HomeMy WebLinkAboutBNY Western Trust Company 8/24/04
TRUST AGREEMENT
by and among
BNY WESTERN TRUST COMPANY,
as Trustee
and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION,
as Corporation
and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT,
Dated as of November 1,2004
Relating to
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
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TRUST AGREEMENT
THIS TRUST AGREEMENT, made and entered into as of November 1, 2004 (the
"Agreement'), by and among BNY WESTERN TRUST COMPANY, as trustee (the "Trustee"), a
banking corporation duly organized and existing under the laws of the State of California, and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION, as seller, a
nonprofit public benefit corporation duly organized and existing under the laws of the State of
California (the "Corporation"), and TRUCKEE DONNER PUBLIC UTILITY DISTRICT, as
purchaser, a public utility district duly organized and existing under the laws of the State of
California (the "District");
WITNESSETH:
In consideration of the mutual covenants herein contained and for other valuable
consideration, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; CONTENTS OF
CERTIFICATES AND OPINIONS; RECITALS
Section I.I. Definitions. Unless the context otherwise requires, the terms defined in this
section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any
report or other document mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the
terms defined herein. All capitalized terms used herein and not defined herein shall have the
meanings ascribed thereto in the Installment Purchase Agreement:
ARreerneRt. The term"Agreement"means this Trust Agreement, as originally executed or as
it may from time to time be amended or supplemented as provided for herein.
Assignment Agreement. The term "Assignment Agreement' means that certain Assignment
Agreement, by and between the Corporation and the Trustee, dated as of November 1, 2004 as
originally executed or as it may from time to time be amended or supplemented in accordance with
its terms.
Certificate Payment Fund. The term "Certificate Payment Fund" means the fund by that
name established in Section 5.2 hereof.
Certificates. The term "Certificates" means the certificates of participation executed and
delivered by the Trustee pursuant to this Agreement.
Code. The term "Code" means the Internal Revenue Code of 1986, as amended, and the
United States Treasury Regulations in effect with respect thereto.
Delivery Cost Fund. The term "Delivery Cost Fund" means the fund by that name
established in Section 3.4 hereof.
Delivery Costs. The term"Delivery Costs" means all items of expense directly or indirectly
payable by or reimbursable to the District and related to the authorization, execution, sale and
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delivery of the Certificates, including but not limited to costs of preparation and reproduction of
documents, printing expenses, filing and recording fees, initial fees and charges of the Trustee and
counsel to the Trustee, legal fees and charges, fees and disbursements of consultants and
professionals, rating agency fees, title insurance premiums, letter of credit fees and bond insurance
premiums (if any), fees and charges for preparation, execution and safekeeping of the Certificates
and any other cost, charge or fee in connection with the original execution and delivery of the
Certificates.
Depository or DTC. The term "Depository" or "DTC" means The Depository Trust
Company, New York, New York, a limited purpose trust company organized under the laws of the
State of New York in its capacity as securities depository for the Certificates.
Determination of Taxability. The term "Determination of Taxability" means the Trustee's
obtaining actual knowledge of a judgment or order of a court or an order, ruling, regulation or
decision of the United States Department of the Treasury or the Internal Revenue Service which is
binding with respect to the Certificates and which declares or determines, as applicable, that interest
with respect to the Certificates is includable in gross income for federal income tax purposes (other
than interest on any Certificate for any period during which such Certificate is held by a "substantial
user" of any facility financed with the proceeds of the Certificates or a "related person," as such
terms usd in Section 147(a)of the Code).
Information Services. The term "Information Services" means national information services
that disseminate securities redemption notices; or, in accordance with then-current guidelines of the
Securities and Exchange Commission, such other services providing information with respect to
called bonds as the District may specify in a Written Request to the District and the Trustee as the
Trustee may select.
Installment Payments. The term "Installment Payments" means the installment payments
payable by the District pursuant to the Installment Purchase Agreement and in the amounts and at the
times set forth in the Installment Purchase Agreement.
Installment Payment Date. The term "Installment Payment Date" means each date on which
Installment Payments are scheduled to be paid by the District pursuant to the Installment Purchase
Agreement.
Installment Purchase Agreement. The term "Installment Purchase Agreement" means the
Installment Purchase Agreement, dated as of November 1, 2004, by and between the District and the
Corporation, as originally executed or as it may from time to time be amended or supplemented in
accordance with its terms.
Interest Fund. The term "Interest Fund" means the fund by that name established in
Section 5.2 hereof.
Letter of Representations. The term "Letter of Representations" means the letter of the
District and the Trustee delivered to and accepted by the Depository on or prior to delivery of the
Certificates as book-entry certificates setting forth the basis on which the Depository serves as
depository for such book-entry certificates, as originally executed or as it may be supplemented or
revised or replaced by a letter from the District and the Trustee delivered to and accepted by the
Depository.
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Nominee. The term "Nominee" means the nominee of the Depository, which may be the
Depository, as determined from time to time pursuant to Section 2.10 hereof.
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Outstanding. The term "Outstanding," when used as of any particular time with reference to
Certificates, means (subject to the provisions of Section 11.4) all Certificates except: (1)certificates
canceled by the Trustee or delivered to the Trustee for cancellation; (2) Certificates paid or deemed
to have been paid within the meaning of Section 10.1; and (3) Certificates in lieu of or in substitution
for which other Certificates shall have been executed and delivered by the Trustee pursuant to
Section 2.10.
Owner. The term "Owner" or"Certificate Owner" or"Owner of Certificates" or any similar
term, when used with respect to the Certificates, means any person who shall be the registered owner
of any Outstanding Certificate.
Participants. The term "Participants" means those broker-dealers, banks and other financial
institutions from time to time for which the Depository holds book-entry certificates as securities
depository.
Payment Dates Payment Date. The term "Payment Dates" means May 1 and November 1 in
each year commencing May 1, 2005 and any date on which the unpaid Installment Payments are
declared to be due and payable immediately and provided such declaration is not rescinded or
annulled, all in accordance with Section 8.1 of the Installment Purchase Agreement.
Permitted Investments. The term"Permitted 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:
(a) for all purposes, including but not limited to defeasance investments in refunding
escrow accounts: (1) cash (insured at all times by the Federal Deposit Insurance Corporation or
otherwise collateralized with obligations described in paragraph (2) below), or (2) direct obligations
of(including obligations issued or held in book entry form on the books of) the Department of the
Treasury of the United States of America; and
(b) for all purposes other than defeasance investments in refunding escrow accounts:
(1) obligations of any of the following federal agencies which obligations represent full faith and
credit of the United States of America, including the Export - Import Bank; Farmers Home
Administration; General Services Administration; U.S. Maritime Administration; Small Business
Administration; Government National Mortgage Association (GNMA); U.S. Department of Housing
& Urban Development (PHA's); and Federal Housing Administration; (2)bonds, notes or other
evidences of indebtedness rated "AAA" and "Aaa" by the applicable Rating Agency issued by the
Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with
remaining maturities not exceeding three years; (3) U.S. dollar denominated deposit accounts,
certificates of deposit, federal funds and banker's acceptances with domestic commercial banks
(including the Trustee and its affiliates) which are either insured by the Federal Deposit Insurance
Corporation or have a rating on their short term certificates of deposit on the date of purchase of
"A-I" or"A-1+" by S&P and "P-1" by Moody's and maturing no more than 360 days after the date
of purchase (ratings on holding companies are not considered as the rating of the bank); (4)
commercial paper which is rated at the time of purchase in the single highest classification, "A-I+"
by S&P and"P-1" by Moody's and which matures not more than 270 days after the date of purchase;
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(5) investments in a money market fiend rated "AAAm" or "AAAm-G" or better by S&P, including
such funds for which the Trustee or an affiliate acts as investment advisor or provides other services;
(6) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any
state of the United States of America or of any agency, instrumentality or local governmental unit of
any such state which are not callable at the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to call on the date specified in the notice and
which are rated, based on the escrow, in the highest rating category of S&P and Moody's or any
successor thereto; (7) any Investment Agreement; and (8)the Local Agency Investment Fund.
Prepayment Fund. The term "Prepayment Fund" means the fund by that name established in
Section 5.2 hereof.
Prepayment Price. The term "Prepayment Price" means the principal amount with respect to
such Certificate (or portion thereof) plus the applicable premium, if any, payable upon prepayment
thereof pursuant to the provisions of such Certificate and this Agreement.
Principal Corporate Trust Office. The term "Principal Corporate Trust Office" means the
principal corporate trust office of the Trustee in Los Angeles, California, or such other office as the
Trustee may from time to time designate in writing to the District, the Corporation and the Owners.
Principal Fund. The term "Principal Fund" means the fund by that name established in
Section 5.2 hereof.
Project. The term "Project" means the facilities and equipment described in Exhibit B to the
Installment Purchase Agreement. The term "Parity Project" means any additions, betterments,
extensions or improvements designated by the Board of Directors of the District as a Parity Project,
the acquisition and construction of which is to be paid for with the proceeds of any Contracts or
Bonds.
Rebate Fund. The term "Rebate Fund" means the fund by that name established in
Section 5.6 hereof.
Record Date. The term "Record Date" means, with respect to any Payment Date for a
Certificate,the fifteenth day of the calendar month prior to such Payment Date.
Reserve Fund. The term "Reserve Fund" means the fund by that name established in
Section 5.2 hereof.
Securities Depositories. The term "Securities Depositories" means The Depository Trust
Company or, in accordance with then-current guidelines of the Securities and Exchange
Commission, such other securities depositaries, or no such depositaries as the Corporation or the
District may designate in a Written Request of the Corporation or a Written Request of the District,
as the case may be, to the Trustee.
Special Counsel. The term "Special Counsel" means any attorney at law or firm of attorneys
selected by the District, of nationally-recognized standing in matters pertaining to the federal tax
exemption of interest on bonds issued by states and political subdivisions, and duly admitted to
practice law before the highest court of any state of the United States of America.
State. The term"State"means the State of California.
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Statement of the Corporation or District. The term "Statement of the Corporation or District'
means a statement signed by or on behalf of(i) the Corporation by its President or a Vice President
or (ii) the District by the President and by the Secretary or by any two persons (whether or not
members of the Board of Directors) who are specifically authorized by resolution of the District to
sign or execute such a document on its behalf. If and to the extent required by the provisions of
Section 1.3, each Statement of the Corporation or District shall include the statements provided for in
Section 1.3.
Tax Certificate. The Term "Tax Certificate" means the Tax Certificate dated November
2004, concerning certain matters pertaining to the use and investment of proceeds of the Certificates
executed by and delivered to the District on the date of execution and delivery of the Certificates,
including any and all exhibits attached thereto.
Trustee. The term "Trustee" means BNY Western Trust Company, a banking corporation
duly organized and existing under and by virtue of the laws of the State of California having a
principal corporate trust office in Los Angeles, California, or such other office as the Trustee may
from time to time designate in writing to the District, the Corporation and the Owners, or its
successor as Trustee hereunder.
Written Consent of the Corporation or District Written Order of the Comoration or District.
Written Request of the Corporation or District, Written Requisition of the Corporation or District.
The terms "Written Consent of the Corporation or District," "Written Order of the Corporation or
District," "Written Request of the Corporation or District," and "Written Requisition of the
Corporation or District' mean, respectively, a written consent, order, request or requisition signed by
or on behalf of (i) the Corporation by its President or a Vice President or (ii) the District by the
President or General Manager or its Treasurer or by the Secretary or by any two persons (whether or
not members of the Board of Directors) who are specifically authorized by resolution of the District
to sign or execute such a document on its behalf.
Section 1.2. Rules of Construction. Words of any gender shall be deemed and construed
to include all genders, and words importing persons shall include corporations and associations,
including public bodies, as well as natural persons. Unless the context otherwise indicates, words
importing the singular number shall include the plural number and vice versa.
Section 1.3. Content of Statements and Opinions. Every statement or opinion with respect
to compliance with a condition or covenant provided for in this Agreement, including each Statement
of the Corporation, shall include (a) a statement that the person or persons making or giving such
statement or opinion have read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such statement or opinion are based; (c) a statement that, in the
opinion of the signers, they have made or caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (d) a statement as to whether, in the opinion of the signers,
such condition or covenant has been complied with.
Any such statement or opinion made or given by an officer of the Corporation may be based,
insofar as it relates to legal or accounting matters, upon a statement or opinion of or representations
by counsel, accountants or consultants, unless such officer knows, or in the exercise of reasonable
care should have ]mown, that the statement or opinion or representations with respect to the matters
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upon which his statement or opinion may be based, as aforesaid, are erroneous. Any such statement
or opinion made or given by counsel, accountants or consultants may be based, insofar as it relates to
factual matters, upon information with respect to which is in the possession of the Corporation, or
upon the statement or opinion of or representations by an officer or officers of the Corporation,
unless such counsel, accountant or consultant knows, or in the exercise of reasonable care should
have known, that the statement or opinion or representations with respect to the matters upon which
his opinion may be based as aforesaid are erroneous.
Section 1.4. Recitals.
(a) Installment Purchase Agreement. The Corporation and the District have
entered into the Installment Purchase Agreement whereby the Corporation has agreed to assist the
District in financing the Project and the District has agreed to purchase the Project from the
Corporation.
(b) Installment Payments.ments. Under the Installment Purchase Agreement, the
District is obligated to pay to the Corporation or its assigns Installment Payments for the purchase of
the Project.
(c) Assignment Agreement. For the purpose of obtaining the moneys required to
be deposited by the Corporation with the Trustee, and for the purpose of securing the obligations of
the Corporation hereunder, the Corporation has assigned and transferred certain of its rights under the
Installment Purchase Agreement to the Trustee, pursuant to the Assignment Agreement; and in
consideration of such assignment and the execution of this Agreement, the Trustee has agreed to
execute and deliver certificates of participation, each evidencing an interest in the Installment
Payments in an aggregate amount equal to the aggregate principal amount of certificates of
participation so executed and delivered.
(d) Conditions Precedent Satisfied. The District and the Corporation hereby
certify that all acts, conditions and things required by law to exist, happen and be performed
precedent to and in connection with the execution and entering into of this Agreement have happened
and have been performed in regular and due time, form and manner as required by law, and the
parties hereto are now duly empowered to execute and enter into this Agreement.
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates. The Trustee is hereby authorized to execute
certificates of participation, to be denominated "Revenue Certificates of Participation, Series 2004"
in an aggregate principal amount of $ evidencing undivided interests in Installment
Payments to be paid by the District under the Installment Purchase Agreement.
Section 2.2. Denominations; Medium and Place of Payment Dating. The Certificates
shall be delivered in the form of fully registered Certificates, in the denomination of$5,000 each or
any integral multiple thereof; provided that no Certificate shall have principal represented thereby
maturing in more than one year.
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The principal and Prepayment Price with respect to the Certificates shall be payable in lawful
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money of the United States of America upon presentation and surrender thereof at the Principal
Corporate Trust Office of the Trustee. Interest with respect to the Certificates shall be payable by
check or draft of the Trustee mailed by first class mail on each Payment Date of such Certificates to
the respective Certificate Owners of record thereof as of the close of business on the Record Date at
the addresses shown on the books required to be kept pursuant to Section 2.8 or, upon the written
request received by the Trustee of an Owner of at least $1,000,000 in aggregate principal amount of
Certificates, by wire transfer of immediately available funds to an account in the United States
designated by such Owner prior to the applicable Record Date.
The Certificates shall be dated their date of delivery. Interest with respect to the Certificates
shall be payable from the Payment Date preceding their date of execution, unless such date shall be
after a Record Date and on or before the succeeding Payment Date, in which case interest shall be
payable from such Payment Date or unless such date shall be on or before the first Record Date, in
which case interest shall be payable from provided, however, that if, as shown by
the records of the Trustee, interest represented by the Certificates shall be in default, Certificates
executed in exchange for Certificates surrendered for transfer or exchange shall represent interest
from the last date to which interest has been paid in full or duly provided for with respect to the
Certificates, or,if no interest has been paid or duly provided for with respect to the Certificates, from
Section 2.3. Payment of Principal and Interest with Respect to Certificates. The
Certificates shall become payable on November 1 in the years, in the amounts and at the rates, as
follows:
Payment Date Interest Rate
(November 1) Principal Amount
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Section 2.4. Form of Certificates. The Certificates and the form of assignment to appear
thereon shall be in substantially the form set forth in Exhibit A hereto with necessary or appropriate
variations, omissions and insertions as permitted or required by this Agreement.
Section 2.5. Execution. The Certificates shall be executed by and in the name of the
Trustee, as trustee under this Agreement, by the manual signature of an authorized officer or
signatory of the Trustee.
Section 2.6. Transfer of Certificates. Any Certificate may, in accordance with its terms,
be transferred, upon the books required to be kept pursuant to the provisions of Section 2.8, by the
person in whose name it is registered, in person or by such person's duly authorized attorney, upon
surrender of such Certificate for cancellation at the Principal Corporate Trust Office of the Trustee,
accompanied by delivery of a duly executed written instrument of transfer in a form approved by the
Trustee.
Whenever any Certificate or Certificates shall be surrendered for transfer, the Trustee shall
execute and deliver a new Certificate or Certificates of the same maturity, for a like aggregate
principal amount and of authorized denomination or denominations. The Trustee may charge a sum
for each new Certificate executed and delivered upon any transfer. The Trustee may require the
payment by any Certificate Owner requesting any such transfer of any tax or other governmental
charge required to be paid with respect to such transfer. Following any transfer of Certificates the
Trustee shall cancel and destroy the Certificates it has received.
Section 2.7. Exchange of Certificates. Certificates may be exchanged at the Principal
Corporate Trust Office of the Trustee, for a like aggregate principal amount of Certificates of other
authorized denominations of the same maturity. The Trustee may charge a sum for each new
Certificate executed and delivered upon any exchange except in the case of any exchange of
temporary Certificates for definitive Certificates. The Trustee may require the payment by the Owner
requesting such exchange of any tax or other governmental charge required to be paid with respect to
such exchange. Following any exchange of Certificates the Trustee shall cancel and destroy the
Certificates it has received
The Trustee shall not be required to register the exchange, or transfer pursuant to Section 2.6
hereof, of any Certificate (i) within 15 days preceding selection of Certificates for prepayment or (it)
selected for prepayment.
