HomeMy WebLinkAbout12 - Attachment 4 - Draft Trust Indenture (Water System Refunding Revenue Bonds Series 2015)D RAF T
ATTAC HM EN T 4
IN D EN TU R E OF TR U ST
Dated as of June 1, 2015
B y and between
THE B AN K O F N EW YORK M E LLON TRU ST C OM PA N Y , N.A .,
as Trustee
and the
TR U CK EE D ON N ER PUB LI C U TI LITY D ISTRIC T
Relating to
$__________
TR U CK EE D ON N ER PUB LI C U TI LITY D ISTRIC T
W A TER SY S T EM REFU N DI N G R EVENU E B ON D S, SER IES 2015
TABL E O F CO N TEN TS
Page
i
ART ICLE I
D EFIN IT IO N S; CO N TE N T O F CERT IFIC ATES A N D OP IN IO N S .................................................. 2
Section 1.01. D efinitions ........................................................................................................ 2
Section 1.02. C onte nt of Certificates a nd O pinions ............................................................. 1 5
Section 1.03. Interpr etat ion .................................................................................................. 15
ART ICLE II
T H E 2 015 BO N DS .............................................................................................................................. 16
Section 2.01. Author iz at ion of 2015 B onds ......................................................................... 16
Section 2.02. Terms of the 2015 Bonds ............................................................................... 16
Section 2.03. Trans fer of 2015 B onds .................................................................................. 17
Section 2.04. Excha nge of 2015 Bonds ................................................................................ 17
Section 2.05. R egis tr ation B ooks ......................................................................................... 18
Section 2.06. F orm a nd Exe cut ion of 2015 B onds ............................................................... 18
Section 2.07. 2015 Bonds Mutilated, L ost, D estroyed or St ole n ......................................... 18
Section 2.08. B ook E ntr y S ys tem ......................................................................................... 19
ART ICLE III
IS SU AN CE O F 2015 BON D S ; APPLICAT IO N O F P RO CEED S ..................................................... 21
Section 3.01. Iss uan ce of the 2015 B onds ............................................................................ 21
Section 3.02. App lic ation of P r oceeds of the 2015 B o nds a nd Certa in O ther M one ys ........ 21
Section 3.03. Estab lis hme nt a nd App lica tion of C osts of Issuance F und ............................ 22
Section 3.04. V alid ity of 2015 B onds .................................................................................. 22
ART ICLE IV
RED EM PTIO N O F 2015 BO ND S ...................................................................................................... 22
Section 4.01. Terms of Redemption ..................................................................................... 22
Section 4.02. S ele ction of 2015 B onds for R edemption....................................................... 23
Section 4.03. N otic e of Redemp tion..................................................................................... 23
Section 4.04. P artia l R ede mption of 2015 B o nds ................................................................. 24
Section 4.05. Effect of Redemption ..................................................................................... 24
ART ICLE V
WATER SY S TEM REVENU ES, F UN D S AN D AC CO UN TS;
PAYM EN T O F P RIN CIPAL AN D IN TEREST ................................................................................. 24
Section 5.01. P ledge a nd Ass ig nme nt ; Re ve nue F u nds ........................................................ 24
Section 5.02. App lic ation of P a yme nt Fu nd ......................................................................... 26
Section 5.03. App lic ation of Interes t A ccou nt ..................................................................... 26
TABL E O F CO N TEN TS
(continued)
Page
ii
Section 5.04. App lic ation of P r inc ip al Accou nt ................................................................... 27
Section 5.05. App lic ation of Rede mpt ion F u nd ................................................................... 27
Section 5.06. R ate Stabiliza tion Fund .................................................................................. 27
Section 5.07. R eserve Fu nd .................................................................................................. 27
Section 5.08. Investm ents ..................................................................................................... 28
Section 5.09. R ebate F u nd .................................................................................................... 29
Section 5.10. App lic ation of F u nds and Accou nts W he n N o 2015 Bonds are O uts ta nd ing 30
Section 5.11. Add itiona l C ontra cts and B onds ..................................................................... 30
Section 5.12. C la ims U pon t he Insuran ce Policy and P aym e nts b y and to the Insurer ........ 32
Section 5.13. P a yme nts b y the Insu rer as a R esu lt of Nonpa ym ent ..................................... 33
ART ICLE V I
PARTICU L AR C O V EN AN TS ........................................................................................................... 33
Section 6.01. C omp lia nce w ith Inde nture ............................................................................ 33
Section 6.02. B udgets ........................................................................................................... 33
Section 6.03. P a yme nt of T ax es a nd C omp lia nc e w ith G over nme nt a l R egu lations ............ 34
Section 6.04. O bserva nce of L aw s and Regu lations ............................................................ 34
Section 6.05. Em ine nt D oma in P roc eeds ............................................................................. 34
Section 6.06. Aga inst Sa le or O ther D is p os it ion of P roperty ............................................... 34
Section 6.07. Aga inst C ompe tit ive F acilit ies ....................................................................... 35
Section 6.08. M aint e na nce and O perat ion of the Water S yste m .......................................... 35
Section 6.09. P a yme nt of C la ims ......................................................................................... 35
Section 6.10. C omp lia nce w ith C ontrac ts ............................................................................ 35
Section 6.11. Insura nce ......................................................................................................... 35
Section 6.12. Am ou nt of R at es a nd Charg es ........................................................................ 36
Section 6.13. C ollect ion of R ates a nd C harges .................................................................... 37
Section 6.14. Enforc eme nt of C ontracts ............................................................................... 37
Section 6.15. C ont inu ing D isclosure .................................................................................... 37
Section 6.16. P unctua l P a yme nt ........................................................................................... 37
Section 6.17. Extens ion of P aym e nt of 2015 B onds ............................................................ 37
Section 6.18. Aga inst E ncu mbrances ................................................................................... 38
Section 6.19. P ower to Is sue 2015 Bonds a nd M ake P ledge a nd Assig nme nt ..................... 38
Section 6.20. Accou nt ing Records a nd F ina nc ia l S tateme nts .............................................. 38
Section 6.21. Tax Cove na nts ................................................................................................ 38
Section 6.22. W aiver of Law s .............................................................................................. 39
Section 6.23. F urther Assuranc es ......................................................................................... 39
Section 6.24. P rosecut ion a nd D e fe ns e of Su its ................................................................... 39
ART ICLE V II
E V EN TS O F DEF AU LT AN D REM ED IE S O F 2015 BON DS O WN ERS ....................................... 40
Section 7.01. Events of De fau lt ............................................................................................ 40
Section 7.02. R emed ies U pon E ve nt of D efault ................................................................... 4 0
Section 7.03. App lic ation of W ater S ys tem Re venu es a nd Other F unds A fter D efault ....... 4 1
Section 7.04. Trustee to R eprese nt 2015 B ond O w ners ....................................................... 42
TABL E O F CO N TEN TS
(continued)
Page
iii
Section 7.05. 2015 Bond Ow ners’ D ir ect ion of P roceed ings ............................................... 4 2
Section 7.06. S uit b y O wners ............................................................................................... 43
Section 7.07. Abs olu te O b liga tion of the D istr ict ................................................................ 43
Section 7.08. R emed ies N ot Exc lus ive ................................................................................. 43
Section 7.09. N o Wa iver of D e fau lt ..................................................................................... 43
Section 7.10. Insurer R ig hts ................................................................................................. 43
ART ICLE V III
T H E TR U STEE ................................................................................................................................... 44
Section 8.01. D uties, Im munit ies and L iab ilit ies o f Trustee ................................................ 44
Section 8.02. M erger or C onsolidation ................................................................................. 45
Section 8.03. L iability of Truste e ......................................................................................... 46
Section 8.04. R ig ht t o Re ly on D ocume nts .......................................................................... 48
Section 8.05. P reservation and Inspection of D ocume nts .................................................... 49
Section 8.06. C ompe nsa tion a nd Indem nifica t ion ................................................................ 49
Section 8.07. N otic e to Insurer b y Trustee ........................................................................... 49
ART ICLE IX
M O D IFICAT IO N O R AM EN D M EN T OF TH E IND ENTURE ........................................................ 49
Section 9.01. Ame ndm e nts P erm itted .................................................................................. 49
Section 9.02. Effect of S upp lementa l Inden ture ................................................................... 50
Section 9.03. End orsem ent of 2015 Bonds; Preparation of N ew 2 015 Bonds ..................... 51
Section 9.04. Ame ndm e nt of Particu lar 2015 B o nds ........................................................... 51
Section 9.05. Effect of Insura nce P olic y .............................................................................. 51
ART ICLE X
D EFEAS AN CE .................................................................................................................................... 5 1
Section 10.01. D isc harge of Inde nture ................................................................................... 51
Section 10.02. D isc harge of L iab ilit y on 2015 B onds ............................................................ 52
Section 10.03. D epos it o f M one y or Secur ities w it h Trustee ................................................. 52
Section 10.04. P a yme nt of 2015 Bonds A fter D isc harge of Inde ntur e .................................. 53
ART ICLE X I
M ISCELL AN E O U S ............................................................................................................................ 53
Section 11.01. L iab ility L im it ed ............................................................................................. 53
Section 11.02. S uccess or Is D eemed Inc luded in A ll R e fere nces t o Predecessor .................. 54
Section 11.03. L im itation of R ig h ts to Par ties a nd 2015 B ond O w ne rs ................................. 54
Section 11.04. W aiver of N otic e; Requ ire me nt of M ailed N otic e ......................................... 54
Section 11.05. D estruct ion of 2015 B onds ............................................................................. 54
Section 11.06. S everab ilit y of Invalid Pr ovis ions .................................................................. 54
TABL E O F CO N TEN TS
(continued)
Page
iv
Section 11.07. N otic es ............................................................................................................ 54
Section 11.08. Ev id ence of R ig h ts of 2015 B ond O w ners ..................................................... 55
Section 11.09. D isqualified 2015 B ond s ................................................................................ 55
Section 11.10. M oney H e ld for Particu lar 2015 B onds .......................................................... 5 5
Section 11.11. F unds and Accou nts ....................................................................................... 56
Section 11.12. W aiver of Pers onal Liab ilit y .......................................................................... 56
Section 11.13. Ex ecution in S e veral C ou nterp arts ................................................................. 56
Section 11.14. C U SIP N umbers ............................................................................................. 56
Section 11.15. C hoic e of Law ................................................................................................ 56
Section 11.16. Insurer as T hird Party Be nefic iar y ................................................................. 56
Section 11.17. Imp airme nt of Insurer’s R ig hts ...................................................................... 56
Section 11.18. Inter est Rate Exc ha nge Agreeme nt ................................................................ 56
Section 11.19. Insurer C onsid eration ..................................................................................... 57
Section 11.20. Am ou nts P a id b y Insurer ................................................................................ 57
Section 11.21. C ove na nt to Preser ve P r ior it y ......................................................................... 57
Section 11.22. S ubrogation a nd Sur viva l of O bligations ....................................................... 57
Section 11.23. R e imburs eme nt of Fees .................................................................................. 57
Section 11.24. P rovis ion of Infor mat ion ................................................................................ 58
Section 11.25. Add itio na l Informa tion ................................................................................... 58
Section 11.26. D iscussion of a nd Acc es s to Informa tion ....................................................... 59
Sig natur es ............................................................................................................................ S-1
E xhib it A Form of 2015 Bond ............................................................................................. A-1
1
IN D EN TU R E OF TR U ST
T H IS IN D EN TU RE O F TRU S T, made a nd e ntered into a nd dated as of June 1, 2 015 (the
“Indenture”), b y and betwee n TR U CK EE D O N NER P U BLIC U T IL ITY D IS TR IC T , a pub lic utilit y
distr ict du ly orga niz ed a nd ex is ting u nder a nd b y vir tue of t he laws of the State of Ca lifor nia (t he
“Dis tr ict”), a nd TH E B AN K O F N EW Y O RK MELLO N TRU S T COM PAN Y , N .A., a nationa l
bank ing assoc iation du ly orga niz ed a nd ex ist ing u nder the law s of the U nited Sta tes of Am erica, as
trustee hereu nder (the “Trustee”);
W I T N E S S E T H :
W H EREAS , the D istr ict has determ ined that it is in the best interest of the public t o adva nc e
refu nd a p ortion of t he ou tsta nd ing Truc kee Donner P ublic U t ilit y D istr ic t Re fu nd ing Re ve nu e
Certific ates of Part ic ipation (Water S ystem I mpr ove ment P rojects) Ser ies 2006; a nd
W H EREAS , the D istr ict is aut hor iz ed b y Artic le 11 of Chap ter 3 of Part 1 of Divis ion 2 of
T itle 5 o f the G overnme nt C ode of the S tate of Ca lifor nia, inc lud ing bu t not lim ited t o Sect ion 53583,
to iss ue b onds for t he purp ose of r e fund ing a ny e vid e nces of indebted ness of the D istr ict; a nd
W H EREAS , in order t o pr ovid e for t he authe nt ication and de liver y of re fu nd ing r evenue b onds
(the “2015 Bo nds”), to estab lis h a nd declare t he ter ms and c ond itions up on w hic h s uch 2015 Bo nds
are to be is sued and secur ed a nd to s ecure t he pa yme nt of the pr inc ip a l ther e of a nd interes t and
prem ium, if an y, thereon, t he D istr ict has author iz ed the execu tion a nd de liver y of the Inde nture; a nd
W H EREAS , the D istr ic t has deter m ined t hat a ll ac ts and pr oceed ings requ ired b y law nec essar y
to m a ke th e 2015 B onds , w he n executed b y the D ist rict, aut he nt icated a nd de livered b y t he Trustee ,
and du ly is sued, the va lid, b ind ing a nd lega l special ob lig at ions of t he D istr ict, a nd to c onstitute the
Inde ntur e a va lid and b ind ing agree ment for t he uses and purp oses herein set forth in acc orda nce w it h
its terms, ha ve been d one a nd ta ke n, a nd the exe cut ion a nd deliver y of the Inde nture ha ve b ee n in a ll
respects duly authoriz ed;
N O W , THEREFO RE, TH E IN D EN TURE WITN ESS ETH:
G RANTIN G CLAU S ES
T he D istr ict, in c ons ideration o f the pre m is es a nd the acc epta nc e b y t he Trustee of t he trusts
hereb y cre ated a nd of t he mutua l c ove na nts her e in conta ined a nd of t he pur c hase a nd ac ceptance of the
2015 Bonds b y the O wners thereo f, a nd for other va lu ab le c ons iderat ions, t he r ece ip t of w hic h is hereb y
acknow ledged, in order to s ecure the pa ym e nt of t he principa l of a nd the inter est and prem ium (if a ny)
on a ll 2015 B onds at a ny time iss ued a nd O uts tand ing u nder the Inde nture, a cc ord ing to their te nor,
and t o secure the per forma nc e and ob serva nce o f a ll the c ove nants a nd c ond itions t her e in a nd herei n
set fort h, d oes hereb y assig n a nd p ledge u nt o, and gr ant a s ecur it y interes t in, the follow ing (the “Trust
E state”) t o the Trustee, a nd its s uccessors in trus t a nd ass ig ns fore ver, for the secur ing of the
perform a nce of t he ob ligations of the D istr ict to t he 2 015 Bond Ow ners here ina fter set forth:
GRAN TIN G C LAU SE F IR ST
A ll r ig ht, title a nd interest o f t he D istr ic t in a nd to the W a ter S yste m Re ve nu es (as d efined
here in), inc lud ing, but w ithou t lim it ing t he ge neralit y of t he foreg oing, t he prese nt a nd co nt inu ing r ig ht
2
to ma ke c la im for, co llect, r ece ive and r eceip t for a ny Water S ystem Re ve nues pa ya b le to or re ce iv ab le
b y t he D istr ict u nder the C ons titut ion of the State, t he Public U t ilit ies Code a nd the G over nment C ode
of t he S tate of Ca lifornia a nd t he Inde nture a nd a ny ot her app licab le law s of t he St ate or otherw ise, to
bring act ions and pr oceed ings t hereu nd er for t he e nforceme nt thereo f, a nd t o do a ny a nd a ll t hings
w hich t he District is or m a y bec ome e ntit led to d o t hereund er, su bject to t he terms hereof.
GRAN TIN G C LAU SE S ECO N D
A ll m oneys a nd secur it ies he ld in fu nds a nd acc ou nts of the Ind e nture, excep t am ou nts held in
the Rebat e F und, a nd a ll ot her r ig hts of e very nam e and na tu re from tim e to time herein or here a fter
b y deliver y or b y w r it ing of a ny kind p ledged, as s ig ned or tr a nsferr ed as and for add it iona l secur ity
hereu nd er to t he Trustee b y the D istr ict or b y a nyon e on its beha lf, or w ith its w ritte n c ons e nt, a nd to
hold a nd app ly the sam e, subject t o the t erms here of.
