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TRUST INDENTURE
Between
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAYS CROSSING)
And
BNY WESTERN TRUST COMPANY,
as Trustee
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAY'S CROSSING)
SPECIAL TAX BONDS
Dated as of September 1, 2004
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'TRUST INDENTURE
THIS TRUSTINDENTURE, dated as of September 1, 2004, governs the terms of the
Special Tax Bonds ofTruckee Donner Public Uli lily District Community Facilities District No. 04-1
(Gray's Crossing).
RECITALS.
WHEREAS, the Board of Directors (hereinafter sometimes referred to as the "legislative
body of the District") of the Truckee Donner Public Utility District has heretofore undertaken
proceedings and declared the necessity to issue bonds on behalf of Truckee Donner Public Utility
District Community Facilities District No. 04-1 (Gray's Crossing) (the "District") pursuant to the
terms and provisions of the Mello-Roos Community Facilities Act of 1982. as amended, being
Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the
"Act"); and
WHEREAS, based upon a resolution adopted by the legislative body of the District on
July 21, 2004 and an election held on July 21. 2004 authorizing the levy of a special tax and the
issuance of bonds by the District, the District is now authorized to issue bonds in one or more series,
pursuant to the Act, in an aggregate principal amount not to exceed $35,000,000; and
WHEREAS, the legislative body of the District intends to accomplish the financing of the
cost of planning, designing, construcling, acquiring-,modifying, expanding,improving, furnishing,
equipping or rehabilitaung certain improvements.and all appurtenances and appurtenant work in
connection with the foregoing(collectively, the "Facilities") and (ii) the incidental expenses incurred
and to be incurred in connection with financing the Facilities,including costs associated with the
creation of the District and the issuance of bonds and the establishment and replenishment of a bond
reserve fund (the"Incidental Expenses"). through the issuance of bonds in an aggregate principal
amount of$_ designated as the "Truckee Donner Public Utility District Community
Facilities District No. 04-1 (Gray's Crossing) Special Tax Bonds, Series 2004" (the"Bonds"); and
WHEREAS, the legislative body of the District has determined all requirements of the Act
for the issuance of the Bonds have been satisfied;
NOW, THEREFORE, in order to establish the terms and conditions upon and subject to
which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants
contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for
other valuable consideration, the receipt ofwhich is hereby acknowledged,the District and BNY
Western Trust Company, as Trustee, hereby covenant and agree, for the benefit of the Owners of the
Bonds which may be issued hereunder from tine to time, as follows:
ARTICLE I
DEFINITIONS
Section I.I. Definitions. Unless the context otherwise requires,the following terms shall
have the following meanings:
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.12004 Bonds" means any of the District's Special Tax Bonds, Series 2004 that are
Outstanding under this Indenture.
"Act" means the ?Mello-Roos Community Facilities Act of 1982,as amended, Sections 53311
et seq. of the California Government Code.
"Acquisition and Construction Fund"means the fund by such name created and established
pursuant to Section 3.1.
"Acquisition and Disclosure Agreement"means the Acquisition and Disclosure Agreement,
dated as of July 22, 2004,by and between the PUD, on behalf of itself and the District, and the
Developer, as the same may be amended from time to time pursuant to the provisions thereof and
consistent with the provisions of this Indenture.
Administrative Brpense.s"means the administrative costs incurred by the District or the
PUD on behalf of the District with respect to the calculation, levy, and collection of the Special
Taxes, including all attorneys' fees and other costs related thereto,the Zees and expenses of the
Trustee, any fees for credit enhancement for the Bonds which are not otherwise paid as Costs of
Issuance, any costs related to the District's compliance v<ith State and federal laws requiring
continuing disclosure of information concerning the Bonds and the District and the calculation or
payment of arbitrage rebate,and any other costs otherwise incurred by the District or the PUD on
behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of
Formation and any obligation of the District hereunder.
"Administrative Expense Account" means the account by such name in the Special Tax Fund
created and established pursuant to Section 3.1.
"Administrative Expense Cup"means the amount of S25,500,with such amount escalating
by 2%per Bond Year beginning September 2, 2005, provided that the District may, in its sole
discretion, fund Administrative Expenses,without limitation, from any other funds available to the
District,including the Surplus Fund.
"Affiliate"of another Person means (i) a Person directly or indirectly owning, controlling, or
holding with power of vote, 25% or more of the outstanding voting securities of such other Person,
(ii) any Person 25% or more of whose outstanding voting securities are a directly or indirectly
owned, controlled,or held with power to vote, by such other Person, and (iii) any Person directly or
indirectly controlling, controlled by,or under common control with, such other Person; for purposes
hereof, control means the power to exercise a controlling influence over the management or policies
ofPerson, unless such power is solely the result of an official position with such Person.
"Alternative Penalty Account"means the account by such name created and established in
the Rebate Fund pursuant to Section 3.1.
"Annual Debt Service"means the principal amount of any Outstanding Bonds payable in a
Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any
Outstanding Bonds in such Bond Year, if the Bonds are retired as scheduled.
"Authorized Investments"means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
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(a) Direct obligations of the United States of America (including obligations issued or
held in book-erury form on the books of the Department of the Treasury, and CATS and TIGRS) or
obligations the principal of and interest on which are unconditionally guaranteed by the United States
of America ("Direct Obligations");
(b) Bonds.debentures, notes or other evidence of indebtedness issued or guaranteed by
any of the follov,ing federal agencies and provided such obligations are backed by the full faith and
credit of the United States of America (stripped securities are only permitted if they have been
stripped by the agency itself):
0) U.S. Export-Import Bank ("Eximbank") - direct obligations or fully
guaranteed certificates of beneficial ownership,
(n) Farmers Home Administration ("FniFIA") - certificates of beneficial
ownership,
(iii) Federal Financing Bank,
(iv) Federal Housing Administration Debentures ("FHA"),
(v) General Services Administration -participation certificates,
(vi) Government National Mortgage Associanon("GNMA" or"Ginnie Mae") -
GNMA-guaranteed mortgage-backed bonds and GNMA-guaranteed pass-through
obligations,
(vii) U.S. Maritime Administration - guaranteed Title XI financing, and
(\iii) U.S. Department of Housing and Urban Development("HUD") - project
notes,local authority bonds, new communities debentures (U.S. government guaranteed
debentures), and U.S. Public Housing Notes and Bonds (U.S. government guaranteed public
housing notes and bonds);
(c) Bonds, debentures.notes or other evidence of indebtedness issued or guaranteed by
any of the following non-full faith and credit U.S. government agencies (stripped securities are only
permitted if they have been stripped by the agency itself):
0) Federal Home Loan Bank System - senior debt obligations,
(ii) Federal Rome Loan Mortgage Corporation ("FHLMC" or"Freddie Mad') -
participation certificates and senior debt obligations,
(iii) Federal National Mortgage Association ("FNMA" or"Fannie Mae") -
mortgage-backed securities and senior debt obligations,
(iv) Student Loan Marketing Association ("SLMA" or"Sallie Mae") - senior debt
obligations,
(v) Resolution Funding Corp. ("REFCORP") obligations, and
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(vi) Farm Credit System Corp. - Consolidated system-wide bonds and notes;
(d) Money market funds registered under the Federal Investment Company Act of 1940,
whose shares are registered under the Securities Act of 1933, and to which Standard &Poor's has
assigned a rating of AAAm-G. AAAm or AAm, and, which, ifthey are rated by Moody's, are rated
Aaa, Aal or Aa2 (including the money market funds of the Trustee and its affiliates or funds for
which the Trustee or affiliates provide investment ad%isory or other management services):
(e) Certificates of deposit secured at all times by collateral described in (a) and/or(b)
above. Such certificates must be issued by commercial banks, savings and loan associations or
mutual savings banks. The collateral must be held by a third party and the Trustee on behalf of the
Bondholders must have a perfected first security interest in the collateral;
(f) Certificates of deposit, savings accounts, deposit accounts or money market deposits
which are fully insured by FDIC or which are udth a bank rated AA or better by Standard &Poor's
and Aa or better by Moody's (including those of the Trustee and its affiliates);
(g) Investment Agreements with any corporation, including banking or financial
institutions, provided that:
(i) the long-term debt of the provider of any such investment agreement, or in
the case of a guaranteed corporation the long-term debt of the guarantor, or in the case of a
monoline financial guaranty insurance company the claims paying ability, is rated, at the time
of im esument, in one of the two highest rating categories offered by each Rating Agency
(without regard to gradations of plus or minus, or numerical o adations,within such
category), and
(it) any such investment agreement shall include a provisions that in the event
that the long-tern debt rating or claims paying ability rating of the provider or the guarantor
is downgraded below AA- by Standard &Poor's or AO by Moody's during the tens of the
agreement the provider must either(A) deliver to the Trustee or a third party custodian
collateral in the form of Unites States Treasury or agency obligations which at least equal
102% of the principal amount invested thereunder or(B) assign The existing agreement and
all of its obligations thereunder to a financial institution mutually acceptable to the provider,
the District and the Trustee which is rated in one of the two highest rating categories offered
by each Rating Agency (without regard to gradations of plus or minus, or numerical
gradations, within such category), and
(iii) any such invcstmern agreement shall include a provision that in the event that
the long-tern debt rating or claims paying ability rating of the provider, or the guarantor, is
downgraded below A- by Standard &Poor's or A3 by Moody's during the term of the
agreement the provider must repay the principal of and accrued by it unpaid interest on the
invested moneys, and
(iv) any such agreement shall include a provision to the effect that in the event of
default under such Investment Agreement by such provider or in the event of a bankruptcy of
such provider, the District has the right to withdraw or cause the Trustee to withdraw all
funds invested in such agreement and thereafter to invest such funds pursuant to this
Indenture, and
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(v) any such investment agreement permits withdrawal upon not more than three
(3) days nonce (excepting only withdrawals from the Acquisition and Construction Fund,
from which withdrawals may be permitted upon not more than seven (7) days notice) for any
Purpose authorized for the use of the invested funds under this Indenture;
(h) Commercial paper rated, at the time of purchase, Prime - I by Moody's and A-I or
better by Standard & Poor's;
(i) Bonds or notes issued by any state or municipality which are rated by both Rating
Agencies in one of the two highest rating categories assigned by such agencies;
(j) Federal funds or bankers acceptances with a maximum tern of one year of any bank
which has an unsecured,uninsured or unguaraniced obligation rating of Prime- I or A3 or better by
Moody's and A-1 or A or better by Standard &Poor's;
(k) Repurchase agreements collateralized by Direct Obligations, GNMAs, FNMAs or
FHLMCs with any registered broker,dealer subject to the Securities Investors' Protection
Corporation jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer or bank
has an uninsured, unsecured and unguarameed obligation rated P-1 or A3 or better by Moody's. and
A-I or A-by Standard &Poor's; provided:
0) a master repurchase agreement or specific written repurchase agreement
governs the transaction, and
(n) the securities are held free and clear of any lien by the Trustee or an
independent third party acting solely as agent (`Agent") for the Trustee, and such third party
is (i) a Federal Reserve Bank, (ii) a bank which is a member of the Federal Deposit Insurance
Corporation and which has combined capital, suphrs and undivided profits of not less than
S50 million, or(iii) a hank approved in writing for such purpose by the District, and the
Trustee shall have received written confirmation from such third party that it holds such
securities, free and dear of any lien.as agent for the Trustee, and
(iii) a perfected first security interest under the Uniform Commercial Code, or
book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such
securities is created for the benefit of the Trustee. and
(iv) the Agent will value the collateral securities no less frequently than weekly
and will liquidate the collateral securities if any deficiency in the required collateral
percentage is not restored within two Business Days of such valuation, and
(v) the fair market value of the securities in relation to the amount of the
repurchase obligation, including principal and interest, is equal to at least 103%;
(1) The State of California Local Agency Investment Fund; and
(m) Any other investment which the District is permitted by law to make.
To the extent that any of the requirements concerning Authorized Investments embodies a
legal conclusion, the Trustee shall be entitled to conclusively rely upon a certificate from the
appropriate party or an opinion from counsel to such party, that such requirement has been met.
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"Authorized Rejn csentatir e of the District"means the General Manager of the PM the
Assistant General Manager of the PUD and any other person or persons designated by the legislative
body of the District and authorized to act on behalf of the District by a written certificate signed by
the President of the legislative body of the District and containing the specimen signature of each
such person.
"Bond Counsel' means an attornev at law or a firm of anornevs selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice of law before the highest
court of any state of the Untied States of America or the District of Columbia.
"Bond Register''means the books which the Trustee shall keep or cause to be kept on which
the registration and transfer of the Bonds shall be recorded.
"Bondowner"or°Dnazer-"means the person or persons in whose name or names any Bond is
registered.
"Bonds" means the 2004 Bonds and any Parity Bonds issued pursuant to this Indenture.
"Bond )`ear-means the twelve month period commencing on September 2 of each year and
ending on September I of the folloxs ing year. except that the first Bond Year for a Series of Bonds
shall begin on the Delivers, Date of the Bonds of such Series and end on the first September 1 which
is not more than 12 months after such Delivery Date,provided that for purposes of Section 3.8 `Bond
Year" shall have the meaning ascribed thereto in the Tax Certificate applicable to the Bonds in
question.
"Business An"means a day which is not a Saturday or Sunday or a day of the year on vfiich
hanks in New York.New York, Los Angeles, California, or the city where the corporate trust office
ofthe Trustee is located, are not required or authorized to remain closed.
"Certificate ofan Authorized Representative" means a written certificate or warrant request
executed by an Authorized Representative of the District on behalfofthe District.
"Code" means the Internal Revenue Code off986, as amended, and any regulations,rulings,
judicial decisions, and notices, announcements, and other releases of the United States Treasury
Department or Internal Revenue Sej-s ice interpreting and construing it.
"Costs oflssuance"means the costs and expenses incurred in connection with the issuance
and sale of Bonds, including the acceptance and initial annual fees and expenses of the Trustee, legal
fees and expenses, costs of print ing the Bonds and the preliminary and final official statements for
the Bonds, fees of financial consultants, District formation and related administration costs and all
other related fees and expenses, as set forth in a Certificate ofan Authorized Representative.
"Costs oflssuanceAccount"means the Account by that name created and established in the
Acquisition and Construction Fund pursuant to Section 3.1.
"Delireri-Date"means the date on which the Bonds of a Series are issued and delivered to
the initial purchasers thereof.
-Developed Property"has the meaning ascribed thereto in the RMA.
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DOCSOCI 0549570,22925-0010
"Developer"means Gray's Crossing LLC and any successor thereto.
'Direct Debt for Developed Property" means the product of(a) the sum of all Outstanding
Bonds and the Parity Bonds then proposed to be issued multiplied by (b) a fraction, the numerator of
which is the aggregate amount of the Maximum Special Tax then applicable to the Developed
Property and the denominator of which is the aggregate amount of the Maximum Special Tax then
applicable to all of the Property within the District.
'Direct Debt for Taxable Pro/mrty"means the sum of Direct Debt for Developed Property
U and Direct Debt for ndeveloped Property.
"Direct Debt for Undeveloped Pro],er ry" means the product of(a) the sum of all Outstanding
Bonds and the Parity Bonds then proposed to be issued multiplied by (b) a fraction, the numerator of
which is the aggregate amount of the Maximum Special Tax then applicable to the Undeveloped
Property and the denominator ofwhich is the aggtcgate amount of the Maximum Special Tax then
applicable to all of the Property within the District.
-District"means Truckee Donner Public Utility District Community Facilities District
No. 04-1 (Gray's Crossing) established pursuant to the Act and the Resolution of Formation.
"DTC"means The Depository Trust Company, New York, New York,and its successors and
assigns.
`DTCParth ipants" means securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations maintaining accounts with DTC.
"Federal Securities"means any of the following:
(a) Cash,
(b) United States Treasury Certificates,Notes and Bonds (including State and Local
Government Series—"SLGS"),
(c) Direct obligations of the U.S. Treasury which have been stripped by the U.S.
Treasury itself, e.g., CATS, TIGRS and similar securities,
(d) The interest component of Resolution Funding Corp. strips which have been stripped
by request to the Federal Reserve Bank of New York and are in book-entry form,
(e) Pre-refunded municipal bonds rated Aaa by Moody's and AAA by Standard &
Poor's,
(1) Obligations issued by the following agencies which are backed by the full faith and
credit of the United States:
(i) U.S. Export-Import Bank- direct obligations or fully guaranteed certificates
of beneficial ownership,
(ii) Farmers Home Administration -certificates of beneficial ownership,
DOCSOC/1054957v3/22925-0010
(iii) Federal Financing Bank,
(iv) General Services Administration - participation certificates,
(v) U.S. Maritime Administration - guaranteed `title XI financing, and
(vi) U.S. Department of Housing and Urban Development (HUD) -project notes,
local authority bonds, new communities debentures -U.S. government guaranteed
debentures, U.S. Public Housing Notes and Bonds -U.S. government guaranteed public
housing notes and bonds.
`Fiscal }'ear-" means the period beginning on July I of each year and ending on the next
following;tune 30.
"Gross Taxes"means the amount of all Special Taxes received by the District, together with
the proceeds collected from the sale of property pursuant to the foreclosure provisions of this
Indenture for the delinquency of such Special Taxes remaining after the payment of all the costs
related to such foreclosure actions, including,but not limited to,all legal fees and expenses, court
costs. consultant and title insurance fees and expenses.
"Independew Financial Consuhant" means a financial consultant or firm of such consultants
generally recognized to be well qualified in the financial consulting field, appointed and paid by the
District, who, or each of whom:
(a) is in fact independent and not under the domination of the District or the PUD;
(b) does not have any substantial interest, direct or indirect, in the District or the PUD;
and
(c) is not connected with the District or the PUD as a member, officer or employee of the
District or the P( D,but who may be regularly retained to makee annual or other reports to the District
or the PUD.
"Indenture" means this Trust Indenture, together with any Supplemental Indenture entered
into pursuant to Article VI.
"Interest At "means the account by such name created and established in the Special
Tax Fund pursuant to Section 3.1.
"Inter est Payment Date"means each March I and September 1, commencing March 1,2005;
provided, lion ever, that, if any such day is not a Business Day.. interest up to, but not including,the
Interest Payment Date will be paid on the Business Day next following such date.
"Investment Agreement"means one or more agreements for the investment of Funds of the
District complying with the criteria therefor as set forth in subsection (g) of the definition of
Authorized Investments herein.
"Ma-ximurn Annual Debr Service" means the maximum amount of the Annual Debt Service
for any Bond Year prior to the final maturity of the Bonds.
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DOCSOC/10549570/22925-0010
"Maximum Special Tax"has the meaning ascribed thereto in the RMA.
"Moofi-'s"means Moody's Investors Service, its successors and assigns.
"National Repositories"means any Nationally Recognised Municipal Securities Information
Repository for purpose of the Rule.
"Nei Taxes"means, for each Fiscal Year,Gross Taxes (exclusive of any penalties and
interest accruing with respect to delinquent Special Tax installments)minus amounts (not in excess
of the then current Administrative Expense Cap) set aside to pay Administrative Expenses and minus
also the portion of any Prepayment that is not required to be deposited in the Special Tax Fund
pursuant to Section 3.2.
"Outstanding"or"Outstanding Bonds"means all Bonds theretofore issued by the District,
except:
(a) Bonds theretofore cancelled or surrendered for cancellation in accordance with
Section 10.1;
(b) Bonds for payment or redemption of which moneys shall have been theretofore
deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds),
provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in this Indenture; and
(e) Bonds which have been surrendered to the Trustee for transfer or exchange pursuant
to Section 2.9 or for which a replacement has been issued pursuant to Section 2.10.
"Onerdapping Debt for Developed Pr operti,"means the sum of(a) the aggregate amount of
all unpaid assessments which are a lien on Developed Property and which are pledged to secure the
repayment of bonds,plus (b) a portion of the principal amount of any outstanding Bonds of other
community facilities districts which are payable at]east partially from special taxes to be levied on
Developed Property (the "Other CFD Bonds") determined by mnhiplying the aggregate principal
amount of the Other CFD Bonds by a fraction the numerator of which is the total amount of the
maximum special taxes that may be then Icvied for the Other CFD Bonds on Developed Property and
the denominator of which is the total amount of the maximum special taxes that may be then levied
for the Other CFD Bonds on all parcels of property which are subject to the levy of such special
taxes.
"Overlapping Debt for Taiahle Aoperijv"means the sum of Overlapping Debt for
Developed Property and Overlapping for Undeveloped Property.
"Overlapping Debt for Undeveloped Property" means the sum of(a) the aggregate amount
of all unpaid assessments which are a lien on Undeveloped Property and which are pledged to secure
the repayment of bonds, plus (b) a portion of the principal amount of any outstanding Bonds of other
community facilities districts which are payable at least partially from special taxes to be levied on
Undeveloped Property (the "Other CFD Bonds") determined by mnitiplying the aggregate principal
amount of the Other CFD Bonds by a fraction the numerator of which is the total amount of the
maximum special taxes that may be then levied for the Other CFD Bonds on Undeveloped Property
and the denominator of which is the total amount of the maximum special taxes that may be then
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DOCSOC/1 054957v3/22925-001 0
levied for the Other CFD Bonds on all parcels of property which are subject to the levy of such
special taxes.