Section 2.8. Certificate Registration Books. The Trustee will keep or cause to be kept, at
the office of the Trustee in Los Angeles, California, sufficient books for the registration and transfer
of the Certificates, which shall upon reasonable prior notice and at all reasonable times be open to
inspection by the Corporation or the District; and, upon presentation for such purpose, the Trustee
shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be
registered or transferred, on said books, Certificates as hereinbefore provided.
The person in whose name any Certificate shall be registered shall be deemed the Owner
thereof for all purposes hereof, and payment of or on account of the interest with respect to and
principal of and Prepayment Price represented by such Certificate shall be made only to or upon the
order in writing of such registered Owner, which payments shall be valid and effectual to satisfy and
discharge liability upon such Certificate to the extent of the sum or sums so paid.
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Section 2.9. Certificates Mutilated Lost Destroyed or Stolen. If any Certificate shall
become mutilated, the Trustee shall execute and deliver a new Certificate of like tenor, maturity and
principal amount in exchange and substitution for the Certificate so mutilated, but only upon
surrender to the Trustee of the Certificate so mutilated.
Every mutilated Certificate so surrendered to the Trustee shall be canceled by it and
destroyed. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and
indemnity satisfactory to the Trustee shall be given indemnifying the Trustee, the Corporation and
the District, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new
Certificate of like tenor and maturity, and numbered as the Trustee shall determine, in lieu of and in
substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of a
sum not exceeding the actual cost of preparing each new Certificate executed under this Section and
of the expenses which may be incurred by the Trustee under this Section. Any Certificate executed
under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen
shall be equally and proportionately entitled to the benefits of this Agreement with all other
Certificates secured by this Agreement. The Trustee shall not be required to treat both the original
Certificate and any replacement Certificate as being Outstanding for the purpose of determining the
principal amount of Certificates which may be executed hereunder or for the purpose of determining
any percentage of Certificates Outstanding hereunder, but both the original and replacement
Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section,
in lieu of delivering a new Certificate for a Certificate which has been mutilated, lost, destroyed or
stolen and which has matured or has been selected for prepayment,the Trustee may make payment of
such Certificate upon receipt of indemnity satisfactory to the Trustee.
Section 2.10. Book-Entry System.
(a) Election of Book-Entry System. Prior to the execution and delivery of the
Certificates, the District may provide that such Certificates shall be initially executed and delivered
as book-entry Certificates. If the District shall elect to deliver any Certificates in book-entry form,
then the District shall cause the delivery of a separate single fully registered certificate (which may
be typewritten) for each maturity date of such Certificates in an authorized denomination
corresponding to that total principal amount of the Certificates designated to mature on such date.
Upon initial execution and delivery, the ownership of each such Certificate shall be registered in the
Certificate registration books in the name of the Nominee, as nominee of the Depository and
ownership of the Certificates, or any portion thereof may not thereafter be transferred except as
provided in Section 2.10(e).
With respect to book-entry Certificates, the District and the Trustee shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a Participant
holds an interest in such book-entry Certificates. Without limiting the immediately preceding
sentence, the District and the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, the Nominee, or any Participant with respect to any
ownership interest in book-entry Certificates, (ii) the delivery to any Participant or any other person,
other than an Owner as shown in the Certificate registration books, of any notice with respect to
book-entry Certificates, including any notice of prepayment, (iii) the selection by the Depository and
its Participants of the beneficial interests in book-entry Certificates to be prepaid in the event the
District prepays the Certificates in part, or (iv) the payment by the Depository or any Participant or
any other person, of any amount with respect to principal, premium, if any, or interest with respect to
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book-entry Certificates. The District and the Trustee may treat and consider the person in whose
name each book-entry Certificate is registered in the Certificate registration books as the absolute
Owner of such book-entry Certificate for the purpose of payment of principal, premium, if any, and
interest with respect to such Certificate, for the purpose of giving notices of prepayment and other
matters with respect to such Certificate, for the purpose of registering transfers with respect to such
Certificate, and for all other purposes whatsoever. The Trustee shall pay all principal, premium, if
any, and interest with respect to the Certificates only to or upon the order of the respective Owner, as
shown in the Certificate register, or his respective attorney duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and discharge the District's obligations with
respect to payment of principal of, premium, if any, and interest evidenced and represented by the
Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in
the Certificate registration books, shall receive a Certificate evidencing the obligation to make
payments of principal, premium, if any, and interest evidenced and represented by the Certificates.
Upon delivery by the Depository to the Owner and the Trustee, of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee, and subject to the
provisions herein with respect to Record Dates, the word Nominee in this Trust Agreement shall
refer to such nominee of the Depository.
(b) Delivery of Letter of Representations. In order to qualify the book-entry
Certificates for the Depository's book-entry system, the District and the Trustee shall execute and
deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of
Representations shall not in any way impose upon the District or the Trustee any obligation
whatsoever with respect to persons having interests in such book-entry Certificates other than the
Owners, as shown on the Certificate registration books. By executing a Letter of Representations,
the Tnistee shall agree to take all action necessary at all times so that the District will be in
compliance with all representations of the District in such Letter of Representations. In addition to
the execution and delivery of a Letter of Representations, the District and the Trustee shall take such
other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify
Book-Entry Certificates for the Depository's book-entry program.
(c) Selection of Depository. In the event (i) the Depository determines not to
continue to act as securities depository for book-entry Certificates, or (ii) the District determines that
continuation of the book-entry system is not in the best interest of the beneficial owners of the
Certificates or the District, then the District will discontinue the book-entry system with the
Depository. If the District determines to replace the Depository with another qualified securities
depository, the District shall prepare or direct the preparation of a new single, separate, fully
registered Certificate for each of the maturity dates of such book-entry Certificates, registered in the
name of such successor or substitute qualified securities depository or its Nominee as provided in
subsection(e) hereof. If the District fails to identify another qualified securities depository to replace
the Depository, then the Certificates shall no longer be restricted to being registered in such
Certificate register in the name of the Nominee, but shall be registered in whatever name or names
the Owners transferring or exchanging such Certificates shall designate, in accordance with the
provisions of Sections 2.6 and 2.7 hereof.
(d) Payments To DeoositKy. Notwithstanding any other provision of this
Agreement to the contrary, so long as all Outstanding Certificates are held in book-entry form and
registered in the name of the Nominee, all payments with respect to principal, prepayment premium,
if any, and interest with respect to such Certificate and all notices with respect to such Certificate
shall be made and given, respectively to the Nominee, as provided in the Letter of Representations or
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as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any
inconsistent provisions herein.
(e) Transfer of Certificates to Substitute Depository.
(i) The Certificates shall be initially executed and delivered as provided
in Section 2.1 hereof. Registered ownership of such Certificates, or any portions thereof, may not
thereafter be transferred except:
(1) to any successor of DTC or its nominee, or of any substitute
depository designated pursuant to clause (B) of subsection (i) of this Section 2.10(e) ("Substitute
Depository"); provided that any successor of DTC or Substitute Depository shall be qualified under
any applicable laws to provide the service proposed to be provided by it;
(2) to any Substitute Depository, upon (1) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its functions as depository, or
(2) a determination by the District that DTC (or its successor) is no longer able to carry out its
functions as depository; provided that any such Substitute Depository shall be qualified under any
applicable laws to provide the services proposed to be provided by it; or
(3) to any person as provided below, upon (1) the resignation of
DTC or its successor (or any Substitute Depository or its successor) from its functions as depository,
or (2) a determination by the District that DTC or its successor (or Substitute Depository or its
successor) is no longer able to carry out its functions as depository.
(ii) In the case of any transfer pursuant to clause (A) or clause (B) of
subsection (i) of this Section 2.10(e), upon receipt of all Outstanding Certificates by the Trustee,
together with a written request of the District to the Trustee designating the Substitute Depository, a
single new Certificate, which the District shall prepare or cause to be prepared, shall be executed and
delivered for each maturity of Certificates then Outstanding, registered in the name of such successor
or such Substitute Depository or their Nominees, as the case may be, all as specified in such written
request of the District. In the case of any transfer pursuant to clause (C) of subsection (i) of this
Section 2.10(e), upon receipt of all Outstanding Certificates by the Trustee, together with a written
request of the District to the Trustee, new Certificates, which the District shall prepare or cause to be
prepared, shall be executed and delivered in such denominations and registered in the names of such
persons as are requested in such written request of the District, subject to the limitations of Section
2.1 hereof, provided that the Trustee shall not be required to deliver such new Certificates within a
period of less than sixty (60) days from the date of receipt of such written request from the District.
(iii) In the case of a partial prepayment or an advance refunding of any
Certificates evidencing a portion of the principal maturing in a particular year, DTC or its successor
(or any Substitute Depository or its successor) shall make an appropriate notation on such
Certificates indicating the date and amounts of such reduction in principal, in form acceptable to the
Trustee, all in accordance with the Letter of Representations. The Trustee shall not be liable for such
Depository's failure to make such notations or errors in making such notations.
(iv) The District and the Trustee shall be entitled to treat the person in
whose name any Certificate is registered as the Owner thereof for all purposes of this Trust
Agreement and any applicable laws, notwithstanding any notice to the contrary received by the
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Trustee or the District; and the District and the Trustee shall not have responsibility for transmitting
payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the
Certificates. Neither the District nor the Trustee shall have any responsibility or obligation, legal or
otherwise, to any such beneficial owners or to any other party, including DTC or its successor (or
Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may
rely conclusively on its records as to the identity of the Owners of the Certificates.
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates. The Trustee is hereby authorized to execute and
deliver Certificates in an aggregate principal amount of$ , upon the Written Order of the
District.
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys. The
proceeds received from the sale of the Certificates being $ , which represents
$ face amount of the Certificates, plus accrued interest of$ , less original issue
discount of$ and less Underwriter's discount of$ , shall be deposited with the
Trustee, who shall deposit the sum of$ , representing accrued and capitalized interest, in
the Certificate Payment Fund, shall deposit the sum of$ in the Delivery Cost Fund, shall
deposit the sum of$ in the Reserve Fund, and shall transfer the remaining proceeds to
the District for deposit in the Acquisition Fund to finance the cost of the Project. The Trustee may,
in its discretion, establish a temporary fund or account in its books and records to properly account
for or to facilitate the foregoing deposits and transfers.
Section 3.3. Validity of Certificates. The validity of the execution and delivery of the
Certificates is not dependent on and shall not be affected in any way by any proceedings taken by the
District, the Corporation or the Trustee with respect to or in connection with the Installment Purchase
Agreement. The recital contained in the Certificates that all acts, conditions and things required by
the Constitution and statutes of the State of California and this Agreement to exist, to have happened
and to have been performed precedent to and in the delivery thereof do exist, have happened and
have been performed in due time, form and manner as required by law shall be conclusive evidence
of their validity and of compliance with the provisions of law in their delivery.
Section 3.4. Delivery Cost Fund. There is hereby established with the Trustee the
Delivery Cost Fund which the Trustee shall establish and maintain and bold in trust separate and
apart from other funds held by it. The moneys in the Delivery Cost Fund shall be used and withdrawn
by the Trustee to pay Delivery Costs upon submission of Written Requisitions of the District stating
the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred, that such payment is a proper charge against said fund and that payment for
such charge has not previously been made. On , or upon the earlier Written
Request of the District, all amounts remaining in the Delivery Cost Fund shall be transferred by the
Trustee to the Certificate Payment Fund.
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ARTICLE IV
PREPAYMENT OF CERTIFICATES
r
Section 4.1. Terms of Prepayment.
(a) The Certificates shall be subject to extraordinary prepayment prior to their
respective stated maturities, as a whole or in part on any date in the order of maturity as directed by
the District in a Written Request provided to the Trustee at least 60 days prior to such date and by lot
within each maturity in integral multiples of$5,000 from prepaid Installment Payments made by the
District from Net Proceeds, upon the terms and conditions of, and as provided for in, Section 6.10 of
this Agreement, and Sections 6.09 and 615 of the Installment Purchase Agreement, at a Prepayment
Price equal to the principal amount thereof plus accrued interest evidenced and represented thereby
to the date fixed for prepayment, without premium.
(b) The Certificates shall further be subject to prepayment prior to their
respective stated maturities, as a whole or in part on any date in the order of maturity as directed by
the District in a Written Request provided to the Trustee at least 60 days prior to such date and by lot
within each maturity in integral multiples of$5,000, on or after November 1, 20_, from amounts
prepaid by the District pursuant to the Installment Purchase Agreement at a Prepayment Price
(expressed as a percentage of the principal amount of such Certificates to be prepaid) plus accrued
interest evidenced and represented thereby to the date fixed for prepayment, as set forth below:
Prepayment Dates Prepayment Price
(c) The Certificates with a stated maturity of November 1, 20_ are subject to
mandatory prepayment prior to such stated maturity in part (by lot) on any November 1 on or after
November 1, 20_, in integral multiples of $5,000 at a Prepayment Price of the principal amount
thereof plus accrued interest evidenced and represented thereby to the date fixed for prepayment,
without premium. Such Certificates shall be prepaid in the amounts and upon the dates as follows:
Mandatory Prepayment Date
(November 1) Principal Amount
* Final maturity
(d) The Certificates with a stated maturity of November 1, 20_ are subject to
mandatory prepayment prior to such stated maturity in part (by lot) on any November 1 on and after
November 1, 20_, in integral multiples of $5,000 at a Prepayment Price of the principal amount
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thereof plus accrued interest evidenced and represented thereby to the date fixed for prepayment,
without premium. Such Certificates shall be prepaid in the amounts and upon the dates as follows:
Mandatory Prepayment Date
(November 1) Principal Amount
* Final maturity
(e) The Certificates are subject to prepayment in part on the next May 1 or
November 1 for which timely notice of prepayment can be given after the date on which the Trustee
receives the statement of the District from proceeds transferred by the District from the Acquisition
Fund in accordance with Section 3.5 of the Installment Purchase Agreement, in the order of maturity
as directed by the District and by lot within each maturity in integral multiples of $5,000 at a
Prepayment Price of the principal amount thereof plus accrued interest evidenced and represented
thereby,to the date fixed for prepayment, without premium.
(f) The Certificates are subject to prepayment prior to maturity upon the Written
Order of the District, in whole or in part on any date, (i) as a result of changes in the constitutions or
laws of the United States or the State of California, any executive or administrative action by any
federal, state or local entity, or any final decree or judgment of any court after the contest thereof by
the District, which materially adversely affect the ability of the District to own or operate the
Broadband System, (ii) the Installment Purchase Agreement becomes void or unenforceable or
impossible of performance in accordance with the intent and purpose of the parties as expressed
therein or (iii) unreasonable burdens or excessive liabilities are imposed upon the District by reason
of its ownership or operation of the Broadband System, in each case at a Prepayment Price equal to
100% of the principal amount thereof (together with interest accrued to such dated fixed for
prepayment), without premium.
(g) The Certificates are subject to prepayment in whole upon the occurrence of a
Determination of Taxability on the first date possible subsequent to such a Determination of
Taxability after the giving of notice to Owners pursuant to Section 4.3 hereof, at a Prepayment Price
equal to 100% of the principal amount thereof(together with interest accrued to such dated fixed for
prepayment), without premium.
Section 4.2. Selection of Certificates for Prepay. Whenever less than all of the
Certificates are called for prepayment, the Trustee shall select the Certificates or portions thereof to
be prepaid from the Outstanding Certificates in accordance with Section 4.1 hereof. The Trustee shall
promptly notify the District in writing of the numbers of the Certificates or portions thereof so
selected for prepayment.
Section 4.3. Notice of Prepayment. Notice of prepayment shall be mailed, first class
postage prepaid, to the respective Owners of any Certificates designated for prepayment at their
addresses appearing on the Certificate registration books and to the Information Services and by
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e
registered or certified or overnight mail to the Securities Depositories at least 30 days but not more
than 60 days prior to the prepayment date.
Each notice of prepayment shall state the date of notice, the prepayment date, the place or
places of prepayment and the Prepayment Price, shall designate the maturities, CUSIP numbers, if
any, and, if less than all Certificates of any such maturity are to be prepaid, the serial numbers of the
Certificates of such maturity to be prepaid by giving the individual number of each Certificate or by
stating that all Certificates between two stated numbers, both inclusive, have been called for
prepayment and, in the case of Certificates to be prepaid in part only, the portions thereof to be
prepaid. Each such notice shall also state that on said date there will become due and payable on each
of said Certificates the Prepayment Price thereof or of said specified portion of the principal
represented thereby in the case of a Certificate to be prepaid in part only, together with interest
accrued with respect thereto to the prepayment date, and that (provided that moneys for prepayment
have been deposited with the Trustee) from and after such prepayment date interest with respect
thereto shall cease to accrue, and shall require that such Certificates be then surrendered to the
Trustee. Any defect in the notice or the mailing thereof will not affect the validity of the prepayment
of any Certificate.
Notice of prepayment of Certificates shall be given by the Trustee on behalf of and at the
expense of the District.
Section 4.4. Partial Prepayment of Certificate. Upon surrender of any Certificate prepaid
in part only, the Trustee shall execute and deliver to the Owner thereof, at the expense of the District,
a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to
the unprepaid portion of the Certificate surrendered and of the same maturity.
Section 4.5. Effect of Prepayment. When notice of prepayment has been duly given as
aforesaid, and moneys for payment of the Prepayment Price of, together with interest accrued to the
prepayment date with respect to, the Certificates (or portions thereof) so called for prepayment are
held by the Trustee, the Certificates (or portions thereof) so called for prepayment shall, on the
prepayment date designated in such notice, become due and payable at the Prepayment Price
specified in such notice and interest accrued thereon to the prepayment date; and from and after the
prepayment date interest represented by the Certificates so called for prepayment shall cease to
accrue, said Certificates (or portions thereof) shall cease to be entitled to any benefit or security
under this Agreement, and the Owners of said Certificates shall have no rights in respect thereof
except to receive payment of said Prepayment Price and accrued interest.
All Certificates prepaid pursuant to the provisions of this Article shall be canceled upon
surrender thereof and destroyed by the Trustee.
ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments. The Installment Payments are
hereby irrevocably pledged to, and shall be used for,the punctual payment of the Certificates, and the
Installment Payments shall not be used for any other purpose while any of the Certificates remain
Outstanding. This pledge shall constitute a first and exclusive lien on the Installment Payments in
accordance with the terms hereof.
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All Installment Payments to which the Corporation may at any time be entitled (including
income or profit from investments pursuant to Section 5.3) shall be paid directly to the Trustee
pursuant to the terms of the Assignment Agreement, and if received by the Corporation at any time
shall be deposited by the Corporation with the Trustee within one business day after the receipt
thereof, and the Trustee shall deposit all Installment Payments as and when received in the
Certificate Payment Fund. All moneys at any time deposited in the Certificate Payment Fund shall be
held by the Trustee in trust for the benefit of the Owners from time to time of the Certificates, but
shall nevertheless be disbursed, allocated and applied solely for the uses and purposes herein set
forth.
Section 5.2. Certificate Payment Fund. There is hereby established with the Trustee each
of the Certificate Payment Fund and the Reserve Fund each of which the Trustee covenants to
maintain and hold in trust separate and apart from other fiords held by it so long as any Installment
Payments remain unpaid. All moneys on deposit in the Certificate Payment Fund (including income
or profit from investments) shall be retained therein except as expressly provided herein.
The Trustee shall transfer from the Certificate Payment Fund the following amounts at the
times and in the manner hereinafter provided, and shall deposit such amounts in one or more of the
following respective fiords, each of which the Trustee shall establish and maintain and hold in trust
separate and apart from other funds held by it, and each of which shall be disbursed and applied only
as hereinafter authorized. Such amounts shall be so transferred to and deposited in the following
respective funds in the following order of priority, the requirements of each such fund at the time of
deposit to be satisfied before any transfer is made to any fund subsequent in priority:
(a) Interest Fund. The Trustee, on the last business day before each Interest
Payment Date (commencing on the last business day of April 2005), shall deposit in the Interest Fund
an amount representing the portion of the Installment Payments designated as interest coming due on
the next succeeding May 1 or November 1, as the case may be. No deposit need be made into the
Interest Fund so long as there shall be in such fund moneys sufficient to pay the interest portion of
Certificates then Outstanding due, if any, on the next May I or November 1, as the case may be.
Except as hereinafter provided, moneys in the Interest Fund shall be used and
withdrawn by the Trustee solely for the purpose of paying the interest with respect to the Certificates
when due and payable (including accrued interest on any Certificates prepaid prior to maturity
pursuant to this Agreement).
(b) Principal Fund. The Trustee, on the last business day before each
November 1 (commencing on the last business day of October 200_j, shall deposit in the Principal
Fund an amount equal to the principal coming due with respect to the Certificates on the next
succeeding November 1. No deposit need be made into the Principal Fund so long as there shall be
in such fund moneys sufficient to pay the portion of all Certificates then Outstanding designated as
principal, and coming due on the next succeeding November 1.
Except as hereinafter provided, moneys in the Principal Fund shall be used and
withdrawn by the Trustee solely for the purpose of paying the principal with respect to the
Certificates when due and payable.
(c) Prepayment Fund. Moneys to be used for prepayment pursuant to Section 4.1
hereof and paid by the District pursuant to Section 7.1 of the Installment Purchase Agreement shall
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be transferred by the Trustee from the Certificate Payment Fund and deposited in the Prepayment
Fund on the prepayment date specified in the Written Request of the District filed with the Trustee
pursuant to Section 7.2 of the Installment Purchase Agreement. Said moneys shall be set aside in the
Prepayment Fund solely for the purpose of prepaying the Certificates in advance of their respective
stated maturities and shall be applied on or after the date specified for prepayment pursuant to
Section 4.1 hereof to the payment of the Prepayment Price with respect to the Certificates to be
prepaid upon presentation and surrender of such Certificates.
Section 5.3. Investment of Moneys in Special Funds. Any moneys in the Delivery Cost
Fund, the Certificate Payment Fund, the Interest Fund, the Principal Fund, the Reserve Fund and the
Prepayment Fund shall be invested upon the Written Request of the District, by the Trustee, in
Permitted Investments which will mature on or before the dates when such moneys are scheduled to
be needed for payment from such fund. Securities acquired as an investment of moneys in a fund
shall be credited to such fund.
In the absence of written investment direction from the District, the Trustee shall invest
moneys held by it solely in Permitted Investments specified in clause(b)(5) of the definition thereof.
Any interest, profit or other income on such investments will be deposited when received by
the Trustee in the Reserve Fund to the extent the amount available and contained therein is less than
the Reserve Requirement and thereafter in the Certificate Payment Fund established hereunder.
Subject to the further provisions of Section 6.3 hereof, the Trustee may sell or present for
prepayment any obligations so purchased at the direction of the District whenever it shall be
necessary in order to provide moneys to meet any payment, and the Trustee shall not be liable or
responsible for any loss resulting from such investment. The Trustee or an affiliate may act as
principal or agent in the acquisition or disposition of any investment and should be entitled to its
customary fee therefor. The Trustee may commingle any of the funds or accounts established
pursuant to this Agreement into a separate fund or funds for investment purposes only; provided,
however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately
notwithstanding such commingling.
Section 5.4. Reserve Fund. The Trustee shall deposit in the Reserve Fund the amounts
required to be deposited therein pursuant to the Installment Purchase Agreement and this Agreement
and apply moneys in the Reserve Fund in accordance with this Section.
If one business day prior to any Payment Date the moneys in the Certificate Payment Fund
are insufficient to make the payments required by this Agreement with respect to Certificates on such
Payment Date, the Trustee shall transfer from the Reserve Fund to the Certificate Payment Fund the
amount of such insufficiency. In the event that the Trustee has transferred moneys from the Reserve
Fund to the Certificate Payment Fund in accordance with this Section, upon receipt of the moneys
from the District to increase the balance in the Reserve Fund to the Reserve Requirement,the Trustee
shall deposit such moneys in the Reserve Fund.
If the amount available and contained in the Reserve Fund exceeds an amount equal to the
Reserve Requirement and if the District is not then in default under the Installment Purchase
Agreement, the Trustee shall semiannually on or before each Payment Date withdraw the amount of
such excess from the Reserve Fund and shall deposit such amount in the Certificate Payment Fund,
and for this determination the Trustee shall make a valuation of the Reserve Fund as often as it may
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deem appropriate, and in any event on or before each Payment Date in each year. In addition, the
Trustee shall, on the date all or any portion of the Certificates are discharged in accordance with
Section 10.2 hereof, value the Reserve Fund in accordance with this Section and withdraw the
excess, if any, on deposit in the Reserve Fund and transfer such amount to or in accordance with the
written direction of the District. Except for such withdrawals, all moneys in the Reserve Fund shall
be used and withdrawn by the Trustee solely for the purpose of paying principal, Prepayment Price
and interest with respect to the Certificates in the event that no other moneys of the District are
available therefor.
For the purpose of determining the amount in the Reserve Fund, all Permitted Investments
credited to the Reserve Fund shall be valued at the lower of cost (inclusive of all interest accrued but
not paid), or market value.
The District may substitute a municipal bond debt service reserve fund policy or a surety
bond or a letter of credit (a "Reserve Insurance Policy") or money for any Reserve Insurance Policy
or money held by the Trustee in the Reserve Fund; provided, that (i) in the case of a municipal bond
debt service reserve fund policy or a surety bond, bonds which are insured by the issuer thereof are
rated in the highest rating category by Standard & Poor's and Moody's Investors Service
(collectively, the "Rating Agencies"), or, in the case of a letter of credit, the unsecured debt
obligations of the issuing bank thereof are rated in the highest short-term rating category by the
Rating Agencies; (it) the sum of the money and face amount of any Reserve Insurance Policy in
effect after such substitution will be equal to the Reserve Requirement; and (iii) in the case of the
substitution of a new Reserve Insurance Policy for money or an existing Reserve Insurance Policy,
the Trustee receives an opinion of Special Counsel to the effect that such substitution will not
adversely affect the exclusion from gross income for federal income tax purposes of interest with
respect to the Certificates.
Section 5.5. Pledge of Moneys in Funds. All amounts on deposit in the Delivery Cost
Fund, the Certificate Payment Fund, the Interest Fund, the Principal Fund, the Prepayment Fund and
the Reserve Fund are hereby irrevocably pledged to the Owners of the Certificates as provided
herein. This pledge shall constitute a first and exclusive lien on the Delivery Cost Fund, the
Certificate Payment Fund, the Interest Fund, the Principal Fund, the Prepayment Fund and the
Reserve Fund for the benefit of the Owners of the Certificates in accordance with the terms hereof
and of the Installment Purchase Agreement.
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Section 5.6. Rebate Fund. r
`s
(a) Establishment. The Trustee shall establish a separate account for the
Certificates designated the "Rebate Fund." Absent an opinion of Special Counsel that the exclusion
from gross income for federal income tax purposes of interest with respect to the Certificates will not
be adversely affected, the District shall cause to be deposited in the Rebate Fund such amounts as are
required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any
time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United
States Treasury. All amounts on deposit in the Rebate Fund for the Certificates shall be governed by
this Section and the Tax Certificate for the Certificates, unless and to the extent that the District
delivers to the Trustee an opinion of Special Counsel that the exclusion from gross income for
federal income tax purposes of interest with respect to the Certificates will not be adversely affected
if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or
in the Tax Certificate, the Trustee (i) shall be deemed conclusively to have complied with the
provisions thereof if it follows all Written Requests of the District, and (ii) shall have no liability or
responsibility to enforce compliance by the District with the terms of the Tax Certificate, and
(iii)may rely conclusively on the District's calculations and determinations and certifications relating
to rebate matters, and (iv) shall have no responsibility to independently make any calculations or
detenninations or to review the District's calculations or determinations thereunder.
(i) Annual Computation. Within 55 days of the end of each Certificate
Year (as such term is defined in the Tax Certificate), the District shall calculate or cause to be
calculated the amount of rebatable arbitrage, in accordance with Section 148 2 of the Code and
Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with
if applicable, in the Tax firespect to the computation of the rebatable arbitrage, described, cate
(e.g., the temporary investments 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 "1'/2%
Penalty")has been made),for this purpose treating the last day of the applicable Certificate Year as a
computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations (the
"Rebatable Arbitrage"). The District shall obtain expert advice as to the amount of the Rebatable
Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each Certificate Year,
upon the written Request of the District, an amount shall be deposited to the Rebate Fund by the
Trustee from any Revenues legally available for such purpose (as specified by the District in the
aforesaid written Request), if and to the extent required so that the balance in the Rebate Fund shall
equal the amount of Rebatable Arbitrage so calculated in accordance with (i) of this Subsection (a).
In the event that immediately following the transfer required by the previous sentence, the amount
then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein,
upon written Request of the District, the Trustee shall withdraw the excess from the Rebate Fund and
then credit the excess to the Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by
Request of the District, to the United States Treasury, out of amounts in the Rebate Account,
(1) Not later than 60 days after the end of(X)the fifth Certificate
Year, and (Y) each applicable fifth Certificate Year thereafter, an amount equal to at least 90% of the
Rebatable Arbitrage calculated as of the end of such Certificate Year; and
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(2) Not later than 60 days after the payment of all the Certificates,
an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable
Certificate 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 the time of any payment required to be made from the
Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such
payment is due, the District shall calculate or cause to be calculated the amount of such deficiency
and deposit an amount received from any legally available source equal to such deficiency prior to
the time such payment is due. Each payment required to be made pursuant to this Subsection(a)
shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before
the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form
8038-T, or shall be made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund
after redemption and payment of the Certificates and the payments described in Subsection(a) above
being made may be withdrawn by the District and utilized in any manner by the District.
(c) Survival of Defeasance. Notwithstanding anything in this Section to the
contrary, the obligation to comply with the requirements of this Section shall survive the defeasance
or payment in full of the Certificates.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform tinder Installment Purchase Agreement.
The Corporation and District covenant and agree with the Owners of the Certificates to perform all
obligations and duties imposed on them under the Installment Purchase Agreement and, together
with the Trustee, to enforce such Installment Purchase Agreement against the other parry thereto in
accordance with its terms.
The Corporation and the District will in all respects promptly and faithfully keep, perform
and comply with all the terms, provisions, covenants, conditions and agreements of the Installment
Purchase Agreement to be kept,performed and complied with by it.
The Corporation and the District agree not to do or permit anything to be done, or omit or
refrain from doing anything, in any case where any such act done or permitted to be done, or any
such omission of or refraining from action, would or might be a ground for cancellation or
termination of the Installment Purchase Agreement
Section 6.2. Budgets. On or prior to the fifteenth day of each Fiscal Year, the District
shall certify to the Trustee that the amounts budgeted for payment of Installment Payments are fully
adequate for the payment of all Installment Payments due under the Installment Purchase Agreement
for such Fiscal Year. If the amounts so budgeted are not adequate for the payment of Installment
Payments due under the Installment Purchase Agreement, the District will take such action as may he
necessary to cause such annual budget to be amended, corrected or augmented so as to include
therein the amounts required to be raised by the District in the then ensuing Fiscal Year for the
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DOCSSF/43383v5/22925-0011
payment of Installment Payments due under the Installment Purchase Agreement and will notify the
Trustee of the proceedings then taken or proposed to be taken by the District.
Section 6.3. Tax Covenants. Notwithstanding any other provision of this Agreement,
absent an opinion of Special Counsel that the exclusion from gross income of interest with respect to
the Certificates will not be adversely affected for federal income tax purposes, the District covenants
to comply with all applicable requirements of the Code necessary to preserve such exclusion from
gross income and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The District will not take or omit to take any action or make
any use of the proceeds of the Certificates or of any other moneys or property which would cause the
Certificates to be"private activity bonds"within the meaning of Section 141 of the Code.
(b) Arbitrage. The District will make no use of the proceeds of the Certificates or
of any other amounts or property, regardless of the source, or take or omit to take any action which
would cause the Certificates to be "arbitrage bonds"within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The District will make no use of the proceeds of the
Certificates or take or omit to take any action that would cause the Certificates to be "federally
guaranteed"within the meaning of Section 149(b) of the Code.
(d) Information Reporting. 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.
(e) Miscellaneous. The District will take no action inconsistent with its
expectations stated in any Tax Certificate executed with respect to the Certificates and will comply
with the covenants and requirements stated therein and incorporated by reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the District from causing the Trustee to execute and
deliver, Certificates the interest with respect to which has been determined by Special Counsel to be
subject to federal income taxation.
Section 6.4. Accounting Records and Reports. The Trustee shall keep or cause to be kept
proper books of record and account in which complete and correct entries shall be made of all
transactions made by it relating to the receipts, disbursements, allocation and application of the
Installment Payments, and such books shall be available upon reasonable prior notice for inspection
by the District and by any Owner of Certificates, or his agent or representative, at reasonable hours
and under reasonable conditions. Each month, so long as the Certificates are Outstanding, the Trustee
shall furnish to the District a statement covering receipts, disbursements, allocation and application
of amounts on deposit in the funds and accounts created hereunder held by it.
Section 6.5. Compliance with Trust Agreement. The Trustee will not execute, or permit
to be executed, any Certificates in any manner other than in accordance with the provisions of this
Agreement, and the District will not suffer or permit any default by it to occur under this Agreement,
but will faithfully observe and perform all the covenants, conditions and requirements hereof.
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Section 6.6. Observance of Laws and Regulations. To the extent necessary to assure their
performance hereunder, the Corporation and the District will well and truly keep, observe and
perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract,
or prescribed by any law of the United States of America, or of the State, or by any officer, board or
commission having jurisdiction or control, as a condition of the continued enjoyment of any and
every right, privilege or franchise now owned or hereafter acquired by the Corporation or the
District, respectively, including its right to exist and carry on its business, to the end that such
contracts, rights and franchises shall be maintained and preserved, and shall not become abandoned,
forfeited or in any manner impaired.
Section 6.7. Compliance with Contracts. The District shall comply with the terms,
covenants and provisions, express or implied, of all contracts for the use of the Project by the
District, and all other contracts and agreements affecting or involving the Project to the extent that
the District is a parry thereto.
Section 6.8. Prosecution and Defense of Suits. The District shall promptly, upon request
of the Trustee or any Certificate Owner, from time to time take such action as may be necessary or
proper to remedy or cure any defect in or cloud upon the title to the Broadband System or any part
thereof, whether now existing or hereafter developing, shall prosecute all such suits, actions and
other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee
(including all of its employees, officers and directors), the Corporation and every Certificate Owner
harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of
them may incur by reason of any such defect, cloud, suit, action or proceeding.
The District shall defend against every suit, action or proceeding at any time brought against
the Trustee (including all of its employees, officers and directors), the Corporation or any Certificate
Owner upon any claim arising out of the receipt, application or disbursement of any of the
Installment Payments or involving the rights of the Trustee, the Corporation or any Certificate Owner
under this Agreement; provided that the Trustee, the Corporation or any Certificate Owner at such
party's election may appear in and defend any such suit, action or proceeding. The District shall
indemnify and hold harmless the Trustee, the Corporation and the Certificate Owners against any and
all liability claimed or asserted by any person, arising out of such receipt, application or
disbursement, and shall indemnify and hold harmless the Certificate Owners against any attorneys'
fees or other expenses which any of them may incur in connection with any litigation (including pre-
litigation activities) to which any of them may become a parry by reason of ownership of Certificates.
The District shall promptly reimburse the Corporation or any Certificate Owner in the full amount of
any attorneys' fees or other expenses which the Corporation or such Owner may incur in litigation or
otherwise in order to enforce such parrying rights under this Agreement or the Certificates, provided
that such litigation shall be concluded favorably to such party's contentions therein.
Section 6.9. Recordation and Filing. The Trustee, upon written direction of the District,
shall record, register, file, renew, refile and re-record all such documents, including financing
statements, as may be required by law in order to maintain a security interest in this Agreement and
the Assignment Agreement, all in such manner, at such times and in such places as may be required
by, and to the extent permitted by, law in order fully to preserve, protect and perfect the security of
the Certificate Owners and the rights and security interests of the Trustee. The Trustee, upon written
direction of the District, shall (subject to Section 8.5 hereof) do whatever else may be necessary or be
reasonably required in order to perfect and continue the lien of this Agreement and the Assignment
Agreement.