T O H AV E AN D TO H O LD all a nd s ingu lar t he T rus t Estat e, whet her now ow ned or herea fter
acqu ired, unto the Trustee a nd its respect ive succes sors in tr ust and ass ig ns fore ver for t he be ne fit o f
the O w ners and such p ledge s ha ll c onst itu te a lie n on and s ecur ity int erest in suc h Trust Es ta te;
IN TRUS T N EV ERTHELESS, upon t he terms a nd trusts herein set forth for the equ a l a nd
prop ortionate benefit, secur it y a nd pr otection of a ll present and futu re Ow ners of t he 2015 B onds is sued
under a nd s ecured b y the Ind entu re w it hout pr ivilege, prior it y or d istinc t ion as to t he lie n or otherw ise
of a ny of the 2015 B onds over a ny of the other 2015 Bonds ;
PR O V ID ED, HOW EV ER, that if the D istr ic t, its s uccess ors or as s ig ns shall w e ll a nd tru ly pay,
or cause to be pa id, the pr inc ipa l of and interes t and any red emp t ion pre m ium on the 2015 B onds du e
or to bec om e due t hereon, a t the times and in t he ma nner pr ovided in the 2015 Bonds acc ord ing to t he
true inte nt and m eaning there of, a nd s ha ll we ll a nd truly ke ep, per form a nd obser ve all t he c ove na nts
and c ond itions pursuant to the term s of t he Ind e ntur e t o b e kept, per formed a nd obs erv ed b y it, a nd
sha ll p ay or cause t o be paid to Trustee a ll sums of mone y d u e or t o bec om e du e in accord a nce w it h
the t erms and pr ovis ions here of, the n up on such final pa ym ents or d ep os its as her e in pr ovided, the
Inde ntur e a nd the r ig hts her eb y gra nted shall cease, term inate and be void ; ot herw ise the Indenture
sha ll r ema in in fu ll forc e a nd e ffec t.
T H E IN D EN TU RE F U RTH ER W ITN ESS ETH , a nd it is express ly d ec lar ed , that a ll 2 015
Bonds issued a nd s ecured hereu nder are to be iss ued, authe nticated a nd d e livered, a nd a ll s old pr oper t y,
rig hts a nd int erests, includ ing, w ithout lim ita tion, t he Water S ystem Re ve nu es, hereb y ass ig ned a nd
pledged, are to be dea lt w ith and d isp osed o f, under, upon and s ubje ct to the terms, c ond itions ,
stipu lat ions, c ove nants, agree m e nts, trusts, uses and purposes hereina fter expressed, and the D is tric t
has agr eed a nd c ovena nted and d oes hereb y c ove na nt and agre e w ith t he Trust ee, for the benefit of t he
respective O w ners fr om time to t ime of the 2015 B onds, as follow s :
ART ICLE I
D EFIN IT IO N S; CO N TENT O F CERTIFIC ATES A N D OP IN IO NS
Section 1.01. D efinit ions. U nless t he c ontext ot herw ise requ ires, the term s de fined in t his
Section 1.01 sha ll, for a ll purposes of t he Indenture and of an y indenture supp leme nta l heret o a nd of
3
any cer tificate, op inion or ot her d ocum en t here in me ntioned, h a ve the m e anings her e in s pecified, t o b e
equ ally app licab le to b oth the s ingu lar and p lura l for ms of a ny of the terms here in d e fined.
Accou nt a nt’s Repor t. The term “Acc ou ntant’s Report ” means a rep ort s ig ned b y a n
Independ en t Cert ified P ub lic Ac c ounta nt.
Author iz ed Represe nta tive. T he term “Authoriz ed R epresentat ive” me a ns, w it h r espect t o t he
D is tric t, its P resid e nt, G e ner a l M a nag er, a nd Treas u rer a nd Adm inistr ative Ser vices D ir ector or a ny
ot her p erson des ig na ted as a n Author iz ed Represent a t ive of t he D istr ic t b y a Cer tificate of the D istrict
sig ned b y its P resid e nt, G e ner a l M anag er, or Tr eas ur er and Adm inis trat ive Serv ic es D irector a nd filed
w it h the Trustee.
Bond Cou nse l. T he ter m “Bond C ou ns e l” me an s S tradling Y oc ca C arls on & Rauth, a
Professiona l Corp ora t ion, or a nother fir m of nationa lly r ec og niz ed att or ne ys exper ie nc ed in t he
issua nce of ob ligations t he interes t on w hic h is ex clu dable fr om gross inc ome u nder Section 103 of t he
Code.
Bond Y ear. The term “B ond Y ear” w ill ha ve t he me aning set forth in t he Tax Cert ific ate.
Bonds. The t erm “B onds ” mea ns a ll re venu e bonds or notes of the D istr ict au thor ized,
executed, is sued a nd de livered b y the D istr ict, t he pa ym e nts of w hic h are pa yab le from N et W ater
S ystem Re ve nu es on a par ity w ith the 2015 Bonds a nd w hic h ar e secured b y a p ledg e of a nd lien on
W ater S ys tem Re ve nu es as described in Section 5.01 here of.
Bus iness D ay. The term “Bus iness D ay” mea ns : (i) a da y w hic h is not a S aturday, Sunday or
legal holida y on w hic h ba nking institu tions in t he S ta te, or in a ny other state in w h ic h the O ffice of the
T rus tee is located, are c los ed; or (ii) a da y on w hic h the N ew Y or k S tock Ex c ha nge is not c los ed .
Certific ate; D ir ection; Request; Requ is it ion. T he ter ms “C ert ific ate,” “D irection,” “Requ est,”
and “Requ is ition” of the D istr ict m ea n a wr itte n c ertificat e, d irec tion, request or r equ is it ion s ig ned in
the name of t he D is tr ict b y its Au thor iz ed R epresentative. A ny s uc h instrum e nt a nd supporting
op inions or repr ese ntations, if a ny, ma y, bu t need not, be c omb ined in a s ing le ins trum ent w ith a n y
ot her instrum e nt, op in ion or represe ntation, a nd the tw o or m or e s o c omb ined shall be read and
construed as a sing le instrum ent. If and to t he exte nt required b y Sec tion 1.02, eac h such instrume nt
sha ll inc lude the stateme nts provid ed for in Section 1 .02.
Clos ing D a te. T he t erm “C los ing D ate” me a ns t he d a te on w hich the 2015 B onds ar e delivered
to the or ig ina l purc haser there of.
Code. T he term “Cod e” me ans the Inter na l Re ve nue Code of 1986, as ame nd ed.
Continu ing D isc losure Certificate. T he term “C ont inu ing D isc losure C ert ificate” means t he
Continu ing D is c losure Cer tificate, dated the C los ing D ate, b y the D is trict, as or ig ina ll y ex ecuted a nd
as it m a y be from time t o tim e am end ed or suppleme nt ed in acc ord a nce w ith its terms.
Contracts . T he ter m “C ontracts ” means and is lim ited to a ll c ontracts of t he D istr ic t pre vious l y
or her ea fter author iz ed a nd execu ted b y t he D istr ict w hic h are on a par it y w ith t he 2015 B onds a nd
w hich are s ecured b y a p ledg e and lie n o n t he Wa ter System Re ve nues as descr ibed in S ect ion 5.01
here of, inc lud ing t he 2006 Cert ific ates t ha t remain outstand ing follow ing the re fu nd ing c ontemp late d
4
here in a nd the D WR Prop os ition 55 L oan, but ex clu ding a ny c ontra cts e ntered int o for operat ion a nd
ma inte na nce of t he W ater S ys te m.
Corp orat ion. T he term “C orp oration” m ea ns the Truckee D onner P ublic U t ilit y D istr ic t
Fina nc ing C orpor at ion, a nonpr ofit pub lic be ne fit c orporation du ly orga niz ed a nd existing u nder a nd
b y virtu e o f the laws of the S ta te of C a lifor nia.
Costs of Issua nce. T he term “C osts of Is sua nce ” mea ns a ll items of expe nse d ir ectl y or
ind ir ectly p ayab le b y or re imbursab le t o the D is tr ict a nd rela ted to the au thor iz at ion, issuance, sa le and
de liver y of the 2015 Bonds, inc lud ing but not lim ited to c osts of preparation and repr oduction of
docum e nts , printing expe ns es, filing a nd rec ord ing fees, in itia l fe es and charges of the Trustee a nd
cou nse l to t he Truste e, lega l fees a nd charges , fees a nd d isbursements o f c onsu ltants a nd pr ofess iona ls,
Rating Age nc y fe es, t it le ins uranc e prem iu ms , letter of credit fees a nd b ond insura nc e premiu ms (if
any), fees a nd c harges for preparation, ex ecut ion a nd safe keep ing of the 2015 B o nds and any ot he r
cost, c harge or fee in c onnection w ith the or ig inal iss uanc e of the 2015 B o nds.
Costs of Is suance Fu nd . T he t erm “C osts of Iss ua nce Fu nd” m eans the fu nd b y t hat name
estab lis hed pursua nt t o Sect ion 3.03.
D ebt Servic e. T he t erm “D ebt Ser vice” m eans, for a ny per iod of ca lcu lation, the sum of:
(1) the interest pa yable dur ing suc h per iod on a ll outsta nding B onds, ass um ing that
a ll outsta nd ing s er ia l B onds are retired as schedu led and t hat a ll outsta nd ing t erm Bonds are
redeemed or p a id fr om s in king fu nd payme nts as schedu led (ex cept t o the exte nt t hat suc h
interes t is cap ita liz ed);
(2) thos e p ortions of t he pr inc ip a l am ou nt of a ll outsta nd ing s er ial B onds matur ing
in suc h per iod ;
(3) thos e port ions of the pr in cipa l a m ou nt of a ll outs tanding term B onds requ ire d
to be pr epa id or pa id in s uch p er iod; a nd
(4) thos e por tions of t he C ontr acts r equ ired to be mad e d uring such per iod (except
to the ext ent t he interes t e vide nc ed a nd repres e nted thereb y is cap ita liz ed);
but less the ear nings to b e der ived from the investm ent of m one ys on dep os it in d ebt servic e reser ve
fu nd s estab lis hed for B o nds or C ontracts ;
provided t hat, as to any suc h B onds or C ontra cts bear ing or c ompr is ing interes t at other t han a
fixed rat e, t he rate of interest used to c a lcu late D ebt S ervice s hall, for a ll purp os es , be ass umed to b ear
interes t a t a fixed r a te equal to the hig her of:
(i) the then curre nt var iab le int erest ra te b or n e b y suc h B onds or C ontrac ts p lus
1%, and
(ii) if suc h B onds or C ontr acts ha ve be en outsta nd ing for at least tw e lve m ont hs,
the a verage ra te over the twe lve m onths im mediate ly preced ing the date of
ca lcu lation, or if s uc h B onds or C ontracts ha ve not been outsta nd ing for t he
tw elve pr ior m onths, the a ver ag e rat e b orne b y reference t o a n index
5
com p arab le to t ha t to be u tiliz ed in determ inin g t he int erest rate for the Bonds
to be issued or the Contracts to b e executed;
provided further t ha t if a ny s er ies or is sue of such B onds or Contrac ts ha ve tw e nty-five perc ent
(25%) or m ore of t he aggreg at e pr inc ip a l a m ount of suc h ser ies or is sue due in a ny one ye ar, D ebt
Servic e s ha ll be deter m ined for the period of deter m ination as if the pr inc ipa l of a nd interes t on suc h
series or iss ue of suc h Bo nds or Contracts w ere being pa id fr om t he date of incur r e nce t her e of in
substant ia lly equ a l annua l am ou nts over a per iod of twenty-five (25) ye ars from t he date of c a lcu lation;
and
provided furt her that, as t o any su c h B onds or C ontra cts or p ortions t here of be ar ing no interes t
but w hic h are sold at a d isc ou nt a nd w hic h d isc ou nt accret es wit h r espect to suc h B onds or C ontr acts
or por t ions th ereof, such accr eted d is c ou nt s ha ll b e tre ated as interest in the ca lcu lation of D ebt Servic e;
and
provided further that if t he B onds or C ontracts c ons titute Pa ired O b liga tio ns, the interest ra te
on suc h B onds or C ontrac ts sha ll be t he resu lting lin ked rate or the e ffe ct ive fixed interest rate t o be
pa id b y the D istr ict w it h respect t o such Paired O b lig ations; a nd
provided further that the am ou nt on dep os it in a d ebt s ervice reser ve fund on a ny d ate of
ca lcu lation of D ebt Servic e s ha ll be deduc ted fr om th e amou nt of pr inc ipa l du e at the fina l matur it y o f
the B onds a nd C ontr acts for w hic h such debt ser vice reserve fu nd w as estab lis hed a nd t o t he ext e nt the
amou nt in suc h deb t ser vice reser ve fu nd is in exces s of suc h a mou nt of pr inc ipa l, s uc h ex ces s sha ll be
app lied to t he fu ll am ou nt of pr inc ipal due, in each preceding year, in descend ing order, u ntil suc h
amou nt is ex hausted.
D efeas a nce S ecur it ies. The term “D e feasa nce S ecurities” m eans : (1) cash, (2) non-ca llab le
dire ct ob lig ations of t he U nited States of America (“Treas ur ies”), (3) evid e nces of ow ners hip of
prop ortionate interests in future in ter est and pr inc ipa l pa yme nts on Treasu r ies he ld b y a ba nk or trust
com p a ny as cus tod ia n, u nder whic h the own er of the investme nt is t he re a l part y in interest a nd has the
rig ht t o proceed d ire ct ly a nd ind ividua lly against the ob lig or and the u nder lyin g Treasur ies are not
ava ilable to a ny p erson c la im ing t hr oug h t he cust od ia n or to w hom t he custod ia n m a y b e ob ligated, (4)
subject t o t he pr ior w ritte n cons e nt of the Insu rer (so long as t he Ins urer has not defaulted on a ny
ob lig at ion u nder th e Ins ura nce Policy or t he Re serve Surety P olic y), pre-refu nded mu nicip a l
ob lig at ions rated “AA A” and “Aaa” b y S&P and Mood y’s, respect ive ly, and (5) subject to the pr ior
w ritte n c onse nt of the Insu rer (so long as the Insure r has n ot d efau lt ed on any ob lig ation u nder t he
Insura nce P olic y or t he Reser ve Suret y P olic y), s ecu rities e lig ib le for “AA A” d e feasa nce u nder t he n
ex isting criter ia of S&P .
D epos it or y; D TC. The term “Dep os it or y” or “D TC ” means T he D epos it or y T rus t C ompany,
N ew Y ork, N ew Y or k, a lim ited purp ose trust compa ny organiz ed u nd er t he law s of t he S tate of N ew
Y ork in its capac ity as Secur it ies D epos itor y for the 2015 Bond s.
D is tric t. T he term “D istr ic t” means Truc kee D onner Pub lic Utilit y D istr ict, a pub lic utilit y
distr ict du ly organiz ed a nd ex is t ing u nder a nd b y vir tu e of the law s of the Stat e.
D onner La ke Wat er As sessme nt D istr ic t N umber 00-1. The term “D onner La ke W ater
Assessment D istr ic t N umber 00-1” mea ns the assessm ent d is trict estab lis hed b y that name b y the
D is tric t.
6
D WR Propos ition 55 L oa n. The ter m “DWR Propos it ion 55 Loa n” means the loa n agreement ,
dated as of August 13, 1992 (numb ered E53311), b y and b etw ee n the S tate of Ca lifor nia D epartm e nt
of W ater Resour ces and t he D istr ict, as such DW R Prop os it ion 55 L oa n ma y be amended or
supplem e nted in acc orda nc e w ith its t erms.
E lectr ic S yste m. T he term “E lectr ic S yste m” means all pr operties and ass ets, rea l a nd persona l,
ta ng ib le a nd intang ib le, of t he D istr ict now or herea fter exist ing, used or perta ining to the p rovis ion o f
pow er, inc lud ing a ll add itions, ex te ns ions, expansio ns, impr oveme nts and bet terme nts thereto;
provided, how e ver, that to the exte nt the D istr ic t is not the sole ow ner of a n asset or pr operty or t o the
exte nt t hat a n ass et or pr oper ty is used in p art for the ab ove d escr ibed e lec tr ic purp oses, only th e
D is tric t’s ow nership interest in suc h asset or pr operty or only t he part of t he asset or prop erty so used
for e lectr ic p urp oses sha ll b e cons idered to b e part of the E le ctr ic S ys tem.
E ve nt of De fau lt. T he term “E ve nt o f Defau lt” means a ny of t he eve nts spec ified in Sect io n
7.01.
Federa l Secur it ies. T he term “Federa l Secu r it ies ” m eans any d ire ct, nonca llab le ge ner a l
ob lig at ions of th e U nited States of Amer ica (inc lud ing ob lig at ions iss ued or he ld in b ook e ntr y form
on the b ooks o f t he D epartm e nt of the Treasur y of the U n ited States of A mer ic a), or noncallab le
ob lig at ions t he t ime ly payme nt of pr inc ipa l of a nd interes t on w hic h are fu lly a nd u nc ond itiona lly
guaranteed b y t he U nited S tates of Amer ica.