"Parcel"has the meaning ascribed thereto in the RMA.
Parity BOndS' Divans all bonds, notes or other evidences of indebtedness issued subsequent
to the issuance of the 2004 Bonds that are payable from Net Taxes on a parity with the 2004 Bonds.
"Pervon" means natural persons, firms, corporations, partnerships, associations, trusts,public
bodies and other entities.
"Pi e1wYmc-nt"means money revered by the PUD or the District as a complete or partial
prepayment of Special Taxes permitted pursuant to the RMA.
"PrepayrrrentAct ount"means the Account by such name created and established in the
Special Tax Fund pursuant to Section 3.1.
"Principal Account"means the Account by such name created and established in the Special
Tax Fund pursuant to Section 3.1.
"Principal Of h e of the Trustee" means the office of the Trustee located in Los Angeles,
California or such other office or offices as the Trustee may designate from time to time, or the office
of any successor Trustee where it principally conducts its business of serving as trustee under
indentures pursuant to which municipal or got crmnental obligations are issued.
"Project"means the public facilities described in the Resolution of Formation, including all
engineering, planning and design services and other incidental expenses related to such facilities and
other facilities if any, authorized by the qualified electors within the District from time to time.
"Projeci Account"mcans the Account by such name created and established in the
Acquisition and Construction Fund pursuant to Section 3.1.
"Project Costs"mcans the amounts necessary to finance the Project, to create and replenish
any necessary reserve accounts, to pay the initial and annual costs associated with the Bonds,
including, but not limited to, remarketing, credit enhancement, other fees and expenses relating to the
issuance of the Bonds and the formation of the District, and to pay any other"incidental expenses' of
the District, as such term is defined in the Act.
PUD"means the Truckee Donner Public Utility District.
"Rating Ageng,- means either Moody's or Standard &Poor's.
"Rebate Account"means the Account by such name created and established in the Rebate
Fund pursuant to Section 3.1.
"Rebate Fund"means the fund by such name created and established pursuant to Section 3.1.
"Rebate Regulations"means any final, temporary or proposed Regulations promulgated
under Section 148(f) of the Code.
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"Record Date" means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
"Redemption Account"means the account by such name created and established in the
Special Tax Fund pursuant to Section 3.1.
"'Regulations"means the regulations adopted or proposed by the Department of Treasury
from time to time v,nh respect to obligations issued pursuant to Section 103 of the Code.
"`Representation Lcner"means the representation letter or leners from the District to DTC.
"Reserve Account"means the account by such name created and established in the Special
Tax Fund pursuant to Section 3.1.
"Reserre Requirement"means, as of any date of calculation by the District, an amount equal
to the lowest of(i) 10% of the original proceeds of the Bonds, less original issue discount, if any,
plus original issue premium, if any, or (ii)Maximum Annual Debt Service, or(iii) 125% of the
average Annual Debt Service.
"Resolution of Formation"means the resolution adopted by the Board of Directors of the
PUD on July 21, 2004,pursuant to which the PUD formed the District.
"RMA"means the Rate and Method of Apportionment of Special Taxes approved by the
qualified electors of the District at an election conducted on July 21, 2004, a copy of which is
attached hereto as Exhibit C.
"Series"means one or more Bonds issued at the same time, or sharing some other common
term or characteristic, and designated as a separate series in the Supplemental Indenture pursuant to
which they are issued.
"Sinking Fund Pa'vnient"means the annual payment in those years indicated in
Section 4.1(b)to be deposited in the Principal Account to redeem a portion of the Term Bonds in
accordance with the schedule set forth herein to retire the Term Bonds.
"Special Tax Administrator"means such person or firm as may be designated by the Board
of Directors to administer the calculation and collection of the Special Taxes, or any successor
person or entity acting in such capacity.
",51m(ial Taxes"means the taxes authorized to be levied by the District in accordance with
the RMA, as the RMA may be amended from time to time(if and to the extent such amendment is
consistent with the covenant set forth in Section 5.2(g)).
"Special Tax Fund"means the fund by such name created and established pursuant to
Section 3.1.
"Standard& Poor's" means Standard &Poor's Ratings Services, a division of The
McGraw-Hill Companies, its successors and assigns.
"Supplemewal Indenture"means any supplemental indenture entered into in accordance with
the provisions hereof amending or supplementing this Indenture.
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"Surplus Fund" means the Fund by such name created and established pursuant to
Section 3.1.
"Tax Cerlificah " means the certificate by that name to be cxecutcd by the District on the
Delivery Date of each Series of Bonds to establish certain facts and expectations and which contains
certain covenants relevant io compliance with the Code.
"Taxable Powerta,"shall have the meaning ascribed thereto in the RNIA.
"Term Bonds" means the Bonds maturing September 1 _, September 1, and
September 7 2035 and tury maturities ofP arity Bonds designated as such in a Supplemental
Indenture.
"Trustee"means BN/Y yd cstern Trust Company, a banking corporation organized and
existing under the laws of the State of California, and its successors or assigns, or any other bank or
trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3
and any successor thereto.
"Undo ii ritee"means the institution or institutions, if any, smith whom the District enters into
a purchase contract for the sale ofBonds.
"Value means with respect to parcels of Taxable Property which are not delinquent in the
payment of am ad valor ten taxes or any Special faxes.either(a)the fair market value, as of the date
of\alue specified in the Appraisal provided for below, of such parcel, including the value of the then
existing improvements thereon, as estimated by an appraiser, who shall be a State of California
certified general real estate appraiser selected and employed by the District, in an appraisal which
specifies a date of value that is less than 90 days preceding the date as of which such value is being
applied by the District and which utilizes a methodology" of valuation that is consistent with the
PL7
D's policy for appraisals, provided that a mass appraisal methodology may be applied when
valuing developed property or(b) the full cash value of such parcel, including the value of the
improvements thereon as set forth on the last equalized assessment roll of the County Assessor of the
County of Nevada,
ARTICLE H
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. .Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant to
the Act,the Bonds in the apgregate principal amount of$35,000,000 shall be issued for the purposes
described herein. The Bonds shall he and are limited obligations of the District and shall be payable
as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely
from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the
Administrative Expense Account of the Special Tax Fund).
Section 2.2. Type and Nature of Bonds. Neither the faith and credit nor the taxing
Power of the PUD, the State of California or any political subdivision thereof other than the District
is pledged to the payment of the Bonds. Except for the Special Taxes, no other taxes are pledged to
the payment of the Bonds. The Bonds are not general or special obligations of the PUD nor general
obligations of the District, but are limited obligations of the District payable solely from certain
12
DOCSOC/1054957v3/22925-0010
amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense
Account), as more fully described herein. The District's limited obligation to pay the principal of,
premium, if any, and interest on the Bonds from amounts in the Special Tax Fund (exclusive of the
Administrative Expense Account) is absolute and unconditional, free of deductions and without any
abatement, offset, recoupment, diminution or set-off whatsoever. 'vo Owner of Bonds may compel
the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the PUD
or the forfeiture ()fully of their property. The Bonds are not a legal or equitable pledge, charge, lien,
or encumbrance upon any of the District's property, or upon any of its income, receipts or revenues,
except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative
Expense Account)which are, under the terns of this Indenture and the Act, set aside for the payment
of the Bonds and interest thereon; and neither the members of the legislative body of the District or
the Board of Directors of the PUD not any pe,sons executing the Bonds,are liable personally on the
Bonds by reason of their issuance.
Notwithstanding anything to the contrary contained in this Indenture,the District shall not be
required to adv 3nce any money derived from any source of income other than the Net Taxes for the
payment of the interest on or the principal of the Bonds, or for the performance of any covenants
contained herein. The District may. however, advance funds for any such purpose, provided that
such funds are derived from a source legally available for such purpose.
Section 2.3. Equality of Bonds and Pledge of Net Taxes. Pursuant to the Act and this
Indenture, the Bonds shall be equally payable from the Net Taxes and other amounts in the Special
Tax Fund (exclusive of the Administrative Expense Account) without priority for number, date of the
Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and
principal of(including Sinking Fund Payments)the Bonds and any premiums upon the redemption
thereof. shall be exclusively paid from the'Vet Taxes and other amounts in the Special Tax Fund
(exclusive of the Administrative Expense Account), which are hereby set aside for the payment of
the Bonds. The Net Taxes and other amounts in the Special Tax Fund (exclusive of the
Administrative Expense Account) are hereby plcdged to the payment of the principal of, premium, if
any, and interest on the Bonds_ Such pledge shall constitute a first lien on such assets. Amounts in
the Special Fax Fund (other than the Admimstrative Expense Account therein)shall constitute a trust
fund held for the benefit of the Owners to be applied to the payment of the interest on and principal
of the Bonds and so ](in,as any of the Bonds or interest thereon remain outstanding shall not be
used for any other purpose, except as permitted by this Indenture of any I pplememal Indenture.
Notwithstanding any provision contained in this Indenture to the contrary, Special Taxes deposited in
the Administrative Expense Account of the Special Tax Fund,the Rebate Fund and the Surplus Fund
shall no longer be considered to be pledged to the Bonds, and none of the Rebate Fund,the Surplus
Fund. the Administrative Expense Account of the Special Tax Fund nor the Acquisition and
Construction Fund shall be construed as a trust fund held for the benefit of the Owners.
Nothing in this Indenture or any Supplemental Indenture shall preclude, subject to the
limitations contained hereunder, the redemption prior to maturity of any Bonds subject to call and
redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the
same now exists or as hereafter amended, or under any other law of the State of California.
Section 2.4. Description of 2004 Bonds; Interest Rates. The 2004 Bonds shall be issued
in fully registered form in denominations of S5,000 or any integral multiple thereof. The 2004 Bonds
shall be numbered as desired by the Trustee.
13
DOCSOC/f 054957v3/22925-0010
The Bonds shall he designated "Truckee Donner Public utility District Community Facilities
District No. 04-1 (Grav`s Crossing), Special Tax Bonds, Series 2004." The 2004 Bonds shall be
dated as of their Delivery Date and shall mature and be payable on September 1 in the years and in
the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in
the table below payable on each Interest Payment Date:
Maturity mate
(Sq,icmher-1) Principal Amount Interest Rate
Interest shall be payable on each 2004 Bond from the date established in accordance with
Section 2.5 below on each Interest Payment Date theteafler until the principal sum of that 2004 Bond
has been paid; provided, however, that ifat the maturity date of any 2004 Bond (or if the same is
redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are
available for the payment or redemption thereof in full, in accordance with the terms of this
Indenture, such 2004 Bonds shall then cease to bear interest. Interest due on the 2004 Bonds shall be
calculated on the basis of a 360-day year comprised of twelve 30-day months.
Section 2.5. Place and Form of Payment. The Bonds shall be payable both as to
principal and interest,and as to any premiums upon the redemption thereof, in lawful money of the
United States of America. The principal of the Bonds and any premiums due upon the redemption
thereof shall be payable by check of the Trustee upon presentation and surrender thereof at the
Principal Office of the Trustee, or at the designated office of any successor Trustee. Interest on any
Bond shall be payable from the Interest Payment Date next preceding the date of authentication of
that Bond, unless (i) such date of authentication is an Interest Pavment Date in which event interest
shall be payable from such date of authentication, (ii) the date of authentication is after a Record
Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be
payable from the Interest Payment Date immediately succeeding the date of authentication, or
(iii)the date of authentication is prior to the close of business on the first Record Date occurring after
the issuance of such Bond, in which event interest shall be payable from the dated date of such Bond;
provided,however, that if at the time of authentication of such Bond, interest is in default, interest on
that Bond shall he payable from the last Interest Payment Date to which the interest has been paid or
made available for payment or, if no interest has been paid or made available for payment on that
Bond, interest on that Bond shall be payable from its dated date. Interest on any Bond shall be paid
14
DOCSOG 10549570,'22925-00 10
to the person whose name shall appear in the Bond Register as the Owner of such Bond as of the
close of business on the Record Date. Such imerest shall be paid by check of the Trustee mailed by
first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond
Register. In addition, upon a request in writing received by the Trustee on or before the applicable
Record Date from an Owner of S1,000.000 or more in principal amount of the Bonds, payment shall
be made on the Interest Payment Date by wire transfer in immediately available funds to an account
within the United States designated by such Owner.
Section 2.6. Form of Bonds. The 2004 Bonds and the certificate of authentication shall
be substantially in the form attached hereto as Exhibit A,which forms are hereby approved and
adopted as the forms of such Bonds and of the certificate of authentication. Notwithstanding any
provision in this Indenture to the contrary, the District may.in its sole discretion, elect to issue the
2004 Bonds in book entry form.
Section 2.7. Execution and Authentication. The Bonds shall be signed on behalf of the
District by the manual or facsimile signatures of the President of the Board of Directors of the PUD
and the District Clerk, or any duly appointed deputy clerk. In case any one or more of the officers
who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed
have been authenticated and delivered by the Trustee (including new Bonds delivered pursuant to the
provisions hereof with relerence to the transfer and exchange of Bonds or to lost, stolen, destroyed or
mutilated Bonds), such Bonds shall nevertheless be valid and may be authenticated and delivered as
herein provided, and may be issued as if the person who signed such Bonds had not ceased to hold
such office.
Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in
Exhibit A hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be
valid or obligatory for any purpose notil such certificate of authentication shall have been duly
executed by the Trustee.
Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its office,
sufficient books for the registration and transfer of the Bonds which shall upon reasonable prior
notice be open to inspection by the District during all regular business hours, and, subject to the
limitations set forth in Section 2.9 below, upon presentation for such purpose,the Trustee shall,
under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred
on said Bond Register, Bonds as herein provided.
The District and the Trustee may treat the Owner of any Bond whose name appears on the
Bond Register as the absolute Owner of that Bond for any and all purposes, and the District and the
Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on
the address of the Bondowner as it appears in the Bond Register for any and all purposes. It shall be
the duty of the Bondowner to give written notice to the Trustee of any change in the Bondowner's
address so that the Bond Register may be revised accordingly.
Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth
in the following paragraph,the registration of any Bond may. in accordance with its terms, be
transferred upon the Bond Register by the person in whose name it is registered, in person or by his
or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the
Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the
Trustee and duly executed by the Bondowner or his or her duly authorized attorney.
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DOCSOCl1054957v3122925-0010
Bonds may be exchanged it the office ofthe Trustee for a like aggregate principal amount of
Bonds of other authorized denominations of the same maturity. The Trustee shall not collect from
he Owner any charge for any new Bond issued upon my exchange or transfer, but shall require the
Bondowner requesting such exchange or transfer to pay any tax or other governmental charge
required to be paid with respect to such exchange or transfer. Whenever any Bonds shall be
surrendered for registration of transfer or exchange, the District shall execute and the Trustee shall
authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal
amount; provided that the Trustee shall not be required to register transfers or make exchanges of
(i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or
(ii) any Bonds chosen for redemption.
Section 2.10. Mutilated. Lost. Destroyed or Stolen Bonds. if any Bond shall become
mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond of
like tenor, date and maturity in exchange and substitution for the Bond so mutilated, but only upon
surrender io the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the
Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. lfany Bond shall be lost,
destroyed or stolen, evidence of such loss, destruction or thefi may be subuited to the Trustee and, if
such evidence is satisfactory to the Trustee and, ifam indemnih satisfactory to the District and the
Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver, a new
Bond of like tenor and maturity, numbered and dated as the Trustee shall determine in lieu of and in
substitution for the Bond so lost, destroyed or stolen. Any Bond issued in lieu of any Bond alleged to
be mutilated, lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits
hereof with all other Bonds issued hereunder. The Trustee shall not treat both the original Bond and
any replacement Bond as being Outstanding Sor the purpose of determining the principal amount of
Bonds which may be executed, authenticated and dehN Bred hereunder or for the purpose of
determining any percentage of Bonds Outstanding hereunder, but both the original and replacement
Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in
lieu of dehverine a new Bond which has been mutilated.lost, destroyed or stolen, and which has
matured, the Trustee may make payment with respect to such Bonds.
Section 2.11. Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be affected in any way by any defect in any proceedings taken by the District, or by
the invalidity,. in whole or in part, of any contacts made by the District in connection therewith, and
the recital contained in the Bonds that the same are issued pursuant to the Act and other applicable
laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance.
Section 2.12. Book-Entry System.
(a) All Bonds shall be initially issued in the form of a separate single certificated frilly
registered Bond for each maturity date ofthe Bonds. upon initial issuance, the ownership of each
Bond shall be registered in the Bond Register in the name of Cede & Co.,as nominee of DTC.
Except as provided in Section 2.12(d) hereof, all Outstanding Bonds shall be registered in the Bond
Register in the name of Cede & Co., as nominee of DTC.
(b) With respect to Bonds registered in the Bond Register in the name of Cede &Co., as
nominee of DTC, the District and the Trustee shall have no responsibility or obligation with respect
to (i)the accm acy of the records of DTC,Cede & Co. or any DTC Participant with respect to any
ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other
than an Owner, as shown in the Bond Register, of any notice with respect to the Bonds, including any
16
UOCSOC/1 05495 70/2292s-0010
notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an
Owner, as shown in the Bond Regrstcr,of any amount with respect to principal of, premium, if any,
or interest on the Bonds. The District and the Trustee may treat and consider the person in whose
name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for
the purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of
giving notices of redemption and other matters with respect to such Bond, for the purpose of
registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee
shall pay all principal of, premium, if any.. and interest on the Bonds only to or upon the order of the
respective Owners, as shown in the Bond Register,as provided in Section 2.8 hereof, or their
respective attorneys duly authorized in Naniting, and all such payments shall be valid and effective to
full satisfy and discharge the District's obligations with respect to payment of principal of,
premium,if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other
than an Owner. as shown in the Bond Register, shall recciv e a certificated Bond evidencing the
obligation of the District to make payments ofprincipal, premium, if any, and interest pursuant to
this Indenture. upon delivery by DTC to the Trustee of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein
with respect to record dates.the word "Cede & Co." in this Indenture shall refer to such new
nominee of DTC.
(c) The delivery ofthe Representation Letter by the District and the Trustee shall not in
any way limit the provisions of Section 2.12(b) hereof or in any other Na�ay impose upon the District
or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other
than the Owncrs, as shown on the Bond Register. The 7 rustee shall take all action necessary for all
representations in the Representation Letter tiith respect to the Trustee to be complied with at all
times.
(d) DTC mad determine to discontinue providing its services with respect to the Bonds at
any time by giving written notice to the District and the Trustee and discharging its responsibilities
with respect thereto under applicable law.
The District, in its sole discretion and without the consent of any other person, may terminate
the services of DTC with respect to the Bonds if the District determines that either DTC is unable to
discharge its responsibilities with respect to the Bonds or a continuation of the requirement that all
Outstanding Bonds be registered in the Bond Register in the name of Cede &Co., or any other
nominee of DTC, is not in the best interest of the beneficial owners of such Bonds.
Upon the discontinuation or termination of the services of DTC with respect to the Bonds
pursuant to the foregoing after which no substitute securities depository willing to undertake the
functions of DTC hereunder can be found which, in the opinion of the District, is willing and able to
undertake such functions upon reasonable and customary terms, the District is obligated to deliver
Bond certificates, as described in this Indenture and the Bonds shall no longer be restricted to being
registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered
in whatever name or names DTC shall designate to the Trustee in Uniting, in accordance with the
provisions of this Indenture.
(e) Notwithstanding any other provisions of this Indenture to the contrary, as long as any
Bond is registered in the name of Cede & Co., as nominee of DTC,all payments with respect to
principal or, premium, if any, and interest on such Bond and all notices with respect to such Bond
shall be made and given, respectively, in the manner provided in the Representation Letter.
17
DOCSOG10549570/22925-0010
Section 2.13. Conditions for the Issuance of Parity Bonds. The District may issue Parity
Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than
in the Administrative Expense Account therein) and secured by a Lien and charge upon such amounts
equal to the lien and charge securing the 2004 Bonds and airy other Parity Bonds theretofore issued
hereunder or under any Supplemental Indenture for any purposes authorized under the Act. Parity
Bonds may be issued subject to the following additional specific conditions, which are hereby made
conditions precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all cov enanis set forth in this Indenture and
any Supplemental Indenture then in effect and a certificate of the District to that effect shall have
been tiled with the Trustee; provided, howcv er, that Parity Bonds may be issued notwithstanding that
the District is not compliance with all such covenants so long as immediately following the
issuance of such Parity Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the
Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a
Supplemental Indenture duly adopted by the District which shall specify the following:
(i) The purpose for which such Parity Bonds are to be issued and the fund or
funds into which the proceeds thereof are to be deposited, including payment of all costs and the
finding of all reserves incidental to or connected with such issuance;
(i i) The authorized principal amount of such Parity Bonds;
(iii) `['he date and the maturity date or dates of such Parity Bonds: provided that
(i) cach maturity date shall fall on a September 1, and (it) fixed serial maturities or Sinking Fund
Payments. or any combination thereof, shall he established to provide for the retirement of all such
Parity Bonds on or before their respective maturity dates;
(iv) The description of the Parity Bonds, the place of payment thereof and the
procedure for execution and authentication;
(v) The denominations and method of numbering of such Parity Bonds;
(vi) The amount and due date of each mandatory Sinking Fund Payment, if any,
for such Parity Bonds and the redemption provisions for such Parity Bonds;
(vii) The amount, if any, to be deposited from the proceeds ofsueh Parity Bonds in
the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve
Requirement;
0 iii) The form of such Parity Bonds; and
(ix) Such other provisions as are necessary or appropriate and not inconsistent
with this Indenture.