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{
i
3
Notwithstanding anything to the contrary above, the Trustee shall have no duty or liability i
whatsoever to monitor or notify any party with respect to the timeliness, sufficiency or validity of
i
any such recording, re-recording, filing, filing of continuation statements and the like with respect to
this Agreement; it being expressly understood and agreed that the Trustee's duties under this Section
shall be exclusively limited to following the express written filing or recording instructions of the
District, from time to time with respect to the above described actions so long as the District shall
supply said recording or filing instruments.
Section 6.10. Eminent Domain. If all or any part of the Broadband System shall be taken
by eminent domain proceedings (or sold to a government threatening to exercise the power of
eminent domain), the Net Proceeds therefrom shall be applied in the manner specified in Section 6.15
of the Installment Purchase Agreement.
Section 6.11. Further Assurances. Whenever and so often as requested so to do by the
Trustee or any Certificate Owner, the Corporation and the District will promptly execute and deliver
or cause to be executed and delivered all such other and further instruments, documents or
assurances, and promptly do or cause to be done all such other and further things, as may be
necessary or reasonably required in order to further and more fully vest in the Trustee and the
Certificate Owners all rights, interest, powers, benefits, privileges and advantages conferred or
intended to be conferred upon them by this Agreement.
Section 6.12. Continuine Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of its obligations under the continuing disclosure certificate to be
executed and delivered by the District in connection with the delivery of the Certificates.
Notwithstanding any other provision of this Agreement, failure of the District to comply with the
continuing disclosure certificate shall not be considered an Event of Default; however, any Owner or
Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the District to comply with its obligations
under this Section 6.12. For purposes of this Section, "Beneficial Owner" means any person which
has or shares the power, directly or indirectly, to make investment decisions concerning ownership of
any Certificates (including persons holding Certificates through nominees, depositories or other
intermediaries).
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.1. Notice of Non-Payment. In the event of delinquency in the payment of any
Installment Payments due by the District pursuant to the Installment Purchase Agreement, the
Trustee shall, after one business day following the date upon which such delinquent Installment
Payment was due, as soon as practicable give written notice of the delinquency and the amount of the
delinquency to the District and the Corporation.
Section 7.2. Action on Default or Termination. Upon the occurrence of an Event of
Default (as that term is defined in the Installment Purchase Agreement), which event shall constitute
a default hereunder, and in each and every such case during the continuance of such Event of
Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of
Certificates at the time Outstanding shall be entitled, upon notice in writing to the District, to
exercise the remedies provided to the Corporation in the Installment Purchase Agreement.
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Upon declaration of the entire principal amount of the unpaid Installment Payments and the
accrued interest thereon to be due and payable immediately and provided such declaration is not
rescinded or annulled, all in accordance with Section 8.1 of the Installment Purchase Agreement, the
Trustee shall apply all moneys received as Installment Payments and all moneys held in any fund or
account hereunder as directed in Section 8.2 of the Installment Purchase Agreement.
Section 7.3. Other Remedies of the Trustee. The Trustee shall have the right --
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the District or any board member, officer or employee thereof, and to
compel the District or any such board member, officer or employee to perform or carry out its or his
duties under law and the agreements and covenants required to be performed by it or him contained
herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee; or
(c) by suit in equity upon the happening of any default hereunder to require the
District and its directors, officers and employees to account as the trustee of an express trust.
Section 7.4. Non-Waiver. A waiver of any default or breach of duty or contract by the
Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or
remedies on any such subsequent default or breach of duty or contract. No delay or omission by the
Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall
impair any such right or remedy or shall be construed to be a waiver of any such default or breach of
duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by
law or by this article may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Trustee.
If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned
or determined adversely to the Trustee, the Trustee and the District shall be restored to their former
positions,rights and remedies as if such action,proceeding or suit had not been brought or taken.
Section 7.5. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity or by statute or otherwise and may be exercised without exhausting and
without regard to any other remedy conferred by any law.
Section 7.6. No Obligation by the District to Owners. Except for the payment of
Installment Payments when due in accordance with the Installment Purchase Agreement and the
performance of the other covenants and agreements of the District contained in said Installment
Purchase Agreement and herein, the District shall have no obligation or liability to the Owners of the
Certificates with respect to this Agreement or the execution, delivery or transfer of the Certificates,
or the disbursement of Installment Payments to the Owners by the Trustee; provided however that
nothing contained in this Section shall affect the rights, duties or obligations of the Trustee expressly
set forth herein.
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Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings.
The Trustee is hereby appointed the agent and attorney of the Owners of all Certificates outstanding
hereunder for the purpose of filing any claims relating to the Certificates. The Owners of a majority
in aggregate principal amount of the Certificates Outstanding hereunder shall, upon tender to the
Trustee of reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such direction, have the right to direct the method and place of conducting all
remedial proceedings by the Trustee, provided such direction shall be in accordance with law and the
provisions of this Trust Agreement and that the Trustee shall have the right to decline to follow any
such direction which in the opinion of the Trustee would be unjustly prejudicial to Certificate-owners
not parties to such a direction.
Section 7.8. Power of Trustee to Control Proceedings. In the event that the Trustee, upon
the happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of
the Owners of a majority in aggregate principal amount of the Certificates then outstanding pursuant
to Section 7.7 hereof, it shall have full power, in the exercise of its discretion for the best interests of
the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that the Trustee shall
not, unless there no longer continues an Event of Default hereunder, discontinue, withdraw,
compromise or settle, or otherwise dispose of, any litigation pending at law or in equity, if at the time
there has been filed with it a written request signed by the Owners of at least a majority in principal
amount of the Certificates Outstanding hereunder opposing such discontinuance, withdrawal,
compromise, settlement or other disposal of such litigation.
Section 7.9. Limitation on Certificate-owners' Right to Sue. No Owner of any Certificate
executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b)
the Owners of at least a majority in aggregate principal amount of all the Certificates then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name; (e) said Owners shall have
tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with
such request for a period of sixty (60) days after such written request shall have been received by,
and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender or indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy
hereunder; it being understood and intended that no one or more Owners of Certificates shall have
any right in any manner whatever by his or their action to enforce any right under this Agreement,
except in the manner herein provided, and that all proceedings at law or in equity to enforce any
provision of this Agreement shall be instituted, had and maintained in the manner herein provided
and for the equal benefit of all owners of the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of the principal of (and
premium, if any) and interest with respect to such Certificate, as herein provided, on and after the
respective due dates expressed in such Certificate, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected without the consent of
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such Owner, notwithstanding the foregoing provisions of this Section or Section 7.10 or any other
provision of this Agreement.
Section 7.10. No Oblieation with Respect to Performance by Trustee. Neither the District
nor the Corporation shall have any obligation or liability to any of the other parties hereto or to the
Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon
it under this Agreement.
Section 7.11. No Liability to Owners for Pam. The Corporation shall not have any
obligation or liability to the Owners of the Certificates with respect to the payment of the Installment
Payments by the District when due, or with respect to the performance by the District of any other
covenant made by it in the Installment Purchase Agreement or herein. Except as provided in this
Agreement, the Trustee shall not have any obligation or liability to the Owners of the Certificates
with respect to the payment of the Installment Payments by the District when due, or with respect to
the performance by the District of any other covenant made by it in the Installment Purchase
Agreement or herein.
Section 7.12. No Responsibility for Sufficiency. The Trustee shall not be responsible for
the sufficiency of this Agreement, the Installment Purchase Agreement, or of the assignment made to
it by the Assignment Agreement of rights to receive Installment Payments pursuant to the Installment
Purchase Agreement, or the value of or title to the Project. The Trustee shall not be responsible or
liable for selection or liquidation of investments or any loss suffered in connection with any
investment of funds made by it under the terms of and in accordance with this Agreement.
Section 7.13. Indemnification of Trustee. The District shall indemnify the Trustee
(including all of its employees, officers and directors) and hold it harmless against any loss, liability,
expenses or advances, including but not limited to fees and expenses of counsel and other experts,
incurred or made without negligence or willful misconduct on the part of the Trustee, (i) in the
exercise and performance of any of the powers and duties hereunder or under the Installment
Purchase Agreement by the Trustee, (ii) relating to or arising out of the Project, or the conditions,
occupancy, use, possession, conduct or management of, or work done in or about, or from the
planning, design, acquisition, installation or construction of the Project or any part thereof, or (iii)
arising out of or relating to any untrue statement or alleged untrue statement of any material fact or
omission or alleged omission to state a material fact necessary to make the statements made, in light
of the circumstances under which they were made, not misleading in any official statement or other
offering circular utilized in connection with the sale of the Certificates, including the costs and
expenses of defending itself against any claim of liability arising under this Agreement. Such
indemnity shall survive payment of the Certificates and discharge of this Agreement or resignation or
removal of the Trustee.
ARTICLE VIII
THE TRUSTEE
Section 8.L Employment of Trustee. In consideration of the recitals hereinabove set forth
and for other valuable consideration, the District hereby agrees to employ the Trustee to receive,
hold, invest and disburse the moneys received pursuant to the Installment Purchase Agreement for
credit to the various funds and accounts established by this Agreement; to execute, deliver and
transfer the Certificates; and to apply and disburse the Installment Payments received from the
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District to the Owners of Certificates; and to perform certain other functions; all as herein provided
and subject to the terms and conditions of this Agreement.
Section 8.2. Acceptance of Employment. In consideration of the compensation herein
provided for, the Trustee accepts the employment above referred to subject to the terms and
conditions of this Agreement.
Section 8.3. Trustee: Duties. Removal and Resi ne ation. By executing and delivering this
Agreement, the Trustee accepts the duties and obligations of the Trustee provided in this Agreement,
but only upon the terms and conditions set forth in this Agreement.
The District may, by written request to the Trustee, remove the Trustee and appoint a
successor Trustee;provided, however, that if the District is in default under the Installment Purchase
Agreement, the Owners of a majority in aggregate principal amount of all Certificates Outstanding
may, by written request to the Trustee,remove the Trustee and appoint a successor Trustee. Any such
successor shall be a bank or trust company doing business and having a corporate trust office in
California, which has (or the parent holding company of which has) a combined capital (exclusive of
borrowed capital) and surplus of at least twenty million dollars ($20,000,000) and subject to
supervision or examination by federal or state authorities. If such bank or trust company 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.
The Trustee may at any time resign by giving written notice to the District and by giving to
the Certificate Owners notice of such resignation by mail at the addresses shown on the registration
books maintained by the Trustee. Upon receiving such notice of resignation, the District shall
promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the
event that the District does not appoint a successor Trustee within thirty (30) days following receipt
of such notice of resignation, the resigning Trustee may at the expense of the District petition the
appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective upon written acceptance
of appointment by the successor Trustee.
Section 8.4. Compensation of the Trustee. The District shall from time to time, subject to
any agreement in effect with the Trustee,pay to the Trustee reasonable compensation for its services
and shall reimburse the Trustee (including all of its employees, officers and directors) for all its
advances and expenditures, including but not limited to advances to and fees and expenses of
independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other
experts employed by it in the exercise and performance of its powers and duties hereunder. Such
compensation and reimbursement shall be paid by the District and amounts owing therefor shall
constitute a charge on the moneys in the Acquisition Fund and payable by the District; provided,
however, that the Trustee shall not otherwise have any claims, except in accordance with
Section 7.13 hereof and Section 8.2 of the Installment Purchase Agreement, or lien for payment of
compensation for its services against any other moneys held by it in the funds or accounts established
hereunder but may take whatever legal actions are lawfully available to it directly against the
District. The obligations of the District under this Section shall survive resignation or removal of the
Trustee and payment of the Certificates and discharge of this Agreement.
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Section 8.5. Protection of the Trustee. The Trustee shall be protected and shall incur no
liability whatsoever in acting or refraining from acting or proceeding in good faith upon any
resolution, notice, telegram, request, consent, waiver, certificate, statement, order, facsimile
transmission, electronic mail, affidavit, voucher, bond, requisition or other paper or document which
it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the
proper party or pursuant to any of the provisions of this Agreement, and the Trustee shall be under no
duty to make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements. The Trustee shall not be bound to recognize any person as an Owner of
any Certificate or to take any action at the request of any such person unless such Certificate shall be
deposited with the Trustee or satisfactory evidence of the ownership of such Certificate shall be
furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the
Corporation or 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 by it
hereunder in good faith in accordance therewith.
Whenever in the administration of its duties under this Agreement, 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)
shall be deemed to be conclusively proved and established by a certificate of the Corporation or the
District and such certificate shall be fall warranty to the Trustee for any action taken or suffered
under the provisions of this Agreement upon the faith thereof, but in its discretion the Trustee may
(but shall have no duty), in lieu thereof, accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Certificates provided pursuant to
this Agreement, and may join in any action which any Owner may be entitled to take with like effect
as if the Trustee were not a parry to this Agreement. The Trustee, either as principal or agent, may
also engage in or be interested in any financial or other transaction with the District or the
Corporation, and may act as depository, trustee, or agent for any committee or body of Owners of
Certificates or of obligations of the Corporation or the District as freely as if it were not Trustee
hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers
hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers,
and shall be entitled to advice of counsel concerning all matters of trust and its duties hereunder, and
the Trustee shall not be answerable for the default or misconduct of any such attorney, agent or
receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of
any discretion or power under this Agreement or in the performance of its duties hereunder or for
anything whatever in connection with the funds and accounts established hereunder, except only for
its own willful misconduct or negligence.
The recitals, statements and representations by the District or the Corporation contained in
this Agreement or in the Certificates shall be taken and construed as made by and on the part of the
District or Corporation and not by the Trustee and the Trustee does not assume, and shall not have,
any responsibility or obligations for the correctness of any thereof.
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The Trustee undertakes to perform such duties, and only such duties as are specifically set
forth in this Agreement and no implied duties or obligations shall be read into this Agreement against
the Trustee.
No provision in this Agreement shall require the Trustee to risk or expend its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not assured to it.
In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and
not in its individual capacity and all persons, including without limitation the Owners and the District
or the Corporation having any claim against the Trustee arising from this Agreement shall look only
to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided
herein. Under no circumstances shall the Trustee be liable in its individual capacity for the
obligations evidenced by the Certificates.
The Trustee makes no representation or warranty, express or implied as to the title, value,
design, compliance with specifications or legal requirements, quality, durability, operation,
condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by
the District or the Corporation of the Project. In no event shall the Trustee be liable for incidental,
indirect, special or consequential damages in connection with or arising from the Installment
Purchase Agreement or this Agreement for the existence, furnishing or use of the Project.
The Trustee shall not be deemed to have knowledge of any Event of Default hereunder or
under the Installment Purchase Agreement unless and until it shall have actual knowledge thereof or
have received notice thereof at its corporate trust office at the address set forth in Section 11.11
hereof The Trustee shall, during the existence of any Event of Default (which has not been cured)
use the same degree of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
The Trustee shall not be accountable for the use or application by the District, or the
Corporation or any other party of any funds which the Trustee has released in accordance with the
terms of this Agreement.
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 the public enemy or terrorists, acts of a government, acts
of the other parry, 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 involving a party or others relating to zoning 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 similar event and/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 Trust Agreement provided, however, that: (a) subsequent to such
facsimile transmission of written instructions and/or directions, (b) such originally executed
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instructions and/or directions shall be signed by a person as may be designated and authorized to sign
for the parry 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 8.6. Mereer 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 (provided such company is
eligible under Section 8.3 hereof), shall be the successor to the Trustee without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted.
(a) This Agreement and the rights and obligations of the District and of the
Owners of the Certificates and of the Trustee may be modified or amended at any time by an
amendment hereto which shall become binding when the written consents of the Owners of a
majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates
disqualified as provided in Section 11.4 hereof, shall have been filed with the Trustee. No such
modification or amendment shall (1) extend the stated maturities of the Certificates, or reduce the
rate of interest or yields-to-maturity, as the case may be, represented thereby, or extend the time of
payment of interest, or reduce the amount of principal represented thereby, or reduce any premium
payable on the prepayment thereof, without the consent of the Owner of each Certificate so affected,
or (2) reduce the aforesaid percentage of Owners of Certificates whose consent is required for the
execution of any amendment or modification of this Agreement, or (3) modify any of the rights or
obligations of the Trustee or the Corporation without its written consent thereto, or (4) modify the
limitations on the liability of the District hereunder without the consent of the Nevada County Local
Agency Formation Commission.
(b) This Agreement and the rights and obligations of the Corporation and the
District and of the Owners of the Certificates may also be modified or amended at any time by an
amendment hereto which shall become binding upon adoption, without the consent of the Owners of
any Certificates, but only to the extent permitted by law and only for any one or more of the
following purposes—
(i) to add to the covenants and agreements of the Corporation or the
District contained in this Agreement other covenants and agreements thereafter to be observed or to
surrender any right or power herein reserved to or conferred upon the Corporation or the District, and
which shall not adversely affect the interests of the Owners of the Certificates;
(ii) to cure, correct or supplement any ambiguous or defective provision
contained in this Agreement or in regard to questions arising under this Agreement, as the
Corporation or the District may deem necessary or desirable and which shall not adversely affect the
interests of the Owners of the Certificates; and
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3
to make such other amendments or modifications as may be in the
best interests of the Owners of the Certificates.
Section 9.2. Endorsement or Replacement of Certificates After Amendment or
Supplement. After the effective date of any action taken as hereinabove provided, the Trustee may
determine that the Certificates may bear a notation by endorsement in form approved by the Trustee
as to such action, and in that case upon demand of the Trustee to the Owner of any Outstanding
Certificate and presentation of such Owner's Certificate for such purpose at the principal corporate
trust office of the Trustee a suitable notation as to such action shall be made on such Certificate. If
the Trustee shall so determine, new Certificates so modified as in the opinion of the Trustee shall be
necessary to conform to such action shall be prepared, and in that case upon demand of the Trustee to
the Owner of any Outstanding Certificates such new Certificates shall be exchanged at the principal
corporate trust office of the Trustee without cost to each Owner for Certificates then Outstanding
upon surrender of such Outstanding Certificates.