Fisca l Y ear. T he ter m “F isca l Y ear ” m eans the tw elve m ont h per iod b eg inning on Ja nuary 1
of ea c h year and e nd ing on D ecemb er 31 of the sam e ye ar, b oth dates inc lus ive, or any other tw e lve
month p er iod herea fter se le cted and d es ignated as the officia l fis ca l year period of t he D istr ict.
Fitch. T he ter m “F itc h” means F itch R atings , Inc., or any success or t here t o.
Inde ntur e. The term “Inde nture” m ea ns t he Inde nture o f Trust, D ated as of J une 1, 2015, b y
and be tw een the D istr ic t a nd t he Truste e, as or ig in a lly execu ted or as it m ay fr om tim e t o t im e be
supplem e nted, m od ified or am ended b y a ny Supp lem enta l Inde ntur e.
Independ en t Certified Pub lic Ac c ou nta nt. T he term “Indepe nd e nt Certified P ub lic
Accou nt a nt” m ea ns a ny firm o f cer tified pub lic acc ounta nts app ointed b y t he D istr ict, eac h of w hom
is independent of the D istr ict purs uant t o the S tatement on Au d iting S tandards N o. 1 of the Am er ica n
Inst itu te of Certified Pub lic Acc ou nta nts.
Independ en t F ina ncia l C onsu lta nt. T he term “Ind e pende nt F inancia l C onsulta nt ” m ea ns a
fina ncia l c onsu lta nt or firm o f s uch c onsu lt a nts appointed b y t he D istr ict, w hic h ma y, for purposes o f
the cer t ific ation d escribed in the de finition of “Paire d Oblig at ions” b e a n interes t rate sw ap adv iser,
and w h o, or ea c h of w h om : (1) is in fact ind ep end e nt and not u nd er d om ination of the D istr ict; (2) d oes
not ha ve a ny substa ntia l interest, d irec t or ind ir ect, w it h the D istr ict; a nd (3) is not c onnected w ith the
D is tric t as a n officer or emp loye e t here of, but w ho m a y be r egu lar ly r eta ined to ma ke reports thereto.
Information Services. The t erm “Infor mation S erv ices” m eans the M unic ipa l Secur ities
Rulema king B oard’s E lectr onic M u nic ip a l M arket A ccess s yste m ; or, in accorda nce w ith the n-curre nt
guide lines of t he S ecurities a nd Ex c hang e C omm iss ion, such ot her ser vic es provid ing informa t ion wit h
respect t o ca lled bonds as the D is tr ic t ma y spec if y in a certificate to t he Truste e a nd as the Trustee m a y
select.
7
Insura nce Polic y. T he term “Insura nc e P olic y” m eans the insura nce p olic y issued b y the
Insurer guara nteeing t he schedu led pa ym e nt of pr inc ipa l of a nd inter est on t he 2015 B onds w he n due.
Insurer. T he t erm “Insurer” m ea ns __________, or a ny success or thereto or ass ig ne e ther e of.
Interest Accou nt. T he term “Inter es t A ccou nt” mea ns the a ccou nt b y that name in the Pa yme nt
Fu nd estab lis hed pursuant to Sect ion 5.02.
Interest Pa yme nt D ate. The t erm “Interes t Pa ym e nt Date” mea ns N ovem b er 15, 2015 a nd e ac h
M a y 15 a nd N ovember 15 of eac h year t her ea fter.
Investm e nt Agree me nt. T he ter m “Investme nt Agre eme nt” me ans a n investme nt agre ement
supported b y appr opr ia te op inions of c ou nse l; pr ovid ed the pr ovider t here of or t he guara ntor thereo f is
rated b y at least tw o R ating Age nc ies, at t he t im e of is sua nce, at least “A A”, “Aa” or “A A” (S&P,
M ood y’s or F itc h, r espectively).
L etter of R eprese nta tions. T he t erm “Letter of Repre senta tions” me a ns t he letter of the D istr ic t
and t he Trustee de livered to a nd acc epted b y the D epos it ory on or pr ior to de liver y of t he 2015 B onds
as book e ntr y b onds sett ing forth the b as is on w hic h the D ep os itor y ser ves as depos itor y for such b ook
entry b onds , as or ig ina lly executed or as it ma y be su pple me nted or revis ed or replac ed b y a le tter from
the D istr ict and the Truste e de livered to a nd a ccept ed b y the D ep os it or y.
M ood y’s. T he term “M ood y’s ” m ea ns M ood y’s Investors Ser vice, or any s uc cessor ther eto.
N et P roceeds . The t erm “N et P roc eeds” means, w he n used w it h respect t o a ny casua lt y
insura nc e or c ondem nat ion aw ard, t he pr oceeds fr om such insu ranc e or c ondem nation aw ard rema ining
after pa yme nt of a ll ex pe nses (inc lud ing attorney’s fe es) incurred in the c olle ct ion of s uc h pr oceeds.
N et W ater S ys tem Re ve nues. The term “N et W ater S ystem Re venu es” m ea ns , for a ny F isca l
Y ear, the W a ter S yst em Re ve nues for suc h F isca l Y ear less the O peration and M ainte na nc e Cos ts o f
the Water S yste m for such F is cal Y ear.
N om ine e. The term “N om inee” means t he nom ine e of the Depos itor y, w hic h ma y be the
D epos it or y, as determ ined fr om t ime to tim e pursua nt t o Sect ion 2.08 here of.
O ffice of the Trus tee. T he term “O ffice of t he Tru stee” means t he pr inc ip al corp ora te trus t
offic e of the Trustee in L os A nge les, Califor nia, pr ovid ed that for purp oses of p a yme nt, r edemption,
excha nge, tra ns fer, surre nder a nd canc e llation of 2015 Bonds, such term means the office of the Truste e
at w hic h it c onduc ts its corp orate age nc y b us iness, or su ch other office as the Trustee ma y fr om t im e
to time d es ignate in w riting to t he D istr ict and the O w ners.
O perat ion and M a inte na nce C osts of the W a ter S yste m. The term “O pera tion a nd M ainte na nc e
Costs of the W ater S ys te m” me a ns (i) c os ts spent or incurr ed for m a int e na nce a nd oper at ion of t he
W ater S ys tem ca lcu lat ed in a cc orda nc e w it h ge ne rally accept ed accou nting pr incip les, inc lud ing
(among other th ings) the r eas onab le ex pe nses of m a nageme nt and repa ir a nd other expenses necessar y
to m ainta in a nd preserve the W ater S ys tem in g ood repa ir a nd w or king order , and inc lud ing
adm inistra tive c osts of t he D is tr ic t that are c harge d direc t ly or app ortioned to the Water S ys tem ,
inc lud ing but not lim ited to salar ies a nd w ages of emp loyees, pa ym e nts t o t he P ub lic Emp lo yees
Retirem e nt S ys te m, over head, ins urance, taxes (if any), fees of aud itors, accou nta nts , attorne ys ,
consu lt ants or e ng ineers a nd insura nc e prem iums , a nd inc lud ing a ll other re asonab le and ne cess ar y
8
costs of the D istr ic t or c harges (ot her tha n D ebt Service) requ ir ed to b e paid b y it to c omp ly w ith t he
terms of this Inde nture or a ny ot her C ontract or of a ny res olution or inde nture authoriz ing t he is suance
of a ny B onds or of s uc h B onds, a nd (ii) a ll c osts of w ater purc has ed or otherw ise acqu ir ed for deliver y
b y t he W at er S yste m (inc lud ing a ny inter im or re ne w ed arrange me nt therefor), but exclud ing in a ll
cas es deprec ia tion, rep lacem ent and obs olescence c harges or reser ves ther e for a nd am ort iz a tion of
inta ng ib les or other bookkeep ing e ntr ies of a s im ilar nature.
O pinion of Cou nse l. The term “O p inion of C ou nse l” means a w r itt e n op inion of c ou ns el
(inc lud ing but not lim ited to c ou ns e l to the D istr ic t) s elected b y the D istr ic t. If a nd t o the ext e nt
requ ired b y the pr ovis ions of Sect ion 1 .02, eac h O pinio n of C ou ns e l s ha ll inc lude t he st ateme nts
provided for in Se ction 1.02.
O uts tand ing. T he t erm “Outsta nd ing,” w he n us ed as of a ny particular tim e w ith re fere nce t o
2015 Bonds, m eans (sub jec t t o the pr ovis ions of Section 11.09) a ll 2015 B onds t her etofore, or
thereup on b eing, au t he nticated and de livered b y t he Trustee under t he I ndenture except : (i) 2015 Bonds
theret ofore ca nce led b y the T rus tee or s urre nder ed to the T rus tee f or cancellation; (ii) 2015 B onds w ith
respect t o w hic h a ll liab ility of t he D is tr ict sha ll ha ve been d is charged in ac c orda nce w it h Sec tion
10.02, inc lud ing 2015 B onds (or p ortions thereof) described in Sect ion 11.09; a nd (iii) 2015 B onds for
the tra ns fer or exc ha nge of or in lieu of or in subst itu tion for w hic h other 2015 B onds s hall ha ve b een
authe nticated a nd de livered b y t he Trus tee pursuant t o t he Ind e nture.
O w ner; 2015 Bond O w ner. The term “O wner” or “2015 Bond O w ner,” w he ne ver used here in
w it h respect to a 2015 B ond, me ans the person in w hose nam e the ow nership of suc h 2015 B ond is
registered o n t he R eg is tration B ooks.
Paired O bligations. T he ter m “Paired O bligations” means a ny B o nd or C ontract (or p ortion
thereo f) des ig nat ed as P aired Ob lig ations in t he res olu t ion, indenture or ot her docume nt author iz ing
the iss ua nce or execution and de livery ther e of, w hic h are s imu lt a ne ou s ly is sued or ex ecuted a nd
de livered (i) t he princ ip al of w hic h is of equa l am ount m atur ing and t o b e red eem ed or prepa id (or
cancelled a fter acqu is ition ther e of) on t he same da tes and in the same am ou nts , a nd (ii) t he interest
rates w hic h, ta ke n together, result in a n irrevocab l y fi xed interes t rate ob ligation of the D is tr ict for the
term of such B ond or C ontr act.
Parity Pr oje ct. T he ter m “Parity Pr ojec t” me a ns an y add itions, better ments , exte ns ions or
impr oveme nts to t he D istr ict’s Water S ys tem des ig nated b y the B oard of D irect ors of the D istr ict as a
Parity Project, the a cqu is it ion a nd c o nstruction of w hic h is to be p a id for w ith t he pr oc eeds of a ny
Contracts or Bonds.
Partic ipa nts . The term “Partic ipa nts ” means thos e broker-dea lers , banks a nd other fina nc ia l
institut ions fr om tim e to t ime for w hic h t he D epos it or y holds b ook entr y certificates as Secur ities
D epos it or y.
Pa yme nt Fund. T he term “P a ym ent Fund” means the fu nd b y t ha t name estab lis hed pursuant
to Se c t ion 5.02.
Permitted Inves tm ents. The ter m “Perm it ted Investments” means a ny of t he follow ing
ob lig at ions if a nd to the exte nt tha t t he y are perm iss ible in ves tments of funds of the D istr ict (pr ovid ed
that t he Truste e sha ll be e ntitled to re ly up on a ny investme nt d irections fr om t he D istrict as c onc lusive
9
cert ificat ion to t he Trustee that the in ves tme nts describ ed therein are perm iss ib le investme nt of fu nd s
of t he D istr ict):
(a) D irect ob lig at ions of the U nited States (inc lud ing ob lig at ions iss ued or held in
book-e ntr y form on the b ooks of the D epartment of t he Treasur y, a nd CATS and TIG RS ) or ob ligations
the princ ipa l of a nd interest on w hic h are u nc ond it iona ll y guara nteed b y t he U n ited S tates.
(b) Bonds , debe ntures, notes or other e vid ence of ind ebted ness is sued or
guaranteed b y a ny of the follow ing federa l age nc ies and pr ovided su ch ob ligations are ba cked b y the
fu ll fa ith a nd cred it o f the U nited States (stripp ed s ecurit ies are only p erm itted if t he y ha ve bee n
stripped b y the age nc y itse lf):
1. U .S. Export-Imp ort Ba nk (“Ex imba nk”)
D irect ob liga tions or fu ll y guaranteed c ertificates of bene fic ia l
ow nership
2. Farmers H ome Adm inistr at ion (“FmH A ”)
Certific ates of be ne fic ia l ow ners hip
3. Federa l F ina nc ing Bank
4. Federa l H ous ing Adm inis tration D ebe ntur es (“FH A”)
5. G eneral Services Ad m inistration
Partic ipa tion cer t ific ates
6. G overnme nt N a tio na l M ortgage Ass oc ia t ion (“G NM A”)
G N M A - guaranteed m ortgage-b ac ked b onds
G N M A - guaranteed p ass-throu g h ob lig ations (not a cceptab le for
certa in cash-flow se ns it ive is sues)
7. U nited St ates M ar itime Adm inis tr ation
G uarant eed Tit le X I fina nc ing
8. U nited St ates D epartm e nt of Hous ing a nd U rba n D e ve lop me nt
(“HU D ”)
Project N otes
L oc a l Aut hor ity B onds
N ew Comm u nities Debe ntures
U nited St ates g over nme nt guara nteed debentu r es
U nited St ates Pub lic H ous ing N otes a nd Bonds
U nited St ates g over nme nt guara nteed pub lic hous ing notes a nd b onds
(c) Bonds, debe ntures, notes or other e vid e nce of ind ebted ness is sued or
guaranteed b y any of the follow ing non-fu ll fa ith a nd cr ed it U nited S tates g over nme nt age nc ies
(stripped s ecur ities are only perm itted if t he y ha ve b e en s tr ipp ed b y the age nc y itse lf):
1. Federa l H om e L oa n Ba nk S ys tem
Senior deb t ob liga t ions
10
2. Federa l H om e L oa n M ortgage C orp ora tion (“FH LM C”)
Partic ipa tion Cert ificates
Senior deb t ob liga t ions
3. Federa l N ationa l M ortg age Ass oc ia tion (“F N M A”)
M ortgage-ba c ked secu rities a nd s e nior debt ob ligatio ns
4. Student L oa n M ar keting As soc iation (“SLM A”)
Senior deb t ob liga t ions
5. Resolut ion F und ing C orp orat ion ob lig at ions
6. Farm Cred it S ys tem
Consolida ted s ys tem-w ide b onds a nd notes
(d) M one y mar ket fu nds reg istered und er the F edera l Investme nt C ompa ny Ac t of
1940, w hos e s hares are regis tered u nder the Fed era l Secu rities A ct of 1933, a nd ha ving a rat ing b y
S&P of “A AAm -G ,” “AA A-m” or “A A-m ” a nd if r ated b y M ood y’s rated “Aaa,” “Aa1” or “A a2,”
inc lud ing su ch fu nds for w hich the Trustee, its a ffili ates or subs id iar ies pr ovide investment ad vis ory
or ot her ma nage me nt ser vic es or for w hic h the T rustee or a n a ffilia te of t he Trustee s erves as
investm e nt ad m inistrat or, s hare holder ser vic ing agent, a nd/or cust od ia n or subcust od ia n,
notw it hsta nd ing that (i) the Trus tee or a n a ffiliate of the Trustee rece ives fees fr om fu nds for ser vices
render ed, (ii) the Trustee collects fees for services rendered pursua nt to this Inde ntur e, w hic h fees are
separate fr om the fe es rece ived from such fu nds, and (iii) ser vices per formed for su ch fu nds a nd
pursuant to this Inde nture m a y at t imes d up licat e thos e pr ovid ed t o suc h fu nds b y the Trustee or a n
affilia te of t he Trustee.
(e) Certific ates of depos it s ecured at a ll t im es b y c ollater a l descr ibed in c lauses (a)
and/or (b) above. Such certific ates mus t be issued b y c ommer c ial ba nks (in clud ing a f filiates of the
T rus tee), sa vings a nd loa n associations or m u tua l s av ings ba nks . The c ollatera l mu st be he ld b y a t hird
part y a nd t he b o nd holders mus t ha ve a per fec ted firs t s ecurity inter es t in t he c olla teral.
(f) Cert ific ates of d epos it, s av ings a ccou nts, dep os it accou nts or m oney mar ke t
depos its (inc lud ing thos e of the Trustee and its a ffilia tes) w hic h are fu lly ins ured b y FD IC, or secur ed
at all tim es b y c ollat eral descr ibed in c lauses (a) a nd/or (b) ab ove.
(g) Investm e nt Agre eme nts , inc lud ing guara nteed inves tme nt c ontra cts , forw ard
purchase agr eeme nts a nd reserve fu nd put agreement s.
(h) Comm erc ia l p aper rated, a t the tim e of purchase, “P rime-1” b y M ood y’s and
“A-1” or bet ter b y S&P .