(e) The Trustee shall have received the following documents or money or securities, all
of such documents dated or certified, as the case may be, as of the date of delivery of such Parity
Bonds to the Trustee (unless the Trustee shall be directed by the District to accept any of such
documents bearing a prior date):
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DOCSOC/1 05495 70/22 92 5-001 0
(i) A certified copy of the Supp]ementaI Indenture authorizing the issuance of
such Parity Bonds;
(ii) A written request of the District as to the delivery of such Parity Bonds;
(iii) An opinion of Bond Counsel to the effect that (a) the District has the right and
Power under the Act to adopt this Indenture and the Supplemental Indentures relating to such Parity
Bonds, and this Indenture and all such Supplemental Indentures have been duly and lawfully adopted
by the District, are in full force and effect and are valid and binding upon the District and enforceable
in accordance \v ith their terns (except as enforcement may be limited by bankruptcy, insolvency,
reorganization and other similar laws relating to the enforcement ofcreditors' rights); (b) this
Indenture creates the valid pledge x%hich it purports to create of the Net Taxes and other amounts as
provided in this Indenture, subject to the application thereof to the purposes and on the conditions
permitted by this Indenture; and (c) such Parity Bonds are valid and binding limited obligations of
the District. enforceable in accordance vN ith their terms (except as enforcement may be limited by
bankruptcy, insch ency, reorganization and other similar laws relating to the enforcement of
creditors' rights) and the terns ofthis Indenture and all Supplemental Indentures thereto and entitled
to the benefits of this Indenture and all such Supplemental Indentures. and such Parity Bonds have
been duly and validly authorized and issued in accordance with the Act (or other applicable laws)
and this indenture and all such Supplemental Indentures; and a further opinion of Bond Counsel to
the effect that, assuming compliance by the District with certain tax covenants, the issuance of the
Parity Bonds will not adN e sely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax exempt basis, or
the exemption from State of California personal income taxation of interest on any Outstanding
Bonds and Parity Bonds theretofore issued;
(iv) A certificate of the District containing such statements as may be reasonably
necessary to show compliance with the requirements of this Indenture;
(v) A certificate or certificates from the Special Tax Administrator and/or one or
more Independent Financial Consultants which, when taken together, certify that:
(A) The Maximum Special Taxes that may be levied in each Fiscal Year
on property that is not then delinquent in the payment of any ad valorem taxes or any Special Taxes
is not less than the sum of the Administrative Expense Cap plus 110% of the Annual Debt Service in
the Bond Year that begins in such Fiscal Year;
(B) The Value ofTaxable Property is not less than four(4) times the sum
of Direct Debt for Taxable Property plus Overlapping Debt for Taxable Property;
(C) The Value of Developed Property is not less than four(4) times the
sum of Direct Debt for Developed Property plus Overlapping Debt for Developed Property;
(D) The Value of undeveloped Property is not less than three(3)times
the sum of Direct Debt for Undeveloped Property plus Overlapping Debt for Undeveloped Property;
(E) The Maximum Special Taxes applicable to Parcels that are then
delinquent in the payment of any ad valorem taxes or any Special Taxes shall not exceed 10 percent
of the aggregate amount of the Maximum Special Tax then applicable to the Taxable Property; and
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DOCSOC/1054957v3/22925-0010
(F) No Parcel that is owned by the Dex eloper or an Affiliate of the
Dex eloper shall be delinquent in the payment of any ad valorem taxes or any Special Taxes.
For purposes of the Ibreaoing certificate, all calculations shall consider the Paritv Bonds
proposed to be issued to be Outstanding.
The provisions of this paragraph (c) shall not apply to Parity Bonds issued for the purpose of
refunding Otnstanding Bonds if the District sliall Kay e received a ceriifieate from an Independent
Financial Consultant to the effect that Annual Debt Service after the issuance of such Parity Bonds
xx-ill be no larger than Annual Debt Service would have been prior to the issuance of such Parity
Bonds in each Fiscal Year in which Bonds or Parity Bonds (other(}ran the refunding Parity Bonds)
will remain Outstanding.
(yi) Such further documents. money and securities as are required by the
prox isions of this Indenture and the Supplememal Indenture prov rdmg for the issuance of such Parity
Bonds,
ARTICLE IlI
CREATION OF FINDS AND APPLICATION OF REVENUES AND GROSS TAXES
Section 3.1. Creation of Funds; Application ol'Proceeds.
(a) There is hereby created and established and shall be maintained by the Trustee the
following funds and accounts:
(i) The Truckee Donner Public Utility District Community Facilities District
No. 04-1 (Gray's Crossmg) Special Tax Fund (the "Special Tax Fund") (in which there shall be
established and created an Interest Account (and a Capitalized Interest SubacCount therein for the
2004 Bonds), a Principal Account. a Redemption Account, a Prepayment Account, a Reserve
Account and an Administrative Expense Account);
(ii) The Truckee Donner Public Utility District Community Facilities District
No. 04-1 (Grays Crossing) Rebate Fund (the "Rebate Fund") (in xxhich there shall be established a
Rebate Account and an Alternative Penalty Account for the 2004 Bonds);
(in) The Truckee Donner Public Utility District Community Facilities District
No. 04-1 (Grays Crossing) Surplus Fund (the "Surplus Fund"); and
(iv) The Truckee Donner Public Utility District Community Facilities District
No. 04-1 (Grays Crossing) Acquisition and Construction Fund (the "Acquisition and Construction
Fund") (in vyhich there shall be established a Costs of Issuance Account and a Project Account for
the 2004 Bonds).
The amounts on deposit in the foregoing funds, accounts and subaecounts shall be held by the
Trustee and the Trustee shall invest and disburse the amounts in such finds, accounts and
subaccounis in accordance with the provisions of this Article Ill and shall disburse investment
earnings thereon in accordance with the provisions of Section 3.11 hereof.
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DOCSOC/10549570,/22925-0010
(b) The proceeds of the sale of the Bonds received by the Trustee on behalf of the
District shall be deposited and transferred as follows:
(i) S25,500 shall be deposited in the Administrative Expense Account of the
Special Tax Fund for the disbursement in accordance with Section 3.3 below;
(ii) S _shall be deposited in the Capitalized Interest Subaccount for
the 2004 Bonds in the Interest Account of the Special "Fax Fund for disbursement in accordance with
Section 3.4 below;
(iii) $ shall be deposited in the Cots of Issuance Account for the
2004 Bonds in the Acquisition and Construction Fund for disbursement in accordance with Section
3.10 below;
(iv) S shall be deposited to the Project Account for the 2004 Bonds in
the Acquisition and Construction Fund for disbursement in accordance with Section 3.10 below; and
(v) S shall be deposited in the Reserve Account of the Special Tax
Fund (equaling the initial Reserve Requirement) to be disbursed in accordance with Section 3.7
below.
The Trustee may, in its discretion, establish a temporary fund or account in its books and
records to facilitate such transfers.
Section 3.2. Deposits to and f�isbursements from Special Tax Fund. The Trustee shall,
on each date on which the Special Taxes are received from the Pl`D or The District, deposit the
Special Taxes in the Special Tax Fund in accordance with the terms of the Indenture to be held by the
Trustee,provided that am Prepayment shall he deposited in the funds and accounts (and in the
respective amounts) specified in the cerlifcate of the Special Tax Administrator delix°erect to the
Trustee in connection with the delivery of the Prepayment to the Trustee. The Trustee shall transfer
the amounts on deposit in the Special Tax Fund generally on the dates and in the amounts set forth in
the following Sections, in the following order of priority.. but subject in any event to the provisions of
the following Sections, to:
(a) The Administrative Expense Account,
(b) The Interest Account,
(c) The Principal Account,
(d) The Redemption Account,
(e) The Reserve Account,
(f) The Rebate Fund, and
(g) The Surplus Fund.
At the maturity of all of the Bonds and,after all principal and interest then due on the Bonds
then Outstanding has been paid or provided for and any amounts owed to the Trustee have been paid
21
DOCSOC/10549570/22925-0010
in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any
lawful purpose.
Section 3.3. .Administrative Expense Account of the Special Tax Fund. In addition to
bond proceeds deposited therein, the Trustee shall, commencing in Fiscal Year 2005-2006, not less
Often than annually transfer from the Special Tax Fund and deposit in the Administrative Expense
Account from time to time amounts necessary to make timely pav merit of Administrative Expenses
upon the written direction of the District;provided, howevcr, that the total amount of the deposits
into the Administrative Expense Account in any Bond Year shall not exceed the Administrative
Expense Cap until such time as (i) there has been deposited in the Interest Account and the Principal
Account an amount, together with any amounts already on deposit therein, that is Sufficient to pay
the interest and principal on all Bonds due in such Bond Year and (ii) there has been deposited in the
Reserve Account the amount,if any. required in order to cause the amount on deposit therein to equal
the Reserve Requirement. In addition to the foregoing,the Trustee shall also deposit in the
Administrative Expense Account the portion of any Prepayment directed to be deposited in the
certificate of the Special Tax Administrator dehcered to the Trustee in connection with such
Prepayment.
Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The
principal of and interest due on the Bonds until maturity. other than principal due upon redemption,
shall be paid by the Trustee from the Principal Account and the Interest Account,respectively. For
the purpose of assuring that the payment of principal of and interest on the Bonds will be made when
due, the Trustee shall make the transfers described below from the Special Tax Fund on each Interest
Payment Date first to the Interest Account and then to the Principal Account; provided, however,that
to the extent that deposits have been made in the Interest Account or the Principal Account from the
proceeds of the sale of an issue of the Bonds, the transfer from the Special Tax Fund need not be
made; and provided, further, that, if amounts in the Special Tax Fund are inadequate to make the
foregoing transfers then any deficiency shall be made up by an immediate transfer from the Reserve
Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account shall
be equal to the installment of interest due on the Bonds on said Interest Payment Date and any
installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in
the Interest Account shall be used for the payment of interest on the Bonds as the same become due
after the application for such purpose of moneys on deposit in the Capitalized Interest Subaccount of
the Interest Account. On any date on which Bonds are to be redeemed from moneys on deposit in
the Prepayment Account, the Trustee shall withdraw from the Capitalized Interest Subaecount and
transfer to the Prepayment Account the amount, if any, directed to be so transferred in the certificate
ofthe Special Tax Administrator delivered to the Trustee in connection with the delivery of the
Prepayment giving rise to such redemption.
(b) To the Principal Account, an amount such that the balance in the Principal Account
on September I of each year,commencing September 1, 2006 shall equal the sum of(i)the principal
payment due on the Bonds maturing on such September 1, (ii) the Sinking Fund Payment due on any
Outstanding Bonds on such September 1, and (in) any principal payment due on a previous
September I which remains unpaid. Moneys in the Principal Account shall be used for the payment
of the principal of such Bonds as the same become due at maturity or pursuant to the Sinking Fund
Payment schedules set forth in Section 4.1(b)hereof and in any Supplemental Indenture.
22
DOCSOC/10549570/22 92 5-00 1 0
In addition to the transfers to the Interest .Account and Principal Account described in the
first paragraph of this Section, the Trustee shall also transfer thereto such portions of a Prepayment as
may be directed to be so transferred in the certificate of the Special Tax Administrator delivered to
the Trustee in connection with the Prepayment.
Section 3.5. Redemption Account of the Special Tax Fund.
(a) After making the deposits to the,Interest Account and the Principal Account of the
Special Tax Fund pursuant to Section 3.4 abov e, and in accordance with the District's election to call
Bonds for optional redemption as set forth in Section 4.1(a) hereof the Trustee shall transfer from the
Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and
sufficient to pay the principal and the premiums, if any, payable on the Bonds called for optional
redemption; provided, hoxiever, that amounts in the Special Tax Fund (other than the Administrative
Expense Account therein)may,be so deposited in the Redemption Account and applied to optionally
redeem Bonds only if immediately following such transfer and redemption the amount in the Reserve
Account will equal the Reserve Requirement. The Trustee shall also transfer from the Acquisition
and Construction Fund and deposit in the Redemption Account moneys in the amounts and at the
times provided in Section 3.10.
(b) Moneys set aside in the Redemption Account shall be used solely for the purpose of
redeeming Bonds and shall be applied on or after the redemption date to the payment of the principal
of and premium, if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds;
provided_however, that in lieu or partially in lieu of such call and redemption, moneys deposited in
the Redemption Account as set forth above may be used to purchase Outstanding Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds may be made by the District at public
or pr ue sale as and when and at such prices as the District may in its discretion determine but only
at prices (including broker age or other expenses)not more than par plus accrued interest, plus, in the
case of moneys set aside for an optional redemption, the premium applicable at the next following
call date according to the premium schedule established pursuant to Section 4.I(a)hereof. Any
accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the
Interest Account of the Special Tax Fund for the payment of interest on the next following Interest
Payment Date.
Section 3.6. Prepayment Account of the Special Tax Fund.
(a) The Trustee shall deposit in the Prepayment Account the portion of each Prepayment
directed to be so deposited in the certificate of the Special `fax Administrator delivered to the Trustee
in connection with the delivery of such Prepayment. On each date on which Bonds are to be
redeemed from moneys on deposit in the Prepayment Account pursuant to subsection (b) of this
Section.the 7 rustee shall withdraw from the Capitalized Interest Subaccount(if any)for the
applicable Series ofBonds and from the Reserve Account and deposit in the Prepayment Account the
respective amounts, if any, directed to be so withdrawn and deposited in the certificate of the Special
Tax Administrator delivered to the Trustee in connection with the Prepayment giving rise to such
redemption.
(b) Moneys set aside in the Prepayment Account shall be used solely for the purpose of
redeeming Bonds and shall be applied on or after the redemption date to the payment of the principal
of and premium,if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds;
provided, however, that in lieu or partially in lieu of such call and redemption,moneys deposited in
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DOCS00 1 0 5495 7 0/22 925-001 0
the Prepayment Account as set forth aboee may be used to purchase Outstanding Bonds in the
manner hereinafter provided. Purchases of Outstanding Bonds may be made by the District at public
or private sale as and when and at such prices as the District may in its discretion determine but only
at prices (including brokerage or other expenses) not more than par plus accrued interest, plus the
premium applicable at the next following call date according to the premium schedule established
pursuant to Section 4.1(c)hereof Any accrued interest payable upon the purchase of Bonds may be
paid from the amount reserved in the Interest Account or the applicable Capitalized Interest
Subaccount for the payment of interest on such Bonds on the next following Interest Payment Date.
Section 3.7. Reserve Account of the Special Tax Fund. There shall be maintained in the
Reserve Account an amount equal to the Reserve Requirement. 'Notwithstanding any provision
hereof to the contrary- the amounts in the Reserve Account shall be applied as follows:
(a) Moneys in the Reserve Account shall be used solely for the purpose of(i) paying the
principal of,including Sinking Fund Payments, and interest on any Bonds when due in the event that
the moneys in the Interest Account and the Principal Account are insufficient therefor, (it) making
any required transfer to the Rebate Fund pursuant to Section 3.8 upon written direction from the
District, and (iii) making any transfer to the Prepayment Account required pursuant to the provisions
of Section 3.6. If the amounts in the Interest Account or the Principal Account are insufficient to pay
the principal of,including Sinking Fund Payments, or interest on any Bonds when due, or amounts in
the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the
TrlSlee shall withdraw fi-om the Reserve Account for deposit in the Interest Account or the Principal
Account or the Rebate Fund, as applicable,moneys necessary for such purposes.
(b) Whencver moneys are withdrawn from the Reserve Account, after making the
required transfers referred to in Sections 3.4. 3.6 and 3.8 hereof, the Trustee shall transfer to the
Reserve Account from av ailablc moneys in the Special Tax Fund, or from any other legally available
Funds which the District elects to apply to such purpose.the amount needed to restore the amount of
such Reserve Account to the Reserve Rcqunemeut. Moneys in the Special Tax Fund shall be
deemed available for transfer to the Reserve Account only if the Trustee determines that such
amounts will not be needed to make the deposits required to be made to the Interest Account or the
Principal Account for the next succeeding Interest Payment Date. If amounts in the Special Tax
Fund or otherwise transferred to replenish the Reserve Account are inadequate to restore the Reserve
Account to the Reserve Requirement,then the District shall include the amount necessary fully to
restore the Reserve Account to the Reserve Requirement in the next annual Special Tax levy to the
extent of the maximum permitted Special Tax rates and to the extent permitted by the Act.
(c) In connection with an optional redemption of the Bonds hereunder or a partial
defeasance of the Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may
be applied to such optional redemption or partial defeasance so long as the amount on deposit in the
Reserve Account following such optional redemption or partial defeasance equals the Reserve
Requirement.
(d) To the extent that the Reserve Account is at the Reserve Requirement as of the first
day of the final Bond Year for Outstanding Bonds,amounts in the Reserve Account may be applied
to pay the principal of and interest due on the Bonds in such final Bond Year. 'Moneys in the Reserve
Account in excess of the Reserve Requirement not transferred in accordance with the preceding
provisions of this paragraph shall be withdrawn from the Reserve Account on each Interest Payment
Date and transferred to the Interest Account.
24
DOCSOC1054957v3/22925-0010
Section 3.8. Rebate Fund.
(a) The Trustce shall establish and maintain a find separate from any other find
established and maintained hereunder designated as the Rebate Fund and shall establish a separate
Rebate Account and Alternative Penalty Account therein for the 2004 Bonds. All money at any time
deposited in the Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held
by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the
Rebate Account and the Alternate Penalty Account shall be established for each Series of Bonds the
imrrest on which is ehcluded from gross income for federal income tax purposes. All amounts on
deposit in the Rebate Fund with respect to the Bonds shall be governed by this Section and the Tax
Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion
from gross income for federal income tax purposes of interest pay menu on such Bonds will not be
adversely affected if such requirements are not satisfied.
(i) Rebate Account. The following requirements shall be satisfied with respect
to each subaccount of the Rebate Account:
(A) Annual Computation. Within 55 days of the end of the fourth and the
fifth Bond Year and each fifth Bond Year thereafter, the District shall calculate or cause to be
calculated the amount of rebatable arbitragc for each Series of Bonds in accordance with
Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any
applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax
Certificate for each issue (e. the temporary un estments exceptions of Section 148(f)(4)(B) and (C)
of the Code), and taking into account whether the election pursuant to Section 148(0(4)(C)(vii) of
the Code (the "P%a% Penalty") has been made), for this purpose treating the last day of the applicable
Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate
Regulations (the "Rebatablc Arbitrage'). The District shall obtain expert advice as to the amount of
the Rebatable Arbitrage to comply with this Section.
(B) Annual Transfer. Within 55 days of the end of each Bond Year for
which Rebatable Arbitragc most be calculated as required by the Tax Certificate, upon the written
direction of an Authorized Representative of the District, an amount shall be deposited to each
subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and
to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable
Arbitrage so calculated by or on behalf of the District in accordance with (A) of this
Subsection (a)(i). In the event that immediately following any transfer required by the previous
sentence, or the date on which the District determines that no transfer is required for such Bond Year,
the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds
the amount required to be on deposit therein, upon written instructions from an Authorized
Representative of the District,the Trustee shall withdraw the excess from the appropriate subaccount
of the Rebate Account and then credit the excess to the Special Tax Fund.
(C) Payment to the Treasury. The Trustee shall pay, as directed in writing
by an Authowed Representative of the District, to the United States Treasury, out of amounts in
each subaccount of the Rebate Account,
l. Not later than 60 days after the end of(A) the fifth Bond Year
and (B) each applicable frfrh Bond Year thereafter,an amount equal to at least 90% of the Rebatable
Arbitrage calculated as of the end of such Bond Year for each issue of Bonds; and
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DOCSOC/1054957v3/22925-0010
2- Not later than 60 days after the payment or redemption of all
of the Bonds an amount equal to 100""() of the Rehaiable Arbitrage calculated as of the end of such
applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in
accordance with Section 148(f) of the Code.
In the event that, prior to tire time of any payment required to be made from the Rebate
Account. the amount in the Rebate Account is not sufficient to make such payment when such
payment is due, the District shall calculate 01 Cause 10 be calculated the amount of'such deficiency
and deposit an amount received fioni any le-ally available sourcc equal to such deficiency prior to
the time such payment is due. Each payment requircri to be made pursuant to this Subsection (a)(i)
shall be made on or before the dale on which such payment is due, and shall be accompanied by
Internal Revenue Service Form 80 18J. or shall be made in such other manner as provided under the
Code.
(it) Ahcm_,':iflNePenaI�Accoumt.
(A) If the Penalty has been elected, NNillim
85 days of the Six-Month Period. the District shall determine or cause to be determined whether the
I '/z% Penalty is payable(and the amount of such penalty) as of the close of the Six-Month Period.