Section 9.3. Amendment of Particular Certificates. The provisions of this article shall not
prevent any Owner from accepting any amendments to the particular Certificates held by him or her,
provided that due notation thereof is made on such Certificates.
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement. When the obligations of the District under the
Installment Purchase Agreement shall cease pursuant to Article IX of the Installment Purchase
Agreement (except for the right of the Trustee and the obligation of the District to have the money
and Permitted Investments mentioned therein applied to the payment of Installment Payments as
therein set forth and the obligation to apply moneys on deposit in the Rebate Fund as provided in
Section 5.6), then and in that case the obligations created by this Agreement shall thereupon cease,
terminate and become void except for the obligation of the District to direct the Trustee to apply
money on deposit in the Rebate Fund as provided herein which shall continue until such moneys are
so applied and the right of the Owners to have applied and the obligation of the Trustee to apply such
moneys and Permitted Investments to the payment of the Certificates as herein set forth, and subject
to application of moneys on deposit in the Rebate Fund as provided in Section 5.6, the Trustee shall
turn over to the District, after provision for payment of amounts due the Trustee hereunder, as an
overpayment of Installment Payments, any surplus in the Certificate Payment Fund and all balances
remaining in any other funds or accounts other than moneys and Permitted Investments held for the
payment of the Certificates at maturity or on prepayment, which moneys and Permitted Investments
shall continue to be held by the Trustee in trust for the benefit of the Owners and shall be applied by
the Trustee to the payment, when due, of the principal or interest and premium, if any, represented by
the Certificates, and after such payment,this Agreement shall become void.
If moneys or securities described in clause (i) (a) or (d) of the definition of Permitted
Investments are deposited with and held by the Trustee as hereinabove provided, the Trustee shall
within thirty (30) days after such moneys or Permitted Investments shall have been deposited with it,
mail a notice, first class postage prepaid, to the Owners at the addresses listed on the registration
books kept by the Trustee pursuant to Section 2.8, setting forth (a) the date fixed for prepayment of
the Certificates, (b) a description of the moneys or securities described in clause (i) (a) or (d) of the
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DOCSSF/43383v5/2292 5-00 1 1
definition of Permitted Investments so held by it, and (c) that this Agreement has been released in
accordance with the provisions of this Section.
Section 10.2. Deposit of Money or Securities with Trustee. Whenever in this Agreement or
the Installment Purchase Agreement it is provided or permitted that there be deposited with or held in
trust by the Trustee money or securities in the necessary amount to pay or prepay any Certificates,
the money or securities to be so deposited or held may include money or securities held by the
Trustee in the funds and accounts established pursuant to this Agreement and shall be—
(a) lawful money of the United States of America in an amount equal to the
principal amount represented by such Certificates and all unpaid interest represented thereby to
maturity, except that, in the case of Certificates which are to be prepaid prior to maturity and in
respect of which notice of such prepayment shall have been given as in Article IV provided or
provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount
to be deposited or held shall be the principal amount or Prepayment Price and all unpaid interest to
such date of prepayment if any, represented by such Certificates; or
(b) non-callable securities described in clause (i) (a) or (d) of the definition of
Pennitted Investments which will provide money sufficient to pay the principal at maturity or upon
prepayment plus all accrued interest to maturity or to the prepayment date, as the case may be,
represented by the Certificates to be paid or prepaid, as such amounts become due, plus premium, if
any, provided that, in the case of Certificates which are to be prepaid prior to the maturity thereof,
notice of such prepayment shall have been given as in Article IV provided or provision satisfactory
to the Trustee shall have been made for the giving of such notice;
provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this
Agreement and the Installment Purchase Agreement or by Written Request of the District) to apply
such money or securities to the payment of such principal or Prepayment Price and interest
represented by such Certificates.
Section 10.3. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of the
interest, principal or Prepayment Price represented by any of the Certificates which remain
unclaimed for two years after the date of deposit of such moneys if deposited with the Trustee after
the date when the interest, principal or Prepayment Price represented by such Certificates have
become payable, shall at the Written Request of the District be repaid by the Trustee to the District as
its absolute property 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 the interest and
principal or Prepayment Price represented by much Certificates; provided, however, that before
being required to make any such payment to the District, the Trustee shall, at the written request and
expense of the District, first mail a notice to the owners of the Certificates so payable that such
moneys remain unclaimed and that after a date named in such notice, which date shall not be less
than thirty (30) days after the date of the mailing of such notice, the balance of such moneys then
unclaimed will be returned to the District.
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DOCS SF/43383v5/22925-0011
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties. Nothing contained herein,
expressed or implied, is intended to give to any person other than the District, the Trustee, the
Corporation and the Owners any claim, remedy or right under or pursuant hereto, and any agreement,
condition, covenant or term required herein to be observed or performed by or on behalf of the
District shall be for the sole and exclusive benefit of the Trustee, the Corporation and the Owners.
Section 11.2. Successor Deemed Included in all References to Predecessor. Whenever
either the District, the Corporation or the Trustee or any officer thereof is named or referred to
herein, such reference shall be deemed to include the successor to the powers, duties and functions
that are presently vested in the District, the Corporation or the Trustee or such officer, and all
agreements, conditions, covenants and terms required hereby to be observed or performed by or on
behalf of the District, the Corporation or the Trustee or any officer thereof shall bind and inure to the
benefit of the respective successors thereof whether so expressed or not.
Section 11.3. Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or more
instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or such Owner's attorney of
any declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to take acknowledgments of
deeds to be recorded in the state or territory in which he or she purports to act that the person signing
such declaration, request or other instrument or writing acknowledged to him or her the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or
other officer, or by such other proof as the Trustee may accept which it may deem sufficient.
The ownership of any Certificates and the amount,payment date, number and date of owning
the same may be proved by the books required to be kept by the Trustee pursuant to the provisions of
Section 2.8.
Any declaration, request or other instrument in writing of the Owner of any Certificate shall
bind all future Owners of such Certificate with respect to anything done or suffered to be done by the
District or the Trustee in good faith and in accordance therewith.
Section 11.4. Disqualified Certificates. Certificates owned or held by or for the account of
the Corporation or the District (but excluding Certificates held in any pension or retirement fund)
shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of
Outstanding Certificates provided for in this Agreement, and shall not be entitled to consent to or
take any other action provided for in this Agreement.
The Trustee may adopt appropriate regulations to require each Owner of Certificates, before
his or her consent provided for in this Agreement shall be deemed effective, to reveal if the
Certificates as to which such consent is given are disqualified as provided in this Section.
Section 11.5. Waiver of Personal Liability. No director, officer or employee of the District
or the Corporation shall be individually or personally liable for the payment of the interest, principal
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DOCSSF/43383v5/22925-0011
or the prepayment premiums, if any, represented by the Certificates, but nothing contained herein
shall relieve any director, officer or employee of the District or Corporation from the performance of
any official duty provided by any applicable provisions of law or by the Installment Purchase
Agreement or hereby.
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates. All
Certificates acquired by the District, whether by purchase or gift or otherwise shall be surrendered to
the Trustee for cancellation. Whenever in this Agreement provision is made for the cancellation by
the Trustee of any Certificates, the Trustee shall destroy such Certificates and upon written request
deliver a certificate of such destruction to the District.
Section 11.7. Headings. Headings preceding the text of the several Articles and Sections
hereof, and the table of contents, are solely for convenience of reference and shall not constitute a
part of this Agreement or affect its meaning, construction or effect.
All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or subdivision hereof.
Section 11.8. Funds and Accounts. Any fund required by this Agreement to be established
and maintained by the Trustee may be established and maintained in the accounting records of the
Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof
and any reports or statements with respect thereto, be treated either as a fund or as an account;but all
such records with respect to all such funds shall at all times be maintained in accordance with sound
corporate trust industry practices and with due regard for the protection of the security of the
Certificates and the rights of every Owner thereof.
Section 11.9. Partial Invalidity. If any one or more of the agreements, conditions,
covenants or terms required herein to be observed or performed by or on the part of the District, the
Corporation or the Trustee shall be contrary to law, then such agreement or agreements, such
condition or conditions, such covenant or covenants or such term or terns shall be null and void and
shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof
and shall in no way affect the validity hereof or of the Certificates, and the Owners shall retain all the
benefit, protection and security afforded to them under any applicable provisions of law. The District,
the Corporation and the Trustee hereby declare that they would have executed this Agreement, and
each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and
would have authorized the execution and delivery of the Certificates pursuant hereto irrespective of
the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or
phrases hereof or the application thereof to any person or circumstances may be held to be
unconstitutional, unenforceable or invalid.
Section 11.10. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND
GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE.
Section 11.11. Notices. All written notices to be given under this Agreement to the parties
hereto shall be given by mail or personal delivery to the parry entitled thereto at its address set forth
below, or at such address as the party may provide to the other parties in writing from time to time.
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DOCS SFA3383 v5/22925-0011
If to the District: Truckee Donner Public Utility District
P.O. Box 309
11570 Donner Pass Road
Truckee, CA 96160
Attention: General Manager
If to the Corporation: Truckee Donner Public Utility District Financing Corporation
c/o Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96160
Attention: President
If to the Trustee: BNY Western Trust Company
700 South Flower Street, Suite 500
Los Angeles, CA 90017-4104
Attention: Corporate Trust
Section 11.12. Liability of District Limited to Revenues. Notwithstanding anything
contained herein, the District shall not be required to advance any moneys derived from any
source of income other than the Revenues for the payment of amounts due hereunder and/or for
the performance of any agreements or covenants required to be performed by it contained herein
and is hereby prohibited from using any other District moneys for any such purpose.
Section 11.13. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
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DOCSSF/43 38 3v5/22925-001 1
IN WITNESS WHEREOF, the parties have executed and attested this Agreement by their
officers hereunto duly authorized as of the date and year first written above.
BNY WESTERN TRUST COMPANY, as Trustee
By:
Authorized Officer
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
FINANCING CORPORATION
By:
President
By:
Clerk
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
President
By:
Clerk
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DOGS SF/43383 v5/22925-0011
EXHIBIT A
[FORM OF CERTIFICATE OF PARTICIPATION]
TRUCKEE DONTINER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATE OF PARTICIPATION, SERIES 2004
Evidencing an Interest of the Owner Hereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
CERTIFICATE
INTEREST RATE PAYMENT DATE DATED CUSIP
—% 2004
REGISTERED OWNER:
PRINCIPAL AMOUNT: AND NO/I 00 DOLLARS
THIS IS TO CERTIFY that the Registered Owner (specified above) of this Certificate of
Participation (herein called the "Certificate") is the owner of an undivided interest in the right to
receive certain Installment Payments (as that term is defined in the Trust Agreement hereinafter
mentioned) under that certain Installment Purchase Agreement (the "Installment Purchase
Agreement"), dated as of November 1, 2004, by and between Truckee Donner Public Utility District
Financing Corporation (the "Corporation") and the Truckee Donner Public Utility District (the
"District"). The Installment Payments to be made thereunder have been assigned to BNY Western
Trust Company, as trustee (the "Trustee"), having a corporate trust office in Los Angeles, California.
The Trustee has executed and delivered $_ aggregate principal amount of Certificates.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the
Installment Purchase Agreement and the Trust Agreement, dated as of November 1, 2004, by and
among the Trustee, the Corporation and the District (the "Trust Agreement") on the Certificate
Payment Date (specified above) the Principal Ai-nount (specified above) representing a portion of the
Installment Payments designated as principal coming due on the Certificate Payment Date, and to
receive an interest component on such principal component at the interest rate per annurn specified
above, from the Interest Payment Date(as hereinafter defined)preceding the date of execution hereof
by the Trustee, unless such date of execution is after a Record Date (as hereinafter defined)and on or
before the succeeding Interest Payment Date, in which case interest shall be payable from such
Interest Payment Date, or unless such date of execution is on or before the first Record Date, in
which case interest shall be payable from _; provided, however, that if, as shown by
the records of the Trustee, interest represented by this Certificate is in default, Certificates executed
in exchange for this Certificate surrendered for transfer or exchange shall represent interest from the
last date to which interest has been paid in full or duly provided for with respect to this Certificate,
or, if no interest has been paid or duly provided for with respect to this Certificate, from
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DOCSSF/43383v5/22925-0011
Interest with respect to this Certificate shall be paid on May I and November I in each year,
commencing May I (each, an "Interest Payment Date"), and continuing to and including the
Certificate Payment Date or the date of prior prepayment hereof, whichever is earlier. Interest with
respect to this Certificate shall be calculated on the basis of a 360-day year of twelve 30-day months.
The principal with respect hereto and prepayment premiums, if any, are payable in lawful money of
the United States of America upon presentation and surrender at the principal corporate trust office of
the Trustee in Los Angeles, California or such other office as the Trustee may from time to time
designate in writing to the District, the Corporation and the registered owners (the "Principal
Corporate Trust Office"). Interest with respect hereto is payable by check or draft of the Trustee
mailed by first class mail on each Interest Payment Date to the Registered Owner hereof as of the
close of business on the fifteenth day of the calendar month prior to such Interest Payment Date (the
"Record Date") at the address shown on the books maintained by the Trustee or, upon the written
request received by the Trustee of an Owner of at least $1,000,000 in aggregate principal amount of
Certificates, by wire transfer of immediately available funds to an account in the United States
designated by such Owner prior to the applicable Record Date, except, in each case that,if and to the
extent that there is a default in the payment of the interest due on such Interest Payment Date, such
defaulted interest shall be paid to the owner in whose name this Certificate is registered at the close
of business on a special record date as determined by the Trustee.
This Certificate has been executed by the Trustee pursuant to the terms of the Trust
Agreement. Copies of the Trust Agreement and the Installment Purchase Agreement are on file at
the corporate trust office of the Trustee in Los Angeles, California, and reference is made to the Trust
Agreement and the Installment Purchase Agreement and any and all amendments thereto for a
description of the pledges and covenants securing the Certificates, the nature, extent and manner of
enforcement of such pledges, the rights and remedies of the registered owners of the Certificates with
respect thereto and the other terms and conditions upon which the Certificates are delivered
thereunder,
TheCertificates are payable from Installment Payments payable by the District and other
amounts on deposit in certain funds and accounts held under the Trust Agreement, including but not
limited to the Reserve Fund, all in accordance therewith. All Revenues and all amounts on deposit in
the Revenue Fund (as such terms are defined in the Installment Purchase Agreement) are irrevocably
pledged to the payment of the Installment Payments and the Revenues shall not be used for any other
purpose while any of the Installment Payments remain unpaid; provided that out of Revenues there
may be apportioned such sums for such purposes as are expressly permitted in the Installment
Purchase Agreement. This pledge, together with the pledge created by all other Contracts and Bonds
(as such terms are defined in the Installment Purchase Agreement) constitutes a first lien on
Revenues, subject to application of Revenues and all amounts on deposit in the Revenue Fund as
permitted in the Installment Purchase Agreement, and the Revenue Fund for the payment of the
Installment Payments and all other Contracts and Bonds in accordance with the terms of the
Installment Purchase Agreement.
The obligation of the District to make Installment Payments is a special obligation of the
District payable solely from Net Revenues (as defined in the Installment Purchase Agreement) on a
parity with certain outstanding Contracts as described in the Installment Purchase Agreement and
does not constitute a debt of the District or of the State of California or of any political subdivision
thereof in contravention of any constitutional or statutory debt limitation or restriction. The District
may at any time incur Contracts or issue Bonds, the payments of which are on a parity with the
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DOCSSFl43383v5122 9 2 5-00 1 1
Installment Payments and which are secured by a pledge of and lien on the Revenues in accordance
with the Installment Purchase Agreement.
The Certificates are authorized to be executed and delivered in the form of fully registered
Certificates in the denomination of $5,000 each or any integral multiple thereof; provided that no
Certificate shall have principal represented thereby maturing in more than one year. Subject to the
limitations and conditions and upon payment of the taxes and governmental charges provided in the
Trust Agreement, Certificates may be exchanged for a like aggregate principal amount of Certificates
of the same Certificate Payment Date of other authorized denominations at the Principal Corporate
Trust Office of the Trustee.
This Certificate is transferable by the Registered Owner hereof, in person or by such person's
duly authorized attorney, but only in the manner, subject to the limitations and conditions and upon
payment of the taxes and governmental charges provided in the Trust Agreement, and upon surrender
of this Certificate for cancellation at the Principal Corporate Trust Office of the Trustee,
accompanied by delivery of a duly executed written instrument of transfer, in a form approved by the
Trustee. Upon such transfer a new Certificate or Certificates of the same Certificate Payment Date
and of authorized denomination or denominations, for a like aggregate principal amount will be
delivered to the transferee in exchange herefor.
The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all
purposes, and the Trustee shall not be affected by any notice to the contrary.
The Trustee shall not be required to register the transfer or exchange of any Certificate
(i) within 15 days preceding selection of Certificates for prepayment or(it) selected for prepayment.
The Certificates are subject to prepayment prior to their respective stated maturities, as a
whole or in part on any date in the order of maturity as directed by the District in a written request to
the Trustee and by lot within each maturity in integral multiples of$5,000, from prepaid Installment
Payments made by the District from Net Proceeds (as defined in the Installment Purchase
Agreement), under the circumstances and upon the terms prescribed in the Trust Agreement and the
Installment Purchase Agreement, at a prepayment price equal to the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium.
The Certificates shall be subject to prepayment in part on the next May 1 or November 1 for
which timely notice of prepayment can be given after the date on which the Trustee receives the
statement of the District referred to in the Trust Agreement in the order of maturity as directed by the
District and by lot within each maturity in integral multiples of $5,000 from proceeds transferred
from the Acquisition Fund to the Certificate Payment Fund for deposit into the Prepayment Fund at a
Prepayment Price of the principal amount thereof plus accrued interest evidenced and represented
thereby to the date fixed for prepayment, without premium.