(i) Bonds or notes issued b y any s tat e or mu nic ipalit y w h ich ar e rated b y M ood y’s
and S &P in one of the tw o highest R ating C ateg or ies assig ned b y suc h agenc ies .
(j) Federa l fu nds or ba nkers a ccepta nces w ith a m ax imu m term of one ye ar of a ny
bank (inc lud ing those of t he Trustee a nd its a ffiliates) w hic h has a n u nsecur ed , u nins ured and
unguaranteed ob liga tion rating of “Pr ime-1” or “A3 ” or bett er b y M ood y’s a nd “A-1” or “A” or bett er
b y S&P.
11
(k) Repur chase agreeme nts f or 30 da ys or less must follow the follow ing cr iteria .
Repurchase agreeme nts w hic h provid e for the trans fer of s ecur it ies fr om a dealer ba nk or s ecur ities
firm (se ller/b orr ower) to a mu nic ipa l e ntity (bu yer/lender), and t he tr ans fer of cas h from a mu nic ip a l
ent ity t o t he d ealer b a nk or secur ities firm w it h a n agreeme nt t hat t he dealer ba nk or s ecur ities firm
w ill repa y the cas h p lus a yie ld to t he munic ip a l ent ity in exc ha nge for t he s ecur ities at a specified da te ;
and :
1. Repurchase agreem ents must b e betw ee n t he mu ni c ipa l e ntit y a nd a
dea ler bank or secur ities firm ;
A. Primar y dealers on the Federa l R eserve rep orting dealer lis t
w hich ar e rated “A” or better b y S&P a nd Mood y’s; or
B. Banks rat ed “A ” or ab ove b y S&P and M ood y’s.
2. The w ritte n r epurc has e agr eements c ontr ac t m ust inc lude the
follow ing :
A. Se curit ies whic h are acceptab le for tra nsfer are :
(l) D irec t United Sta tes gover nme nts , or
(2) F ed era l age nc ies backed b y the fu ll fa ith a nd cred it of
the U nited S tates gover nme nt (and FN M A & F H LM C)
B. The term of a r epurc hase agre ement ma y be up to 30 d ays
C. The collatera l mus t be delivered to t he mu nic ip a l e ntity, truste e
(if trustee is not supp lying the c ollatera l) or t hird party acting as age nt for t he trustee (if t he trustee is
supplying th e c ollater a l) before /s imu lta ne ous w it h p aym e nt (per fe ction b y p ossess ion of certifica ted
securities).
D . V aluat ion of C ollatera l
(l) The secu rities mus t b e va lued w eekl y, mar ked to
market a t curre nt m ar ket pr ice p lus ac crued interest.
(2) The va lu e of c olla teral must b e equ a l to 104% of the
amou nt of c ash trans ferred b y the mu nic ipa l e ntit y to t he dea ler ba nk or s ecur it y firm u nder the rep o
plus accrued interest. If t he va lu e of s ecur it ies he ld as collat era l s lips be low l04% of the va lue of the
cas h tr a nsferred b y mu nicipa lity, t he n add itional c ash and /or acc eptab le secur it ies mus t be tr a ns ferred.
If, how e ver, the se curities us ed as c ollatera l are F N M A or FH LM C, the n t he valu e of colla teral must
equ al 105%.
(3) A lega l op inion must be de livered to t he munic ip a l
ent ity t o the e ffect t ha t t he repurch ase agreem e nt m ee ts guide lines u nder s tat e law for leg al investm e nt
of pub lic funds.
(l) The C a lifornia Ass et M a nagem e nt P r ogram.
12
(m) A ny s ta te adm inist ered pooled investme nt fu nd in w hic h the Distr ic t is
statut orily per m itted or requ ired to invest w ill b e deemed a perm itted investme nt, includ ing, but not
lim ited t o t he L ocal Age nc y Inves tment Fu nd in the t reas ur y of t he State.
Princ ip a l A ccou nt. T he term “Pr inc ipal Acc ou nt” means the accou nt b y t hat name in the
Pa yme nt Fund es tab lis hed pursua nt t o Sec tion 5.02.
Rate Stab iliz a t ion F u nd. T he t erm “Ra te S tab iliz ation Fund ” means the D istr ict accou nt
desig na ted b y the D istr ict as ac c ou nt number ____, t ogether w it h ot her acc ou nts cre ated in the futur e
and d es ig nated b y ac t ion of t he B oard of Dir ect ors a s a part of the Ra te Stab iliz ation Fund c ontinue d
pursuant to S ectio n 5.06.
Rating. The term “Rating” m eans any curre ntly e ffe ctive r ating on the 2015 Bonds issued b y
a Rat ing Agency.
Rating Ag e nc ies. T he ter m “Rating Ag encies” m eans S&P a nd M ood y’s if such r ating
agenc ies are the n rating the 2015 B onds.
Rebate F und. T he term “Reba te F und ” mea ns the fu nd b y that nam e es tab lis hed for t he 2015
Bonds pursuant to S ect ion 5.09.
Record D ate. The term “R e c ord D ate” mea ns , w ith respect to a ny Interest P ayme nt Date, the
firs t da y of t he ca le ndar m onth preced ing s uch Inter est P a yme nt D ate, w hether or not suc h da y is a
Bus iness D a y.
Redempt ion D ate. T he term “Rede mption D a te” means the date fix ed for a n optiona l
redemption pr ior t o maturit y of the 2015 B o nds.
Redempt ion Fu nd. T he term “Rede mpt ion Fu nd” means t he fund b y that na me estab lis hed
pursuant to S ectio n 5.05.
Redempt ion Price. T he term “Redemp tion Pr ic e” m eans , w it h respect t o a ny 2015 B ond (or
portion thereof), the pr incip a l a m ou nt of s uc h 2015 Bond (or p or tion) p lus the interes t accrued t o t he
app licab le R edemp tion Date a nd t he ap p licab le pre m ium, if a ny, pa yab le up on r edempt ion there of
pursuant to the pr ovis ions of suc h 2015 B ond a nd the I nde ntur e.
Registr ation B ooks. T he term “R egis trat ion Books ” mea ns the r ecords ma intained b y t he
T rus tee for t he reg istration of ow ners hip a nd reg istr ation o f tra ns fer of t he 2015 B onds pursuant t o
Section 2.05.
Reserve Fund. T he term “Reserve Fund” me ans the fund b y that name estab lis hed pur sua nt t o
Section 5.07.
Reserve R equ ire ment. [The term “Reser ve Requ ire ment” mea ns in itia lly: (i) $_______; a nd
therea fter (ii) t he lesser of t he am ou nt set fort h in c la use (i) or the m ax imum pa yme nts of pr inc ipa l of
and interes t on the 2015 Bonds pa yable in t he the n-c urrent or any fu ture F is ca l Y ear.]
Reserve S urety Po lic y. The term “Reser ve S uret y P olic y” mea ns the mu n ic ip a l bond deb t
servic e res erve ins urance p olic y N o. _______ issued b y the Insurer a nd dep os it ed in t he R eser ve F u nd
to satis f y the Reser ve Requ ir eme nt.
13
Respons ib le O fficer of the Trustee. The term “Resp ons ib le O fficer of the Trustee” m ea ns any
offic er w it hin t he cor p ora te trust divis ion (or a ny success or group or dep artme nt of the Tr ustee)
inc lud ing any vice pres ide nt, assist a nt vice pres id e nt, ass ista nt secret ary or a ny other officer or ass is ta nt
offic er o f the Truste e cust omar ily per form ing fu nc t ions s im ilar to those perform ed b y the pers o ns who
at t he t im e sha ll b e suc h offic ers, respective ly, w ith resp ons ib ilit y for the adm inis tration of the
Inde ntur e.
S&P. T he term “S &P” m ea ns Sta ndard & P oor’s R atings S er vices, a S ta ndard & P oor’s
Fina nc ial Ser vices LLC bus iness , or a ny succ essor thereto.
Securit ies Dep os itor ies. T he term “Secur it ies D epos it or ies” mea ns T he D ep os it or y Trust
Compa ny; a nd, in acc ord a nce w ith the n current guide lines of the Se cur ities a nd Exc ha ng e
Comm iss ion, such ot her addres ses a nd/or s uch other secur it ies dep os itor ies as t he D istr ict ma y
desig na te in a W r itte n Request of t he D istr ict de liver to the Trustee.
State. T he term “S tate” mea ns the Sta te of Ca lifor ni a.
Su ppleme nta l Indenture. The t erm “Suppleme nta l Inde ntur e” mea ns a ny inde nture herea fter
duly aut hor iz ed a nd entered into betw een t he D istr ict a nd the Trustee, s upp lem e nting, m od ifying or
amend ing the Ind e nture; but only if a nd to t he ext e nt that such S upple me nta l Inde nture is specifica lly
author iz ed her eu nder.
T ax Certificate. T he term “T ax C ertificate” m ea ns th e Tax C ertificate dat ed the C los ing D ate,
conc er ning certa in matters perta ining to t he us e and investm ent of proce eds of the 2015 Bonds, iss ued
b y the D istr ict on t he date of issuance of the 2015 B onds , inc lud ing a ny and all exhib its att ached
theret o.
T rus tee. The t erm “Trus tee” means T he B a nk o f N e w Y ork M e llon Trust Com p any, N .A., a
na tiona l b a nking ass oc iation du ly organiz ed a nd e xisting u nd er t he law s of the United S ta tes o f
Amer ica, or its success or as T rustee her eund er as provided in Section 8.01.
2006 Certificat es. The ter m “2006 Certificates” has the meaning assig ned t hereto in t he
W H EREAS c lauses t o this Inde nture.
2006 Escrow Age nt. The term “2006 Escrow Ag ent ” means T he Bank of N ew Y ork M e llon
T rus t Company, N .A., as escr ow age nt pursu ant to the terms of the 2006 Cer tific ates Escr ow
Agreem e nt, or its s uccess or thereu nder.
2006 Es crow Agreeme nt. The term “20 06 E scrow Agreeme nt” means the 2006 Escrow
Agreem e nt, D ated as of Augus t 1, 2015, by a nd bet w een the D istr ic t a nd the 2006 Escrow Age nt, as
or ig ina lly executed or as it ma y fr om tim e to t ime be ame nded or su pp lem ented in acc orda nce w ith its
terms.
2006 Insta llme nt Purc hase C ontr act. The term “2006 Insta llme nt Purch as e C ontact” means the
Insta llme nt Purc has e C ontr act, dated as of S ept em b er 1, 2006, b y a nd b etw een t he D is trict a nd the
Corp orat ion, as or ig ina lly execu ted a nd as it m a y fr om tim e t o t ime be am end ed or supp le mented in
acc ordance t herew it h.
2006 Reserve Fu nd. T he term “2006 R eser ve Fund” mea ns the fu nd b y t ha t name estab lis he d
pursuant to the 2006 Trust Agre eme nt.
14
2006 Trust Agreeme nt. T he term “20 06 Trus t Agreement” m e ans the Trust Agreem ent, date d
as of S eptember 1, 2006, b y a nd am ong t he D is tric t, the Corp ora t ion, a nd T he B a nk of N ew Y or k
M ellon Trus t C ompa ny, N .A., as trustee thereu nd er.
2015 B onds . T he term “2015 B onds ” m eans the Tru ckee D onner P ub lic U tilit y D istr ict W ater
S ystem Re fu nd ing R eve nue B onds, Series 2015 is su ed her eu nder.
V aluat ion D ate. “Valu ation D ate” mea ns the fifth Business D ay preced ing the date o f
redemption.
V alue. T he term “V a lue,” w hic h s ha ll b e de term ine d as of the da te of calcu la t ion, mea ns that
the va lue of a ny investme nts sha ll be ca lcu la ted as follow s :
(a) For the purp os e of d e term inin g the am ou nt of any fu nd, a ll Per m itted
Investm e nts cred ited to such fu nd s ha ll b e va lued at fa ir m ar ket va lue. T he Trustee s ha ll d eter m ine
the fair mar ke t va lue b ased on a ccepted industr y s ta ndard s and fr om accep ted industr y pr oviders.
Accep ted industr y provid ers sha ll inc lude, but are not lim ited to, pric ing services provided b y F ina nc ia l
T imes Interac tive D ata C orp oration, Bank of Am e rica M err ill L ync h, a nd M orga n S ta nle y Sm ith
Barne y.
(b) As to certificates of d epos it and ba nkers ’ accep ta nces : the fac e a mou nt there of,
plus accrued interest.
(c) As to a ny investm e nt not specified ab ove : mar ke t va lue, or, if t he market va lu e
is not asc erta inab le b y t he D istr ict or the Trustee, at c ost.
W ater Ser vic e. The term “Water S er vice” m ea ns t he w ater d istr ibution ser vice made a vailab le
or pr ovided b y t he Water S yste m.
W ater S yste m . The term “W a ter S ystem” m ea ns t he w hole a nd ea c h a nd e ver y p art of t he
w ater s ys tem of the D istr ic t, includ ing t he por tion the reof ex ist ing on the date hereo f, a nd inc lud ing a ll
add it ions , betterme nts, exte ns ions a nd impr oveme nts to su c h water s yst em or any p ar t t hereof here after
acqu ired or c onstructed.
W ater S ystem Re ve nue F u nd. T he ter m “Wa ter S ys tem Re ve nue F und ” mea ns those D istr ic t
acc ou nts des ig nat ed b y the D istr ict, together w ith other accou nts created in t he future and des ig nated
b y act ion of t he B oard of D irec t ors, as a part of t he W ater S ys tem Re ve nu e Fund establis hed pursuant
to Se ct ion 5.01(b) hereof, and exc lud es a ny acc ou nt int o w hic h ad valorem taxes le vied b y t he D istr ic t
are dep os ited.
W ater S yste m Reve nues. The term “Water S yst em Reve nu es” means a ll inc om e, rents , rates,
fees, c harges a nd ot her m one ys der ived from or attr ib utab le to the ow nership or opera t ion of the Water
S ystem c a lcu lated in acc or d a nce w ith g enera lly acc epted acc ou nting princ ip les, inc lud ing, w it hou t
lim iting the ge nera lity of the foreg oing,
(1) a ll income, r ents, rates , fees, c harg es, business in terru ption insurance pr oceeds or other
mone ys der ived b y the D is tric t fr om t he sa le, furnishing a nd supplying of w ater , or ot her s ervices ,
fac ilities a nd com m od ities sold, furnis hed or supplied thr oug h t he fac ilities of or in t he c onduct or
operat ion of the bus iness of t he W ater S ys tem; p lus
15
(2) the proceeds of an y sta nd-b y w ater a va ilabilit y c harg es; plus
(3) the connection c harges a nd fac ilities fees or sim ilar charg es related t o t he W ate r
S ystem; p lus
(4) the ear nings on a nd inc ome der ived fr om t he investment of the am ou nts describ ed in
c lauses (1) thr oug h (3) hereo f, a nd on Wa ter S ystem Re ve nue F u nd reser ves a nd am ou nts on dep os it
in the R ate Stab iliz ation Fu nd, p lus
(5) notw ithst a nd ing t he app licat ion of ge nerall y ac c epted ac c ou nt ing pr inc ip les, a ll
amou nts tra ns ferred fr om the R ate Stabiliz at ion Fu nd to the W ater S ystem Re venu e Fu nd dur ing a n y
Fisca l Y e ar in ac cord ance w it h Sec tion 5.06 hereof;
but exc lu d ing in a ll c ases (i) an y am ou nts tra ns ferred fr om the Water S yste m Re ve nue F u nd t o the Rat e
Stabiliz ation Fu nd dur ing a ny F isc a l Y e ar in acc ord a nce w it h Section 5.01(d)(iv) hereof, (ii) cu stom er
depos its or a ny ot her dep os its or ad va nces s ub ject to re fu nd u ntil suc h d ep os its or adva nces ha ve
become t he pr oper t y of t he D is tr ict, (iii) a ny pr oceeds of taxes restr icted b y law to be us ed b y the
D is tric t to pa y ob ligations of the D is tr ict her eafter is s ued, and (iv) re ve nu es from D onner La ke Wa ter
Assessment D is trict N umber 00-1.
W ritte n Cons e nt of t he D istr ict; Wr itte n O rder of the D istr ict; Wr it ten R equest of the D istr ict;
W ritte n Requ is ition of th e D istr ic t. The terms “W r itt en Cons e nt of t he D istr ic t,” “W r itte n O rder of the
D is tric t,” “Writte n Reques t of t he D istr ict,” and “Wr itte n Requ is ition of the D is tr ic t” m ea n,
respective ly, a w r itte n c onsen t, order, request or requ is ition s ig ned b y or on be ha lf of t he D istr ict b y
the P reside nt of its Board of D ire ct ors or its G ener a l M anager or Treas urer a nd Adm inis tr ative Ser vic es
D irect or or b y a ny tw o p erso ns (w hether or not offic ers of the B oard of D ire ct ors of t he D istr ic t) w ho
are specifica ll y authoriz ed b y res olu t ion of t he D istr ic t t o s ig n or ex ecute suc h a d ocume nt on its be half.