The District shall obtain c),pen advice in making such determinations.
(B) Six MonthI ran0er. Within 85 days ofthe close ofthe Six-Month
Period. the Trustee, at the xvi-ruen direction of an Authorized Representative of the District, shall
deposit an amount in the appropriate subaccounts of the Alternative penalty Account from any
source of funds held by the Trustee pursuant to this Indenture and designated by the District in such
written directions or provided to it by the District, if and to the extent required, so that the balance in
cash subaccount ofthe Ahernali%c Penally Account equals the amount of P/2% Penalty due and
payable to the United States Treasury delcriumcd as provided in Subsection (a)(ii)(A) above, In the
event that immediately following any transfer provided for in the previous sentence, or the date on
which the District determines that no transfer is required for such Bond Year, the amount then on
deposit in it subaccount ofthe Alternative Penalty Account exceeds the amount required to be on
deposit therein to make the payments required by Subsection (C) below, the Trustee, at the written
direction of an Authorized Representative of the District, shall withdraw the excess from the
applicable subaccount of the Ahernative Penalty Account and credit the excess to the Special Tax
Fund,
(C) Payment to the Treasum The Trustee shall pay, as directed in writing
by an Authorised Representative ofthe Disirict,to the I'mied States Treasury, out of amounts in a
SUNICCOUT11 of the Alternative Penalty Account, specified by the District in writing not later than
90 days after the close ofthe Six-Month Period the V/2'Xo Penalty,if applicable and payable,
computed in accordance with Section 148(f)(4) ofthe Code. In the event that, prior to the time of
any payment required to be made from a subaccount ofthe Alternative Penalty Account,the amount
in such subaccount is not sufficient to make such payment when such payment is due, the District
shall calculate the amount of such deficiency and direct the Trustee, in Uniting, to deposit an amount
equal to such deficiency into such subaccount of the Alternative Penalty Account from any funds
held by the Trustee pursuant to this Indenture and designated by the District in such written
directions prior to the time such payment is due. Fach pa%niclut required to be made pursuant to this
Subsection (a)(ii) shall be made on or before the (late on which such payment is due, and shall be
26
DOCSOG I 054957v3l'22925-001 0
accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as
provided under the Code.
(b) Dispositon of Unexpended Funds. Any funds remaining in the Accounts of the
Rebate Fund after redemption and payment of the Bonds and after making the payments described in
Subsection (a)(i)(C) or(a)(ii)(C) (whichever is applicable), may be withdrawn by the Trustee at the
written direction of the District and utilized in any lawfu] manner pursuant to the Act.
(e) Survival of Deleasance and Final Payment. Atotwithstanding anything in this Section
or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall
survive the defeasance and final payment of the Bonds.
(d) Amendment Without Consent of Owncrs. This Section may be deleted or amended
in any manner without the consent of the Owncrs,provided that prior to such event there is delivered
to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not
adve sely affect the exclusion from gross income for federal income tax purposes of interest on the
Bonds.
(e) Trustee Res onsibility. The Trustee shall be deemcd conclusively to have complied
with its obligations with respect to the Rebate Fund and any amounts required to be rebated to the
United States Treasury hereunder by following the directions given by the District pursuant to this
Section, and no other obligations ofthe Trustee shall be implied hereunder.
Section 3.9. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5,
3.6, 3.7 and 3.8 hereof, as soon as practicable after each September 1, and in any event prior to each
October 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund, if any,to the
Surplus Fund, other than amounts in the Special Tax Fund which the District has deemed available in
the Special Tax Fund in calculating the amount of the leery of Special Taxes for such Fiscal Year
pursuant to Section 5.2(b)hereof. On the written direction of an Authorized Representative of the
District, moneys deposited in the Surplus Fund shall be transferred by the Trustee, (i) to the Interest
Account or the Principal Account to pay the principal of, including Sinking Fund Payments, and
interest on the Bonds when due in the event that moneys in the Special Tax Fund and the Reserve
Account are insufficient therefor, (ii)to the Reserve Account in order to replenish the Reserve
Account to the Reserve Requirement, and (iii) to the Administrative Expense Account to pay
Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense
Account are insufficient to pay Administrative Expenses. In the event unexpended amounts remain
on deposit in the Surplus Fund after the foregoing transfers, if any, the District shall apply such
unexpended amounts to, in its sole discretion, either(i)pay Project Costs, (ii)to reduce the next
fiscal year's Special Tax levy by depositing such amount in the Special Tax Fund, or(iii) for any
other]awful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds and may be
used by the District for any ]awful purpose in the manner described in this Section. In the event that
the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt
service on any Outstanding Bonds, upon the written direction of the District, the Trustee will
segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of
the Surplus Fund shall be invested in Authorized Investments the interest on which is excludable
from gross income under Section 103 of the Code (other than bonds the interest on which is a tax
preference item for purposes of computing the alternative minimum tax of individuals and
27
DOCSOC/1 054957v3/22925-001 0
corporations under the Code) or in Authorised Investments at a yield not in excess of the yield on the
Bonds unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect
the exclusion from grass income for federal income tax purposes of interest on the Bonds.
Section 3.10. Acquisition and Construction Fund.
(a) The moneys in the Acquisition and Construction Fund shall be applied exclusively to
Pay the Project Costs and Costs of Issuance. Amounts for Project Costs or Costs of Issuance shall be
disbursed by the "Trustee from the applicable Project Account or the applicable Costs of Issuance
Account, as the case may be, pursuant to a requisition signed by an Authorized Representative of the
District substantially in the form of Exhibit B hereto.
(b) Upon the earlier of the first anni\ersary of the applicable Delivery Date or its receipt
of a Certificate of an Authorized Representative that all or a specified portion of the amount
remaining in the Costs of Issuance Account for a Series of Bonds is no longer needed to pay Costs of
Issuance for such Series, the Trustee shall transfer all or such specified portion of said amount to the
Administrative Expense Account.
(c) upon receipt of a Certificate of an Authorized Representative (i) slating that the
portion ofthe Facilities to be financed from the applicable Project Account has been completed and
that all costs of such Facilities have been paid, or (ii) stating that such portion ofthe Facilities has
been substanllally completed and that all remaining costs of such portion of the Facilities have been
determined and specifying the amount to be retained therefor, or(iii) stating that no additional costs
of 1 acilities (or no additional such costs abme a ,pccified amount) are expected to be paid from the
applicable Project Account, the Trustee shall (A) if the amount remaining in such Project Account
(less any such retention) is equal to or greater than S25,000,transfer the portion of such amount equal
to the largest integral multiple of S5,000 that is not greater than such amount to the Redemption
Account, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required
to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Proceeds
Account (less any such retention) to the Interest Account, to be applied to the payment of interest on
the Bonds.
Section 3.11. Investments. Moneys held in any of the funds, accounts and subaccounts
under this Indenture shall be invested al the 'Arinen direction of an Authorized Representative of the
District in accordance with the limitations set forth below only in Authorized Investments which
shall be deemed at all times to be a part of such funds, accounts and subaccounts. Any investment
earnings,gains or losses resulting from such Authorized Investments shall be credited or charged to
the fund, account or subaecount from which such investment va°as made. Moneys in the funds,
accounts and su Face outits held under this Indenture may be invested by the Trustee on the written
direction of the District, from time to time, in Authorized Im estments subject to the following
restrictions:
(a) Moneys in the Interest Account, the Principal Account and the Redemption Account
shall be invested on]y in Authorized Inv estntents which will by their terns mature, or in the case of
an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure
the payment of principal of, premium,if any.. and interest on the Bonds as the same become due.
Notwithstanding anything herein to the contrary, amounts in the Capitalized Interest Subaccount on
the Delivery Date for the Bonds shall not be invested at yields greater than those set forth in the Tax
Certificate.
28
DOCSOG 1054957v3.22 92 5-00 1 0
(b) Moneys in the Acquisition and Construction Fund shall be invested in Authorized
Investments which will by their terms mature, or in the case of an Investment Agreement are
available without penalty,as close as practicable to the date the District estimates the moneys
represented by the particular investment will be needed for withdrawal from the Acquisition and
Construction I Surd. Aotwitlistanding anything herein to the contrary, amounts in the Acquisition and
Construction Fund on the Delivery Date for the Bonds shall not be invested at yields greater than
those set forth in the Tax Certificate.
(c) The amount in the Reserve Account may be invested only in Authorized Investments
which mature not later than five years from their date of purchase:provided that such amounts may
he invested in an Investment Agreemenl to the final matuity of Bonds so long as such amounts may
be withdrawn at any time, without penalty,Ibr application in accordance with Section 3.7 hereof; and
provided that no such Authorized Investment of amounts in the Reserve Account allocable to the
Bonds shall mature later than the final maturity date of the Bonds. Notwithstanding anything herein
to the contrary, amounts in the Reserve Fund on the Delivery Date for the Bonds shall not be
invested at yields greater than those set forth in the Tax Certificate.
(d) Moneys in the Rebate Fund shall be inw esled on1v in Authorized ]m�estments of the
type described in clause (a) of the definition thereof which by their terns will mature,as nearly as
practicable, on the dates Such amounts are needed to be paid to the United States Government
pursuant to Section 3.8 hereof or in Authorized Investments of the type described in clause(d) of the
definition thereof.
(e) In the absence of wwritten investment directions from the District,the Trustee shall
invest solely in Authorized Investments specified in clause (d) of the definition thereof:
The Trustee shall sell,or present for redemption,any Authorized Investment whenever it
may be necessary to do so in order to provide moneys to meet any payment or transfer to such funds
and accounts or from such funds and accounts. For the purpose of determining at any given time the
balance in anv such finds and accounts, any such investments constituting a part of such funds and
accounts shall be valued at their cost, except that amounts in the Reserve Account shall be valued at
the market value thereof and marked to market at least annually. In making any valuations of
investments hereunder, the Trustee may utilize computerized securities pricing services that may be
available to it. including those available through its regular accounting system, and rely thereon.
Notwithstanding anything herein to the contrary,the Trustee shall not be responsible for any Loss
from investments, sales or transfers undertaken in accordance with the provisions of this Indenture.
The Trustee or an affiliate may act as principal or agent in connection with the acquisition or
disposition of any Authorized Invest rients and shall be entitled to its customary fee therefor. Any
Authorized Im estments that are registrable securities shall be registered in the name of the Trustee or
its nominee.
For inw estment purposes, the Trustee may commingle the funds and accounts established
hereunder(other than the Rebate Fund)but shall account for each separately.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with
any investments made by the Trustee hereunder.
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DOCSOC/1 05495 7 0/22925-001 0
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1, Redemption of Bonds.
(a) 011tion d Redern4mon. Subject to the hmnaticns set forth below, the 2004 Bonds may
be ucdecmcd at the option of the District f}om any source of funds, other than Prepayments, on any
]merest Payment Date. in eN hole, or in part inthe order of maturne selected by the District and by lot
urthm a matunrty, at the following redemption prices expressed as a percentage ofthe principal
amount to be redeemed, together with accrued .merest to the date of redemption:
Redemption Dates Redemption Prices
through %
_ through_
through_
and thereafter
In the ceeni the District elects to redeem 2004 Bonds as provided above, the District shall
cis c gutter notice to the 1 rustee of its electron to so redeem, the redemption date and the principal
amount ofthe Bonds to be redeemed. The nonce to the I nustee shall be given at least 60 but no more
than 90 days prior to the redemption date, or such shorter period as shall he acceptable to the Trustee.
(b) N'talidalory Sml<ing Fund Redemption The 2004 `Perm Bonds maturing on
September 1, shall be called before maturity and redeemed, from the Sinking Fund Payments
that h u%c been deposited into the Principal Account, on September 1, and on each September 1
thereafter prior to maturirv, in accordance with the schedule of Sinking Fund Payments set forth
below. The Bonds so culled for redemption shall be selected by the Trustee by lot and shall be
redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof, plus
accrued "merest to the redemption date, without premium, as follows:
Redemption Date
(September 1) Principal Amount
(maturity)
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DOCSOC/1 Os4959v3/22925-0010
The 2004 Term Bonds maturing on September 1 shall be called before maturity and
redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account, on
September 1,_,and on each September 7 thereafter prior to maturity, in accordance with the
schedule of Sinking Fund Payments set forth below. The Bonds so called for redemption shall be
selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond
equal to the principal amount thereof,plus accrued interest to the redemption date, without premium,
as follows:
Redemption Date
(September 1) Principal Amount
(maturity)
The 2004 Term Bonds maturing on September I, 2035 shall be called before maturity and
redeemed, from the Sinking Fund Payments that have been deposited into the Principal Account,on
September 1,_, and on each September I thereafter prior to maturity, in accordance with the
schedule of Sinking Fund Payments set forth below- The Bonds so called for redemption shall be
selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond
equal to the principal amount thereof, plus accrued interest to the redemption date, without premium,
as follows:
Redemption Date
(September 1) Principal Amount
2035 (maturity)
If during the Fiscal Year itrunediately preceding one of the redemption dates specified in(b)
above the District purchases 2004 Term Bonds, at least 45 days prior to the applicable redemption
date the District shall deliver to the Trustee a Certificate of an Authorized Representative specifying
the principal amount purchased and the principal amount of 2004 Bonds so purchased shall be
credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such
upcoming Sinking Fund Payment for such Term Bonds. All Bonds purchased pursuant to this
subsection shall be cancelled pursuant to Section 10.1 hereof.
In the event of a partial redemption of 2004 Tenn Bonds, other than as a result of Sinking
Fund Payments, each of the remaining Sinking Fund Payments for such 2004 Term Bonds that were
partially redeemed, as described above, will be reduced, as nearly as practicable, on a pro rata basis
in increments of$5,000.
(c) Secial Mandator RRedemption From Prepayments. The 2004 Bonds are subject to
special mandatory redemption on any Interest Payment Date from amounts on deposit in the
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DOCSOC/1 054957v3/22925-001 0
Prepayment Account,in integral multiples of S5,000, in whole or in part as hereinafter provided, at
he following redemption prices. expressed as a percentage of the principal amount to be redeemed,
together with accrred interest to the date of redemption:
Redemption Dates Redemption Prices
through aka
through
through _
_-_and thereafter
The 7 r u<tee shall select 2004 Bonds for redemption pursuant to the provisions of this
subsection from the maturities of all Bonds of all Sevres so that the ratio of Outstanding Bonds to the
Bonds originalb, issued shall be approximately the same in each maturity of each Series. The
particular Bonds of each maturity of a Series to be redeemed shall be selected by lot in whatever
manner the Trustee chooses.
Section 4.2. Selection of Bonds for Redemption. lfless than all of the Bonds
Outstanding are to be redeemed, the portion of any Bond of a dzrnomination of more than S5.000 to
be redeemed shall be in the principal amount of S5,000 or an integral multiple thereof. In selecting
Portions of such Bonds for redemption, the Trustee shall treat such Bonds as representing that
number of Bonds of S5,000 denominations which is obtained by dividing the principal amount of
such Bonds to be redeemed in part by S5.000. The Trustee shall promptly notify the District in
writing of the Bonds, or portions thereof, selected for redemption.
Section 4.3. 'Notice of Redemption. When Bonds are due for redemption under
Section 4.1 above,the Trustee shall give notice, it, the name of the District, of the redemption of such
Bonds; provided,hooves er, that a notice of a redemption to be made from other than from Sinking
Fund Payments shall be conditioned on there being on deposit on the redemption date sufficient
money to pay the redemption price of the Bonds to be redeemed Such notice of redemption shall
(a) specify the CUS1P numbers (if any), the bond numbers and the maturity date or dates of the
Bonds selected Ibr redemption, except that where all of the Bonds are subject to redemption, or all
the Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not be specified;
(b) ;Tate the date fixed for redempnon and surrender of the Bonds to he redeemed; (c) state the
redemption price; (d) state the place or places Nahere the Bonds are to be redeemed; (e)in the case of
Bonds to be rcdccmed only in pan, state the portion ofsuch Bond which is to lie redeemed; (f) state
the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond
being redeemed; and (It)state any other descriptive information needed to identify accurately the
Bonds being redeemed as shall be specified by the Trustee. Such notice shall further state that on the
date fixed for redemption, there shall become due and payable on each Bond or portion thereof called
for redemption, the principal thereof, together with any premium, and interest accrued to the
redemption date, and that from and aficr such date, interest thereon shall cease to accrue and be
payable. At least 30 days but no more than 60 days prior to the redemption date, the Trustee shall
mail a copy of such notice, by first class marl, postage prepaid, to the respective Owners thereof at
their addresses appearing on the Bond Register and to the original purchaser of the Bonds. The
actual receipt by the Owner of any Bond or the original purchaser of any Bond of notice of such
redemption shall not be a condition precedent to redemption, and neither the failure to receive nor
any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds
or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such
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DOCSOC/1054957v3/22925-0010
redemption has been given as herein provided shall be conclusive as against all parties and the
Owner shall not be entitled to show that he or she failed to receive notice of such redemption.
In addition to the foregoing notice, further notice shall be ,iven by the Trustee asset out
below, but no defect in said further notice nor any failure to give all or any portion of such further
norice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given
as above prescribed.
Each further notice of redemption shall be sent by the Trustee by registered or certified mail,
overnight deliN cry service or facsimile transmission or by other acceptable means to any registered
securities depositories then in the business of holding substantial amounts of obligations of types
comprising the Bonds and any national information scry ices as shall be specified by the Trustee that
disseminate notice of redemption of obligations such as the Bonds.
Upon the pat ment of the redemption price of any Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number
dentifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or
other transfer.
Section 4.4. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed
in part only, the District shall execute and the Trustee shall authenticate and deliver to the
Bondowner, at the expense of the District, a new Bond or Bonds of authorized denominations equal
in aggregate principal amomu to the unredeemed portion of the Bonds surrendered, with the same
interest rate and the same maturity.
Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of
redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date
fixed for such redemption:
(a) The Bonds, or portions thereof.designated for redemption shall, on the date fixed for
redemption,become due and payable at the redemption price thereof as provided in this Indenture,
anything in this Indenture or in the Bonds to the contrary notwithstanding;
(b) Upon presentation and surrender thereof at the office of the Trustee,the redemption
price of such Bonds shall be paid to the Owners thereof,
(c) As of the redemption date the Bonds or portions thereof so designated for redemption
shall be deemed to be no longer Outstanding and such Bonds or portions thereof shall cease to bear
further interest; and
(d) As of the date fixed for redemption no Owner of any of the Bonds or portions thereof
so designated for redemption shall be entitled to any of the benefits of this Indenture or any
Supplemental Indenture, or to any other rights, except with respect to payment of the redemption
price and interest accrued to the redemption date from the amounts so made available.
Section 4.6. Purchase of Bonds by District. In lieu, or partially in lieu, of optional,
mandatory or mandatory sinking fund redemption, the District may elect, prior to the selection of
Bonds for redemption by the Trustee,to instruct the Trustee to purchase Bonds at public or private
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DOCSOC/1054957v3/22925-0010
sale ai such prices as the District may in its discretion determine; provided that the purchase price
thereof(including brokerage or other expenses) shall not exceed the principal amount thereof plus
accrued interest to the purchase date and, in the case of pmrhase with fiords in an optional
redemption account, applicable premium.
ARTICLE V
COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged
hereunder to the Bonds against all claims and demands of all persons.
Section 5.2. Covenants. So long as any of the Bonds issued hereunder are Outstanding
and unpaid, the District makes the following covenants with the BondoWners under the provisions of
the Act and this Indenture(to be performed by the District or its proper officers, agents or
employees), xn hich covenants are necessary and desirable to secure the Bonds and tend to make them
more marketable; provided, however,that said covenants do not require the District to expend any
finds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
(a) Punctual Pavment A -ainst Encumbrances. The District covenants that it will receive
all Special Taxes in trust and will immediately deposit such amounts with the Trustee, and the
District shall have no beneficial right or interest in the amounts so deposited except as provided by
this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and
purposes set forth herein, and shall be accounted for separately and apart from all other money,
funds,accounts or other resources of the District.
The District furiher covenants that, in connection with the delivery of any Prepayment to the
Trustee, the District will also deliver to the Trustee a certificate of the Special Tax Administrator
ideruifying with respect to the Prepayment: (i) the "Remaining Facilities Amount" (as defined in the
RMA), if any, with instructions that said amount shall be deposited in the Project Account of the
Acquisition and Construction Fund, (ii) the "Administrative Fees and Expenses" (as defined in the
RMA), �a ith mstrtetions that said amowit shall be deposited in the Administrative Expense Account,
(iii) the amount that represents the Special Taxes levied in the current Fiscal Year on the subject
Assessor's Parcel which had not been paid, xn ith instructions to deposit portions of said amount in the
Interest Account and the Principal Account of the Special Tax Fund, (iv)the amount of the"Reserve
Fund Credit" (as defined in the RMA), vvuh instructions to withdraw said amount from the Reserve
Account and transfer it to the Prepayment Account in connection with the redemption of Bonds, and
(v)the amount to be deposited in the Prepayment Account.