The Certificates are subject to prepayment prior to their respective stated maturities, as a
whole or in part on any date in the order of maturity as directed by the District in a written request to
the Trustee and by lot within each maturity in integral multiples of$5,000, on or after November 1,
20 , from amounts prepaid by the District pursuant to the Installment Purchase Agreement, at a
prepayment price (expressed as a percentage of the principal amount of such Certificates to be
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DOCSSFl43383v5122925-0011
prepaid)plus accrued interest evidenced and represented thereby to the date fixed for prepayment, as
set forth below:
Prepayment Dates Prepayment Price
The Certificates with a stated maturity of November 1, 20 are subject to mandatory
prepayment prior to such stated maturity in part (by lot) on any November I on and after November
1, 20_, in integral multiples of$5,000 at a prepayment price of the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium, in the amounts set forth in the Trust Agreement.
The Certificates with a stated maturity of November 1, 20_ are subject to mandatory
prepayment prior to such stated maturity in part (by lot) on any November I on and after November
1, 20 , in integral multiples of$5,000 at a prepayment price of the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium, in the amounts set forth in the Trust Agreement.
As provided in the Trust Agreement, notice of prepayment hereof shall be mailed, first class
postage prepaid, not less than 30 days nor more than 60 days prior to the prepayment date, to the
Registered Owner of this Certificate at the address thereof appearing on the Certificate registration
books. If this Certificate is called for prepayment and payment is duly provided therefor as specified
in the Trust Agreement, interest represented hereby shall cease to accrue from and after the date fixed
for prepayment. Any defect in the notice or the mailing thereof will not affect the validity of the
prepayment of this Certificate.
To the extent and in the manner permitted by the terms of the Trust Agreement and the
Installment Purchase Agreement, as the case may be, the Trust Agreement and the rights and
obligations of the District and of the registered owners of the Certificates and of the Trustee or the
Installment Purchase Agreement and the rights and obligations of the Corporation and the District
and the registered owners of the Certificates and the Trustee, respectively, may be modified or
amended with the written consents of the registered owners of a majority in aggregate principal
amount of the Certificates then outstanding, but no such modification or amendment shall (1) extend
the stated maturities of the Certificates, or reduce the rate of interest or yield-to-maturity represented
thereby, or extend the time of payment of interest, or reduce the amount of principal represented
thereby, or reduce any premium payable on the prepayment thereof, without the consent of the
registered owner of each Certificate so affected, or (2) reduce the percentage of registered owners of
Certificates whose consent is required for the execution of any amendment or modification of the
Trust Agreement or the Installment Purchase Agreement, or (3) modify any of the rights or
obligations of the Trustee or the Corporation without its written consent thereto.
To the extent and in the manner permitted by the terms of the Trust Agreement and the
Installment Purchase Agreement, as the case may be, the Trust Agreement and the rights and
obligations of the Corporation and the District and of the registered obligations of the Corporation
and the District and of the registered owners of the Certificates or the Installment Purchase
Agreement and the rights and obligations of the Corporation and the District also be modified or
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DOCS SF/43383v512 2 92 5-00 1 1
amended, without the consent of the registered owners of any Certificates, but only to the extent
permitted by law and only for any one or more of the following purposes - -
(1) to add to the covenants and agreements of the Corporation or the District contained in
the Trust Agreement or the Installment Purchase Agreement other covenants and
agreements thereafter to be observed or to surrender any right or power in the Trust
Agreement or the Installment Purchase Agreement reserved to or conferred upon the
Corporation or the District, and which shall not adversely affect the interests of the
registered owners of the Certificates;
(2) to cure, correct or supplement any ambiguous or defective provision contained in the
Trust Agreement or the Installment Purchase Agreement or in regard to questions arising
under the Trust Agreement or the Installment Purchase Agreement, as the Corporation or
the District may deem necessary or desirable and which shall not adversely affect the
interests of the registered owners of the Certificates; and
(3) to make such other amendments or modifications as may be in the best interests of the
registered owners of the Certificates.
Upon acceleration, the Installment Payments and the Certificates shall become due and
payable immediately from the sources described in the Installment Purchase Agreement and the Trust
Agreement,respectively.
The Trustee has no obligation or liability to the registered owners of the Certificates for the
payment of interest, principal or prepayment premium, if any, with respect to the Certificates out of
the Trustee's own funds; the Trustee's sole obligations are those described in the Trust Agreement.
The recitals of facts herein shall be taken as statements of the District and the Corporation and the
Trustee does not have any responsibility for the accuracy thereof.
The District has certified that all acts, conditions and things required by the Constitution and
statutes of the State of California and the Trust Agreement to exist, to have happened and to have
been performed precedent to and in the delivery of this Certificate, do exist, have happened and have
been performed in due time, form and manner as required by law.
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DOCS SF/43383 v5/22925-0011
IN WITNESS WHEREOF, this Certificate has been executed by the manual signature of an
authorized signatory of the Trustee, all as of the date set forth below.
Execution date: BNY WESTERN TRUST COMPANY,
as Trustee
By:
Authorized Signatory
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DOCSSF/43383v5/22425-00I1
[FORM OF ASSIGNMENT]
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
the within mentioned Certificate and
hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the Certificate register of the Trustee with full power of substitution
in the premises.
Dated:
Note: The signature(s) to this Assignment
must correspond with the names) as written
on the face of the within Certificate in every
particular, without alteration or enlargement or
any change whatsoever.
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an
eligible guarantor institution.
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DOCSSF/43383v5/22925-0011
Table of Contents
Page
ARTICLE I
DEF NITIONS; RULES OF CONSTRUCTION; CONTENTS OF CERTIFICATES AND
OPINIONS; RECITALS
Section1.1. Definitions .................................................................................................................... I
Section 1.2. Rules of Construction...................................................................................................5
Section 1.3. Content of Statements and Opinions.............................................................................5
Section1.4. Recitals..........................................................................................................................6
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates............................................................................................6
Section 2.2. Denominations; Medium and Place of Payment; Dating..............................................6
Section 2.3. Payment of Principal and Interest with Respect to Certificates....................................7
Section2.4. Form of Certificates......................................................................................................8
Section2.5. Execution......................................................................................................................8
Section 2.6. Transfer of Certificates.................................................................................................8
Section 2.7. Exchange of Certificates...............................................................................................8
Section 2.8. Certificate Registration Books......................................................................................8
Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen ........................................................9
Section2.10. Book-Entry System.......................................................................................................9
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates............................................................................................... 12
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys........................... 12
Section 3.3. Validity of Certificates................................................................................................ 12
Section 3.4. Delivery Cost Fund..................................................................................................... 12
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section 4.1. Terms of Prepayment.................................................................................................. 13
Section 4.2. Selection of Certificates for Prepayment.................................................................... 14
Section 4.3. Notice of Prepayment................................................................................................. 14
Section 4.4. Partial Prepayment of Certificate................................................................................ 15
Section 4.5. Effect of Prepayment.................................................................................................. 15
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DOCS SF/43383v5/22925-0011
Table of Contents
(continued)
Page
ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments.............................................................. 15
Section 5.2. Certificate Payment Fund........................................................................................... 16
Section 5.3. Investment of Moneys in Special Funds......... ................_............ ........................... 17
Section5.4. Reserve Fund.............................................................................................................. 17
Section 5.5. Pledge of Moneys in Funds......................................................................................... 18
Section5.6. Rebate Fund................................................................................................................ 19
Section 5.7. Reserved...................................................................... Error! Bookmark not defined.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform Under Installment Purchase Agreement...........20
Section6.2. Budgets .......................................................................................................................20
Section6.3. Tax Covenants ............................................................................................................21
Section 6.4. Accounting Records and Reports................................................................................21
Section 6.5. Compliance with Trust Agreement.............................................................................21
Section 6.6. Observance of Laws and Regulations.................................................................... 22
Section 6.7. Compliance with Contracts.........................................................................................22
Section 6.8. Prosecution and Defense of Suits ...............................................................................22
Section 6.9. Recordation and Filing................................................................................................22
Section6.10. Eminent Domain.........................................................................................................23
Section 6.11. Further Assurances .....................................................................................................23
Section 6.12. Continuing Disclosure ................................................................................................23
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.1. Notice of Non-Payment..............................................................................................23
Section 7.2. Action on Default or Termination.................. ...................................................... .....23
Section 7.3. Other Remedies of the Trustee ...................................................................................24
Section7.4. Non-Waiver................................................................................................................24
Section 7.5. Remedies Not Exclusive.............................................................................................24
Section 7.6. No Obligation by the District to Owners....................................................................24
Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings ............25
Section 7.8. Power of Trustee to Control Proceedings...................................................................25
Section 7.9. Limitation on Certificate-owners' Right to Sue..........................................................25
Section 7.10. No Obligation with Respect to Performance by Trustee............................................26
Section 7.11. No Liability to Owners for Payment...........................................................................26
Section 7.12. No Responsibility for Sufficiency ..............................................................................26
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Page
Section 7.13. Indemnification of Trustee..........................................................................................26
ARTICLE VIII
THE TRUSTEE
Section 8.1. Employment of Trustee...............................................................................................26
Section 8.2. Acceptance of Employment........................................................................................27
Section 8.3. Trustee: Duties, Removal and Resignation................................................................27
Section 8.4. Compensation of the Trustee......................................................................................27
Section 8.5. Protection of the Trustee.............................................................................................28
Section 8.6. Merger or Consolidation.............................................................................................30
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted...............................................................................................30
Section 9.2. Endorsement or Replacement of Certificates After Amendment or Supplement.......31
Section 9.3. Amendment of Particular Certificates ........................................................................31
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement....................................................................................31
Section 10.2. Deposit of Money or Securities with Trustee......................................................... ...32
Section10.3. Unclaimed Moneys.....................................................................................................32
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties.........................................................33
Section 11.2. Successor Deemed Included in all References to Predecessor...................................33
Section 11.3. Execution of Documents by Owners..........................................................................33
Section 11.4. Disqualified Certificates.............................................................................................33
Section 11.5. Waiver of Personal Liability.......................................................................................33
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates......................34
Section11.7. Headings .....................................................................................................................34
Section 11.8. Funds and Accounts....................................................................................................34
Section11.9. Partial Invalidity .........................................................................................................34
Section11.10. California Law............................................................................................................34
Section11.11. Notices........................................................................................................................34
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Page
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; CONTENTS OF CERTIFICATES AND
OPINIONS; RECITALS
SectionLL Definitions .................................................................................................................... 1
Section 1.2. Rules of Construction...................................................................................................5
Section 1.3. Content of Statements and Opinions.............................................................................5
Section1.4. Recitals..........................................................................................................................6
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates ............................................................................................6
Section 2.2. Denominations; Medium and Place of Payment; Dating..............................................6
Section 2.3. Payment of Principal and Interest with Respect to Certificates....................................7
Section 2.4. Form of Certificates......................................................................................................8
Section2.5. Execution......................................................................................................................8
Section 2.6. Transfer of Certificates.................................................................................................8
Section 2.7. Exchange of Certificates...............................................................................................8
Section 2.8. Certificate Registration Books......................................................................................8
Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen ........................................................9
Section2.10. Book-Entry System.................... ................................................................................_9
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates............................................................................................... 12
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys...........................12
Section 3.3. Validity of Certificates................................................................................................ 12
Section 3.4. Delivery Cost Fund..................................................................................................... 12
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section4.1. Terms of Prepayment.................................................................................................. 13
Section 4.2. Selection of Certificates for Prepayment.................................................................... 14
Section 4.3. Notice of Prepayment ................................................................................................. 14
Section 4.4. Partial Prepayment of Certificate................................................................................ 15
Section 4.5. Effect of Prepayment..............................................................
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ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments..............................................................15
Section 5.2. Certificate Payment Fund........................................................................................... 16
Section 5.3. Investment of Moneys in Special Funds..................................................................... 17
Section5.4. Reserve Fund.............................................................................................................. 17
Section 5.5. Pledge of Moneys in Funds......................................................................................... 18
Section5.6. Rebate Fund................................................................................................................ 19
Section 5.7. Reserved...................................................................... Error? Bookmark not defined.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform Under Installment Purchase Agreement...........20
Section6.2. Budgets .......................................................................................................................20
Section 6.3. Tax Covenants ............................................................................................................21
Section 6.4. Accounting Records and Reports................................................................................21
Section 6.5. Compliance with Trust Agreement.............................................................................21
Section 6.6. Observance of Laws and Regulations.........................................................................22
Section 6.7. Compliance with Contracts................................ ........................................................22
Section 6.8. Prosecution and Defense of Suits ...............................................................................22
Section 6.9. Recordation and Filing................................................................................................22
Section 6.10. Eminent Domain.........................................................................................................23
Section 6.11, Further Assurances .....................................................................................................23
Section 6.12. Continuing Disclosure ................................................................................................23
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.L Notice of Non-Payment..............................................................................................23
Section 7.2. Action on Default or Termination...............................................................................23
Section 7.3. Other Remedies of the Trustee ...................................................................................24
Section7.4. Non-Waiver................................................................................................................24
Section 7.5. Remedies Not Exclusive.............................................................................................24
Section 7.6. No Obligation by the District to Owners....................................................................24
Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings ............25
Section 7.8. Power of Trustee to Control Proceedings...................................................................25
Section 7.9. Limitation on Certificate-owners' Right to Sue..........................................................25
Section 7.10. No Obligation with Respect to Performance by Trustee............................................26
Section 7.11. No Liability to Owners for Payment...........................................................................26
Section 7.12. No Responsibility for Sufficiency ..............................................................................26
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(continued)
Page
Section 7.13. Indemnification of Trustee..........................................................................................26
ARTICLE VIII
THE TRUSTEE
Section 8.L Employment of Trustee...............................................................................................26
Section 8.2. Acceptance of Employment........................................................................................27
Section 8.3. Trustee: Duties, Removal and Resignation................................................................27
Section 8.4. Compensation of the Trustee......................................................................................27
Section 8.5. Protection of the Trustee.............................................................................................28
Section 8.6. Merger or Consolidation.............................................................................................30
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted...............................................................................................30
Section 9.2. Endorsement or Replacement of Certificates After Amendment or Supplement.......31
Section 9.3. Amendment of Particular Certificates ........................................................................31
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement....................................................................................31
Section 10.2. Deposit of Money or Securities with Trustee.............................................................32
Section10.3. Unclaimed Moneys.....................................................................................................32
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties.........................................................33
Section 11.2. Successor Deemed Included in all References to Predecessor...................................33
Section 11.3. Execution of Documents by Owners..........................................................................33
Section 11.4. Disqualified Certificates.............................................................................................33
Section 11.5. Waiver of Personal Liability.......................................................................................33
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates......................34
Section11.7. Headings .....................................................................................................................34
Section 11.8. Funds and Accounts....................................................................................................34
Section11.9. Partial Invalidity .........................................................................................................34
Section11.10. California Law............................................................................................................34
Section11.11. Notices...................................................... .................................................................34
Section 11.12. Liability of District Limited to Revenues...................................................................35
Section 11.13. Execution in Counterparts...........................................................................................35
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DOCSSF/43383v5/22925-001 1
#205169v1
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Series 2004
PURCHASE CONTRACT
September_, 2004
Board of Directors
Truckee Donner Public Utility District
Truckee, California
Ladies and Gentlemen:
The undersigned, (the "Purchaser"), hereby offers to enter into this
Purchase Contract (the "Purchase Contract") with you, the Truckee Donner Public Utility
District (the "District"), which upon the District's acceptance of this offer, will be binding upon
the District and the Purchaser. This offer is made subject to acceptance by you prior to 11:59
P.M., California time, on the date hereof. If this offer is not so accepted, this offer will be
subject to withdrawal by the Purchaser upon notice delivered to you at any time prior to
acceptance. Upon acceptance, this Purchase Contract shall be in full force and effect in
accordance with its terms and shall be binding upon the District and the Purchaser. All
capitalized terms used herein and not otherwise defined shall have the respective meanings
ascribed thereto in the Placement Memorandum (as hereinafter defined).
1. Purchase, Sale and Delivery of the 2004 Certificates
(a) Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, the Purchaser hereby agrees
to purchase and the District agrees to cause the Trustee (as defined below) to execute and
deliver to the Purchaser all (but not less than all) of $ aggregate principal
amount of Truckee Donner Public Utility District Revenue Certificates of Participation,
Series 2004 (the "2004 Certificates"). The 2004 Certificates are being delivered to
provide funds (i) to pay the cost of the construction of a "Fiber-to-the-Home"broadband
telecommunications network within the territory of the District to be used for government
and community connectivity for education and other government services, along with the
provision of other broadband communication services to business and residential
customers such as cable television service, Internet access and telephone services (the
"Project"), (ii) to pay capitalized interest on the Certificates during the construction of
Project, (iii) to fund any reserve requirement for the Certificates, and (iv) to pay costs of
issuance, as further described in the Private Placement Memorandum, dated
2004, related to the Certificates (the "Placement Memorandum").
................ ............
{
Pursuant to an Installment Purchase Agreement, dated as of 1, 2004 (the
"Installment Purchase Agreement"), by and between the District and the Truckee Donner
Public Utility District Financing Corporation (the "Corporation"), in consideration for the
Corporation's assistance in financing the Project, the District sells to the Corporation and
the Corporation purchases from the District certain assets and facilities comprising a
portion of the Project (the "Property") to be purchased back by the District from the
Corporation pursuant to the Installment Purchase Agreement. The 2004 Certificates
evidence the interests of the owners thereof in the installment payments (the "Installment
Payments") to be made by the District pursuant to the Installment Purchase Contract.
The 2004 Certificates shall be delivered pursuant to a Trust Agreement, dated as
of 1, 2004 (the "Trust Agreement"), by and among the District, the Corporation
and BNY Western Trust Company, as trustee (the "Trustee"). The Corporation will
assign certain of its interests in the Installment Purchase Agreement to the Trustee
pursuant to the Assignment Agreement dated , 2004, from the Corporation to the
Trustee (the "Assignment Agreement"). The 2004 Certificates shall be dated the date of
delivery thereof. The 2004 Certificates shall mature in the amounts and on the dates and
will accrue interest at the rates set forth in Exhibit A hereto. The 2004 Certificates shall
be substantially in the form described in, and shall be issued and secured under, the
provisions of the Trust Agreement.