Section 1.02. Conte nt of Certific ates a nd O p inions. E ver y c ertifica te or op inion pr ovided for
in the Indenture exc ept t he cert ificate of destruct ion p rovided for in Section 11.05 hereof, w it h respect
to comp lia nce w it h a ny pro vis io n here of s ha ll include : (1) a s ta tem e nt t hat th e pers on m aking or g iving
such cert ifica te or op inion has read s uch pr ovis ion a nd the de finitions here in re lating t hereto; (2) a brie f
stateme nt as t o t he na ture and sc ope of t he ex am ina t ion or invest ig at ion up on w hic h the cert ifica te or
op inion is b as ed; (3) a s tatem e nt tha t, in t he op inion of such person he has mad e or cau sed to be mad e
such exa m ination or invest iga tion as is neces sary t o enab le him to ex press a n informed op inion w ith
respect to the s ub ject m atter re ferred to in the ins trument t o w hich his s ig nature is a ffix ed; (4) a
stateme nt of the assumptions up on w hic h such cert ificate or op inio n is based, a nd tha t su ch
assumptions are reas onab le ; a nd (5) a s tateme nt as to w het her, in the op inion of such person, suc h
provis ion has been c omp lied w ith.
Section 1.03. Interpr etat ion.
(a) U nless the co ntext otherw ise ind icates, w ords expre ss ed in the s ingu lar shall
inc lude the p lura l and vice versa a nd the us e of the neuter, mascu line, or fe m inine g e nder is for
con ven ie nce only a nd shall be deemed to inc lude the neuter, mascu line or fe m in ine gend er, as
app ropr iate.
(b) H eadings of art ic les a nd sections here in a nd th e tab le of c onte nts her e of ar e
sole ly for c onve nience of r e ference, d o not constitute a p art here o f a nd s ha ll not a ffect the me a ning ,
16
construc tion or e ffec t hereof.
(c) A ll r e ferenc es herein t o “Artic les,” “Se ct ions” and other subd ivis ions ar e to the
corresp ond ing Artic les, S ect ions or su bdivis ions of the Inde nture; th e w ords “here in,” “hereof,”
“her eb y,” “hereu nder” a nd other w ords of s im ilar im port re fer to the Ind enture as a w hole and not t o
any par ticu lar Ar tic le, S ection or subd ivis ion her e of.
ART ICLE II
THE 2 015 BON DS
Section 2.01. Author iz at ion of 2015 Bo nds. The D istr ic t hereb y author iz es t he is suance
hereu nd er fr om t im e to tim e of t he 2015 B onds, w hic h s ha ll c onst itute specia l ob ligat ions of t he
D is tric t, for the purp ose of ad va nce re fu nd ing a p ortio n of t he outst a nd ing 2006 Cer tific ates. T he 2 015
Bonds are hereb y des ig nat ed the “Truc kee D onner P ublic U t ilit y D is trict Water S yste m R efu nd in g
Reve nu e B onds, Series 2015” in the aggreg a te pr inc ip al am ou nt of $__________. The Inde nture
constitutes a cont inu ing agreeme nt w it h the O wners from tim e to tim e of the 2015 Bonds to secure t he
fu ll pa yme nt of t he pr inc ipa l of a nd interest a nd pr em iu m (if a ny) on a ll the 2015 B onds, s ubje ct to the
cove na nts, pr ovis ions a nd c ond itions herein c onta in ed .
Section 2.02. T erms of the 2015 Bonds . T he 2015 B onds s ha ll be issued in fu lly r eg istered
form w it hout c oup ons in d e nom ina t ions o f $5,000 or any integra l mu lt ip le t hereof.
(a) T he 2015 Bonds s ha ll matur e on N ove mber 15 in e a ch of t he years a nd in the
amou nts set f orth be low a nd s ha ll bear in ter est on e ach Interest P aym e nt D at e at t he rates s et forth
be low :
M aturity D ate
(N ovem ber 15) P rin cipal Am oun t Interest Rate
17
Interest on the 2 015 B onds shall be pa yab le on ea c h Int erest Pa yment D ate to the person w hose
nam e ap pears on t he Reg is tr at ion B ooks as the Ow ner t her e of as of the Rec ord D ate im med ia te ly
preced ing eac h suc h Interest P a ym ent Date, suc h int erest to be pa id b y c heck of the Trustee se nt b y
firs t class ma il on t he app lic ab le Interest P a ym e nt D ate to the O w ner at the address of suc h O w ner as
it appe ars on t he Reg istra tion B ooks (ex cept that in the c ase of a n O w ner of one m illion d ollars
($1,000,000) or more in pr inc ip a l am ou nt, su c h pa yment ma y, at suc h O w ner’s op t ion, be mad e b y
w ire trans fer o f immed iate ly a va ilable fu nd s to a n acc ou nt in t he U nited States in acc ord a nce w ith
w ritte n instructions p rovid ed to the Trustee b y s uc h O w ner p r ior t o t he Re c ord D ate). Pr inc ip a l of a nd
prem ium (if a ny) on a ny 2015 B ond s ha ll be pa id b y c heck of the Trust ee up on pres e ntation and
surrender ther e of at m atur it y or up on the pr ior rede m ption there of, at the O ffic e of t he Truste e. Both
the p r inc ip a l of a nd interest a nd pr em ium (if a ny) on t he 2015 B onds sha ll b e p a yab le in law fu l m one y
of t he U nited States of Amer ica.
E ac h 2015 Bond s ha ll be dated t he da te of initia l d e liver y, and s ha ll b ear int erest fr om t he
Interest P a ym ent Date next prec ed ing the date of authent icat ion there of u nless : (a) it is authent icat ed
after a Re cord D a te a nd o n or be fore the follow ing Interest Pa ym e nt D a te, in w hic h eve nt it shall be ar
interes t from suc h Interest Pa yme nt D at e; or (b) unles s it is aut he nt icated o n or be for e
N ovember 1, 2015, in whic h e ve nt it s ha ll bear interes t fr om t he date of initia l de liver y; provided,
how e ver, that if, as of the date of aut he nt ication of a ny 2015 B ond, interest t hereo n is in de fau lt, suc h
2015 B ond s ha ll be ar interes t fr om the Interest P a yment Date to w hic h interest has pre vious ly b een
pa id or made ava ilab le for pa yme nt t here on.
Interest on the 2015 Bonds shall be calcu lat ed on t he bas is of a 360 da y year comp os ed of
tw elve 30 da y m ont hs.
Section 2.03. T rans fer of 2015 B onds . Any 2015 B ond m a y, in a ccord a nce w it h its terms,
be tra ns ferred on the Reg istr at ion Books b y t he pers on in w h ose nam e it is reg ister ed, in person or b y
his or her d u ly aut hor iz ed attorney, up on surre nder of s uc h 2015 B ond a t the O ffice of t he Trustee for
cancellation, acc om pa nied b y de liver y o f a w r itte n ins tr um e nt of tra nsf er, du ly executed in a form
accept ab le to the Trustee. T he Trustee s ha ll not be requ ir ed to reg ister the tra ns fer of a ny 2015 B ond
during t he per iod in whic h t he Trustee is selec ting 2015 Bonds for redemp t ion a nd any 2015 B o nd t ha t
has been s e lect ed for redempt ion.
W he ne ver a ny 2015 Bond or 2015 Bonds s ha ll be s urrender ed for trans fer, th e D istrict sha ll
execute and t he Trustee s ha ll aut he nt ic ate a nd s ha ll de liver a new 2015 Bond or 2015 Bo nds of
author iz ed d e nom ination or de nom inat ions for a like series a nd aggregate pr inc ipa l a m ount of the same
matur ity. T he Trustee sha ll requ ir e the 2015 Bond O w ner req ues ting such tra nsfer to pa y a ny tax or
ot her g overnme nt a l c harge requ ir ed t o b e pa id w it h r espect t o suc h tra nsfer. F ollow ing a ny tra ns fer of
2015 Bonds , the Trustee w ill cancel a nd d estroy the 2 015 Bonds it has rece ived.
Section 2.04. E xchange of 2015 Bonds. 2015 Bonds ma y b e exc hanged a t the O ffic e of the
T rus tee for a like aggreg ate pr inc ipa l am ou nt of ot her author ized de nom ina t ions of t he s ame ser ies a nd
matur ity. T he Trustee sh all not be req u ired t o exc ha nge any 2015 B ond dur ing t he period in w hich the
T rus tee is selec ting 2015 Bonds for rede mption a nd any 2015 B ond that has been s elect ed for
redemption. The Trus tee shall r equ ire t he 2015 B ond O w ner requesting su ch exc ha ng e to pa y a ny tax
or ot her g overnm e nta l c harg e requ ir ed to be pa id w ith respect to such exchange. F ollow ing a ny
excha nge of 2015 Bonds , the Trustee w ill canc e l a nd destr oy t he 2 015 Bonds it has rece ived.
18
Section 2.05. Registr ation B ooks. T he Trustee w ill ke ep or c aus e t o be kept, at the O ffic e o f
the Trustee, s u ffic ient rec or ds for the reg istration a nd transfer of ow ners hip of the 2015 B o nds, w hic h
sha ll up on reas onab le notice and at reas onab le tim es be open t o inspec tion dur ing regu lar bus iness
hours b y the D is tr ict a nd the O w ners; and, upon pr ese ntation for such purp ose, the Trustee s ha ll, u nder
such re asonab le r egu lations as it ma y prescr ibe, r egister or tra nsf er or c ause to be r egis tered o r
trans ferr ed, on suc h r e c ords, the ow ners hip of t he 2015 Bonds as her einbe fore pr ovid ed.
T he p ers on in w hose name a ny 2015 Bond s hall b e reg istered s ha ll be de emed the Ow ner
thereo f for a ll purp oses hereof, and pa yme nt of or on acc ou nt of the inter est on a nd princ ipa l a nd
Redempt ion Pr ice of such 2015 B onds s ha ll be ma de onl y t o or upon the ord er in w riting of suc h
registered Ow ner, w hich pa ym ents sha ll be va lid and effectua l to satis fy a nd d is c harge liab ilit y up o n
such 2015 B ond t o t he ex te nt of the su m or sums s o pa id.
Section 2.06. Form a nd Exe cution of 2015 Bonds . T he 2015 B ond s sha ll be in substa ntia ll y
the form set forth in Exhib it A hereto. The 2015 Bonds sha ll be ex ecuted in t he nam e and on behalf
of the D istr ict w ith t he ma nu a l or facs im ile s ig natu re of its Preside nt [, c ou nters ig ned b y t he ma nu a l
or facs im ile s ig na tur e of the Secretar y, a nd s ig ne d b y t he ma nua l or facs im ile s ig na ture of t he
T reasurer]. T he 2015 B onds ma y carr y a s eal, a nd s uch sea l ma y be in the form of a facs im ile of t he
D is tric t’s sea l a nd ma y be rep r odu ced, imprinted or impressed on t he 2015 Bonds. T he 2015 B onds
sha ll the n be de livered to th e Truste e for au t he ntica tion b y it. In case an y of t he officers w ho s hall
ha ve s ig ned or attested a ny of t he 2015 Bonds sha ll cease t o be such offic er or offic ers of the D istr ic t
before th e 2015 Bonds so s ig ned or attested s ha ll ha ve been aut he nticated or de liver ed b y t he Trustee ,
or iss ued b y t he D is tr ict, suc h 2015 B o nds ma y ne verthe less be aut he ntic ated, de livered a nd iss ued
and, up on such aut henticatio n, deliver y a nd issue, sha ll b e as b ind ing upon the D is tr ict as th oug h thos e
w ho s ig ned a nd a ttested t he same had c ont inued t o b e such officers of the D is tr ict, a nd a ls o a ny 2015
Bonds ma y be sig ned and att ested on be ha lf of t he D istr ic t b y suc h pers ons as at the actua l d ate of
execut ion of such 2015 Bonds shall be the proper officers of the D is trict a lthoug h at the nom ina l d ate
of s uc h 2015 Bonds any suc h pers on s ha ll not ha ve b een such officer of t he D istr ict.
O nly s uc h of t he 2015 Bonds as s ha ll bear t here on a certificate of authe ntication s ubstantia lly
in t he form set for th in Ex hib it A heret o, m a nua lly ex ecuted b y the Trustee, s ha ll be va lid or ob ligator y
for a ny purp ose or e ntit led to t he bene fits of the Ind enture, and su ch cer t ific ate of or on b eha lf o f the
T rus tee s ha ll be c onc lus ive e vide nc e that t he 2015 Bonds s o authe ntic ated ha ve bee n du ly executed,
authe nticated a nd de livered hereunder a nd are e nt it le d to the be ne fits of the Inde nture.
Section 2.07. 2015 Bond s M utila ted, L ost, D estroyed or Stole n. If any 2015 B ond s ha ll
become mut ilated, t he D istr ic t, at the expe nse of the O w ner of s aid 2015 Bo nd, sha ll execut e, and the
T rus tee sha ll t hereup on aut hentic ate a nd deliver, a new 2015 Bond of like te nor, ser ies and au thor iz e d
denom ination in exchange and subst itu tion for the 2 015 B onds so m utilated, bu t only up on surrend er
to the Trus te e of t he 2015 Bond s o mutilated . E ver y mutila ted 2015 Bond s o surrend ered to t he Truste e
sha ll be cance led b y it. If any 2015 B ond s ha ll be los t, destr oyed or s tole n, e vidence of suc h loss,
destruct ion or the ft ma y be s ubm it ted to the T rustee a nd, if such e vide nce be satisfa ctor y to the Trustee
and indemn it y sat is factor y t o the T rustee shall be g iven, the D istr ict, a t the expense o f the O wner, shall
execute, a nd the Truste e s ha ll thereup on authe ntic ate and de liver, a new 2015 Bond of like te nor, ser ies
and au t hor iz ed de nom ina tion in lieu of a nd in subst itution for t he 2015 Bond s o lost, destr oyed or
stole n (or if a ny such 2015 B ond sha ll ha ve matured or shall be ab ou t to m ature, instead of is suing a
substitute 2015 Bond, the Truste e ma y pa y t he sam e w it hout surre nder t her e of). The D istr ict ma y
requ ire pa ym e nt b y the Ow ner of a sum not exceed ing the actu a l cost of p rep ar ing e ac h new 2015
Bond issued under this S ect ion and of the expe ns es w hic h ma y be incurred b y the D is tr ict a nd t he
19
T rus tee in connec t ion therew it h. A ny 2015 B ond issued u nder t he pr ovis ions of this S ect ion in lieu o f
any 2015 B ond a lleged t o be lost, destr oyed or sto le n sha ll cons titut e a n or ig ina l add it iona l c ontr actual
ob lig at ion on t he part of the D istrict w het her or not the 2015 B ond s o a lleg ed to be lost, destr oyed, or
stole n b e at a ny tim e e nforceab le b y a nyone, a nd sha ll b e ent itled to the b ene fits of the Ind e nture w it h
a ll ot her 2015 Bonds secured b y t he Ind e ntu re. N otw iths ta nd ing any other provis ion of this Section,
in lieu of de livering a new 2015 B ond for a 2015 B ond w hic h has bee n mutilated, lost, destr oyed or
stole n a nd w hic h has m atur ed or has been s e lected for red em ption, the Trustee may make payme nt of
such 2015 B ond up on re ceip t of indem nity sat is factor y to the Trustee.
Section 2.08. Book E ntr y S ys tem.
(a) E lection of Book E ntr y S yst em. Pr ior to t he is sua nc e of the 2015 Bonds , t he
D is tric t m a y pr ovide that such 2015 B onds sha ll be initia ll y issu ed as b o ok e ntr y 2015 B ond s. If t he
D is tric t sha ll e lec t to de liver a ny 2015 Bonds in b ook en try form, the n t he D istr ict sh all caus e the
de liver y of a s eparate s ing le fu lly reg ister ed bond (whic h may be typew r itte n) for each matur ity da te
of s uch 2015 Bonds in a n authoriz ed den om ination c orresp ond ing t o that t ota l pr inc ip a l am ou nt of t he
2015 Bonds des ig na ted to ma ture on suc h date. U pon init ia l issua nc e, the ow ners hip of ea c h su ch 2015
Bond s ha ll b e reg istered in t he 2 015 Bond Reg istr ation Books in the na me of the N om inee, as nom ine e
of t he D epos itor y, and ow nership of the 2015 B onds, or an y p or tion t hereof m a y not t hereaft er be
trans ferr ed except as provid ed in Section 2.08(e).