The District covenants that it will duly and punctually pay or cause to be paid the principal of
and interest on every Bond issued hereunder, together with the premium, if any, thereon on the date,
at the place and in the manner set forth in the Bonds and in accordance with this Indenture to the
extent that Net Taxes are available therefor, and that the payments into the Funds and Accounts
created hereunder will be made, all in strict conformity with the terms of the Bonds and this
Indenture, and that it will faithfully observe and perform all of the conditions, covenants and
requirements of this Indenture and all Supplemental Indentures and of the Bonds issued hereunder.
The District will not mortgage or otherwise encumber,pledge or place any charge upon any
of the Special Taxes except as provided in this Indenture, and will not issue any obligation or
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DOCSOC/1054957v3/22925-0010
security havine a lien or charge upon the Net Taxes superior to or on a parity with the Bonds.
Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable
from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay
the Bonds.
(b) l.evv of Special Tax. Beginning in Fiscal Year 2005-2006 and in each Fiscal Year
thereafter so long as any Bonds issued under this Indenture are Outstanding, the legislative body of
the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on
deposit in the Special Tax Fund,to pay (1) the principal (including Sinking fund Payments) of and
intcrest on the Bonds when due, (2)to the extent permitted by law,the Administrative Expenses, and
(3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve
Requirement.
(c) Commence Foreclosure Proceedin s. The District covenants for the benefit of the
Owners of the Bonds that it (i) will commence judicial foreclosure proceedings against all parcels
owned by a property owner where the aggregate delinquent Special Taxes on such parcels is greater
than S7,500 by the October 1 following the close of each Fiscal Year in which such Special Taxes
were due and (ii) will commence judicial foreclosure proceedings against all parcels with delinquent
Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special
Taxes in an amount which is less than 95% of the total Special Tax levied for such Fiscal Year, and
(in) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid;
provided that, notwithstanding the foregoing.the District may elect to defer foreclosure proceedings
on any parcel which is owned by a delinquent property owner whose property is not, in the
aggregate.delinquent in the payment of Special Taxes for a period of three years or more or in an
amount in excess of S12.000 so long as (1)the amount in the Reserve Account of the Special Tax
Fund is at Ieast equal to the Reserve Requirement, and (2) the District is not in default in the payment
of the principal of or interest on the Bonds. The District may,but shall not be obligated to, advance
funds from any source of legally available funds in order to maintain the Reserve Account of the
Special Tax Fund at the Reserve Requirement or to avoid a default in payment on the Bonds.
'The District covenants that it will deposit the proceeds of any foreclosure which constitute
Net Taxes in the Special Tax Fund.
The District will not,in collecting the Special Taxes or in processing any such judicial
foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1,
53344.2, 53356.1 and 53356.5 of the California Government Code in any manner which would
materially and adversely affect the interests of the Bondowners and,in particular, will not permit the
tender of Bonds in full or partial payment of any Special Taxes except upon receipt of a certificate or
certificates from the Special Tax Administrator and/or one or more Independent Financial
Consultants that to accept such tender will not result in a reduction in the maximum Special Taxes
that may be levied on the taxable property within the District in any Fiscal Year to an amount less
than the sum of I I0% of Annual Debt Service in the Bond Year ending on the September I
following the end of such Fiscal Year plus the estimated Administrative Expenses for such Bond
Year.
(d) 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 hen or charge upon the Special Taxes
or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or
which might impair the security of the Bonds then Outstanding; provided that nothing herein
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DOCSOC/1054957v3/22925-0010
----------------
contained shall require the District to make any such payments so long as the District in good faith
shall contest the validity of any such claims.
(e) Books and Accounts. The District Na ill keep proper books of records and accounts,
separate from all other records and accounts of the District, in NNhich complete and correct entries
shall be made of all transactions relating to the levy of the Special Tax and the deposits to the Special
Tax Fund. Such books of records and accounts shall at all times during business hours be subject to
the inspection of the Owners of not less than 10% of the principal amount of the Bonds then
Outstanding or their representatives authorized in writing.
(0 Federal Tax Co-%en-nts. Notwithstanding any other provision of this Indenture,
absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds
will not he adversely affected for federal income tax purposes, the District covenants to comply with
all applicable requirements of the Code necessary to preserve such exclusion from gross income and
specifically covenants, without limiting the gencrality of the foregoing, as follows:
(i) Private Ac ivy. The District will take no action or refrain from taking any
action or make any use of the proceeds of the Bonds or of any other moneys or property which would
cause the Bonds to be "pm°ate activity bonds" within the meaning of Section 141 of the Code;
00 Arbitra"e. The District will make no use of the proceeds of the Bonds or of
any other amounts or property,regardless of the source, or take any action or refrain from taking any
action which will cause the Bonds to be "arbitrage bonds" v�ithin the meaning of Section 148 of the
Code;
(iii) 1 ederal Guaranty. The District will make no use of the proceeds of the Bonds
or take or omit to take any action that Na ould cause the Bonds to be"federally guaranteed"within the
meaning of Section 149(b) of the Code;
(iv) lnforrnation Reporting. The District will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section 149(e) of the
Code;
(v) I1edte Bonds. The District will make no use of the proceeds of the Bonds or
any other amounts or property, regardless of the source, or take any action or refrain from taking any
action that would cause the Bonds to be considered "hedge bonds" within the meaning of Section
149(g) of the Code unless the District takes all necessary action to assure compliance with the
requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal
income tax purposes of interest on the Bonds; and
(vi) Miscellaneous. The District will take no action and will refrain from taking
any action inconsistent with its expectations stated in the Tax Certificate and will comply with the
covenants and requirements stated therein and incorporated by reference herein, including payment
of amounts required to pay the District's pro rata share of any rebate amounts owing to the United
States on the Bonds.
(vii) Other Tax Exempt Issues, The District will not use proceeds of other tax
exempt securities to redeem any Bonds without first obtaining the written opinion of Bond Counsel
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DOCSOCI t 054957v3/22925-0010
that doing so will not impair the exclusion from gross income for federal income tax purposes of
interest on the Bonds.
(g) Reduction of Maximum Special Taxes. The District hereby finds and determines
that,historically.. delinquencies in the payment of special taxes authorized pursuant to the Act in
community facilities districts in California have from time to time been at levels requiring the levy of
special taxes at the maximum authorized rates in order to make timely payment of principal of and
interest on the outstanding indebtedness of such community facilities districts. For this reason, the
District hereby determines that a reduction in the Maximum Special Tax (as defined in the RMA)
authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g)
would interfere with the timely retirement of the Bonds. The District determines it to be necessary in
order to preserve the security for the Bonds to covcnant, and, to the maximum extent that the law
permits it to do so, the District hereby does cov cnam. that it will take no action that would
discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy the
Special Tax, including the initiation of proceedings to reduce the Maximum Special Tax rates for the
District, unless, in connection therewith, (i) the District receives a certificate or certificates from the
Special Tax Administrator and/or one or more Independent Financial Consultants which, when taken
together, certify that, on the basis of the parcels of land and improvements existing in the District as
of the July I preceding the reduction, the maximum amount of the Special Tax which may be levied
on then existing Developed Property (as defined in the RMA) in each Bond Year will equal at least
110%, of the sum of the estimated Administrative Expenses and Annual Debt Service in that Bond
Year on all Bonds to remain Outstanding after the reduction is approved, (ii) the District finds that
any reduction made under such conditions will not adversely affect the interests of the Owners of the
Bonds and (iii) the District receives both (A) a certificate of the Developer specifying the
development activity that the Developer expects will take place within the District in each Fiscal
Year until all such development is complete, which specification shall be sufficiently detailed to
permit the preparation of the certificate required pursuant to (B) hereof, and (B) a certificate or
certificates from the Special Tax Administrator and/or one or more Independent Financial
Consultants which, when taken together,in the determination of the District, certify that(1)on the
basis of the parcels of land and improvements existing in the District as of the July 1 preceding the
proposed reduction and (2) on the basis of the future development activity described in the certificate
of the Developer described in (A) hereof, the maximum amount of the Special Tax which may be
levied each Fiscal Year on all property within the District that is subject to the levy of the Special
Taxes will equal at least 110% of the sum of the estimated Administrative Expenses and Annual
Debt Service in each applicable Bond Year on all Bonds subsequent to the proposed reduction. For
purposes of estimating Administrative Expenses for the foregoing calculations,the Independent
Financial Consultant or the Special Tax Administrator shall compute the Administrative Expenses
for the current Fiscal Year and escalate that amount by two percent(2%) in each subsequent Fiscal
Year.
(h) Covenant to Defend. The District covenants that in the event that any initiative is
adopted by the qualified electors in the District which purports to reduce the Maximum Special Tax
below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the
Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal
action in order to preserve its ability to comply with such covenants.
Section 5.3. Continuing Disclosure and Reporting Requirements. The District
covenants to comply with the terms of the Continuing Disclosure Agreement executed by it on the
Delivery Date with respect to compliance with Rule 15c2-12,provided the failure of the District to
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DOCSOC/1 054957v3/22925-001 0
comply with the terms of said Continuing Disclosure Agreement shall not constitute an event of
defaalt under Article VIII hereof.
ARTICLE VI
A 1IEND'.\IENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent.
The District and Trustee may from time to time, and at any time, without notice to or consent of any
of the Bondowners, enter into Supplemental Indentures in order to provide for the issuance of Parity
Bonds pursuant to Section 211 and for any of the following purposes:
(a) to cure any ambiguity,to correct or supplement any provisions herein which may be
inconsistent with any other provision herein, or to make any other provision with respect to matters
or questions arising under this Indenture or in any additional resolution or order, provided that such
action is not materially adverse to the interests of the Bondowners;
(b) to add to the covenants and agreements of and the limitations and the restrictions
upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions
to be observed by the District which are not contrary to or inconsistent with this Indenture as
theretofore in effect or which father secure Bond payments:
(c) to modify, amend or supplement this Indenture in such manner as to permit the
qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute
hereafter in effect,or to comply with the Code or regulations issued thereunder,and to add such other
terms, conditions and provisions as may be permitted by said act or similar federal statute, and which
shall not materially adversely affect the interests of the Owners of the Bonds then Outstanding; or
(d) to modify, alter or amend the RMA in any manner so long as such changes do not
reduce the maximum Special Taxes that may be levied in each year on property within the District to
an amount which is less than that permitted under Section 5.2(g) hereof, or
(e) to modify, alter,amend or supplement this Indenture in any other respect which is not
materially adverse to the Bondowners.
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Indentures described in Section 6.1, the Owners ofnot less than a
majority in aggregate principal amount of the Bonds Outstanding shall have the right to consent to
and approve the execution and delivery by the District of such Supplemental Indentures as shall be
deemed necessary or desirable by the District for the purpose of waiving,modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided,however, that nothing herein shall permit, or be construed as permitting, (a) an
extension of the maturity date of the principal, or the payment date of interest on, any Bond, (b) a
reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest
thereon, (c) a preference or priority of any Bond over any other Bond, or(d) a reduction in the
aggregate principal amount of the Bonds the Owners of which are required to consent to such
Supplemental Indenture, without the consent of the Owners of all Bonds then Outstanding.
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DOCSOC/1054957v3/22925-0010
If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to
the terms of this Section shall require the consent of the Bondowners, the District shall so notify the
Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee
shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be
mailed,by first class mail, postage prepaid,to all Bondowners at their addresses as they appear in the
Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture
and shall state that a copy thereof is on file at the office of the Trustee for inspection by all
Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of
such Supplemental Indenture when consented to and approved by the Owners of not less than a
majority in aggregate principal amount of the Bonds Outstanding as required by this Section.
Whenever at any time within one year after the date of the first mailing of such notice, the Trustee
shall receive an instrument or instruments purporting to be executed by the Owners of a majority in
aggregate principal amount of the Bonds Outstanding,which instrument or instruments shall refer to
the proposed Supplemental Indenture described in such notice,and shall specifically consent to and
approve the adoption thereof by the District substantially in the form of the copy referred to in such
notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the
District, shall thereafter become a part of the proceedings for the issuance of the Bonds. In
determining whether the Owners of a majority of the aggregate principal amount of the Bonds have
consented to the adoption of any Supplemental Indenture, Bonds which are owned by the District or
by any person directly or indirectly controlling or controlled by or under the direct or indirect
common control with the District shall be disregarded and shall be treated as though they were not
Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Indenture and the receipt of consent to any such
Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of
the Outstanding Bonds in instances where such consent is required pursuant to the provisions of this
Section,this Indenture shall be, and shall be deemed to be, modified and amended in accordance
therewith, and the respective rights, duties and obligations under this Indenture of the District and all
Owners of Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder,
subject in all respects to such modifications and amendments.
Section 6.3. Notation of Bonds; Delivery of Amended Bonds. After the effective date
of any action taken as hereinabove provided, the District may determine that the Bonds may bear a
notation,by endorsement in form approved by the District, as to such action, and in that case upon
demand of the Owner of any Outstanding Bond at such effective date and presentation of his Bond
for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation as to such action shall be made on such Bonds. If the
District shall so determine, new Bonds so modified as, in the opinion of the District, shall be
necessary to conform to such action shall be prepared and executed, and in that case upon demand of
the Owner of any Outstanding Bond at such effective date such new Bonds shall be exchanged at the
office of the Trustee or at such additional offices as the Trustee may select and designate for that
purpose, without cost to each Owner of Outstanding Bonds,upon surrender of such Outstanding
Bonds.
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ARTICLE VII
TRUSTEE
Section 7.1. Duties, Immunities and Liabilities of Trustee. BNY Western Trust
Company shall be the Trustee for the Bonds unless and until another Trustee is appointed by the
District hereunder. The Trustee shall, prior to an event of default and after curing all events of
default which may have occurred, perform such duties and only such duties as are specifically set
forth herein. Upon the occurrence and upon the continuance of an event of default, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a reasonablee corporate trustee would exercise or use as trustee under a
trust indenture. The District may, at any time, appoint a successor Trustee satisfying the
requirements of Section 7.2 below for the purpose of receiving all money which the District is
required to deposit Nvith the Trustee hereunder and to allocate, use and apply the same as provided in
this Indenture.
The Trustee is hereby authorized to and shall mail or cause to be mailed by first class mail,
postage prepaid, or wire transfer in accordance with Section 2.5 above,interest payments to the
Bondowners, to select Bonds for redemption, and to maintain the Bond Register. The Trustee is
hereby authorized to pay the principal of and premium,if any, on the Bonds when the same are duly
presented to it for payment at maturity or on call and redemption, to provide for the registration of
transfer and exchange of Bonds presented to it for such proposes, to provide for the cancellation of
Bonds all as provided in this Indenture, and to provide for the authentication of Bonds, and shall
perform such other duties expressly assigned to or imposed on it as provided in this Indenture;
provided,however,that no other duties of the Trustee shall be implied or imposed upon the Trustee
other than as expressly stated hereunder. The Trustee shall keep accurate records of all funds
administered by it and all Bonds paid, discharged and cancelled by it.
The Trustee is hereby authorized to redeem the Bonds when duly presented for payment at
maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds upon payment
thcreof in accordance with the provisions of Section 10.1 hereof.
The District shall from time to time, subject to any agreement bctween the District and the
Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all
its advances and expenditures, including, but not limited to, advances to and fees and expenses of
independent accountants or counsel employed by it in the exercise and performance of its powers and
duties hereunder, and indemnify and save the Trustee and its officers, directors and employees
harmless against costs, claims, expenses (including the reasonable expenses of its counsel) and
liabilities not arising from its own negligence or willful misconduct which it may incur in the
exercise and performance of its powers and duties hereunder. The foregoing obligation of the
District to indemnify the Trustee shall survive the removal or resignation of the Trustee or the
discharge of the Bonds.
Section 7.2. Removal of Trustee. The District may at any time at its sole discretion
remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a
written notice of its decision to remove the Trustee and may appoint a successor or successors
thereto; provided that any such successor, other than the Trustee, shall be a bank or trust company
having (or in the case of a financial institution that is part of a bank holding company, such company
shall have) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000,
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DOCSOC/1 05495 7v3/22925-001 0
and subject to supervision or examination by federal or state authority. Any removal shall become
effective only upon acceptance of appointment by the successor Trustee. If any bank or trust
company appointed as a successor publishes a report of condition at least annually, pursuant to law or
to the requirements of any supervising or examining authority above referred to, then for the
purposes of this Section the combined capital and surplus of such bank or trust company shall be
deemed to be its combined capital and surplus as set forth in its most recent report of condition so
published. Any removal of the Trustee and appointment of a successor Trustee shall become
effective only upon acceptance of appointment by the successor Trustee and notice being sent by the
successor Trustee to the Bondowners of the successor Trustee's identity and address.
Section 7.3. Resignation of Trustee. The Trustee may at any time resign by giving
written notice to the District and by giving to the Owners notice of such resignation, which notice
shall be mailed to the Owners at their addresses appearing in the registration books in the office of
the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a
successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. In the
event a successor trustee shall not have been designated within 30 Business Days, the Trustee shall
have the right to petition any court for an order appointing a replacement "Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee shall become effective only upon
acceptance of appointment by the successor Trustee.
Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and
agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and
agreements of the District, and the Trustee assumes no responsibility and shall have no liability for
the correctness of the same and makes no representations as to the validity or sufficiency of this
Indenture, the Bonds, and shall incur no responsibility and have no liability in respect thereof, other
than in connection with its express duties or obligations specifically set forth herein, in the Bonds or
in the certificate of authentication of the Trustee. The Trustee shall be under no responsibility or
duty and shall have no responsibility with respect to the issuance of the Bonds for value. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for its own
negligence or willful misconduct.
The Trustee shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, report,facsimile transmission, electronic mail, Bond, certificate of an Independent
Financial Consultant or the Special Tax Administrator or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties. The Trustee may
consult with counsel, who may be counsel to the District, with regard to legal questions, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless and
until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established,
if disputed.
Whenever in the administration of its duties under this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by a written certificate of the District, and such certificate shall be full warrant to the
Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof,
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DOCSOC/I 054957v3/22925-0010
but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence as to it may deem reasonable.
The Trustee shall have no duty or obligation whatsoever to monitor or enforce the collection
of Special Taxes or other fiords to be deposited with it hereunder, or as to the correctness of any
amounts received. The sole obligation ofthe Trustee with respect thereto shall be limited to the
proper accounting for such fiords as it shall actually receive. No provision in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of its rights or powers.
In the event the Trustee shall advance hinds in connection with its administration of this trust,
the Trustee shall be entitled to interest at the maximum interest rate permitted by law.
The Trustee shall not be deemed to have knowledge of any event of default of the type
described in Section 8.1(c) unless and until it shall have actual knowledge thereof by receipt of
written notice thereof at its corporate trust office.
The Trustee shall not be considered in breach of or in default in its obligations hereunder or
progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of
such obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government,
acts of the other party, fires, floods,epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion,mob violence, riot, inability to procure or general sabotage or rationing of
labor, equipment, facilities,sources of energy, material or supplies in the open market, litigation or
arbitration ins olving a party or others relating to /oning or other governmental action or inaction
pertaining to the project,malicious mischief,condemnation, and unusually severe weather or delays
of suppliers or subcontractors due to such causes or any similar event and or occurrences beyond the
control of the Trustee.
The Trustee agrees to accept and act upon facsimile transmission of written instructions
and/or directions pursuant to this Indenture provided, however, that: (a) subsequent to such facsimile
transmission of written instructions and/or directions the Trustee shall forthwith receive the
originally executed instructions and/or directions, (b) such originally executed instructions and/or
directions shall be signed by a person as may be designated and authorized to sign for the party
signing such instructions and or directions, and (c)the Trustee shall have received a current
incumbency certificate containing the specimen signature of such designated person.
Section 7.5. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the
Trustee without the execution or filing of any paper or further act, anything herein to the contrary
notwithstanding.
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DOCSOC/1054957v3/22925-0010
ARTICLE ViIl
EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute
an "event of default":
(a) Default in the due and punctual payment of the principal of or redemption premium,
if any, on any Bond when and as the same shall become due and payable, whether at maturity as
therein expressed, by declaration or otherwise;
(b) Default in the due and punctual payment ofthe interest on any Bond when and as the
same shall become due and payable; or
(e) Except as described in (a) or (b),default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in this Indenture,
the Bonds, and such default shall have continued for a period of 30 days after the District shall have
been given notice in writing of such default by the Owners of 25% in aggregate principal amount of
the Outstanding Bonds.
The District agrees to give notice to the Trustee immediately upon the occurrence of an event
of default under (a) or(b) above and within 30 days of the District's knowledge of an event of default
under(c) above.
Section 8.2. Remedies of Owners. Following the occurrence of an event of default, any
Owner shall have the right for the equal benefit and protection of all Owners similarly situated:
(a) By mandamus or other suit or proceeding at law or in equity to enforce his rights
against the District and any of the members, officers and employees of the District, and to compel the
District or any such members, officers or employees to perform and carry out their duties under the
Act and their agreements with the Owners as provided in this Indenture;
(b) By suit in equity to c join any actions or things which are unlawful or violate the
rights of the Owners; or
(c) By a suit in equity to require the District and its members, officers and employees to
account as the trustee of an express trust.
