereunder, free of any deductions and without abatement, diminution
or set-off whatsoever.
Section 10.9. California Law. THE INSTALLMENT PURCHASE AGREEMENT
SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.
Section 10.10. Notices. All written notices to be given hereunder shall be given by mail to
the party entitled thereto at its address set forth below, or at such other address as such party may
provide to the other party in writing from time to time, namely:
If to the District: Truckee-Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96160
Attention: General Manager
If to the Corporation: Truckee-Donner Public Utility District Financing
Corporation
c/o Truckee-Donner Public i?tiliry District
11570 Donner Pass Road
Truckee, CA 96160
Attention: President
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If to the Bond Insurer:
Section 10.11. Effective Date. This Agreement shall become effective upon its execution
and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for
the payment thereof shall have been made to the written satisfaction of the Corporation).
Section 10.12. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one and
the same instrument.
Section 10.13. Indemnification of Corporation. The District hereby agrees to indemnify and
hold harmless the Corporation if and to the extent permitted by law, from and against all claims,
advances, damages and losses, including legal fees and expenses, arising out of or in connection with
the acceptance or the performance of its duties hereunder and under the Trust Agreement; provided
that no indemnification will be made for willful misconduct, negligence or breach of an obligation
hereunder or under the Trust Agreement by the Corporation.
Section 10.14. Amendments Permitted. This Agreement and the rights and obligations of
the Corporation, the District, the Owners of the Certificates and of the Trustee may be modified or
amended at any time by an amendment hereto which shall become binding when the written consents
of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding,
exclusive of Certificates disqualified as provided in the Trust Agreement, shall have been filed with
the Trustee and, so long as the Bond Insurance Policy is in full force and effect, with the prior written
consent of the Bond Insurer. No such modification or amendment shall (1) extend the stated
maturities of the Certificates, or reduce the rate of interest represented thereby, or change the method
of computing the rate of interest with respect thereto, or extend the time of payment of interest, or
reduce the amount of principal represented thereby, or reduce any premium payable on the
prepayment thereof, without the consent of the Owner of each Certificate so affected, or (2) reduce
the aforesaid percentage of Owners of Certificates whose consent is required for the execution of any
amendment or modification of this Agreement without the consent of the Owners of all Certificates
then Outstanding, or(3) modify any of the rights or obligations of the Trustee, the Corporation or the
Bond Insurer without its respective written consent thereto.
This Agreement and the rights and obligations of the Corporation, the District and of the
Owners of the Certificates may also be modified or amended at any time by an amendment hereto
which shall become binding upon adoption, without the consent of the Owners of any Certificates,
but only to the extent pennitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Corporation or the District
contained in this Agreement other covenants and agreements thereafter to be observed or to surrender
any right or power herein reserved to or conferred upon the Corporation or the District, and which
shall not adversely affect the interests of the Owners of the Certificates;
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(b) to cure, correct or supplement any ambiguous or defective provision
contained in this Agreement or in regard to questions arising under this Agreement, as the
Corporation or the District may deem necessary or desirable and which shall not adversely affect the
interests of the Owners of the Certificates; and
(c) to make such other amendments or modifications as may be in the best
interests of the Owners of the Certificates.
No amendment without consent of the Owners may modify any of the rights or obligations of
the Trustee without its written consent thereto or the rights or obligations of the Bond Insurer without
its written consent thereto.
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IN WITNESS WHEREOF, the parties hereto have executed and attested this Agreement by
their officers thereunto duly authorized as of the day and year first written above.