W ith respect to book entr y 2015 Bonds , the D is tr ict a nd the Trustee sh a ll ha ve no respons ib ilit y
or ob lig at ion to a ny Part icip ant or to a ny person on b eha lf of w hic h such a P articip a nt holds a n inter est
in s uch b ook en tr y 2015 B onds. W it hout lim it ing the im med iate ly prec ed ing se nte nce, the D istr ict a nd
the Trustee s ha ll ha ve n o res pons ib ilit y or ob liga t ion w ith respect to: (i) the accur ac y of t he records of
the D epos itor y, the N om inee, or a ny Part ic ip a nt w ith respect to any ow ners hip interest in book entr y
2015 Bonds ; (ii) t he d e livery to a ny Partic ipa nt or a ny ot her p erson, other tha n an O wner as s how n in
the 2015 B ond R eg istr ation B ooks, of a ny not ice w ith respect t o b ook e ntr y 2015 B onds, inc lud ing any
not ice of r edemption; (iii) the s e lect ion b y t he D epos itor y a nd its P ar tic ip a nts of the be ne fic ia l int erests
in b ook entr y 2015 B onds to be r ed eem ed in t he e ve nt the D is tr ict redeems t he 2015 Bonds in par t; or
(iv) the pa yme nt b y the D ep os it or y or a ny Part icip a nt or a ny ot her p erso n, of a ny am ou nt of pr inc ipa l
of, prem iu m, if any, or interest on b ook e ntr y 2015 B onds. The D istr ict a nd the T rustee m a y treat a nd
cons ider the p erso n in w hose name eac h b ook e ntr y 2015 Bond is reg ister ed in the 2015 B ond
Registr ation B ooks as t he abs olute O w ner of such b ook entr y 2015 B ond for t he purp ose of p aym ent
of pr inc ipal of, pre m ium a nd inter est on s uch 2015 Bond, for t he purp ose of g iving notic es o f
redemption a nd other ma tters w it h respect t o such 20 15 Bond, for the purpose of r egister ing tr a ns fers
w it h respect to suc h 2015 B ond, and for all ot her purpos es w ha ts oe ver. T he Trus tee s hall pa y a ll
princ ipa l of, premium, if any, a nd int erest on the 2015 Bonds only t o or up on the or der of the respective
O w ner, as s how n in t he 2015 B o nd R eg istrat ion B ooks, or his respective attor ne y du ly author iz ed in
w riting, a nd a ll suc h pa yme nts sha ll b e va lid a nd effect ive t o fu lly sat is fy and d isc harg e the D is tr ic t’s
ob lig at ions w ith respect to pa yme nt of pr incipal of, prem ium, if a ny, a nd interest on the 2015 Bonds
to the ex te nt of the sum or sum s s o pa id. N o p ers on other tha n an O w ner, as s how n in the 2015 B ond
Registr ation B ooks, s ha ll rece ive a 2015 Bond evide nc ing the ob lig ation to ma ke pa ym e nts of pr inc ip a l
of, p rem ium, if a ny, a nd interest on the 2 015 Bonds. U pon d e liver y b y the Depos itor y to t he D istr ict
and t he Trustee of w r itte n notic e to the e ffe ct tha t t he D epos it or y has determ ined to s ubst itu te a new
nom inee in p lace of the N om inee, a nd sub ject to t he provis ions here in w ith respe ct t o Record D ates ,
the w ord N om ine e in the Inde nture s ha ll r efer to such nom inee of t he Dep os it or y.
20
(b) D eliver y of Letter of Repr esentat ions. In ord er to qu a lify the book e ntr y 2015
Bonds for t he D ep os itor y’s book entr y s ystem, t he D istric t and the Trustee s ha ll execute a nd deliver t o
the D epos itor y a L etter of Represe ntations. T he exec ution and de liver y of a Letter of Represe nta tions
sha ll not in a ny w a y imp ose up on the D istr ict or t he Trustee a ny ob ligat ion w hats oe ver w it h r espect t o
persons ha ving interests in such b ook entr y 2015 B onds ot her t ha n the O wners, as s how n on the 2015
Bond Reg is tration B ooks. B y execu ting a L etter of Representations , the Truste e s ha ll agree t o ta ke a ll
action necess ar y a t a ll times s o t hat the Trustee w ill be in c omp lia nce w it h a ll representa tions of the
T rus tee in suc h Letter of Represe nt at ions. In add ition to t he exe cut ion and de livery of a L etter o f
Representations , the D istr ic t a nd the Trustee s ha ll take such ot her act ions, not inc ons iste nt w ith t he
Inde ntur e, as are reas onab ly nec essar y to qua lify b ook e ntry 2015 Bonds for t he Dep os itor y’s book
entry pr ogra m.
(c) Sele ct ion of Dep os it or y. In the e ven t tha t: (i) the D e pos itor y de term ines not to
cont inue to act as Secur ities D epos it or y f or b ook entr y 2015 Bonds; or (ii) the D istr ic t determ ines that
cont inuation of the b ook e ntr y s yste m is not in the b est inter est of the bene fic ia l ow ners of t he 2015
Bonds or the D istr ict, then t he D is trict w ill d isc ont in ue t he b ook en try s ys te m w ith th e D ep os itor y. If
the D istr ict determ ines to rep la ce t he D ep os it or y w it h a nother qualified Se cur ities D epos itory, the
D is tric t shall prepar e or d irec t the preparation of a new sing le, separa te, fu lly reg is tered 2015 B ond for
eac h of t he matur ity d ates of s uc h b ook entr y 2015 B onds, registered in t he nam e of suc h success or or
substitute qualified Securities D epos itor y or its N om inee as pr ovided in subsect ion (e) here o f. If th e
D is tric t fa ils to ident if y a nother qua lifie d Secur ities D epos itor y t o r ep lace t he D ep os it or y, the n the
2015 Bonds sha ll no longer b e restr icted t o be ing r eg ist ered in such 2015 B ond Reg istra t ion B ooks in
the name of t he N om ine e, but s ha ll be reg is tered in whatever name or nam es the O w ners transferr ing
or exc ha ng ing s uc h 2015 Bonds shall d es ig nate, in acc orda nce w ith the pr ovis ions of S ections 2 .03
and 2.04 here of.
(d) Pa yme nts To D ep os it or y. N otw ithsta nd ing a ny other p r ovis ion of the
Inde ntur e t o the c ontrar y, so long as a ll O utsta nd ing 2015 Bonds are he ld in b ook e ntr y form a nd
registered in the nam e of the N om inee, all paym ents of princ ipa l of, redem ption prem ium, if a ny, a nd
interes t on su ch 2015 B ond and all notices w it h respect t o such 2015 B ond sha ll be made and g ive n,
respective ly to the N om inee, as pr ovided in the L ette r of R eprese ntations or as ot herw ise instru cted b y
the D epos itor y a nd agreed to b y the Trustee notw ithsta nd ing a ny inc ons iste nt pr ovis ions here in.
(e) T rans fer of 2015 B onds t o Substitute D ep os itor y.
(i) T he 2015 Bonds s ha ll be init ia lly is sued as pr ovid e d in Se ct ion 2.01
here of. Regis tered ow ners hip of s uch 2015 B onds , or a ny p or t ions there of, may not t her ea fter b e
trans ferr ed except :
(A) to an y success or of D TC or its nom inee, or of a ny s ubstitute
depos itor y d es ig nated pursuant t o c lause (B) of subsect ion (i) of t his Sec tion 2.08(e) (“Substitute
D epos it or y”); provided tha t any success or of DTC or Su bst itut e D epos itor y sha ll b e qua lified u nder
any app licab le law s to provide the ser vic e prop os ed to be pr ovided b y it;
(B) to a ny Subst itute D ep os it or y, upon: (1) t he res ig nation of D TC
or its success or (or a ny Subs titut e D ep os it or y or its s uccessor) fr om its fu nctions as dep os it ory; or (2)
a d eter m ina tion b y the D istr ict that D TC (or its success or) is no longer ab le t o c arr y out its fu nc tions
as depos it or y; pr ovided that a ny s uc h S ubst itu te D e pos itor y s ha ll be qua lif ied u nd er a ny app licab le
law s to pr ovide t he ser vic es prop osed t o be p r ovid ed b y it; or
21
(C) to any p erson as pr ovided b e low , u pon: (1) t he res ignation of
D TC or its success or (or any S ubst itute D ep os itor y or its s uccessor) fr om its fu nc tions as dep os itory;
or (2) a det erm ina tion b y the D istr ic t that D TC or its s uccess or (or Subs titu te D ep os it or y or its
success or) is no longer ab le t o carr y out its fu nct ions as depos itor y.
(ii) In the cas e of a ny trans fer p ursua nt to c laus e (A) or c lause (B) of
subsection (i) of th is Sec t ion 2.08(e), up on rec eipt of a ll O uts ta nd ing 2015 B onds b y the Tr ustee ,
toge ther w ith a Wr itte n Request of t he D istr ict to the Trustee des ig nat ing the Subst itute D ep os it ory, a
sing le new 2015 B ond, whic h t he D is tr ict s ha ll prepar e or caus e to b e prepared, shall be is sued for eac h
matur ity of 2015 B onds t he n O uts tand in g, reg ister ed in the name of suc h successor or suc h S ubst itu te
D epos it or y or the ir N om ine es, as the case ma y be, all as sp ecified in such Wr itten Request of t he
D is tric t. In t he case of an y tra ns fer purs uan t t o c la use (C) of subsection (i) of this S ect ion 2.08(e),
upon rece ipt of a ll O uts ta nd ing 2015 B onds b y the Trustee, toge t her w it h a Wr itte n Requ est of t he
D is tric t t o the Trustee, new 2015 B ond s, w hich the Distr ict s ha ll prepare or cause to be prep ared, s ha ll
be issued in su c h denom inat ions and reg ist ered in the na mes of suc h pers ons as are requested in such
W ritte n R eq ues t of the D istr ict, s ub je ct t o the lim itations of Se ct ion 2.01 here of, provided tha t t he
T rus tee s ha ll not be r equ ired to de liver such new 20 15 Bonds w ithin a per iod of less tha n s ixt y (60)
da ys fr om the d ate of re ceipt of such Writte n R equest fr om the D is tr ic t.
(iii) In the c ase of a part ia l red em ption or a n ad va nce refu nd ing of any 2015
Bonds e videncing a p or tion of the princ ip a l m atur ing in a part icu lar year, D TC or its successor (or a n y
Su bstitute D ep os itor y or its s uccessor) sha ll ma ke a n appr opriate notation on s uch 2015 B onds
ind icating the date a nd a m ou nts of suc h red uc t ion in princ ipa l, in form accep tab le to the Truste e, a ll i n
acc ordance w ith the Letter of Repres e ntations. T he Trustee s ha ll not be liable for s uc h D epos itor y’s
fa ilu re to ma ke suc h n otat ions or err ors in ma king su ch notations a nd t he records of the Tr uste e as t o
the O utsta nd ing pr inc ip al am ou nt of such 2015 B ond s shall be contr olling.
(iv) T he D istr ic t a nd the Tr ustee sha ll be e ntitled t o tr eat the perso n in
w hose nam e a ny 2015 B ond is reg is tered as t he O wner thereof for a ll purp os es of the Inde nture a nd
any app lic ab le law s, notw it hsta nd ing a ny notice t o the c ontrary rec e ived b y the Trustee or the D istr ic t;
and the D istr ict a nd the Trus tee s ha ll have no respons ib ility for tra nsm itting pa yme nts to,
com mu nicat ing w it h, notifying, or otherw ise dealing w it h a ny benefic ia l ow ners o f the 2015 Bonds.
N eit her the D istr ict nor t he Truste e shall ha ve a ny respons ib ility or ob ligation, legal or ot herw ise, t o
any suc h b ene f ic ia l ow ners or t o any ot her par ty, inc lud ing D T C or its successor (or S ubst itute
D epos it or y or its success or), exc ept to t he O w ner of a ny 2015 B onds , and the Trustee ma y re ly
conc lus ive ly on its records as to t he ide ntity of the O w ners of the 2015 Bonds.
ART ICLE III
IS SU AN CE O F 2015 BON D S ; APPLICAT IO N O F P RO CEED S
Section 3.01. Is suance of the 2015 Bonds. At any time a fter t he e xecu tion of the Ind e nture,
the D istr ict m a y execute a nd t he Trust ee shall au t he nticate a nd, up on W r itte n Reques t o f t he D istr ict,
de liver the 2015 Bonds in the aggregat e pr inc ip a l am ou nt of $________.
Section 3.02. App lic ation of Proceeds of t he 2015 B onds a nd C er ta in O ther M one ys. T he
proceeds rece ived fr om t he s a le of the 2015 Bonds in the am ou nt o f $________ (ot her tha n $____ paid
b y t he init ia l purc haser d irectl y to the Bond Insurer ) sha ll b e dep os ited w ith t he Truste e, w ho s ha ll
trans fer : (a) $________ from t he p roceeds of th e 2015 Bonds to t he 2006 Escr ow Age nt for depos it in
22
the 2006 Escr ow Fund (as suc h t erm is d e fined in t he 2006 Escr ow Agre eme nt) a nd (b) d epos it th e
amou nt of $____________ fr om the proceeds of the 2015 Bonds in t he C os ts of Issuance F und. T he
T rus tee ma y estab lis h te mp orar y fu nds or a ccou nts in its records t o recor d and fa c ilitate suc h dep os its
and tr a nsfer.
Section 3.03. E stab lis hment a nd App lication of C osts of Is suanc e Fund. The Trustee shall
estab lis h, ma inta in a nd hold in tr ust a separa te fund desig na ted as t he “C osts of Is suance F und.” T he
mone ys in the C osts of Is sua nce Fund sha ll b e used and w ithdrawn b y the Trust ee t o pa y the C osts o f
Is suance upon s ubm is s ion of Requ is itions of t he D ist rict s tating t he pers on to w h om payme nt is to be
made, the am ou nt to be pa id, the purpose for w hich the ob lig at ion w as incurred, that suc h pa yme nt is
proper c harge aga ins t sa id fu nd a nd that payme nt for s uch c harg e has not pre vious ly been m ade. Each
such Requ is ition of t he D istr ic t sha ll be su ffic ie nt e vide nce t o t he Trustee of the facts s tated t here i n
and t he T rustee shall ha ve no dut y to c onfir m the acc urac y of s uc h facts. O n t he s ix m o nth a nniversar y
of t he is sua nc e of the 2015 B onds, or u p on t he ear lier Wr itte n Request of the D istr ict, a ll am ou nts
rema ining in the C os ts of Issua nce Fu nd sha ll be tr a ns ferred b y t he Trust ee [to the I nterest Acc ou nt]
and the C osts of Is suanc e Fund s ha ll be c los ed. Inves tm ent e ar nings on am ou nts on dep os it in the
Costs o f Issua nce Fu nd sha ll be r eta ined in t he C ost of Iss uance Fund.
Section 3.04. V alid it y of 2015 B onds. T he va lid it y of t he au t hor iz ation a nd iss ua nc e of the
2015 Bonds is not d epe nde nt on a nd sha ll not be a ffe cted in a ny w a y b y a ny pr oc eed ings ta ke n b y the
D is tric t or the Tr ust ee w ith respect t o a ny other agre eme nt. T he recita l c o nta ined in the 2015 Bonds
that t he same ar e is sued pursuant to the C ons titu t ion a nd law s of the S ta te sha ll be c onc lus ive eviden ce
of t he valid ity a nd of c omp lia nc e w ith the pr ovis ions of law in t he ir issuance.
ART ICLE IV
RED EM PTIO N O F 2015 BO ND S
Section 4.01. T erms of R ed empt ion.
(a) T he 2015 B onds sha ll b e subje ct t o extraord inar y redempt ion prior t o their
respective sta ted matur ities, as a whole or in p art on a ny date in the order of m atur ity a nd w ithin
matur ities as dir ected b y the D istr ict in a Wr itte n R e quest provided t o the Trustee at least 60 da ys (or
such lesser nu mb er of da ys acc eptab le to the T rustee in t he s ole d iscretion of t he Trustee, suc h notic e
for the c onve nience of the T rustee) pr ior to s uc h date a nd b y lot w it hin ea ch matur ity in integra l
mu lt ip les of $5,000 fr om N et Pr oceeds, up on the terms and cond itions of, a nd as provid ed for in,
Sections 6.05 and 6.11, at a Rede mpt ion P r ic e equ a l to the pr inc ip a l a m ou nt thereof p lus ac cru ed
interes t t hereon t o t he d ate fix ed for r edempt ion, w ithout pre m ium.