Nothing in this Article or in any other provision of this Indenture, the Bonds shall affect or
impair the obligation of the District, which is absolute and unconditional, to pay the interest on and
principal of the Bonds to the respective Owners thereof at the respective dates of maturity, as herein
provided, out of the Net Taxes and other amounts pledged for such payment, or affect or impair the
right of action, xNhich is also absolute and unconditional, of such Owners to institute suit to enforce
such payment by virtue of the contract embodied in the Bonds and in this Indenture.
A waiver of any default or breach of duty or contract by any Owner 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. No delay or omission by any Owner to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a waiver of
any such default or an acquiescence therein, and every power and remedy conferred upon the Owners
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DOCSOC/1 054957v3/22925-001 0
by the Act or by this article may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or
determined adversely to the Owners, the District and the Owners shall be restored to their former
positions,rights and remedies as if such suit,action or proceedimg had not been brought or taken.
No remedy herein conferred upon of reserved to the Owners is intended to be exclusive of
any other remedy. Every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise,
and may be exercised without exhausting and without regard to any other remedy conferred by the
Act or any other law.
"fhe Trustee's counsel is not and shall not be decmed counsel to the Bondholders. Any
communication between the Trustee and its counsel shall be deemed confidential and privileged.
]n case the moneys held by the Trustee after an event of default pursuant to Section 8.1(a) or
(b) shall be insufficient to pay in full the whole amount so owing and unpaid upon the Outstanding
Bonds,then all available amounts shall be applied to the payment of such principal and interest
without preference or priority of principal over interest,or interest over principal, or of any
installment of interest over any other installment of interest,ratably to the aggregate of such principal
and interest.
ARTICLE IX
DEFEASANCE
Section 9.1. Defeasanee. If the District shall pay or cause to be paid, or there shall
otherwise ise be paid, to the Owner of an Outstanding Bond the interest due thereon and the principal
thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture,
then the Owner of such Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as
set forth below, all covenants, agreements and other obligations of the District to the Owner of such
Bond under this Indenture shall thereupon cease, terminate and become void and be discharged and
satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to this Section, the Trustee
shall execute and deliver to the District all such instruments as may be desirable to evidence such
discharge and satisfaction, and the Trustee shall pay over or deliver to the District's general fund all
money or securities held by it pursuant to this Indenture which are not required for the payment of
the principal of, premium, if any, and interest due on such Bonds.
Any Outstanding Bond shall be deemed to have been paid within the meaning expressed in
the first paragraph of this Section if such Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such
Bond, as and when the same become due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity,money which, together
with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense
Account) and available for such purpose, is fully sufficient to pay the principal of, premium,if any,
and interest on such Bond, as and when the same shall become due and payable; or
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DOCSOC/105495 7v3/22925-0010
(c) by depositing with the Trustee or another escrow bank appointed by the District, in
trust, noncallable Federal Securities, in such amount as will be sufficient, together with the interest to
accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative
Expense Account) and available for such purpose, together with the interest to accrue thereon,to pay
and discharge the principal of, premium, if any, and interest on such Bond, as and when the same
shall become due and payable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds shall not have
been surrendered for payment, all obligations of the District under this Indenture and any
Supplemental Indenture with respect to such Bond shall cease and terminate, except for the
obligation of the Trustee to pay or cause to be paid to the Owner of any such Bond not so
surrendered and paid, all sums due thereon and except for the covenants of the District contained in
Section 5.2(t) or any covenants in a Supplemental Indenture relating to compliance with the Code.
Notiec of such election shall be filed with the Trustee not less than ten days prior to the proposed
defeasance date,or such shorter period of time as may be acceptable to the Trustee. In connection
with a defeasance under(b) or(e) above, there shall be provided to the District a verification report
from an independent nationally recognized certified public accountant stating its opinion as to the
sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and
discharge the principal of, premium, if any, and interest on all Outstanding Bonds to be defeased in
accordance with this Section, as and when the same shall become due and payable, and an opinion of
Bond Counsel (which may rely upon the opinion of the certified public accountant)to the effect that
the Bonds being defeased have been legally defeased in accordance with this Indenture and any
applicable Supplemental Indenture. If a forward supply contract is employed in connection with an
advance refunding to be effected under(c) above, (i) such verification report shall expressly state that
the adequacy of the amounts deposited with the bank under(c) above to accomplish the refunding
relies solely on the initial escrowed investments and the maturing principal thereof and interest
income thereon and does not assume performance under or compliance with the forward supply
contract, and (ii) the applicable escrow agreement executed to effect an advance refunding in
accordance with (c) above shall provide that, in the event of any discrepancy or difference between
the terms of the forward supply contract and the escrow agreement, the terms of the escrow
agreement shall be controlling.
Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the
Owners of such Bonds and execute and deliver to the District all such instruments as may be
desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder
of all Outstanding Bonds, the Trustee shall pay over or deliver to the District any funds held by the
Trustee at the time of a defeasance,which are not required for the propose of paying and discharging
the principal of or interest on the Bonds when due. The Trustee shall,at the written direction of the
District, mail, first class,postage prepaid, a notice to the Bondowmers whose Bonds have been
defeased, in the form directed by the District, stating that the defeasance has occurred.
ARTICLE X
MISCELLANEOUS
Section 10.1. Cancellation of Bonds. All Bonds surrendered to the Trustee for payment
upon maturity or for redemption shall be upon payment therefor, and any Bond purchased by the
District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled
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forthwith and shall not be reissued. The Trustee shall destroy such Bonds, and, upon request of the
District,furnish to the District a certificate of such destruction.
Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction,
consent, revocation of consent, or other instrument in writing required or permitted by this Indenture
to be signed or executed by Bondowners may be in any number of concurrent instruments of similar
tenor may be signed or executed by such Owners in person or by their attorneys appointed by an
instrument in writing for that purpose, or by the bank, trust company or other depository for such
Bonds. Proof of the execution of any such instrument,or of any instrument appointing any such
attorney, and of the ownership of Bonds shall be sufficient for the purposes oftlus Indenture (except
as otherwise herein provided), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such
instrument and of any instrument appointing any such attorney,may be proved by a signature
guarantee of any bank or trust company located within the united States of America. Where any
such instrument is executed by an officer of a corporation or association or a member of a partnership
on behalf of such corporation, association or partnership, such signature guarantee shall also
constitute sufficient proof of his authority.
(b) As to any Bond, the person in whose name the same shall be registered in the Bond
Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of
or on account of the principal of any such Bond, and the interest thereon, shall be made only to or
upon the order of the registered Owner thereof or his or her legal representative. All such payments
shall be valid and effectual to satisfy and discharge the liability upon such Bond and the interest
thereon to the extent of the sum or sums to be paid. ]Neither the District nor the Trustee shall be
affected by any notice to the contrary.
Nothing contained in this Indenture shall be construed as limiting the Trustee or the District
to such proof, it being intended that the Trustee or the District may accept any other evidence of the
matters herein stated which the Trustee or the District may deem sufficient. Any request or consent
of the Owner of any Bond shall bind every future Owner of the same Bond in respect of anything
done or suffered to be done by the Trustee or the District in pursuance of such request or consent.
Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the
Outstanding Bonds which remain unclaimed for a period ending at the earlier of two Business Days
prior to the date such funds would escheat to the State or two years after the date when such
Outstanding Bonds have become due and payable,if such money was held by the Trustee at such
date, or for a period ending at the earlier of two Business Days prior to the date such funds would
escheat to the State or two years after the date of deposit of such money if deposited with the Trustee
after the date when such Outstanding Bonds become due and payable, shall be repaid by the Trustee
to the District,as its absolute property and free from trust, and the Trustee shall thereupon be
released and discharged with respect thereto and the Owners shall look only to the District for the
payment of such Outstanding Bonds: provided, however, that,before being required to make any
such payment to the District, the Trustee at the written request of the District or the Trustee shall, at
the expense of the District, cause to be mailed by first-class mail, postage prepaid, to the registered
Owners of such Outstanding Bonds at their addresses as they appear on the registration books of the
Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which
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date shall not be less than 30 days after the date of the mailing of such notice, the balance of such
money then unclaimed will be returned to the District.
Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall
constitute a contract between the District and the Bondowners and the provisions hereof shall be
construed in accordance with the laws of the State of California.
In case any suit, action or proceeding to enforce any right or exercise any remedy shall be
brought or taken and, should said suit, action or proceeding be abandoned, or be determined
adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall
be restored to their former positions, rights and remedies as if such suit, action or proceeding had not
been brought or taken.
After the issuance and delivery of the Bonds this Indenture shall be irrepealable,but shall be
subject to modifications to the extent and in the manner provided in this Indenture, but to no greater
extent and in no other manner.
Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or
prohibit the District from making contracts or creating bonded or other indebtedness payable from a
pledge of the Gross Taxes which is subordinate to the pledge hereunder,or which is payable from the
general fund of the District or from taxes or any source other than the Gross Taxes and other amounts
pledged hereunder.
Section 10.6. Further Assurances. The District will adopt,make, execute and deliver any
and all such further resolutions, instruments and assurances as may be reasonably necessary or proper
to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring
and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
Section 10.7. Severability. If any covenant, agreement or provision, or any portion
thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held
to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application
of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances,
shall be deemed severable and shall not be affected thereby, and this Indenture,the Bonds issued
pursuant hereto shall remain valid and the Bondowners shall retain all valid rights and benefits
accorded to them under the laws of the State of California.
Section 10.8. Notices. Any notices required to be given to the District with respect to the
Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the
General 'Manager, 11570 Donner Pass}toad, Truckee, California 96160,and all notices to the
Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personally delivered
to the Trustee, BNY Western Trust Company, 700 South Flower Street, Suite 500, Los Angeles,
California 90017, Attention: Corporate Trust Department.
Section 10.9. General Authorization. The President of the Board of Directors, the District
Clerk and the General ;Manager are hereby respectively authorized to do and perform from time to
time any and all acts and things consistent with this Trust Indenture necessary or appropriate to carry
the same into effect.
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DOCSOC11054957v3i22925-0010
Section 10.10. Execution in Counterparts. This Trust Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original; and all such counterparts shall togethcr constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed and attested this Trust Indenture by
their officers duly authorized as of the date and year first written above.
fRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1
(GRAY'S CROSSING)
By:
President of the Board of Directors of the
Truckee Donner Public Utility District, acting as
the legislative body of the Truckee Donner
Public Utility District Community Facilities
District No. 04-1 (Gray's Crossing)
ATTEST:
District Clerk of the
Truckee Donner Public Utility District
BNY WESTERN TRUST COMPANY, as Trustee
By:
Its: Authorized Officer
S-I
DOCSOC/1054957v3/22 92 5-0 0 10
EXHIBIT A
FORM OF 2004 BOND
No. _ $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1 (CRAY'S CROSSING)
SPECIAL TAX BOND, SERIES 2004
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NO.
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES
DISTRICT NO. 04-1 (GRAY'S CROSSING) (the"District") FOR VALUE RECEIVED, hereby
promises to pay, solely from certain amounts held under the Indenture (as hercinafter defined), to the
Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless
redeemed prior thereto as hercinafter provided, the Principal Amount set forth above, and to pay
interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next
preceding the date of authentication hereof, unless (i) the date of authentication is an Interest
Payment Date in which event interest shall be payable from such date of authentication, (ii) the date
of authentication is after a Record Date (as hereinafter defined) but prior to the immediately
succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment
Date immediately succeeding the date of authentication, or(iii) the date of authentication is prior to
the close of business on the first Record Date in which event interest shall be payable from the Dated
Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond
interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to
which the interest has been paid or made available for payment or, if no interest has been paid or
made available for payment, interest on this Bond shall be payable from the Dated Date set forth
above. Interest will be paid semiannually on March 1 and September I (each, an"Interest Payment
Date"), commencing March I, 2005, at the Interest Rate set forth above, until the Principal Amount
hereof is paid or made available for payment.
The principal of and premium, if any,on this Bond are payable to the Registered Owner
hereof in lawful money of the United States of America upon presentation and surrender of this Bond
at the office of BNY Western Trust Company (the"Trustee"). Interest on this Bond shall be paid by
check of the Trustee mailed by first class mail, postage prepaid, or in certain circumstances described
in the Indenture by wire transfer to an account within the United States, to the Registered Owner
hereof as of the close of business on the fifteenth day of the month preceding the month in which the
Interest Payment Date occurs (the"Record Date") at such Registered Owner's address as it appears
on the registration books maintained by the Trustee.
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DOCSOC/10549570122925-00 t 0
This Bond is one of a duly authorized issue of"Truckee Donner Public Utility District
Community Facilities District 7vo. 04-1 (Gray's Crossing) Special Tax Bonds, Series 2004" (the
"Bonds") issued in the aggregate principal amount of pursuant to the Mello-Roos
Community Facilities Act of 1982,as amended, being Sections 53311 et.seq., of the California
Government Code(the"Act"). The issuance of the Bonds and the terns and conditions thereof are
provided for by a resolution adopted by the Board of Directors of the Truckee Donner Public Utility
District,acting in its capacity as the legislative body of the District on August 18,2004 and a Trust
Indenture dated as of September 1, 2004, by and between the District and the Trustee (the
"Indenture"), and this reference incorporates the Indenture herein, and by acceptance hereof the
Registered Owner of this Bond assents to said terms and conditions. The Indenture is adopted under
and this Bond is issued under, and both are to be construed in accordance with, the laws of the State
of California.
Pursuant to the Act and the Indenture, the principal of, premium,if any, and interest on this
Bond are payable solely from the annual special taxes authorized under the Act to be levied and
collected within the District and certain other amounts pledged to the repayment of the Bonds as set
forth in the Indenture. The District has covenanted for the benefit of the owners of the Bonds that
under certain circumstances described in the Indenture it will commence and diligently pursue to
completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax
installments levied for payment of principal and interest on the Bonds.
Subject to the further limitations set forth in the Indenture, the Bonds may be redeemed, at
the option of the District from any source of funds on any Interest Payment Date, in whole, or in part
in the order of maturity selected by the District and by lot within a maturity, at the following
redemption prices, expressed as a percentage of the principal amount thereof, together with accrued
interest to the date of redemption:
Redemption Dates Redemption Prices
through %
through
through
and thereafter
In addition, the Term Bonds maturing on September I, , September 1, and
September 1, 2035 are subject to mandatory sinking fund redemption prior to maturity commencing
on September 1,_, September 1,_and September 1,_,respectively, in part, by lot, from
Sinking Fund Payments (as defined in the Indenture) at a redemption price equal to the principal
amount thereof,plus accrued interest to the date of redemption, without premium,to the extent,in
the manner and subject to the terms of the Indenture.
In the event of a partial redemption of Term Bonds, other than as a result of Sinking Fund
Payments, each of the remaining Sinking Fund Payments for the Term Bonds that were partially
redeemed will be reduced, as nearly as practicable,on a pro rata basis.
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DOCSOC/1 054957v3/22925-001 0
The Bonds are also subject to special mandatory redemption on any Interest Payment Date, in
whole or in part, from certain funds derived from the prepayment of Special Taxes, at the following
redemption prices,expressed as a percentage of the principal amount thereof, together with accrued
interest to the date of redemption:
Redemption Dates Redemption Prices
through %
_through
through
and thereafter
Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the
registered owners thereof not less than 30 nor more than 60 days prior to the redemption date by first
class mail,postage prepaid, to the addresses set forth in the registration books. Neither a failure of
the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of
the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to
accrue interest on the specified redemption date; provided that funds for the redemption are on
deposit with the Trustee on the redemption date. Thereafter,the registered owners of such Bonds
shall have no rights except to receive payment of the redemption price upon the surrender of the
Bonds.
This Bond shall be registered in the name of the Registered Otkmer hereof, as to both
principal and interest,and the District and the Trustee may treat the Registered Owner hereof as the
absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Bonds are issuable only in fully registered form in the denomination of$5.000 or any
integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of
other authorized denominations oftire same issue and maturity, all as more fully set forth in the
Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the Principal Office of the Trustee,but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or
denominations for the same aggregate principal amount of the same issue and maturity will be issued
to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of(i) any Bonds for
a period of 15 days next preceding any selection of the Bonds to be redeemed, or(ii)any Bonds
chosen for redemption.
The rights and obligations of the District and of the registered owners of the Bonds may be
amended at any tune, and in certain cases without notice to or the consent of the registered owners, to
the extent and upon the terms provided in the Indenture.
THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE; TRUCKEE DONNER
PUBLIC UTILITY DISTRICT OR OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAY'S CROSSING) FOR WHICH TIIE
TRUCKEE DONNER PUBLIC UTILITY DISTRICT OR THE DISTRICT IS OBLIGATED TO
LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES,
OTHER TIIAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED
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OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL
TAXES AND OTHER AMOUNTS PLEDGED UNDER T]IE INDENTURE BUT ARE NOT A
DEBT OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, THE STATE OF
CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF
ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required by law to exist, happen and be performed precedent to and in the issuance of this
Bond do exist, have happened and have been performed in due time, form and manner as required by
law, and that the amount of this Bond, together with all other indebtedness of the District, does not
exceed any debt limit prescribed by the laws or Constitution of the State of California.
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DOCSOC/1054957v3/22 925-001 0
IN WITNESS WHEREOF, Truckee Donner Public Utility District Community Facilities
District No. 04-1 (Gray's Crossing)has caused this Bond to be dated as of the Dated Date,to be
signed on behalf of the District by the President of the Board of Directors of the Truckee Donner
Public Utility District, acting as the legislative body of Truckee Donner Public Utility District
Community Facilities District No. 04-1 (Gray's Crossing) by his facsimile signature and attested by
the facsimile signature of the Clerk of the Truckee Donner Public Utility District.
President of the Board of Directors of the
Truckee Donner Public Utility District, acting
as the legislative body of Truckee Donner
Public Utility District Community Facilities
District No. 04-1 (Gray's Crossing)
ATTEST:
District Clerk of the Truckee Donner Public
Utility District
[FORM OF TRUSTEE'S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.
Dated: , 2004 BNY WESTERN TRUST COMPANY, as Trustee
By:
Authorized Signatory
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DocsoCl054957v3l'22925-0010
[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a
Professional Corporation, in connection with the issuance of and dated as of the date of the original
delivery of, the Bonds. A signed copy is on file in my office.
District Clerk of the Truckee Donner Public
Utility District
[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto
(typewrite name, address and social security or federal tax identification number)
the within-registered Bond and hereby irrevocably constitute(s) and appoint(s)
attorney,
to transfer the same on the Bond Register of the Trustee with full power of substitution in the
premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible guarantor institution.
Note: The signature(s) on this assignment must correspond with the name(s) as written on the face
of the within-registered Bond in every particular, without alteration or enlargement or any
change whatsoever.
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DOCSOC/1054957v3/22925-0010
EXHIBIT B
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1 (GRAY'S CROSSING)
REQUISITION FOR DISBURSE189ENT OF COSTS OF ISSUANCE
BNY Western Trust Company, Trustee, is hereby requested to pay from the [specify one of
the Costs of Issuance Account or the Project Account] of the Truckee Donner Public Utility District
Community Facilities District No. 04-1 (Gray's Crossing) Acquisition and Construction Fund,
established by the Trust Indenture between the Trustee and Truckee Donner Public Utility District
Community Facilities District No. 04-1 (Gray's Crossing), dated as of September 1, 2004, the
amount specified and to the payee named below for payment of[Describe Type of Costs].
Payee:
Address:
Purpose:
Amount: $
The amount is due and payable under purchase order, contract or other authorization and has
not formed the basis of any prior request for payment. The conditions to the release of this amount
from the Truckee Donner Public Utility District Community Facilities District No. 04-1 (Grays
Crossing) Acquisition and Construction Fund are satisfied.
There has not been filed with nor served upon the District notice of any lien,right to hen or
attachment upon, or stop notice or claim affecting the right to receive payment of the amount
specified above which has not been released or will not be released simultaneously with the payment
of such amount,other than materialmen's or mechanic's liens accruing by mere operation of law.
Dated: TRUCKEE DONNER PUBLIC UTILITY DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 04-1
(GRAY'S CROSSING)
By:
Authorized Officer
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DOCSOC/1 0549570/2292 5-001 0
EXHIBIT C
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES
A Special Tax applicable to each Assessor's Parcel in the Truckee Donner Public Utility District
Community Facilities District No. 04-1 (Gray's Crossing) [herein "CFD No. 04-1"] shall be levied
and collected according to the tax liability determined by the Board of Directors or its designee,
through the application of the appropriate amount or rate for Taxable Properly, as described below.
All of the property in CFD No. 04-1, unless exempted by law or by the provisions of Section G
below, shall be taxed for the purposes, to the extent, and in the manner herein provided, including
property subsequently annexed to the CFD unless a separate Rate and Method of Apportionment is
adopted for the annexation area.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel
Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the
applicable Final Map or other parcel map recorded with the County.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5,
(commencing with Section 53311), Division 2 of Title 5 of the California Government Code.