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
President
Clerk
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
FINANCING CORPORATION
President
Secretary
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EXHIBIT A
PURCHASE PRICE
I. The principal amount of payments to be made by the District hereunder is
2. The installment payments of principal and interest are payable in the amounts and on
the Installment Payment Dates as follows:
Installment Amount Attributable to Amount Attributable to
Payment Date Principal Interest
51h Day Prior To:
A-1
nocssrv5anv7,22925.000e
EXHIBIT B
DESCRIPTION OF THE PROPERTY
The Property consists of the components of the Electric System described below:
Component Approximate Value
Overhead constructed facilities including but not limited to transmission $25,319,700
lines, utility poles and transformers
Underground constructed facilities including but not limited to 18,886,300
transmission lines
Donner Lake Substation 1,500,000
Tahoe Donner Substation 2,000,000
Truckee Substation 2,000,000
Martis Valley Substation 2,000,000
SCADA System 500,000
TOTAL $52,206,000
DOCSSF\35477v7A22925.0006
Table of Contents
Page
ARTICLE I
DEFINITIONS
SectionLL Definitions........................................................................................................ 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the District....................................................................... 12
Section 2.2. Representations and Warranties by the Corporation...................................... 13
ARTICLE III
SALE AND PURCHASE OF THE PROPERTY
Section 3.1. Sale and Purchase of the Property.................................................................. 13
Section 3.2. Purchase and Sale of the Property..................................................................13
Section3.3. Title................................................................................................................ 13
ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.1. Purchase Price, ...................................................... ...... .........--................... 14
Section 4.2. Installment Payments ..................................................................................... 14
ARTICLE V
SECURITY
Section 5.L Pledge of Revenues........................................................................................ 14
Section 5.2. Allocation of Revenues.................................................................................. 15
Section 5.3. Additional Contracts and Bonds........ ..........................................-- 15
Section 5.4. Investments..................................................................................................... 16
Section 5.5. Allocation to Revenue Fund Instantaneous.................................................... 16
ARTICLE VI
COVENANTS OF THE DISTRICT
Section 6.1. Compliance with Installment Purchase Agreement and Ancillary Agreements16
Section 6.2. Against Encumbrances.......................................................--............ ........... 17
Section 6.3. Against Sale or Other Disposition of Property............................................... 17
DOCSSF\35477v7A22925.0006
Table of Contents
(continued)
Page
Section 6A. Against Competitive Facilities.......................... ............................................ 17
Section 6.5. Tax Covenants................................................................................................ 18
Section 6.6. Maintenance and Operation of the Electric System....................................... 18
Section 6.7. Payment of Claims......................................................................................... 18
Section 6.8. Compliance with Contracts............................................................................ 18
Section 6.9. Insurance. ....................................................................................................... 19
Section 6.10. Accounting Records; Financial Statements and Other Reports ....._..............20
Section 6.11. Protection of Security and Rights of the Corporation....................................20
Section 6.12. Payment of Taxes and Compliance with Governmental Regulations............20
Section 6.13. Amount of Rates and Charges........................................................................20
Section 6.14. Collection of Rates and Charges.......... .........................................................20
Section 6.15. Eminent Domain Proceeds.............................................................................20
Section 6.16. Further Assurances.........................................................................................21
Section 6.17. Continuing Disclosure....................................................................................21
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
Section7.1. Prepayment.....................................................................................................21
Section 7.2. Method of Prepayment...................................................................................21
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 8.1. Events of Default and Acceleration of Maturities..........................................22
Section 8.2. Application of Funds Upon Acceleration.......................................................23
Section 8.3. Other Remedies of the Corporation................................................................23
Section8.4. Non-Waiver....................................................................................................23
Section 8.5. Remedies Not Exclusive ................................................................................24
ARTICLE IX
DISCHARGE OF OBLIGATIONS
Section 9.1. Discharge of Obligations................................................................................24
ARTICLE X
MISCELLANEOUS
Section 10.1. Liability of District Limited to Revenues..........____...................................25
Section 10.2. Benefits of Installment Purchase Agreement Limited to Parties....................25
Section 10.3. Successor Is Deemed Included in all References to Predecessor...................25
Section 10.4. Waiver of Personal Liability ..........................................................................25
a
DOCSSF\354770A22925,0006
Table of Contents
(continued)
Page
Section 10.5. Article and Section Headings, Gender and References............................-....26
Section10.6. Partial Invalidity.............................................................................................26
Section10.7. Assignment....................................-.--...................................................--26
Section10.8. Net Contract...................................................................................................26
Section 10.9. California Law....... ........................ ...---...............-.................................-26
Section10.10. Notices............................................................................................................26
Section 10.11. Effective Date.................................................................................................27
Section 10.12. Execution in Counterparts..............................................................................27
Section 10.13. Indemnification of Corporation......................................................................27
Section 10.14. Amendments Permitted..................................................................................27
IN
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