(b) The purchase price for the 2004 Certificates shall be $
(representing the $ aggregate principal amount of the 2004 Certificates less
$ of Purchaser's discount and less $ original issue discount).
(c) At 8:00 o'clock A.M., California time, on _, 2004, or at such other
time or on such other date as the District and the Purchaser mutually agree upon (the
"Closing Date"), the Trustee will, subject to the terms and conditions hereof, deliver or
cause to be delivered to the Purchaser, at a location or locations to be designated by the
Purchaser in New York, New York, the 2004 Certificates (delivered through the book-
entry system of The Depository Trust Company), duly executed, and the parties will
deliver or cause to be delivered, at the offices of Stradling Yocca Carlson & Rauth, A
Professional Corporation, 44 Montgomery Street, Suite 4200, San Francisco, California
94104, or at such other place as shall have been mutually agreed upon by the District and
the Purchaser, the other documents mentioned herein. The Purchaser will accept such
delivery and pay the purchase price of the 2004 Certificates as set forth in subparagraph
(b) above in immediately available funds (such delivery and payment being herein
referred to as the "Closing") to the order of the Trustee in an amount equal to the
purchase price.
(d) The District will undertake pursuant to a Continuing Disclosure
Agreement, to provide certain annual financial information and operating data and
notices of the occurrence of certain events, if material. A description of this undertaking
is set forth in Preliminary Placement Memorandum (as hereinafter defined) and will also
be set forth in the final Placement Memorandum.
2. Use and Preparation of Preliminary lacement Memorandum.
2
The District hereby ratifies, confirms and approves of the use and distribution by the
Purchaser, prior to the date hereof, of the Preliminary Placement Memorandum dated
2004 relating to the 2004 Certificates (which, including the cover page and all appendices
thereto, is referred to herein as the "Preliminary Placement Memorandum"). The District has
deemed final the Preliminary Placement Memorandum as of its date for purposes of Rule 15c2-
12 promulgated under the Securities Exchange Act of 1934 ("Rule 15e2-12"), except for
information permitted to be omitted therefrom by Rule 15c2-12. The District hereby agrees to
cause to be delivered to the Purchaser, within seven (7) business days of the date hereof, copies
of the final Placement Memorandum, dated the date hereof. The District hereby agrees to deliver
or cause to be delivered to the Purchaser copies of the Placement Memorandum in sufficient
quantity to enable the Purchaser to comply with applicable rules of the Municipal Securities
Rulemaking Board ("MSRB"). The Purchaser hereby agrees to deliver a copy of the Placement
Memorandum to a national repository as soon as practicable after the date hereof and to each
investor that purchases any of the 2004 Certificates. The Purchaser shall advise the District of
the date and repository of such filing.
3. Representations, Warranties and Agreements of the District
The District hereby represents and agrees with the Purchaser as follows:
(a) The District is, and will be on the Closing Date, a public utility district of
the State of California organized and operating pursuant to the laws of the State of
California with the full power and authority to execute and deliver the Placement
Memorandum and to enter into the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and this Purchase Contract
(collectively, the "Legal Documents");
(b) By all necessary official action of the District prior to or concurrently with
the acceptance hereof, the District has duly approved, ratified and confirmed the
execution, delivery and distribution of the Placement Memorandum, and has duly
authorized and approved the execution and delivery of, and the performance by the
District of the obligations on its part contained in, the Legal Documents;
(c) The District is not in any material respect in breach of or default under any
applicable constitutional provision, law or administrative regulation to which it is subject
or any applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the District is a party or to which the
District or any of its property or assets is otherwise subject, and no event has occurred
and is continuing which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default in any material respect under any such
instrument; and the execution and delivery of the Legal Documents, and compliance with
the provisions on the District's part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the District is a party or is otherwise subject, nor
will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any material
3
nature whatsoever upon any of the properties or assets of the District under the terms of
any such law, administrative regulation, judgment, decree, loan agreement, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the Trust
Agreement or the Installment Purchase Agreement;
(d) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, to the best
knowledge of the District, after reasonable investigation, pending or threatened against
the District in any material respect affecting the existence of the District or the titles of its
officers to their respective offices or contesting or affecting, as to the District, the validity
or enforceability of the Legal Documents or contesting the powers of the District or its
authority to enter into, adopt or perform its obligations under any of the foregoing, or to
own or operate the Project or offer the services as described in the Placement
Memorandum, or in any way the completeness or accuracy of the Placement
Memorandum, or any amendment or supplement thereto, wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or enforceability
of the Legal Documents;
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matter which are required for the due authorization by, or which would
constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by, the District of its obligations in connection with the
execution and delivery of the 2004 Certificates have been duly obtained, except for such
approvals, consents and orders as may be required under the Blue Sky or securities laws
of any state in connection with the offering and sale of the 2004 Certificates, and, except
as described in or contemplated by the Placement Memorandum, all authorizations,
approvals, licenses, permits, consents and orders of any governmental authority, board,
agency or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by, the District of its
obligations under the Legal Documents have been duly obtained;
(f) The District will furnish such information, execute such instruments and
take such other action in cooperation with the Purchaser as the Purchaser may reasonably
request in order (i) to qualify the 2004 Certificates for offer and sale under the Blue Sky
or other securities laws and regulations of such states and other jurisdictions of the United
States as the Purchaser may designate and (ii) to determine the eligibility of the 2004
Certificates for investment under the laws of such states and other jurisdictions, and will
use its best efforts to continue such qualification in effect so long as required for
distribution of the 2004 Certificates;provided,however, that in no event shall.the District
be required to take any action which would subject it to service of process in any
jurisdiction in which it is not now so subject;
(g) As of the date thereof, the Preliminary Placement Memorandum did not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
4
circumstances under which they were made, not misleading;
(h) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the 2004 Certificates, the Placement Memorandum did not and
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(i) If between the date thereof and the date which is 25 days following the
End of the Underwriting Period for the 2004 Certificates, an event occurs which might or
would cause the information contained in the Placement Memorandum, as then
supplemented or amended, to contain an untrue statement of a material fact or to omit to
state a material fact required to be stated therein or necessary to make such information
therein, in the light of the circumstances under which it was presented, not misleading,
the District will notify the Purchaser, and, if in the opinion of the District, the Purchaser
or their respective counsel, such event requires the preparation and publication of a
supplement or amendment to the Placement Memorandum, the District will forthwith
prepare and furnish to the Purchaser (at the expense of the District) a reasonable number
of copies of an amendment of or supplement to the Placement Memorandum (in form and
substance reasonably satisfactory to the Purchaser). For the purposes of this subsection,
between the date of the Placement Memorandum and the date which is 25 days following
the End of the Underwriting Period, the District will furnish such information with
respect to itself as the Purchaser may from time to time reasonably request;
0) If the information contained in the Placement Memorandum is amended or
supplemented pursuant to paragraph (i) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days following the End of the Underwriting Period, the portions of the Placement
Memorandum so supplemented or amended will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make such information therein, in the light of the circumstances under which it was
presented, not misleading;
(k) After the Closing, the District will not participate in the issuance of any
amendment of or supplement to the Placement Memorandum to which, after being
furnished with a copy, the Purchaser shall reasonably object in writing or which should
be disapproved by counsel for the Purchaser;
(1) Between the date of this Purchase Contract and the Closing Date, except
as disclosed in the Placement Memorandum, the District will not, without the prior
written consent of the Purchaser, offer or issue any bonds, notes, Certificates or other
obligations for borrowed money, or incur any material liabilities direct or contingent,
payable from Revenues of the Project, other than in the ordinary course of its business or
as otherwise permitted under the Installment Purchase Agreement;
5
(m) As used herein and for the purposes of the foregoing, the term "End of the
Underwriting Period" for the 2004 Certificates shall mean the earlier of(i) the Closing
Date unless the District shall have been notified in writing to the contrary by the
Purchaser on or prior to the Closing Date, or (ii) the date on which the End of the
Underwriting Period for the 2004 Certificates has occurred under Rule 15c2-12;
provided, however, that the District may treat as the End of the Underwriting Period for
the 2004 Certificates the date specified as such in a notice from the Purchaser stating the
date which is the End of the Underwriting Period;
(n) Any certificate signed by any authorized official of the District and
delivered to the Purchaser in connection with the execution and delivery of the 2004
Certificates, shall be deemed a representation and warranty by the District to the
Purchaser as to the statements made therein.
4. Conditions to the Obligations of the Purchaser.
The Purchaser hereby enters into this Purchase Contract in reliance upon the
representations and warranties of the District contained herein and the representations to be
contained in the documents and instruments to be delivered at the Closing and upon the
performance by the District of its obligations both on and as of the date hereof and as of the
Closing Date. Accordingly, the Purchaser's obligations under this Purchase Contract to
purchase, to accept delivery of and to pay for the 2004 Certificates shall be subject, at the option
of the Purchaser, to the accuracy in all material respects of the representations of the District
contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material
respects of the statements of the officers and other officials of the District made in any certificate
or other document furnished pursuant to the provisions hereof, to the performance by the District
of its obligations to be performed hereunder and under such documents and instruments at or
prior to the Closing Date, and also shall be subject to the following additional conditions:
(a) The Purchaser shall receive, within seven (7) business days of the date
hereof, copies of the Placement Memorandum and any amendments or supplements as
have been approved by the Purchaser, in such reasonable quantity as the Purchaser shall
have requested;
(b) The representations and warranties of the District contained herein shall be
true and correct in all material respects on the date hereof and on the Closing Date, as if
made on and at the Closing Date;
(c) At the Closing Date, the Legal Documents shall have been duly
authorized, executed and delivered by the respective parties thereto, and the Placement
Memorandum shall have been duly authorized, executed and delivered by the District, as
applicable, all in substantially the forms heretofore submitted to the Purchaser, with only
such changes as shall have been agreed to in writing by the Purchaser, and shall be in full
force and effect; and there shall be in full force and effect such resolution or resolutions
of the board of directors of the District as, in the opinion of Stradling Yocca Carlson &
Rauth, A Professional Corporation, San Francisco, California ("Special Counsel"), shall
be necessary or appropriate in connection with the transactions contemplated hereby;
6
(d) Between the date hereof and the Closing Date, the market price or
marketability of the 2004 Certificates shall been materially adversely affected, in the
reasonable judgment of the Purchaser (evidenced by a written notice to the District
terminating the obligation of the Purchaser to accept delivery of and make any payment
for the 2004 Certificates), by reason of any of the following:
(1) an amendment to the Constitution of the United States or the State
of California shall have been passed or legislation shall have been introduced in
or enacted by the Congress of the United States or the legislature of the State of
California or legislation pending in the Congress of the United States shall have
been amended or legislation shall have been recommended to the Congress of the
United States or otherwise endorsed for passage (by press release, other form of
notice or otherwise) by the President of the United States, the Treasury
Department of the United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the United States
Senate or the Committee on Ways and Means of the United States House of
Representatives, or legislation shall have been proposed for consideration by
either such Committee by any member thereof or presented as an option for
consideration by either such Committee by the staff of such Committee or by the
staff of the Joint Committee on Taxation of the Congress of the United States, or
legislation shall have been favorably reported for passage to either House of the
Congress of the United States by a Committee of such House to which such
legislation has been referred for consideration, or a decision shall have been
rendered by a court of the United States or of the State of California or the Tax
Court of the United States, or a ruling shall have been made or a regulation or
temporary regulation shall have been proposed or made or any other release or
announcement shall have been made by the Treasury Department of the United
States, the Internal Revenue Service or other federal or State of California
authority, with respect to federal or State of California taxation upon Revenues of
the District's Project or other income of the general character to be derived by the
District or upon interest received with respect to obligations of the general
character of the 2004 Certificates which, in the reasonable judgment of the
Purchaser, may have the purpose or effect, directly or indirectly, of affecting the
tax status of the District, its property or income, its securities (including the 2004
Certificates) or the interest thereon, or any tax exemption granted or authorized by
State of California legislation or, in the reasonable judgment of the Purchaser,
materially and adversely affecting the market for the 2004 Certificates or the
market price generally of obligations of the general character of the 2004
Certificates;
(2) legislation enacted, introduced in the Congress or recommended
for passage by the President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States or by the Tax
Court of the United States, or an order, ruling, regulation (final, temporary or
proposed) or Placement Memorandum issued or made by or on behalf of the
Securities and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter shall have been made or issued to the effect that
7
obligations of the general character of the 2004 Certificates, or the 2004
Certificates are not exempt from registration under the Securities Act of 1933, as
amended, or that the Trust Agreement is not exempt from qualification under the
Trust Indenture Act of 1939, as amended;
(3) the declaration of war or engagement in major military hostilities
by the United States or the occurrence of any other national emergency or
calamity relating to the effective operation of the government of, or the financial
community in, the United States;
(4) the declaration of a general banking moratorium by federal, New
York or California authorities, or the general suspension of trading on any
national securities exchange;
(5) the imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions
not now in force with respect to the 2004 Certificates or obligations of the general
character of the 2004 Certificates or securities generally, or the material increase
of any such restrictions now in force, including those relating to the extension of
credit by, or the charge to the net capital requirements of, the Purchaser;
(6) an order, decree or injunction of any court of competent
jurisdiction, or order, ruling, regulation or Placement Memorandum by the
Securities and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter, issued or made to the effect that the issuance,
offering or sale of obligations of the general character of the 2004 Certificates, or
the issuance, offering or sale of the 2004 Certificates, including any or all
underlying obligations, as contemplated hereby or by the Placement
Memorandum, is or would be in violation of the federal securities laws as
amended and then in effect;
(7) an action, suit, proceeding, inquiry or investigation is pending or
threatened (a) to restrain or enjoin the execution or delivery of the 2004
Certificates, (b) which contests or affecting the validity of the 2004 Certificates or
the Legal Documents or (e) in any way contests the existence or powers of the
District to own and operate the Project and provide the Project-related services
described in the Placement Memorandum; or
(8) the withdrawal or downgrading of any rating of the 2004
Certificates by any rating agency then rating the 2004 Certificates; or
(9) any event occurring, or information becoming known which in the
reasonable judgment of the Purchaser, makes untrue in any material respect any
statement or information contained in the Placement Memorandum, or has the
effect that the Placement Memorandum contains any untrue statement of material
fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
8
were made, not misleading;
(e) Prior to or simultaneous with the execution of this Purchase Contract, the
Purchaser shall have received from the District a letter, dated the date of the Preliminary
Placement Memorandum, addressed to the Purchaser, consenting to the posting of the
Preliminary Placement Memorandum on the website, substantially
in the form attached hereto as Exhibit D;
(f) At or prior to the Closing Date, the Purchaser shall have received the
following docu nents, in each case satisfactory in form and substance to the Purchaser:
(1) The Placement Memorandum and each supplement or amendment,
if any thereto, executed on behalf of the District;
(2) Copies of the Legal Documents, duly executed and delivered by
the respective parties thereto;
(3) The approving opinion of Special Counsel, dated the Closing Date
and addressed to the District, in substantially the form attached to the Placement
Memorandum as Appendix B thereto;
(4) The supplemental opinion of Special Counsel, dated the Closing
Date and addressed to the Purchaser in substantially the form attached hereto as
Exhibit B;
(5) The opinion of General Counsel of the District, dated the Closing
Date and addressed to the Purchaser, in substantially the form attached hereto as
Exhibit C;
(6) The opinion of counsel to the Corporation, dated the Closing Date
and addressed to the District and the Purchaser, to the effect that (i) the
Corporation is a California corporation duly organized and validly existing
pursuant to the laws of the State of California; (ii) the Trust Agreement and the
Installment Purchase Agreement have been duly authorized, executed and
delivered by the Corporation and, assuming due authorization, execution and
delivery by the other parties thereto, constitute legal, valid and binding
agreements of the Corporation enforceable in accordance with their respective
terms, subject to laws relating to bankruptcy, insolvency or other laws affecting
the enforcement of creditors' rights generally and the application of equitable
principles if equitable remedies are sought; and (iii) assuming due execution and
delivery thereof by the Trustee and the District, the execution and delivery of the
Trust Agreement by the Corporation is effective and sufficient to transfer all right,
9
title and interest of the Corporation in the Installment Purchase Agreement as are
purported to be transferred thereby (including the Installment Payments) to the
Trustee;
(7) The opinion of counsel to the Trustee, dated the Closing Date and
addressed to the District and the Purchaser, to the effect that (i) the Trustee is a
banking corporation duly organized, validly existing and in good standing under
the laws of the State of California and has full power and authority to execute and
deliver the Trust Agreement and the Continuing Disclosure Agreement and to
perform its obligations thereunder; (ii) the Trust Agreement and the Continuing
Disclosure Agreement have been duly authorized, executed and delivered by the
Trustee and constitute the valid and binding obligations of the Trustee enforceable
against the Trustee in accordance with their terms, except insofar as the validity,
binding nature and enforceability of the Trustee's obligations thereunder may be
limited by the effect of(a) insolvency, reorganization, arrangement, moratorium,
fraudulent transfer and other similar laws, (b) the discretion of any court of
competent jurisdiction in awarding equitable remedies, including, without
limitation, specific performance or injunctive relief and (c) the effect of general
principles of equity;
(8) The opinion of Greenberg Traurig, LLP, Washington, DC,
Purchaser's Counsel, dated the Closing Date and addressed to the Purchaser, to
the effect that (i) the 2004 Certificates are exempt from registration under the
Securities Act of 1933, as amended, and the Trust Agreement is exempt from
qualification under the Trust Indenture Act of 1939, as amended; and (ii) based
upon their participation in the preparation of the Placement Memorandum as
Purchaser's Counsel and without having undertaken to determine independently
the accuracy, completeness or fairness of the statements contained in the
Placement Memorandum, nothing has come to their attention which would cause
them to believe that the Placement Memorandum (excluding therefrom the
information relating to the Project, DTC and the book-entry system and the
financial statements and the statistical data included in the Placement
Memorandum and the appendices thereto, as to which no opinion need be
expressed), as of the date thereof and the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(9) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the District satisfactory to the Purchaser, in form and
substance satisfactory to the Purchaser, to the effect that (i) the representations of
the District contained in this Purchase Contract are true and correct in all material
respects on and as of the Closing Date with the same effect as if made on the
Closing Date; (ii) there is no action, suit, proceeding, inquiry or investigation, to
the best knowledge of such official, pending or threatened (a) to restrain or enjoin
the execution or delivery of the 2004 Certificates, (b) in any way contesting or
affecting the validity of the 2004 Certificates or the Legal Documents or (c) in
10
. ...... ..............................