"Administrative Expenses" means any or all of the following: the fees and expenses of any fiscal
agent or trustee (including any fees or expenses of its counsel) employed in connection with any
Bonds, and the expenses of the TDPUD carrying out its duties with respect to CFD No. 04-1 and the
Bonds, including, but not limited to, levying and collecting the Special Tax, the fees and expenses of
legal counsel, charges levied by the County Auditor's Office, Tax Collector's Office, and/or
Treasurer's Office, costs related to annexing property into the CFD, costs related to property owner
inquiries regarding the Special Tax, amounts needed to pay rebate to the federal government with
respect to the Bonds, costs associated with complying with any continuing disclosure requirements
for the Bonds and the Special Tax, and all other costs and expenses of the TDPUD in any way related
to the establishment or administration of the CFD.
"Administrator" means the person or firm designated by the TDPUD to administer the Special Tax
according to this Rate and Method of Apportionment of Special Tax.
"Affordable Unit" means any Unit within CFD No. 04-1 which is subject to (i) a deed-restricted cap
limiting the appreciation that can be realized by the owner of the Unit for thirty (30) years, or
(ii) another such deed restriction that replaces the 30-year appreciation cap in future years. In the
Fiscal Year after the Fiscal Year in which the deed-restriction on an Affordable Unit expires, such
Unit shall be taxed as Single Family Detached Property or Single Family Attached Property, as
applicable.
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DOCSOC/1 054957v3/22925-001 0
"Assessor's Parcel" or "Parcel" means a lot or parcel, including an airspace parcel for a
condominium unit or Loft Unit, shown on an Assessor's Parcel Map with an assigned Assessor's
Parcel number.
"Assessor's Parcel Flap" means an official map of the County Assessor designating parcels by
Assessor's Parcel number.
"Association Property" means any property within the CFD that is owned by a homeowners
association, excluding such property under the pad or footprint of a Unit. Association Property shall
also include property designated as open space in a recorded Final Map whether or not such property
has yet been dedicated to a homeowners association, public agency, or private land trust.
"Board of Directors" or "Board" means the Board of Directors of the TDPUD.
"Bonds" means bonds or other debt (as defined in the Act), whether in one or more series, issued,
insured or assumed by CFD No. 04-1 related to public infrastructure and/or improvements that are
authorized to be funded by CFD No. 04-1.
"Building Square Footage" means the total gross square footage of the floor area of a
non-residential building detennined by calculating the combined floor area contained within the
building's exterior walls including the area of an addition where floor area is increased. Parking
areas and exterior walkways shall not be included in the calculation of Building Square Footage.
"Capitalized Interest"means funds in any capitalized interest account available to pay debt service
on Bonds.
"Center for the Arts Property" means the property on which a building permit has been issued for
construction of the "Center for the Arts"required pursuant to the Development Agreement, subject to
the limitation set forth in Section G below.
"CFD Formation" means the date on which the Resolution of Formation to form CFD No. 04-1 was
adopted by the Board of Directors.
"Church Property" means, in any Fiscal Year, any Parcel in CFD 04-1 that meets both of the
following criteria: (i) the Parcel is owned by a religious organization which is exempt from ad
valorem property tax, and (ii) a building permit has been issued for construction of a building on the
Parcel that will be used solely as a place of worship. The amount of Church Property within the CFD
shall be subject to the limitation set forth in Section G below.
"County"means the County of Nevada.
"Developed Property"means, in any Fiscal Year, the following:
for Single Family Detached Property, all parcels for which a Final Map was recorded
prior to May 1 of the preceding Fiscal Year
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DOCSOC11054957v3/22925-00 1 0
• for Single Family Attached Property, all parcels for which a building permit for new
construction of a residential structure was issued prior to May 1 of the preceding
Fiscal Year
for Golf Course Property, all Parcels that make up the Golf Course Property if the
certificate of occupancy for the proshop or clubhouse associated with the golf course
was issued at least twenty-four (24) months in advance of May I of the preceding
Fiscal Year
• for Non-Residential Property, all parcels for which a building permit for new
construction of a non-residential structure (which may include Loft Units) was issued
prior to May 1 of the preceding Fiscal Year
"Development Agreement" means the Development Agreement executed between the Town and
Gray's Crossing LLC on March 25, 2004.
"Excess Public Property" means the acres of Public Property that exceed the acreage exempted in
Section G below. In any Fiscal Year in which a Special Tax must be levied on Excess Public
Property pursuant to Step 5 in Section E below, Excess Public Property shall be those Assessor's
Parcel(s) that most recently became Public Property based on the dates on which Final Maps
recorded creating such Public Property or, if an Assessor's Parcel became Public Property other than
through a Final Map, as determined by the Administrator.
"Expected Affordable units" means a total of 36 Units within CFD No. 04-1 that are expected to be
Affordable Units. If, in any Fiscal Year, the Administrator identifies a total number of Affordable
Units within CFD No. 04-1 that exceeds 36 Units, only the first 36 Units for which building permits
were issued shall remain exempt from the Special Tax pursuant to Section G below. Affordable
Units for which permits are issued after building permits for the 36 Expected Affordable Units have
been issued shall be taxed as follows: (i) based on the size of the lot if the Unit is Single Family
Detached Property, as Single Family Attached Property if the Unit meets the definition set forth for
such property below, or(iii) as a Loft Unit if the Unit is located above a retail establishment.
"Expected Land Uses" means the total number of Units and size of SFD Lots expected to be
constructed within the CFD as determined from time to time by the Administrator after applying the
steps in Section D below. At CFD Formation, the Expected Land Uses were those expected to be
reflected in the Tentative Map. The Expected Land Uses at CFD Formation are summarized in
Attachment 1 hereto; the Administrator shall update Attachments 1 and 2 each time a change occurs
to the land use plans for property in the CFD.
"Expected Maximum Special Tax Revenues" means the amount of annual revenue that would be
available if the Maximum Special Tax was levied on the Expected Land Uses, The Expected
Maximum Special Tax Revenues as of CFD Formation are shown in Attachment I of this Rate and
Method of Apportionment of Special Tax.
"Final Bond Sale" means the last series of Bonds that will be issued on behalf of CFD No. 04-1
(excluding any Bond refundings), as determined in the sole discretion of the TDPUD.
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DOCSOG 1054957v3(22925-0010
"Final Map" means a final map, or portion thereof, recorded by the County pursuant to the
Subdivision Map Act (California Government Code Section 66410 et seg.) that creates individual
lots on which building permits for new construction may be issued without further subdivision and
for which no further subdivision is anticipated pursuant to the Tentative Map.
"Fiscal Year"means the period starting July I and ending on the following June 30.
"Fitness Facility Property" means any Assessor's Parcels within the CFD that meets both of the
following criteria (i) a building permit has been issued for construction of a swim or fitness facility
on the Parcel, and (ii) based on the size of the Parcel, no other buildings can be constructed on the
Parcel.
"Fractional Unit" means a single family detached unit or a single family attached unit for which
multiple owners may each purchase a fractional share of ownership (also referred to as a timeshare
unit by the California Department of Real Estate).
"Golf Course Property" means any property within CFD No. 04-1 that is used as a golf course,
including but not limited to, a driving range, clubhouse, pro shop, parking, outbuildings, and other
golf-related amenities. Golf Course Property shall also include any property within the CFD that is
used or expected to be used for a sUrim and/or fitness facility if such facility is located on the same
Assessor's Parcel as the clubhouse,pro shop or other golf-related buildings.
"Lodging Unit" means a unit that is (i) offered for rent to the general public on an overnight or
limited stay basis, as defined in the Development Agreement, and (ii) constructed within the
geographic area labeled Neighborhood Commercial in Attachment 2. If Fractional Units are built
within the 1x'cighborhood Commercial area, all such units shall be taxed at the same rate as other
Units of Single Family Attached Property within the CFD.
"Loft Unit" means a residential Unit located above and attached to a commercial establishment,
which shall not under any circumstance include a residential Unit within which the owner of such
Unit operates an at-home business operation.
"Maximum Special Tax" means the greatest amount of Special Tax that can be levied on an
Assessor's Parcel in any Fiscal Year determined in accordance with Section C below, as may be
adjusted pursuant to Step 3 in Section D below.
"Non-Residential Property" means, in any Fiscal Year, all Parcels of Taxable Property which are
not Single Family Detached Property, Single Family Attached Property, Golf Course Property, Loft
Units, Association Property, Excess Public Property, or Undeveloped Property. As discussed below,
Loft Units shalt be taxed separately from the non-residential Building Square Footage on the Parcel.
"Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levied in
any Fiscal Year to the Maximum Special Tax authorized to be levied in that Fiscal Year is equal for
all Assessor's Parcels of Developed Property, and for Undeveloped Property that the ratio of the
actual Special Tax to the Maximum Special Tax is equal for all Assessor's Parcels of Undeveloped
Property.
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"Public Property" means any property within the boundaries of CFD No. 04-1 that is owned by the
federal government, the State of California, the County, the Town, the TDPUD, or other public
agency.
"Rental Property" means, in any Fiscal Year, all Parcels within the CFD for which a building
permit was issued for construction of a residential structure with multiple Units that share common
walls, all of which are offered or are expected to be offered for rent to the general public and/or
employees. Fractional Units and Loft Units within the CFD shall at no time be categorized as Rental
Property, Lodging Units shall also be categorized as Rental Property for purposes of this Rate and
Method of Apportionment of Special Tax.
"SFD Lot" means an individual residential lot, identified and numbered on a recorded Final Map, on
which a building permit has been or is permitted to be issued for construction of a single family
detached unit without further subdivision of the lot and for which no further subdivision of the lot is
anticipated pursuant to the Tentative Map.
"Single Family Attached Property" means, in any Fiscal Year, all Parcels of Developed Property
for which a building permit was issued for construction of a residential structure consisting of two or
more Units that share common walls and are offered or expected to be offered as for-sale units,
including, but not limited to, such residential structures that meet that statutory definition of a
condominium contained in Civil Code Section 1351.
"Single Family Detached Property" means, in any Fiscal Year, all Parcels of Developed Property
for which a building permit was issued or is permitted to be issued for construction of a Unit that
does not share a common wall with another Unit, including detached Fractional Units.
"Special Tax" means a Special Tax levied in any Fiscal Year to pay the Special Tax Requirement.
"Special Tax Requirement" means the amount necessary in any Fiscal Year to: (i) pay principal
and interest on Bonds which is due in the calendar year that begins in such Fiscal Year; (it) create
and/or replenish reserve funds for the Bonds; (iii) cure any delinquencies in the payment of principal
or interest on Bonds which have occurred in the prior Fiscal Year or, based on existing delinquencies
in the payment of Special Taxes, are expected to occur in the Fiscal Year in which the tax will be
collected; (iv)pay Administrative Expenses; and (v)pay the costs of public improvements and public
infrastructure authorized to be financed by CFD No. 04-1. The amounts referred to in clauses (i)
and (ii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or
surplus balances in fiords and accounts for the Bonds to the extent that such earnings or balances are
available to apply against debt service pursuant to a Bond indenture, Bond resolution, or other legal
document that sets forth these terns; (ii) proceeds received by CFD No. 04-1 from the collection of
penalties associated with delinquent Special Taxes; and (in) any other revenues available to pay debt
service on the Bonds as determined by the Administrator.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 04-1
which are not exempt from the Special Tax pursuant to law or Section G below.
"Tax Zone" means one of the two mutually exclusive geographic areas defined below and identified
in Attachment 2 of this Rate and Method of Apportionment of Special Tax, and any subsequent Tax
Zones created to contain property annexed into the CFD after CFD Formation.
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DOCSOC/1054957v3/22925-0010
"Tax Zone #1"means the geographic area that is specifically identified in Attachment 2 of this Rate
and Method of Apportionment of Special Tax as Tax Zone#1.
"Tax Zone #2"means the geographic area that is specifically identified in Attachment 2 of this Rate
and Method of Apportionment of Special Tax as Tax Zone#2.
"TDPUD" means the Truckee Donner Public Utility District.
"Tentative Map" means the tentative subdivision map for the Gray's Crossing Planned
Development approved by the Town on February 5, 2004.
"Town" means the incorporated Town of Truckee.
"Undeveloped Property"means, in any Fiscal Year, all Parcels of Taxable Property within the CFD
that are not Developed Property.
"Unit" means (i) for Single Family Detached Property, an individual single-family detached unit,
(ii) an individual Loft Unit, and (in) for Single Family Attached Property, an individual residential
unit within a duplex, triplex, fourplex, townhome, or condominium structure.
B. D,ATA PC)R :1NNI;.AL ADMINISTRATION
On or about July 1 of each Fiscal Year, the Administrator shall identify the current Assessor's Parcel
numbers for all Parcels of Taxable Property, The Administrator shall also determine: (i) whether
each Assessor's Parcel of Taxable Property is Developed Property or Undeveloped Property, ii for
Developed Property, which Parcels are Single Family Detached Property, Single Family Attached
Property, Loft Units, Golf Course Property and Non-Residcntial Property, (iii) for Parcels of Single
Family Attached Property, the number of Units on each Parcel, (iv) for Single Family Detached
Property, the size of each residential lot within Final Maps that have been recorded, (v) whether there
are Parcels of Rental Property, Excess Public Property, or Parcels with Affordable Units, and (vi)the
Special Tax Requirement.
For Single Family Attached Property, the number of Units shall be determined by referencing the site
plan, condominium plan, or other development plan. For Non-Residential Property that includes
Loft Units, the Administrator shall reference the condominium map or other such development plan
to determine the Building Square Footage, or if such map or plan is not available, the Administrator
shall determine the Building Square Footage associated with the Loft Units and subtract the square
footage thereof from the total Building Square Footage to determine the square footage that will be
subject to the Maximum Special Tax for Non-Residential Property. If, in any Fiscal Year, an
Assessor's Parcel includes both Developed Property and Undeveloped Property, the Administrator
shall determine the Acreage associated with the Developed Property, subtract this Acreage from the
total Acreage of the Assessor's Parcel, and use the remaining Acreage to calculate the Special Tax
that will apply to Undeveloped Property within the Assessor's Parcel.
In addition, the Administrator shall, on an ongoing basis, monitor whether changes in land use have
been proposed that will affect the Expected Land Uses and whether Final Maps that have been
proposed for approva] by the Town are consistent with the Expected Land Uses. If changes to the
Expected Land Uses are proposed, the Administrator shall apply the steps set forth in Section D
below.
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C. 1LAX1\1L`M SPECIAL TAX
1. Single Family Detached Property
The Maximum Special Tax for Single Family Detached Property for Fiscal Year 2004-05 is shown in
Table 1 below:
TABLE 1
TDPUD CED No.2004-1
Maximum Special Tax for Single Family Detached Property
Maximum Special Tax in Maximum Special Tax
Tax Zone#1 in Tax Zone#2
T_yYe ofProper Lot Size 1 Fiscal Year 2004-05 * Fiscal Year 2004-05 *
Single Family Greater than T $3,300 per $4,125 SFD Lotr j
Detached Property 22,000 s uare feet SFD Lot
Single Family 20,001 to 22,000 $3,200 per �— $4,000 per
Detached Pro let s uare feet SFD Lot SFD Lot
Single Family 18,001 to 20,000 $3,100 per �— $SFD per
Detached Family
_square feet SFD Lot SFD Lot
Single Family 16,001 to I8,000 $3,000 per $3,750 SFD Lot
Detached Pro>ert s rare feet SFD Lot
Single Family 14,001 to 16,000 $2,900 per $3,625 SFD Lot
Detached Pro party s uare feet SFD Lot
Single Family 12,001 to 14,000 $2,800 per $SFD Lotr
Detached Pro pert s uare feet SFD Lot
Single Family 8,000 to 12,000 $2,700 per $SFD Lot3,375 s
Detached Pro -ert s uare feet SFD Lot
Single Family Less than $1,800 per $1,800 SFD Lot
Detached Pro ert 8,000 sc uare feet SFD Lot
On J111v 1, 2005 and on each July I thereafter, the Maximum Special Taxes shown in Table I
above shall be increased by an arnount equal to bvo percent (2%) of the amount in effect for the
prior Fiscal Year.
The square footage of SFD Lots shall be determined by reference to County Assessor's Parcel Maps
or, to the extent such Maps do not reflect square footage of the SFD Lots, by reference to the lot size
summary provided by the engineering firm that produced the Final Map.
2. Single Family Attached Property
The Maximum Special Tax for Single Family Attached Property for Fiscal Year 2004-05 is $1,800
per Unit. On July 1, 2005 and on each July 1 thereafter, this Maximum Special Tax shall be
increased by an amount equal to two percent(2%) of the amount in effect for the prior Fiscal Year.
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3. Loft Units
The Maximum Special Tax for Loft Units for Fiscal Year 2004-05 is $],200 per Unit. On July 1,
2005 and on each July l thereafter, this :Maximum Special Tax shall be increased by an amount equal
to two percent (2%) of the amount in effect for the prior Fiscal Year.
4. Non-Residentitd Property
The Maximum Special Tax for Non-Residential Property for Fiscal Year 2004-05 is $2.50 per square
foot of Building Square Footage. On July 1, 2005 and on each July 1 thereafter, this Maximum
Special Tax shall be increased each Fiscal Year thereafter by an amount equal to two percent(2%) of
the amount in effect the prior Fiscal Year.
5. Golf Course Property
The Maximum Special Tax assigned to Golf Course Property for Fiscal Year 2004-05 is $200,000.
On July 1, 2005 and on each July 1 thereafter, this Maximum Special Tax shall be increased each
Fiscal Year thereafter by an amount equal to two percent (2%) of the amount in effect the prior Fiscal
Year. if the Golf Course Property is fully contained within one Assessor's Parcel, the Maximum
Special Tax identified above shall be collected from the Parcel. If the Golf Course Property is spread
over more than one Assessor's Parcel, the following steps shall be applied in the first Fiscal Year in
which the Golf Course Property is Developed Property to determine the Maximum Special Tax to be
assigned to each Parcel:
Step l: Multiply the total Maximum Special Tax assigned to the Golf Course
Property by fifty percent(50%);
Step 2: Determine the combined Acreage of all Assessor's Parcels on which the
clubhouse, pro shop, driving range, parking lot, and other outbuildings are
located;
Step 3: Divide the amount determined in Step i by the Acreage identified in Step 2 to
calculate a per-acre Special Tax;
Step 4: Multiply the per-acre Special "tax calculated in Step 3 by the Acreage of each
Assessor's Parcel on which the clubhouse, pro shop, driving range, parking
lot, and other outbuildings are located to calculate the Maximum Special Tax
for each of the Parcels;
Step 5: Determine the combined Acreage of all Assessor's Parcels of Golf Course
Property that were not included in the Acreage calculated in Step 2 above;
Step 6: Divide the amount determined in Step 1 by the Acreage calculated in Step 5
to calculate a per-acre Special Tax;
Step 7. Multiply the per-acre Special Tax calculated in Step 6 by the Acreage of each
Assessor's Parcel included in the figure determined in Step 5 to calculate the
Maximum Special Tax for each of the Parcels.
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DOCSOC/10549570/22925-0010
The Maximum Special Tax determined for each Assessor's Parcel of Golf Course Property
Pursuant to the steps set forth above shall be increased on July I of the following Fiscal Year,
and on each July I thereafter, by an amount equal to two percent(2%) of the amount in effect
the prior Fiscal Year. If an Assessor's Parcel of Golf Course Property is further subdivided
or otherwise reconfigured, the Maximum Special Tax assigned to the Parcel shall be
allocated to the new Parcels on an Acreage basis.
6 Undeveloped Property
The Maximum Special Tax for Undeveloped Property for Fiscal Year 2004-05 is $17,500 per Acre.
On July 1, 2005 and on each July I thereafter, this 11aximuni Special Tax shall be increased by
an amount equal to two percent(2%) of the amount in effect for the prior Fiscal Year.
D. BACK-UP FORIbILIA
The Maximum Special Taxes set forth in Section C above were calculated based on the Expected
Land Uses at CFD Formation. The Administrator shall review Tentative Map revisions and other
changes to the land uses within the CFD and compare the revised land uses to the Expected Land
Uses to evaluate the impact on the Expected Maximum Special Tax Revenues. In addition, the
Administrator shall review Final Maps to ensure they reflect the number and size of SIT) Lots that
were anticipated in the Tentative Map.
If, prior to the Final Bond Sale, a change to the Expected Land Uses (a "Land Use/Entitlement
Change") is proposed that will result in a reduction in the Expected Maximum Special Tax
Revenues, no action will be needed pursuant to this Section D as long as the reduction in Expected
Maximum Special Tax Revenues does not reduce debt service coverage on outstanding Bonds below
the amount committed to in the Bond documents. Upon approval of the Land Use/Entitlement
Change, the Administrator shall update Attachment 1 to show the reduced Expected Maximum
Special Tax Revenues, and the reduced Expected Maximum Special Tax Revenues shall be the
amount used to by the TDPUD to make future decisions with respect to Bonds.