(b) T he 2 015 B onds w ith stated matur ities on or a ft er N ovemb er 15, 20___ s ha l l
be subject to red empt ion pr ior to t heir respec tive st at ed matur it ies, as a w hole or in part on a ny da te
in the ord er of m aturit y as d ire cted b y t he D is tr ict in a W r itt e n R eques t pr ovided to the Trustee at least
60 da ys (or suc h less er number of da ys accep tab le to the Trustee in t he s ole d iscretion of the Trustee,
such not ice for the c onve nie nc e of t he T ruste e) pr ior to s uc h date and b y lot w ithin e ach m atu rity in
integra l m u lt ip les of $5,000, on or a fter N ove mber 15, 20__ at a Redemptio n P r ice equ al t o the
princ ipa l am ou nt thereof p lus accrued interes t ther eon t o t he d ate fix ed for redemp tion, w ith out
prem ium
23
(c) T he 2015 B onds w it h stat ed matur it ies on N ovember 15, 20__ are s ubjec t t o
mand ator y s inking fu nd redemp tion in part (b y lot) on ea c h N ove mber 15 on a nd a fter N ove mber
15, 20__, in int eg ra l mu ltip les of $5,000 a t a Rede m pt ion P r ice of the princ ipa l am ou nt there of p lus
accrued interes t e vid e nced and rep r esented ther eb y to the d ate fix ed for red em ption, w ithout
prem ium, in acc orda nc e w it h the f ollow ing schedu le :
Red em ption D ate
(N ovem ber 15)
Pr in cipal
Am oun t
$
(1 )
(1) Final Maturity.
Section 4.02. Sele ct ion of 2015 B onds f or Redemp tion. Whene ve r provis ion is mad e in the
Inde ntur e for the redemp tion of less t han all of the 20 15 Bonds, the Trus tee s ha ll se lect the 2015 B o nds
for redemp tion as a w hole or in part on a ny dat e as directed b y t he D istr ict a nd appr oved in w riting b y
the Insurer (so long as the Insu rer has not de fau lted on a ny ob ligation u nd er the Insura nce P olic y or
the Reser ve Su rety P olic y), a nd b y lot w it hin each maturity in integra l mu lt ip les of $5,000 in
acc ordance w ith Sec t ion 4.01 her eof. T he Trustee w ill pr omptly not ify the D istr ict in w r iting of the
numbers o f the 2 015 B o nds or por tions there o f s o se lected for rede mp tion.
Section 4.03. N otic e of Redemp tion. N otic e of redemp tion s ha ll be mailed b y first c lass mail
at least tw e nty (20) da ys but not m ore tha n s ix ty (60) days before a ny R edempt ion D ate, t o the
respective O w ners of a ny 2 015 B onds des ig nat ed for redemption at t he ir addresses appear ing on the
Registr ation B ooks, to the Se cur ities D epos itor ies a nd the Informa tion S er vic es; pr ovided t hat, in the
cas e of notice of optio na l redemp tion not re la ted t o a n advance or cur re nt refu nd ing, s uc h notic e ma y
be g ive n only if su ffic ie nt fu nd s ha ve been dep os ited w ith t he Trustee to pa y the app licab le Red emptio n
Price of t he 2015 B onds to be rede emed, provided tha t s uch notic e m a y b e ca ncelled b y the D is trict
upon Wr it te n Request de liver ed to the Truste e not less than five (5) days prior to suc h Redemptio n
D ate. Eac h notic e of red emption s ha ll st ate the date of notice, the Rede mpt ion Date, t he p lac e or p laces
of red em ption, the R edempt ion Pr ice, w ill des ig na te the matur ities, CU SIP numb ers, if a ny, a nd, if less
than all 2015 B onds of an y such matur ity are to be re deemed, t he s eria l numbers of t he 2015 B onds of
such ma turit y to be rede emed b y g iving t he ind ividua l nu m ber of eac h 2015 B ond or b y sta ting tha t a ll
2015 Bonds betw ee n tw o stated nu m bers, both inc lu s ive, ha ve been c a lled for red emption a nd, in the
cas e of 2015 B onds t o be r edeem ed in p art only, t he r es pective p or t ions of t he princ ip a l am ount t hereof
to be red eemed. Ea c h suc h not ice s ha ll a lso s tate tha t on the Redemp t ion D ate t her e w ill bec ome du e
and pa yab le o n e ach of said 2015 Bonds or parts thereof des ig na ted for redempt ion the Redempt io n
Price thereof or of s a id s pecified por tion of t he pr inc ip a l t here of in the c ase of a 2015 Bond to b e
redeemed in par t onl y, toget her w ith interest a ccrued there o n to the Redempt ion Date, and that
(provided t hat m one ys for red em ption ha ve be e n depos ited w ith the Trustee) fr om a nd a ft er s uc h
Redempt ion D ate in terest thereon s hall c ease to accru e, and sh all requ ir e t hat suc h 2015 B onds be the n
surrendered to the Trustee. N either the fa ilur e to re ce ive s uch notice nor a ny defec t in t he not ice or
the ma iling there of w ill a f fect the va lid ity of t he redempt ion of a ny 2015 B ond. N otice of red e mpt io n
of 2015 B onds s hall be g ive n b y t he Trustee at the expense of the D istr ict.
W ith respect to a ny notice of optiona l r edem ption of 2015 Bonds , s uch notic e s ha ll s tate that
such redemption s hall be c ond itiona l up on the rece ipt b y the Truste e on or pr ior to t he date fix ed for
such red empt ion of m one ys su ffic ie nt t o pa y t he princ ip al of, premiu m, if a ny, and inter est on suc h
2015 Bonds to be redeem ed and tha t, if such m one ys shall not have be e n so r ece ived, said not ice sha ll
24
be of no for ce a nd e ffect a nd t he T rustee s hall not be r equir ed to red eem suc h 2015 B onds. In t he e ve nt
that such notic e of red emp tion c ontains s uch a c ondition a nd such m one ys are not so received, the
redemption s ha ll not be mad e, a nd the T rust ee sh all within a reas onab le tim e thereafter g ive not ice, in
the ma nner in w hich the not ice of rede mpt ion was g ive n, that such m one ys w ere not s o rece ived.
Section 4.04. Partia l Rede mpt ion of 2015 B onds . U pon s urre nder of a ny 2015 B ond
redeemed in p art only, t he D is trict s hall execute and the Trus tee s ha ll authent ic ate and d e liver to t he
O w ner thereof, a t t he expens e of the D istr ict, a new 2 015 B ond or 2015 Bonds of au t hor iz ed
denom inations equal in aggrega te pr incip a l am ou nt to t he unr edeem ed portion of the 2015 Bonds
surrendered a nd of the same s eries, interest ra te a nd matur ity.
Section 4.05. E ffe ct of Redempt ion. N ot ice of redemp tio n ha ving bee n du ly g ive n as
aforesaid, a nd m one ys for pa ym e nt of t he Red emption P ric e of, t og ether w ith interes t accrued t o the
date fixed for red emption on, t he 2015 B onds (or p ort ions ther e of) so c a lled for r edempt ion be ing he ld
b y the Truste e, on t he Redem ption D ate des ig nated in such notice, the 2015 B onds (or p ortions t her eo f)
so ca lled for red em ption s ha ll bec om e due a nd pa yab le, inter est on the 2015 Bonds so ca lled for
redemption s ha ll cease to a ccrue, sa id 2015 B onds (or por tions ther eof) sha ll cease t o b e e nt itled t o any
bene fit or s ecur ity u nder t he Inde ntur e, a nd the O w ners o f sa id 2015 B onds s ha ll ha ve no r ig hts in
respect thereof except to rece ive p aym e nt of the Re dem ption P rice t hereof. The Trustee sha ll, upon
surrender for pa ym e nt of a ny of the 2015 B o nds t o b e redeemed on the ir Redemption D ates, pa y s uc h
2015 Bonds at t he R edemption P r ice.
A ll 2015 Bonds redeem ed pursuant t o t he pr ovis io ns of t his Artic le sha ll be c a nceled upon
surrender thereo f.
ART ICLE V
WATER SY S TEM REVENU ES, F UN D S AN D AC CO UN TS;
PAYM EN T O F P RIN CIPAL AN D IN TEREST
Section 5.01. Pledge a nd Ass ig nme nt ; Re ve nue Fu nds.
(a) A ll of t he W a ter S ys tem Re ve nues, a ll a m ou nts he ld in t he W ater S yste m
Reve nu e Fund descr ib ed in subs ection (b) below , the Rate Stabiliz a tion Fu nd descr ibed in Se ct ion 5.06
be low a nd a ny other am ounts (inc lud ing proceeds of the sa le of the 2015 Bonds) he ld in any fu nd or
acc ou nt estab lis hed pursua nt to t he Inde nture (exc ept the Rebate Fund) are hereb y irre vocab ly p ledge d
to se cure th e pa yme nt of t he pr inc ip a l of a nd interest, and the pre m ium, if a ny, on t he 2015 B onds in
acc ordance w it h their terms a nd the pr ovis ions of the Inde nture, subject how e ver to the p ledge t here on
securing B onds and Contracts, a nd the Water S ystem R evenu es s ha ll not be used for a ny other p urpos e
w hile t he 2015 B onds rema in O u tsta nd ing; provid ed t hat out of t he W ater S ystem Re venu es a nd
amou nts on dep os it in t he R ate Stab iliz ation Fund there m a y be app ortioned such sums for suc h
purpos es as are expres s ly perm itt ed here in. S a id p led ge, toget her w ith the p ledge cr eated for t he be ne fit
of other B onds a nd C ontr acts, s ha ll c ons titute a firs t lien on and secur ity inter est on W ater S yste m
Reve nu es and, su b ject t o app lic at ion of W ater S ys t em R eve nues and a ll am ou nts o n dep osit in the
W ater S ys tem R eve nue Fu nd a nd the Rate S t ab iliz ation Fu nd as perm itt ed here in, the W ater S ys te m
Reve nu e F u nd, the Rate Stabiliz ation F und a nd other funds a nd a cc ou nts cr eated hereu nder f or th e
pa ym e nt of t he pr inc ipa l of a nd interest, a nd the p rem ium, if a ny, on the 2015 B onds in acc orda nce
w it h the ter ms here of, a nd sha ll attach, be perfect ed and be va lid a nd b ind ing fr om and a ft er the C los ing
D ate, w ithou t a ny phys ica l de liver y there of or furt her act and s ha ll be va lid and b ind ing ag a inst a ll
25
part ies ha ving c la ims of any kind in t ort, c ontract or o therw ise agains t the D is trict, irrespect ive of
w het her suc h par ties have notice here of.
(b) In order to carr y out and e ffectu ate t he p ledge a nd lie n co nt a ined here in, the
D is tric t ag rees and c ove na nts to receive a ll Wa ter S ystem Re ve nues in trust hereu nder a nd t he W ater
S ystem Re ve nu es shall be dep os ited w he n a nd as received in a specia l fu nd des ig nated as the “W ater
S ystem Re venue Fu nd.” The D istr ic t agrees a nd covenants to ma inta in th e W ater S ys tem Re ve nu e
Fu nd a nd to hold t he Wa ter S ys te m Re ve nue Fund s eparate a nd apart fr om ot her fu nds so long as t he
2015 Bonds remain u np a id. M one ys in t he W ater S ystem R e ve nue F u nd shall be he ld in trust b y t he
D is tric t and s ha ll be app lied, used and w ithdraw n b y t he D istr ict for the purposes s et fort h in t his
Section.
(c) T he D istr ict sha ll, fr om the m oneys in the Water S ystem R eve nue Fu nd, pa y
a ll Wa ter S ys te m O perat ion a nd M a inte na nce C os ts (inc lud ing am ou nts reas onably r equ ired to be set
aside in c ontinge nc y r eserves for W a ter S yst em O peration a nd M ainte na nce C osts, t he pa ym ent of
w hich is not then immed iate ly requ ired) as su ch W ater S ys tem O peration a nd M ain tena nce Costs
become due a nd pa ya b le.
(d) A ll rema ining m one ys in t he W ater S yste m R eve nue F und s ha ll be app lied b y
the D istr ict at t he follow ing times for t he trans fer to the follow ing respective s pecial funds in t he
follow ing order of pr ior it y; a nd all m one ys in eac h of s uch fu nds sha ll be held in trust and sha ll be
app lied, used a nd w ithdraw n o nly for t he purp oses se t forth in t his Section:
(i) Interest and P r incipal Pa yme nts. N ot later tha n s ix (6) Bu siness D a ys
prior to eac h I nter est P a ym e nt D ate, t he D istr ic t s ha ll , from t he m one ys in t he W ater S ys tem Re ve nu e
Fu nd, tra ns fer t o t he Trustee for dep os it in the Payment Fu nd t he am ou nt, if a ny, nec ess ary for the
pa ym e nts of int erest a nd princ ipa l, inc lud ing m a nda t or y s inking fu nd insta llme nts, if a ny, on th e 2015
Bonds due a nd pa yab le on s uc h Inter est Pa ym e nt D ate. The D is tr ict s ha ll a ls o, fr om the m one ys in t he
W ater S ys tem R e ve nue F u nd, tra ns fer to the app licable trustee for d ep os it in t he respect ive p a yme nt
fu nd , w it hout pre fere nce or pr ior it y, and in the e ve nt of a ny insu ffic ie nc y of suc h m one ys r atab l y
w it hout any d iscr im ination or prefere nce, a ny other D ebt Service in a cc orda nce w ith t he pr ovis ions o f
any B ond or C ontract.
(ii) Reserve F u nds. N ot later tha n s ix (6) Bu s iness D a ys pr ior t o each
Interest P ayme nt D ate, the D istr ict shall, fr om t he r emaining m one ys in the W ater S ystem R evenu e
Fu nd, therea fter, w ithout pre ference or pr iorit y a nd in the e ve nt of a ny insu ffic ie nc y of s uc h m one ys
ratab ly w ithou t a ny d iscrim ination or pre ference, trans fer t o t he app licab le trust ee for s uc h othe r
reserve fu nds a nd/or acc ou nts, if a ny, as may ha ve been estab lis hed in c onnec tion w it h Bonds or
Contracts , that sum, if a ny, necessar y to restore su ch fu nds or accou nts t o a n am ount eq ua l t o the
reserve r equ irem e nt w ith respect thereto. N o such trans fer s ha ll be made w it h res pect to the R eser ve
Fu nd, w hich sh all be deem ed fu lly fu nd ed at a ll times b y t he dep os it of t he Reserve Suret y P olic y
therein.
(iii) Po lic y C osts a nd Ins urer Re imbursem e nt Am ou nts. The D istr ict s hall,
fr om the rema ining m one ys in t he Water S ystem Reve nu e F und, pa y P olic y C osts or Insurer
Reimburseme nt Am ou nts to t he Insurer (as such ter ms are defined here in), to the ex te nt such am ou nts
are due a nd payab le.
26
(iv) Su rplus. M one ys o n depos it in t he Water S yst em R eve nu e Fund on
any da te w he n t he D is tric t reas onably expe cts such mone ys w ill n ot be needed for the pa yment o f
W ater S ys tem O perat ion a nd M ainte na nce Costs, or for a ny of the purp oses describ ed in c lauses (d)(i),
(d)(ii) or (d)(iii) ma y be expe nded b y t he D is tric t on pa ym ents of pr inc ipa l of a nd interest on notes,
bonds , c ontra cts or ot her ob liga tions pa yab le fr om N et W ater S yste m Re ve nu es subord ina te t o the
pa ym e nts descr ibed in c lauses (d)(i), (d)(ii) a nd (d)(iii) ab ove or for a ny ot her purpose p erm itted b y
law , inc lud ing, but not lim ited t o t he depos it of a m ounts in the R at e S tabilization Fu nd in acc ord a nce
w it h S ection 5.06.
(e) A ll m one ys he ld b y the Distr ict in the Water S ys te m R e ve nue Fund sha ll be
invested in Perm itted Investme nts and t he in ves tment earnings there on sha ll r emain on depos it there in.
Section 5.02. App lic ation of Pa ym e nt Fu nd . T here is hereb y estab lis hed w it h the Trustee the
Pa yme nt Fu nd, w hic h the Trus tee c ove na nts t o ma int a in a nd hold in trust separa te a nd apar t fr om other
fu nd s he ld b y it so long as a ny princ ip a l of and inter est on t he 2 015 B onds rema in u npa id. Excep t as
dire cted here in, a ll pa yme nts of int erest a nd pr inc ip a l on the 2015 B onds tra ns ferred b y the D istr ic t
fr om t he W ater S ystem Re ve nue Fu nd t o the Pa yment Fu nd pursua nt t o Sec t ion 5.01(b) s ha ll b e
promptl y dep os ited b y t he Trus tee up on rece ipt ther e of into the P a yme nt Fund; exc ept that all m one ys
rece ived b y the Truste e a nd requ ir ed hereu nder t o be depos ited in the Red empt ion Fu nd s ha ll be
promptl y dep os ited therein. All pa yments of interest a nd pr inc ipa l on t he 2 015 B o nds d epos ited w ith
the Trustee sha ll b e he ld , d is bursed, allocated a nd applied b y th e Trustee only as pr ovided in the
Inde ntur e. T he Trustee s ha ll a ls o estab lis h a nd hold a n Interes t Acc ou nt a nd a Pr inc ip al Acc ount w it hin
the Pa yme nt Fu nd.