any way contesting the existence or powers of the District, nor to the best
knowledge of such official after reasonable investigation, is there any basis for
any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable
decision, ruling or finding would make invalid or materially adversely affect the
authorization, execution, delivery or performance by the District of the foregoing;
and (iii) no event affecting the District has occurred since the date of the
Placement Memorandum which either makes untrue or incorrect in any material
respect as of the Closing Date any statement or information contained in the
Placement Memorandum relating to the District or is not reflected in the
Placement Memorandum but should be reflected therein in order to make the
statements and information therein relating to the District not misleading in any
material respect; and (iv) except as referred to in or as contemplated by the
Placement Memorandum, with respect to its Project, the District has not incurred
any financial liabilities, direct or contingent, or entered into any transactions and
there has not been any adverse change in the condition, financial or physical, of
the Project, in any case that would materially and adversely affect the ability of
the District to meet its obligations under the Installment Purchase Agreement;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Corporation satisfactory to the Purchaser, in form
and substance satisfactory to the Purchaser, to the effect that (i) the corporation is,
and was at all relevant times, a California corporation duly organized and validly
existing under the laws of the State of California; (ii) the Installment Purchase
Agreement and the Trust Agreement were duly executed and delivered in the
name and on behalf of the Corporation by officers of the Corporation duly
authorized to execute, attest and deliver such agreements on behalf of the
Corporation, and constitute the legal, valid and binding obligations of the
Corporation enforceable against the Corporation in accordance with their terms,
except as limited by applicable reorganization, insolvency, liquidity, readjustment
of debt or other laws affecting the enforcement of the rights of creditors of the
Corporation and by general principles of equity; (iii) the Corporation has
complied with all the terms of the Trust Agreement and the Installment Purchase
Agreement to be complied with by the Corporation prior to or concurrently with
the Closing and such documents are in full force and effect as to the Corporation;
and (iv) the information in the Placement Memorandum under the caption "THE
CORPORATION"is true and correct;
(11) A certificate, dated the Closing Date, signed by a duly authorized
officer of the Trustee, satisfactory in form and substance to the Purchaser, to the
effect that (i) the Trustee is a banking corporation duly organized and existing
under and by virtue of the laws of the State of California, having the full power
and being qualified to enter into and perform its duties under the Trust Agreement
and the Continuing Disclosure Agreement; (ii) to the best of such officer's
knowledge, the execution and delivery of the Trust Agreement and the Continuing
Disclosure Agreement and compliance with the provisions on the Trustee's part
contained therein, will not conflict with or constitute a breach of or default under
any law, administrative regulation, judgment, decree, loan agreement, indenture,
11
bond, note, resolution, agreement or other instrument to which the Trustee is a
party or is otherwise subject; (iii) to the best of such officer's knowledge, the
Trustee has not been served with any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, governmental agency,
public board or body, nor is any such action threatened against the Trustee, as
such but not in its individual capacity, affecting the existence of the Trustee, or
the titles of its officers to their respective offices, or contesting or affecting the
validity or enforceability of the Trust Agreement and the Continuing Disclosure
Agreement against the' Trustee, or contesting the powers of the Trustee or its
authority to enter into, adopt or perform its obligations under the foregoing,
wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Trust Agreement and the Continuing
Disclosure Agreement against the Trustee;
(12) Certified copies of the resolutions of the District authorizing the
execution and delivery of the Legal Documents and the Placement Memorandum;
(13) Certified copies of the resolutions of the Corporation authorizing
the execution and delivery of the Trust Agreement, the Assignment Agreement
and the Installment Purchase Agreement;
(14) A copy of any Preliminary Blue Sky Survey with respect to the
2004 Certificates, prepared by Purchaser's Counsel;
(15) A copy of the financial projections of the District included as
Appendix A in the Placement Memorandum describing the Project;
(16) Arbitrage certifications by the District with respect to the 2004
Certificates in form satisfactory to Special Counsel and Purchaser's Counsel; and
(17) Such additional legal opinions, certificates, proceedings,
instruments, insurance policies or evidences thereof and other documents as the
Purchaser, Purchaser's Counsel or Special Counsel may reasonably request to
evidence the truth and accuracy, as of the date hereof and as of the Closing Date,
of the representations of the District herein and of the statements and information
contained in the Placement Memorandum, and the due performance or
satisfaction by the District at or prior to the Closing of all agreements then to be
performed and all conditions then to be satisfied by the District in connection with
the transactions contemplated hereby and by the Legal Documents and the
Placement Memorandum.
If the District shall be unable to satisfy the conditions to the Purchaser's obligations
contained in this Purchase Contract or if the Purchaser's obligations shall be terminated for any
reason permitted herein, all obligations of the Purchaser hereunder may be terminated by the
Purchaser at, or at any time prior to, the Closing Date by written notice to the District and neither
the Purchaser nor the District shall have any further obligations hereunder.
5. Expenses.
12
All expenses and costs incident to the authorization, execution, delivery and sale of the
2004 Certificates to the Purchaser, including the costs of preparing and printing of the 2004
Certificates, the Preliminary Placement Memorandum and the Placement Memorandum, any
bond insurance premiums, the fees of accountants, financial advisors and consultants, the initial
fees of the Trustee and its counsel, the initial fees and expenses of the District and the
Corporation, the fees and expenses of counsel to the District and counsel to the Corporation, any
California Debt Advisory Fee, the fees and expenses of Special Counsel, and the fees and
expenses of Purchaser's Counsel, in each case incurred in connection with the sale and delivery
of the 2004 Certificates, shall be paid from the proceeds of the 2004 Certificates. In the event
that the 2004 Certificates for any reason are not executed and delivered, or to the extent proceeds
of the 2004 Certificates are insufficient or unavailable therefor, any such fees, costs and expenses
owed by the District, which otherwise would have been paid from the proceeds of the 2004
Certificates, shall be paid by the District.
6. Notices.
Any notice or other communication to be given under this Purchase Contract may be
given by delivering the same in writing to the respective parties at the following address:
Purchaser:
District: Truckee Dormer Public Utility District
11570 Donner Pass Road
Truckee, California 96160
Attention: General Manager
7. Survival of Representations and Warranties
The representations and warranties of the District set forth in or made pursuant to this
Purchase Contract shall not be deemed to have been discharged, satisfied or otherwise rendered
void by reason of the Closing or termination of this Purchase Contract regardless of any
investigations or statements as to the results thereof made by or on behalf of the Purchaser and
regardless of delivery of and payment for the 2004 Certificates.
8. Effectiveness and Counterpart Signatures.
This Purchase Contract shall become effective and binding upon the respective parties
hereto upon the execution hereof by a duly authorized officer of the District and shall be valid
and enforceable as of the time of such execution. This Purchase Contract may be executed by the
parties hereto in separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the same instrument.
9. Parties in Interest.
This Purchase Contract is made solely for the benefit of the District and the Purchaser
(including the successors or assigns of the Purchaser) and no other person shall acquire or have
any right hereunder or by virtue hereof. No assignment of this Purchase Contract shall be made
13
... ... . _
by the Purchaser without the consent of the District.
10. Headin .
The headings of the sections of this Purchase Contract are inserted for convenience only
and shall not be deemed to be a part hereof.
11. Governing Law.
This Purchase Contract shall be construed in accordance with the laws of the State of
California.
Very truly yours,
as Purchaser
By:
Title:
ACCEPTED:
TRUCKLE DONNER PUBLIC UTILITY
DISTRICT
By:
Title:
14
EXHIBIT A
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, AND PRICES OR YIELDS
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
A-1
EXHIBIT B
FORM OF OPINION OF
STRADLING YOCCA CARLSON & RAUTH
BNY Western Trust Company [Purchaser]
Los Angeles, California New York,New York
Re: REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DONiv'ER PUBLIC UTILITY DISTRICT
This letter is addressed to you as the Purchaser (the "Purchaser") pursuant to Section
4(f)(4) of the Purchase Contract dated _ 2004 (the "Purchase Contract"), between you
and the Truckee Donner Public Utility District (the "District") providing for the purchase of
$ principal amount of Revenue Certificates of Participation, Series 2004 (the "2004
Certificates") evidencing interests of the Owners thereof in Installment Payments to be made by
the District). The 2004 Certificates are being executed and delivered pursuant to a Trust
Agreement (the "Trust Agreement") dated as of _, 2004, by and among the District,
the Truckee Donner Public Utility District Financing Corporation (the"Corporation") and BNY
Western Trust Company, as trustee. Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Trust Agreement or, if not defined in the Trust Agreement,
in the Purchase Contract.
In addition to the opinions set forth in our final legal opinion concerning the validity of
the 2004 Certificates and certain other matters, dated the date hereof and addressed to, the
Corporation (but which may be relied upon by yourselves to the same extent as if such opinion
were addressed to you), as of the date hereof, we are of the following opinions or conclusions:
L The 2004 Certificates are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification
pursuant to the Trust Indenture Act of 1939, as amended.
2. The Placement Memorandum dated _, 2004, with respect to the 2004
Certificates (the "Placement Memorandum") and the execution and delivery thereof have been
duly approved by the District.
3. The Purchase Contract and the Continuing Disclosure Agreement have been
duly authorized, executed and delivered by the District and (assuming due authorization,
execution and delivery by and validity against the other parties thereto) are valid and binding
agreements of the District. We call attention to the fact that the rights and obligations under the
Purchase Contract and the Continuing Disclosure Agreement and their enforceability may be
subject to bankruptcy, insolvency, reorganization, assignment, fraudulent conveyance,
moratorium and other laws relating to or affecting creditors' rights, to the application of
equitable principles, to the exercise of judicial discretion in appropriate cases and to the
limitations or legal remedies against public entities in the State of California. We express no
opinion with respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained in the Purchase Contract or the Continuing Disclosure Agreement.
B-1
i
l
Z
4. The statements contained in the Placement Memorandum under the captions
"THE 2004 CERTIFICATES," "SECURITY AND SOURCES OF PAYMENT FOR THE
2004 CERTIFICATES," "TAX MATTERS," "APPENDIX A DEFINITIONS AND
SUMMARY OF CERTAIN PROVISIONTS OF THE INSTALLMENT PURCHASE x
AGREEMENT AND THE TRUST AGREEMENT," and "APPENDIX D PROPOSED FORM
OF CONTINUING DISCLOSURE AGREEMENT" and "APPENDIX B PROPOSED FORM
OF OPINION OF SPECIAL COUNSEL," insofar as such statements expressly summarize
cement, the Installment Purchase Agreement and the
certain provisions of the Trust Agr
d our opinion concerning certain federal tax matters
Continuing Disclosure Agreement, an
relating to the Certificates, are accurate in all material respects. s
This letter is furnished by us as Special Counsel. No attorney-client relationship has
ou in connection with the 2004 Certificates or by virtue
existed or exists between our firm and y
of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as
Purchaser of the 2004 Certificates, is solely for your benefit as such Purchaser and is not to be
used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any
other person. This letter is not intended to, and may not,be relied upon by owners of the 2004
Certificates or by any other party to whom it is not specifically addressed.
Very truly yours,
B-2
EXHIBIT C
FORM OF OPINION OF DISTRICT COUNSEL
BNY Western Trust Company (Purchaser).
Los Angeles, California
Re: REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DON`N`ER PUBLIC UTILITY DISTRICT
Ladies and Gentlemen:
I am General Counsel to the Truckee Donner Public Utility District (the "District'), a
public utility district organized and existing pursuant to Division 7 of the Public Utilities Code
of the State of California, as amended. This opinion is rendered in connection with the
execution, sale and delivery of $ principal amount of Revenue Certificates of
Participation, Series 2004 (the "2004 Certificates") evidencing interests of the Owners thereof
in Installment Payments to be made by the District. Capitalized terms used herein not otherwise
defined shall have the meanings ascribed thereto in the hereinafter referenced Trust Agreement.
In rendering this opinion, I have examined the following documents: (i) the Trust
Agreement dated as of _, 2004 (the "Trust Agreement'),by and among the District, the
Truckee Donner Public Utility District Financing Corporation (the "Corporation") and BNY
Western Trust Company, as trustee (the "Trustee"); (ii) the Installment Purchase Agreement
dated as of _, 2004 (the "Installment Purchase Agreement'), by and between the
District and the Corporation; (iii) the Purchase Contract dated _, 2004 (the "Purchase
Contract'), by and between the District and you, the Purchaser; (iv) the Continuing Disclosure
Agreement dated as of _, 2004 (the "Continuing Disclosure Agreement, by and
between the District and the Trustee; and (v) the Placement Memorandum dated _
2004 (the "Placement Memorandum"), relating to the 2004 Certificates. In addition, I have
examined such other documents and instruments, including certificates of public officials, and
have made such investigations of law and of fact as I have deemed necessary or appropriate for
the purpose of rendering the opinions set forth herein.
Based on the foregoing, I am of the opinion that:
1. The District is, and was at all relevant times, a public utility district duly
organized and validly existing under the laws of the State of California.
2. The resolution or resolutions of the District approving and authorizing the
execution and delivery of the Trust Agreement, the Installment Purchase Agreement, the a
Purchase Contract and the Continuing Disclosure Agreement by the District (the "District
Resolutions") were duly adopted at meetings of the Board of Directors of the District, which
were called and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout. #
3. There is no action, suit, proceeding or investigation at law or in equity before or
by any court, public board or body, pending (with service of process having been
C-1
accomplished) or, to my current actual knowledge after reasonable investigation, threatened
against or affecting the District to restrain or enjoin the Installment Payments under the
Installment Purchase Agreement, in any way contesting or affecting the validity of the 2004
Certificates, the Trust Agreement, the Installment Purchase Agreement, the Continuing
Disclosure Agreement or the Purchase Contract.
4. The adoption of the District Resolutions and the execution and delivery by the
District of the Trust Agreement, the Installment Purchase Agreement, the Continuing
Disclosure Agreement, the Purchase Contract and the Placement Memorandum, and
compliance by the District with the provisions of the foregoing, as appropriate, under the
circumstances contemplated thereby, does not and will not in any material respect conflict with
or constitute on the part of the District a breach or default under any agreement or other
instrument to which the District is a party (and of which I have current actual knowledge after
reasonable investigation) or by which it is bound (and of which I have current actual knowledge
after reasonable investigation) or any existing law, regulation, court order or consent decree to
which the District is subject.
5. The Placement Memorandum, the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and the Purchase Contract have been duly
authorized, executed and delivered by the District and, assuming due authorization, execution
and delivery by other parties thereto, the Trust Agreement, the Installment Purchase Agreement,
the Continuing Disclosure Agreement and the Purchase Contract constitute legal, valid and
binding agreements of the District, enforceable in accordance with their respective terms,
subject in each case to laws relating to bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and the application of equitable principles if equitable
remedies are sought. The enforceability of the foregoing agreements may be subject or limited
by the unenforceability under certain circumstances of provisions imposing penalties,
forfeitures or late payment charges upon delinquency in payment or occurrence of a default, and
no opinion is expressed as to any indemnification provisions contained therein.
6. Except as described in the Placement Memorandum, no authorization, approval,
consent, or other order of the State of California or any other governmental authority or agency
within the State of California having jurisdiction over the District is required for the adoption of
the District Resolutions and for the valid authorization, execution, delivery and performance by
the District of the Placement Memorandum, the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement or the Purchase Contract which has not been
obtained, provided that no opinion is expressed with respect to qualification under Blue Sky or
other state securities laws.
7. Without having undertaken to determine independently the accuracy,
completeness or fairness of the statements contained in the Placement Memorandum and based
upon the information made available to me in the course of my participation in the preparation
of the Placement Memorandum as General Counsel for the District, nothing has come to my
attention which would cause me to believe that the Placement Memorandum (excluding
therefrom the information concerning DTC and the book-entry system and the financial
statements and the statistical data included in the Placement Memorandum, as to which no
opinion is expressed), as of the date thereof and the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
C-2
.......... .. ....................
8. Under the laws of the State of California, the District has the authority to fix and
collect rates and charges for electric service and is not presently subject to the regulatory
jurisdiction of any state, regional or local governmental regulatory authority in connection with.
fixing and collecting such charges, and, to my current actual knowledge after reasonable
investigation, no legislation is proposed or pending to restrict or limit such rates and charges
except as set forth in the Placement Memorandum.
9. The Revenues of the Project (as described in the Placement Memorandum) are
free and clear of and from any and all liens and encumbrances other than as set forth in the
Placement Memorandum.
This letter is furnished by me as General Counsel to the District. No attorney-client
relationship has existed or exists between me and yourselves in connection with the delivery of
the 2004 Certificates or by virtue of this letter. This letter is delivered to you as Purchaser of the
2004 Certificates and is solely for your benefit as such Purchaser and is not to be used,
circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other
person.
Respectfully submitted,
C-3
EXHIBIT D
FORM OF LETTER TO PURCHASER
_, 2004
[Purchaser]
Ladies and Gentlemen:
With respect to the proposed sale to you of its Revenue Certificates of Participation,
Series 2004 (the "2004 Certificates") evidencing interests of the Owners thereof in Installment
Payments to be made by the Truckee Donner Public Utility District (the "Districf°), the District
has delivered to you a Preliminary Placement Memorandum, dated _ _, 2004, relating to
the 2004 Certificates (the "Preliminary Placement Memorandum"). The District, for purposes of
compliance with Rule 15c2-12 of the Securities and Exchange Commission, deems the
Preliminary Placement Memorandum to be final as of its date, except for the omission of no
more than the following information: the offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, dates of mandatory sinking fund
payments, delivery date, ratings, and any other terms of the 2004 Certificates relating to such
matters.
The District hereby approves the use and the distribution by the Purchaser of the
Preliminary Placement Memorandum and the posting and distribution of the Preliminary
Placement Memorandum through the website.
Sincerely,
TRUCKEE DONNER PUBLIC UTILITY
DISTRICT
By:
Name:
Title:
D-I
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