If a proposed Land Use/Entitlement Change would reduce the debt service coverage required on
outstanding Bonds or if the Land Use/Entitlement Change is proposed after the Final Bond Sale, the
following steps shall be applied:
Step 1: By reference to Attachment I (which will be updated by the Administrator
each time a Land Use/Entitlement Change has been processed according to
this Section D), the Administrator shall identify the Expected Maximum
Special Tax Revenues for CFD No. 04-1;
Step 2: The Administrator shall calculate the Maximum Special Tax revenues that
could be collected from property in the CFD if the Land Use/Entitlement
Change is approved;
Step 3: If the amount determined in Step 2 is higher than that calculated in Step I,the
Land Use/Entitlement Change may be approved without further action. If the
revenues calculated in Step 2 are less than those calculated in Step 1, and if:
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DOCSOC/1054957v3/22 92 5-0 01 0
(a) The landowner does not withdraw the request for the Land
Use/Entitlement Change that was submitted to the Town; or
(b) Before approval of the Land Use/Entitlement Change, the landowner
requesting the Land Use/Entitlement Change does not prepay a
portion of the Special Tax for the CFD in an amount that corresponds
to the lost Maximum Special Tax revenue, as determined by applying
the steps set forth in Section H below;
then, the amount of the prepayment determined in Step 3.b shall be allocated on a per-acre
basis and included on the next property tax bill for all Assessor's Parcels within the property
affected by the Land Use/Entitlement Change. The amount allocated to each Assessor's
Parcel shall be added to and, until paid, shall be a part of, the Maximum Special Tax for the
Assessor's Parcel.
If multiple Land Use/Entitlement Changes are proposed at one time (which may include
approval of multiple Final Maps at one time), the Administrator may consider the combined
effect of all the Land Use/Entitlement Changes to determine if there is a reduction in
Expected Maximum Special Tax Revenues that necessitates implementation of Step 3.b. If,
based on this comprehensive analysis, the Administrator determines that there is a reduction
in Expected Maximum Special Tax Revenue, and till of the Load Use/Erttitlement Changes
are being proposed by the same land owner, the Administrator shall determine the required
Prepayment (pursuant to Step 3.b) by analyzing the combined impact of all of the proposed
Land Use/Entitlement Changes. Notwithstanding the foregoing, if the Administrator
analyzes the combined impacts of multiple Land Use/Entitlement Changes, and the Town
subsequently does not approve one or more of the Land Use/Entitlement Changes that was
proposed, the Administrator shall once again apply the three steps set forth above to
determine the combined impact of those Land Use/Entitlement Changes that were approved
simultaneously by the Town.
If, based on the comprehensive analysis, the Administrator determines that there is a
reduction in Expected Maximum Special Tax Revenue, and the Land Use/Entitlement
Changes are not all being proposed by the same land owner, the Administrator shall consider
the proposed Land Use/Entitlemcnt Changes individually to determine the required
prepayment from each owner.
G. METHOD OF LEVY OF THE SPECIAL TAX
Each Fiscal Year, the Administrator shall determine the Special 'fax Requirement to be collected in
that Fiscal Year, and the Special fax shall be levied according to the steps outlined below.
Step l: The Special Tax shall be levied Proportionately on each Parcel of Developed
Property within the CFD that is Single Family Detached Property, Single
Family Attached Property, or a Loft Unit up to 100% of the Maximum
Special Tax for each Parcel for such Fiscal Year until the annount levied on
such Developed Property is equal to the Special Tax Requirement prior to
applying any Capitalized Interest that is available in the CFD accounts.
C-10
DOCSOC/10549570/22925-0010
Step 2: If additional revenue is needed after Step 1, and after applying Capitalized
Interest to the Special Tax Requirement, the Special Tax shall be levied
Proportionately on each Parcel of Developed Property within the CFD that is
Non-Residential Property up to 100% of the Maximum Special Tax for such
Developed Property for such Fiscal Year determined pursuant to Section C.
Step 3: If additional revenue is needed after Step 2, the Special Tax shall be levied
Proportionately on each Parcel of Developed Property within the CFD that is
Golf Course Property up to 100% of the Maximum Special Tax for such
Developed Property for such Fiscal Year determined pursuant to Section C.
Step 4: If additional revenue is needed after Step 3, the Special Tax shall be levied
Proportionately on each Assessor's Parcel of Undeveloped Property within
the CFD, up to 100% of the Maximum Special Tax for Undeveloped
Property for such Fiscal Year determined pursuant to Section C.
Step 5: If additional revenue is needed after Step 4, the Special Tax shall be levied
Proportionately on each Parcel of Association Property within the CFD, up to
100% of the Maximum Special Tax for Undeveloped Property for such Fiscal
Year determined pursuant to Section C.
Step 6: If additional revenue is needed after Step 5, the Special Tax shall be levied
Proportionately on each Assessor's Parcel of Excess Public Property,
exclusive of property exempt from the Special Tax pursuant to Section G
below, up to 100% of the Maximum Special Tax for Undeveloped Property
for such Fiscal Year deternined pursuant to Section C.
F. COLi,ECTION OF SPECIAL TAX
The Special Taxes for CFD No. 04-1 shall be collected in the same manner and at the same time as
ordinary ad valorem property taxes,provided, however, that prepayments are permitted as set forth in
Section H below and provided further that the TDPUD may directly bill the Special Tax, may collect
Special Taxes at a different time or in a different manner, and may collect delinquent Special Taxes
through foreclosure or other available methods. The Special Tax for Fractional Units may be billed
either directly to individual fractional share owners or to a homeowners association, which shall then
bill the individual fractional share owners; non-payment of Special Taxes billed by the homeowners
association shall result in interest and penalties, and the fractional ownership shall be subject to
foreclosure proceedings as set forth in the Bond covenants.
The Special Tax shall be levied and collected until principal and interest on Bonds have been repaid,
TDPUD's costs of constructing or acquiring authorized facilities from Special Tax proceeds have
been paid, and all administrative expenses have been reimbursed. However, in no event shall a
Special 'fax be levied after Fiscal Year 2043-44. Pursuant to Section 53321 (d) of the Act, the
Special Tax levied against a Parcel used for private residential purposes shall under no circumstances
increase more than ten percent(10%) as a consequence of delinquency or default by the owner of any
other Parcel or Parcels and shall, in no event, exceed the Maximum Special Tax in effect for the
Fiscal Year in which the Special Tax is being levied.
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DOCSOC/1054957v3/22925-0010
G. EXEMPTIONS
Notwithstanding any other provision of this Rate and Method of Apportionment of Special Tax, no
Special Tax shall be levied on up to 42.2 acres of Public Property, 237.7 acres of Association
Property, 2 acres of property on which Lodge Units have been or, based on building permits that
have been issued, are expected to be built, 0.67 of an acre of Center for the Arts Property, Fitness
Facility Property, and 9 acres of Church Property. A separate amount of public acreage may be
exempted each time property annexes into CFD No. 04-1. and such additional exemption shall only
apply to property within the annexation area. A Special Tax may be levied on Excess Public
Property pursuant to Step 5 of Section E; however, a public agency may prepay or cause the
prepayment of the special tax obligation on land conveyed to it that would be classified as Excess
Public Property.
In addition, no Special Tax shall be levied in any Fiscal Year on Rental Property or Affordable Units,
H. PREP.A_)_'MENT OE SPECIAL TAX
The following definitions apply to this Section H:
"Outstanding Bonds'' means all Previously Issued Bonds which remain outstanding, with
the following exception: if a Special Tax has been levied against, or already paid by, an
Assessor's Parcel making a prepayment, and a portion of such Special Tax will be used to
pay a portion of the next principal payment on the Bonds that remain outstanding (as
determined by the Administrator), that next principal payment shall be subtracted from the
total Bond principal that remains outstanding, and the difference shall be used as the amount
of Outstanding Bonds for purposes of this prepayment formula.
"Previously Issued Bonds" means all Bonds that have been issued on behalf of the CFD
prior to the date of prepayment.
"Public Facilities Requirements" means either S24,000,000 in 2004 dollars, which shall
increase on January 1, 2005, and on each January 1 thereafter by the percentage increase, if
any, in the construction cost index for the San Francisco region for the prior twelve (12)
month period as published in the Enaineerine News Record or other comparable source if the
Enuineerin�News Record is discontinued or otherwise not available, or such other number as
shall be determined by the TDPUD to be an appropriate estimate of the net construction
proceeds that will be generated from all Bonds that have been or are expected to be issued on
behalf of CFD No. 2004-1. The Public Facilities Requirements shown above may be
adjusted or a separate Public Facilities Requirements identified each time property annexes
into CFD No. 04-1; at no time shall the added Public Facilities Requirement for that
annexation area exceed the amount of public improvement costs that are expected to be
supportable by the Maximum Special Tax revenues generated within that annexation area In
addition, the Public Facilities Requirement may be adjusted if the total number of Units
authorized to be constructed within the CFD is increased by the Town; this adjustment to the
Public Facilities Requirement shall not exceed the amount of public improvement costs that
are expected to be supportable by the Maximum Special Tax revenues generated by the
additional number of Units approved by the Town.
C-12
DOCSOC/1054957v3/22 92 5-001 0
"Remaining Facilities Costs" means the Public Facilities Requirements (as defined above),
minus public facility costs funded by Outstanding Bonds (as defined above), developer
equity, and/or any other source of funding.
The Special Tax obligation applicable to an Assessor's Parcel in the CFD may be prepaid and the
obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein,
provided that a prepayment may be made only if there are no delinquent Special Taxes with respect
to such Assessor's Parcel at the time of prepayment- An owner of an Assessor's Parcel intending to
prepay the Special Tax obligation shall provide the TDPUD with written notice of intent to prepay.
Within 30 days of receipt of such written notice, the TDPUD or its designee shall notify such owner
of the prepayment amount for such Assessor's Parcel. Prepayment must be made not less than 75
days prior to any redemption date for Bonds to be redeemed with the proceeds of such prepaid
Special Taxes. The Prepayment Amount shall be calculated as follows: (capitalized terms as defined
below):
Bond Redemption Amount
plus Remaining Facilities Amount
plus Redemption Premium
plus Defeasance Requirement
plus Administrative Fees and Expenses
less Reserve Fund Credit
equals Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount shall be determined by application
of the following steps:
Step 1. Compute the total maximum Special Tax that could be collected from the
Assessor's Parcel prepaying the Special Tax in the Fiscal Year in which
prepayment would be received by the TDPUD or, in the event of a
prepayment pursuant to Step 3.b in Section D, compute the amount by which
the Maximum Special Tax revenues would be reduced by the Land
UselEntitlement Change and use the amount of this reduction as the figure for
purposes of this Step 1.
Step 2. Divide the Maximum Special Tax from Step 1 by the then-current Expected
Maximum Special Tax Revenues for the CFD.
Step 3. Multiply the quotient computed pursuant to Step 2 by the Outstanding Bonds
to compute the amount of Outstanding Bonds to be retired and prepaid (the
"Bond Redemption Amount').
Step 4. Compute the current Remaining Facilities Costs (if any).
Step 5. Multiply the quotient computed pursuant to Step 2 by the amount determined
pursuant to Step 4 to compute the amount of Remaining Facilities Costs to be
prepaid (the "Remaining Facilities Amount',
C-13
DOCSOC/1054957v3/22925-0010
Step 6. Multiply the Bond Redemption Amount computed pursuant to Step 3 by the
applicable redemption premium, if any, on the Outstanding Bonds to be
redeemed (the "Redemption Premium").
Step 7. Compute the amount needed to pay interest on the Bond Redemption Amount
starting with the first Bond interest payment date after which the prepayment
has been received until the earliest redemption date for the Outstanding
Bonds, which, depending on the Bond offering document, may be as early as
the next interest payment date.
Step 8: Compute the amount of interest the TDPUD reasonably expects to derive
from reinvestment of the Bond Redemption Amount plus the Redemption
Premium from the first Bond interest payment date after which the
prepayment has been received until the redemption date for the Outstanding
Bonds.
Step 9: Take the amount computed pursuant to Step 7 and subtract the amount
computed pursuant to Step & (the "Defeasance Requirement").
Step 10. Determine the costs of computing the prepayment amount, the costs of
redeeming Bonds, and the costs of recording any notices to evidence the
Prepayment and the redemption (the 'Administrative Fees and Expenses').
Step IL If and to the extent so provided in the indenture pursuant to which the
Outstanding Bonds to be redeemed were issued, a reserve fund credit shall be
calculated as a reduction in the applicable reserve fund for the Outstanding
Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund
Credit').
Step 12. The Special Tax prepayment is equal to the sum of the amounts computed
pursuant to Steps 3, 5, 6, 9, and 10, less the amount computed pursuant to
Step 17 (the "Prepayment Amount").
A partial prepayment may be made in an amount equal to any percentage of full prepayment desired
by the party making a partial prepayment. The Maximum Special Tax that can be levied on an
Assessor's Parcel after a partial prepayment is made is equal to the Maximum Special Tax that could
have been levied prior to the prepayment, reduced by the percentage of a full prepayment that the
partial prepayment represents, all as determined by or at the direction of the Administrator.
1. INTERPRETATIO'S' OF SPECIAL TAX FORMULA
The TDPUD reserves the right to make minor administrative and technical changes to this
document that do not materially affect the rate and method of apportioning Special Taxes. In
addition, the interpretation and application of any section of this document shall be left to the
TDPUD's discretion. Interpretations may be made by the TDPUD by ordinance or resolution for
purposes of clarifying any vagueness or ambiguity in this Rate and Method of Apportionment of
Special Tax.
C-14
DOCSOC/1054957v3/22925-00 10
ATTACHMENT 1
EXPECTED LAND USES AND
EXPECTED MAXIMUM SPECIAL TAX REVENUES
AT CFD FORMATION
Number of
Expected Maximum Special
Lots/Units/ Tax Total Expected
Acres/ Per Unit/ Maximum
Building Square Foot, _L__Special Tax
S uare Feet FY 2004-05 * Revenues
Expected Land L'ses 4
TAX ZONE#1
$3,300 per SFD Lot $6,600
SFD Lots Greater than 22A Square Feet 2
$3,200 per SFD Lot $12,800
SFD Lots, 20,001 to 22,000 Square Feet
SFD Lots, 18,001 to 20,000 Square Feet 12 $3,100 per SFD Lot $371200
SFD Lots, 16,001 to 19,000 Square Feet 32 $3,000 per SFD Lot $96,000
$2,900 per SFD Lot $133,400
SFD Lots, 14,001 to 16,000 Square Feet
46
SFD Lots, 12,001 to 14,000 Square Feet 5 $2, 00 per SFD Lot $14,000
SFD Lots, 8,000 to 12,000 Square Feet 0 $2,700 per SFD Lot $0
SFD Lots Less than 8,000 S uare Feet 61 $1,800 er SFD Lot $109,800
I TAX ZONE#2
p
SFD Lots Greater than 22,000 Square Feet � 10 $4,125er SFD Lot $41,250
1
SFD Lots, 20,001 to 22,000 Square Feet 7 $4,000 per SFD Lot $28,000
SFD Lots, 18,001 to 20,000 Square Feet 19 $3,875 per SFD Lot $73,625
SFD Lots, ]6,001 to 1$,000 Square Feet 100 $3,750 per SFD Lot $375,000
SFD Lots, 14,001 to 16,000 Square Feet 118 $3,500 per SFD Lot $427,750
SFD Lots, 12,001 to 14,000 Square Feet 43 $3,575 per SFD Lot $1 3, 500
SFD Lots, 8,000 to 12,000 Square Feet TO $3,375 per SFD Lot $33,750
SFD Lots Less than 8,000 Square Feet 0 $1,800 per SFD Lot $0
Single Family Attached Units l07 $1,800 per Unit $192,600
Loft Units 21 $1,200 per Unit $25,200
Non-Residential Building Square Footage 40,700 $2.50 per squarefoot $101,750
/A $200,000
Golf Course N
Total Expected Maximum Special Tax Revenues
$2,059,225
*Figures are shown in fiscal year 2004-05 dollars and will escalate two percent(2%)per year thereafter.
C-15
DOCSOC1054957v3/22925-0010
ATTACHMENT
TRUCKLE DONNER PUBLIC UTILITY DISTRICT
CONIMt'NrrY FACILITIES DISTRICT No.04-1
(GRAY'S CROSSING)
IDENTIFICATION OF TAX ZONES
C-16
DOCSOG1054957v3/22925-0OI0
IDENTIFICATION OF TAX ZONES FOR
NAP PROPOSED COMMUNITY FACILITIES DISTRICT NO.04-1
r TO RE o ((RAY'S CROSSING)
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
5I ,�erg COUNTY OF NEVADA
o (( STATE OF CALIFORNIA
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VICINITY MAP szl�ta ui I;t<< a8
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[RA H
n e RS-X(Single Family Residential) o
, v RM{(Multi-Fom3lY Residential)
CN(Neighbanhnod Commercial)
cv
REC(Recreation) N
OS(Open Space)
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EN6iNiEERIFI6.INC.
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Table of Contents
Page
ARTICLE I
DEFINITIONS
Section1.1. Definitions .................................................................................................................... 1
ARTICLE B
GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds.......................
Section 2.2. Type and Nature of Bonds...._.......... """" 12
12
Section 2.3. Equality of Bonds and Pledge of Net Taxes_............................................................. 13
Section 2.4. Description of Bonds; Interest Rates....................................
Section 2.5. Place and Form of Payment........................................................................................ 14
Section 2.6. Form of Bonds................................
15
Section 2.7. Execution and Authentication..................................................................................... 15
Section 2.8. Bond Register.................
Section 2.9. Registration of Exchange or Transfer................................_................ ...................... 15
Section 2.10. Mutilated. Lost. Destroyed or Stolen Bonds......................
Section 2.11. Validity of Bonds......._......... ....................... ............. 16
............................... ......... 16
Section 2.12. Book-Entry System........................................... .............................................
16
ARTICLE III
CREATION OF FUNDS AND APPLICATION OF REVENUES AND GROSS TAXES
Section 3.1. Creation of Funds; Application of Proceeds...............................................................20
Section 3.2. Deposits to and Disbursements from Special Tax Fund.......
Section 3.3. Administrative Expense Account of the Special Tax Fund,,,... ..........-... ....... .......-22
Section 3.4. Interest Account and Principal Account of the Special Tax Fund .....Section 3.5. Redemption Account of the Special Tax Fund....................................................... ..... . 22
Section 3.6. Prepayment Account of the Special Tax Fund. .......................... 23
Section 3.7. Reserve Account of the Special Tax Fund............................... . 24
Section3.8. Rebate Fund................................................................................................................25
Section 3.9. Surplus Fund................ ......... ............................................
Section 3.10. Acquisition and Construction Fund, ............. . 27
Section3.11. Investments.................................................................................................................28
ARTICLE IV
REDEMPTION OF BONDS
Section 4.1. Redemption of Bonds. ..................................................
Section 4.2. Selection of Bonds for Redemption......................... •••30
Section 4.3. Notice of Redemption...................... ..................-................................32
32
Section 4.4. Partial Redemption of Bonds......................................................................................33
Section 4.5. Effect of Notice and Availability of Redemption Money...........................
DOCSOC/1 054957v3/22925-001 0 i
Table of Contents
(continued) Page
Section 4.6. Purchase of Bonds by District...............................................
ARTICLE V
COVENANTS AND WARRANTY
34
Section5.1. Warranty .....................................................................................................................
............. ...34
Section 5.2. Covenants........................................... ........ ................................................ .
..........
Section 5.3. Continuing Disclosure and Reporting Requirements -.........................
ARTICLE VI
AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent-.................38
Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent.........-.............- 38
Section 6.3. Notation of Bonds; Delivery of Amended Bonds..................................
ARTICLE VII
TRUSTEE
Section 7.1. Duties, Immunities and Liabilities of Trustee.............................................................40
Section 7.2. Removal of Trustee................................................................................................ ....4 Section 7.3. Resignation of Trustee.............. ................................................................................41
..
Section 7.4. Liability of Trustee ...:......................................................................... ......... .............42
........................41
Section 7.5. Merger or Consolidation...................................................................... .
ARTICLE VIII
EVENTS OF DEFAULT;REMEDIES
...............
Section 8.1. Events of Default.................................................................................... .....43
Section 8.2. Remedies of Owners.............................................................................. ....................43
.
ARTICLE IX
DEFEASANCE
Section9.1. Defeasance..................................................................................................................44
ARTICLE X
MISCELLANEOUS
45
Section 10.1. Cancellation of Bonds........................ . . 46
ndProofofOwnership..............................................•
Section10.2. Execution ofDoeumentsa ...... ............46
Section 10.3. Unclaimed Moneys.................................................................................. .
ii
DOCSOCI 1054957v3122925-0010
Table of Contents
(continued)
Page
Section 10.4. Provisions Constitute Contract....._...............
Section 10.5. Future Contracts—.................... 47
47
SSection 10.6. Further Assurances .....................................................................................................47
Sectiection 10.7. oticebility.................................................................................................................47
on 10.8. Ns............... ................................. . ..........
-' Section 10.9. General Authorizat... ....47
ion............... .......... ............................................
Section 10.10. Execution in Counterparts...........................................................................................47
i Signatures
............................ ..............................................................................
.....S-1
FXHIBIT A FORM OF SPECIAL TAX BOND......................
A-1
EXHIBIT B FORM OF REQUISITION FOR DISBURSEMENT OF
COSTS OF ISSUANCE ..............
B-1
EXHIBIT C RATE AND METFIOD OF APPORTIONMENT OF SPECIAL TAXES ..............C-7
DOCSOC/105495 70/22 925-00 10 ili