T he Trustee sha ll tr a ns fer fr om the P a yme nt F u nd a nd dep os it into t he follow ing respective
acc ou nts the follow ing am ou nts in the follow ing order o f pr ior ity a nd a t the follow ing tim es, the
requ ireme nts of eac h suc h ac c ount (inc lud ing the m aking up of a ny de fic ie nc ies in any s uc h acc ou nt
resulting fr om lac k of W a ter S yste m Re ve nues suffic ie nt to ma ke a ny ear lier requ ired depos it) at the
time of dep os it to be satis fied be fore a ny tra ns fer is made t o a ny a ccou nt s ubseque nt in prior it y:
(a) N ot later tha n the Bus iness D ay preced ing eac h Interest P a ym e nt D ate, t he
T rus tee sha ll d epos it in the Inter est Acc ou nt that su m, if a ny, requ ir ed t o c aus e t he aggr egate am ou nt
on d ep os it in the Interest Ac cou nt to be at least eq ua l to t he a m ou nt of interest becom ing due a nd
pa yable on such Interest Pa yme nt D ate on a ll 2015 B onds t he n O utsta nd ing. N o dep os it ne ed be made
into the Interes t Ac c ount so long as ther e sha ll b e in such fu nd m oneys su ffic ie nt to pa y the interes t
becom ing due and pa ya b le on suc h Inter est Pa ym e nt D ate on a ll 2015 B onds t hen Outsta nd ing.
(b) N ot later than the Bus iness Da y preceding eac h da te on w h ic h t he pr inc ip a l o f
the 2015 B onds s ha ll b e come due a nd payab le her e under, the Truste e s ha ll d ep os it in t he Pr inc ipa l
Accou nt that sum, if a ny, requ ired t o cause t he aggre gate amou nt on dep os it in the Pr inc ipa l Accou nt
to equa l the pr inc ipal am ou nt of th e 2015 B onds com ing due a nd pa ya b le on such da te or s ub ject t o
mand ator y s inking fu nd rede mpt ion on su ch dat e. N o depos it ne ed be made int o the P r inc ip al Ac cou nt
so long as t here s ha ll b e in suc h fu nd m one ys s u ffic ie nt to p a y the pr inc ipa l bec om ing due a nd pa yab le
on s uc h date on a ll 2015 B onds t he n O uts ta nd ing .
Section 5.03. App lic ation of Inter est Ac count. A ll am ou nts in the Interest Ac c ou nt s ha ll b e
used and w ithdrawn b y the Truste e sole ly for t he pu rpos e of pa ying inter est on the 2 015 B onds as it
sha ll b ecome due a nd payable (inc lud ing accrued inte rest on a ny 2015 Bonds purc has ed or acce lerat ed
prior to matur it y pursuant to the Inde nture).
27
Section 5.04. App lic ation of Pr inc ipa l Ac c ou nt. A ll am ou nts in the Princ ipal Accou nt s ha ll
be used and w it hdraw n b y the Trustee s ole ly to pa y the princ ipa l am ou nt of the 2015 Bonds at matur ity,
mand ator y s inking fu nd r edemption, purchase or ac celera tion; pr ovided, how ever, that at a ny t im e
prior t o s e lect ion for rede mpt ion of any suc h 2015 Bonds, upon w ritte n d irection of t he District, t he
T rus tee sha ll app ly suc h am ou nts t o the purchase of 2015 Bonds at p ub lic or pr ivate sa le, as a nd w he n
and at su c h prices (inc lud ing br okerage and other c harges, bu t exc lud ing a ccru ed interest, w hic h is
pa yable fr om t he Interest Acc ou nt) as sha ll be d irec t ed pursu ant to a Writ te n Request of the D istr ict,
except t hat t he purc hase pr ic e (exc lus ive of accrued interest) m a y not exc eed t he Redempt ion Pr ic e
then ap p licab le to the 2015 B onds.
Section 5.05. App lic ation of Redem ption Fu nd. T her e is hereb y est ab lished w ith the Truste e
a spec ia l fu nd des ig na ted as the “Redemp tion F u nd.” A ll am ou nts in t he R edemp tion Fu nd s ha ll be
used and w ithdraw n b y the T rustee s ole l y for the pur pose of pa ying the R ede mption Pr ic e of the 2015
Bonds to be redee med on a ny R edemption D ate pur suant to S ectio n 4.01; pr ovided, how e ver, tha t at
any tim e prior t o s e lection for rede mpt ion of a ny s uch 2015 B onds, upon w ritte n d irec tion o f t he
D is tric t, the Trustee s ha ll app ly suc h am ou nts to the purchase of 2015 B onds a t pub lic or priva te s a le ,
as and w he n a nd at suc h pr ices (inc lud ing brokerage and other charges, but exclud ing accrued int erest,
w hich is pa yab le from the Interest Acc ou nt) as sha ll be d irected pursua nt to a W r itt e n Request of the
D is tric t, ex cept t hat t he purc hase price (exc lus ive of accrued interest) ma y not exceed the Rede m ption
Price t he n app licab le t o t he 2015 B onds.
Section 5.06. Rate Stab iliz ation Fu nd. T here is hereb y c ontinu ed a specia l fu nd des ig nated
as the “Ra te Stabiliz at ion Fu nd” t o be he ld b y the D istr ict in trust hereu nder, w hich fu nd the D is tr ic t
agrees a nd c ovena n ts t o ma inta in a nd to h old separ ate a nd apart fr om ot her fu nd s so long as a ny 2015
Bonds rema in u npa id. O n the da te of execution of t he Ind e nture, t he D is tric t has on d ep os it $_______
in the Ra te S tab ilization F u nd. M one y tra ns ferred b y t he D is tric t fr om th e W a ter S yst em Re ve nue
Fu nd to t he Rate Stab iliz a tion Fund in ac cord a nce with S ection 5.01(d)(iv) sha ll be he ld in t he Ra te
Stabiliz ation Fu nd a nd app lied in acc ordance w it h t he Indenture.
T he D istr ict ma y w ithdraw a ll or a ny p ort ion of the a mou nts on dep os it in t he Ra te Stab iliz atio n
Fu nd and tra ns fer suc h am ou nts to the Water S yst em Reve nu e F und for ap p lication in a ccorda nce w it h
Section 5.01 here of or, in the event t ha t a ll or a p or tion of the 2015 B onds are d isc harged in acc orda nce
w it h Artic le X hereof, tra ns fer a ll or a ny por tion of such am ou nts for app lica t ion in accorda nc e w ith
said Artic le X . Am ou nts tra ns ferred fr om the Rate Stabiliz at ion Fu nd to t he Wa ter S yst em Re ve nu e
Fu nd purs uant t o t his S ectio n 5.06 dur ing or w ithin 270 da ys a fter a F iscal Y ear, ma y be t a ke n int o
acc ou nt as W ater S ys tem Re ve nu es for purposes of the c a lcu lat ions in Sections 5.11 and 6.12(a) in
such F iscal Y ear .
Section 5.07. Reserve F und. T he Truste e s ha ll estab lis h a nd hold in trust the Reser ve Fund.
T he D is tr ict s ha ll cause t he R eserve Suret y P olic y to be depos ited in the Reser ve F u nd a nd the Truste e
sha ll dr aw upon t he Reser ve Surety Polic y in acc ord anc e w ith this Sec t ion 5.07.
As long as the R eserve S urety Polic y sha ll be in fu ll force a nd effect, a nd the Insurer has not
defau lted on a ny ob ligation u nder the Insura nce P olic y or the Reser ve S urety P olic y, the D istr ict a nd
T rus tee agree to c omp ly w it h t he follow ing pr ovis ions:
(a) [TO CO M E F RO M IN SU RER.]
(b) [TO CO M E F RO M IN SU RER.]
28
(c) [TO CO M E F RO M IN SU RER.]
(d) [TO CO M E F RO M IN SU RER.]
(e) [TO CO M E F RO M IN SU RER.]
(f) [TO CO M E F RO M IN SU RER.]
(g) [TO CO M E F RO M IN SU RER.]
Section 5.08. Investm e nts. A ll m oneys in a ny of t he funds or a ccou nts estab lis hed w it h the
D is tric t or the Truste e p ursuant t o the Indenture sha ll be invested b y the D istr ic t or the Truste e, as the
cas e ma y be, s olely in Perm itt ed I nvestme nts , w hic h w ill, as near ly as pract icab le, matur e on or be fore
the dates w he n such m oneys are a nt ic ipated to be ne eded for d is bursem ent. A ny investme nts b y t he
T rus tee shall be d irec ted b y the D is tr ict pursua nt to a W ritte n Request of the D istr ic t filed w ith the
T rus tee at le ast tw o (2) Business D a ys in ad va nce of t he m aking of suc h investm e nts (w hic h d ir ections
sha ll be pr omp tly c onfirmed t o t he Trustee in w r iting ). In the absence of a ny suc h d irections from the
D is tric t, the Trustee sha ll invest a ny suc h m oneys in Permitted Investm ents describ ed in clause (d) of
the de finition there of; provid ed, how e ver, t hat a ny su ch investme n t sha ll be made b y the Trustee onl y
if, pr ior to the date on w hic h suc h investm e nt is to b e made, the Truste e sha ll ha ve re ce ived a w ritte n
dire ction fr om t he D istr ict spec ifying a spec ific m one y mar ket fu nd a nd, if no suc h w ritte n d irection
fr om the D istr ict is s o re ceived, t he Trustee s ha ll hold such m oneys uninvested. O bligations p ur chased
as an investme nt of m one ys in a ny fund s ha ll be dee m ed to be part of s uc h fu nd or accou nt.
A ll interest or ga in derived fr om the investm e nt of am ou nts in a ny of the fu nds or acc ou nts
estab lis hed her eu nder s ha ll be dep os ited in t he Interes t A ccou nt unless ot herw is e pr ovid ed in t he
Inde ntur e, excep t that t he investme nt ear nings on t he Rate Stab iliz ation F u nd s hall be tra ns ferred to
the Water S yste m Re ve nue Fu nd up o n rece ipt thereof as d ir ected b y t he D istr ict. F or purp oses o f
acqu ir ing a ny investm e nts h ereu nder, t he Trustee ma y c omm ing le fu nds (ot her t ha n the Reb ate Fu nd)
he ld b y it hereunder. T he Trustee ma y a ct as pr inc ip a l or age nt in the a cqu is it ion or d is p os ition of a ny
investm e nt a nd m a y imp ose its cus tomary charges there for. T he Trustee s hall in cur no liab ilit y for
losses ar is ing fr om a ny investme nts m ad e purs uant t o t his Sect ion 5.08.
T he D istr ict ac know ledges tha t to the extent t hat regu l ations o f t he C omptr oller of the Curre nc y
or oth er app licab le regu lator y e nt ity gr a nt the D is tr ict the r ig ht t o rece ive br oker age c onfirmations o f
security tra nsac tions as the y occur, t he D istr ic t spec ifically w aives rece ip t of such c onfir mations t o the
exte nt perm itted b y law . The Truste e s hall fur nis h the D istr ict per iod ic c ash tra nsa ction s tate me nts
w hich inc lude deta il for a ll investm e nt tra ns actions e ffected b y the T rustee a nd br okers se lected b y the
D is tric t. U pon t he D is tr ict’s e le ction, su c h state me nts w ill b e delivered v ia the Trus tee’s o nline ser vice
and up on electing such service ; paper stateme nts will b e provid ed only up on request. The D istr ic t
further u nders tands t ha t trade c onfirmat ions for s ecu rit ies tra nsac tions effect ed b y the Trustee w ill b e
ava ilable up on request a nd at no add it iona l c ost a nd other trade c onfirm at ions ma y be obta ined fr om
the app licab le broker.
T he Truste e may ma ke a ny investments hereu nde r thr oug h its ow n bond or investment
departme nt or trust investm e nt departme nt, or those of its p are nt or a n a ffilia te. The Trustee or a ny of
its a ffiliates m a y ac t as s p ons or, ad vis or or ma nager in c onnect ion w ith a ny investme nts made b y t he
T rus tee hereu nder. The Trus tee or any of its af filiates may act as s ponsor, ad vis or or ma nager in
con nection w it h a ny investme nts made b y t he Truste e under t he Indenture.
29
T he D istr ic t s ha ll invest, or cause to be invested, a ll m one ys in any fu nd or acc ou nts estab lish ed
w it h the Trustee as provid ed in the T ax Certifica te.
For inves tme nt purp oses, the T rustee ma y c om m ing le th e fu nds and ac cou nts estab lis hed
hereu nd er, but sha ll acc ou nt for e ac h s ep ar ate ly. In making a ny va lua tions of investments hereunder ,
the Trustee may ut iliz e a nd r e ly on c omputer iz ed se curit ies pr ic ing s er vic es t hat ma y be ava ilable to
the Trustee, inc lud ing those available t hroug h th e Tr ustee accou nting s yste m.
Section 5.09. Rebate Fu nd.
(a) E stab lis hment. The T rustee s ha ll estab lis h a fu nd for the 2015 B onds
desig na ted the “Reba te F u nd.” Except as ma y other w ise be approved b y an op inion of B ond C ou nse l
that t he exclus ion fr om gr oss income for federa l inc ome tax purposes of interest on the 2015 Bonds
w ill not b e ad ver se ly a ffected, the D istr ict s ha ll cause to b e dep os ited in t he R ebat e F u nd su ch a m ou nts
as are requ ired t o b e depos ited therein purs uant t o t his S ect ion a nd the Tax Certific ate. A ll m one y a t
any time d epos ited in t he R ebate Fu nd s ha ll be he ld b y t he Trustee in trust for p a yme nt to the U nite d
States Treas ur y. A ll a m ounts on dep os it in t he Reba te Fu nd f or the 2015 B onds s ha ll b e g overned b y
this Section a nd the Tax C ert ific ate, u nles s and to t he extent that the D istr ict deliv ers to t he Trustee a n
op inion of B ond C ou ns e l that the exc lus ion fr om g ros s inc ome for federa l income t ax purpos es of
interes t on the 2015 B onds w ill not be adversely affe cted if s uc h requ ire me nts ar e n ot satis fied .
N otw it hsta nd ing an ything t o t he c ontrar y conta ine d her e in or in the Tax C ert ificat e, the Trustee :
(i) s ha ll be deem ed co nc lus ive ly to ha ve com p lied with the provis ions her e of a nd t here of if it follow s
a ll Requests of the D istr ict; a nd (ii) sha ll have no lia bility or respons ib ilit y to e nforce c omp lia nc e b y
the D istr ict w it h t he t erms of this S ection a nd t he T ax Certificate ; a nd (iii) ma y r e ly c onc lus ive ly on
the Distr ict’s ca lcu lations a nd det ermina tions a nd certificat ions re lat ing t o reb ate m atters; a nd (iv) s ha ll
ha ve no res pons ib ilit y to ind epe nde ntly ma ke a ny ca lcu lations or de term inat ions or t o re view t he
D is tric t’s ca lcu lat ions or det erm ina tions thereu nd er.
(i) A nnua l C omputation. W ithin 55 da ys of t he e nd of eac h B ond Y ear
(as such term is d e fined in t he Tax C ertificate), the D istr ict s hall ca lcu la te or cause t o b e ca lcu lated t he
amou nt of reba tab le arb itrag e, in acc ordance w ith Se ction 148(f)(2) of the Cod e and Section 1.148-3
of t he Treasury Regu lations (ta king int o ac c ount any app licab le except ions w ith res pect to t he
com pu tation of the rebatable arb itrage, d escribed, if applicab le, in t his Sec t ion or the T ax C ert ificat e
(e.g., the tem p orar y investm ents ex cept io ns of Sect ion 148(f)(4)(B) and t he c onstruction expe nd itur es
except ion of Section 148(f)(4)(C) of t he C ode), a nd taking into acc ou nt w he ther t he e lection purs uant
to Sect ion 148(f)(4)(C)(vii) of the C ode (the “1½% Pena lty”) has b ee n mad e), for this purp ose treating
the last d ay of the app lic ab le Bond Y ear as a com putation d ate, w ithin the m eaning o f
Section 1.148-1(b) of the Treasur y Regu lations (the “Rebatab le Arb itrage”). T he D istr ict s ha ll ob ta in
exp ert ad v ic e as t o the am ou nt o f the R ebatab le Ar b it rage t o c omp ly w it h this Sect ion.
(ii) A nnua l Trans fer. W it hin 55 da ys of the e nd of e ach Bo nd Y ear, upon
the W ritte n Request of the D istr ic t a n am ou nt s ha ll be dep os ited t o t he R ebate Fund b y the Trust ee
fr om a ny N e t Wa ter S ys tem R e ve nu es lega lly a vaila ble for such purp ose (as specified b y the D istr ict
in th e af oresa id Wr itte n R equ es t), if a nd t o the ex te nt requ ired so that t he bala nc e in the Reb ate F u nd
sha ll equa l the am ou nt of Reba tab le Arb itrage so ca lcu lated in a ccorda nce w ith c lause (i) of t his
subsection (a). In the e ve nt t hat imm ed ia te ly follow ing the tr a nsfer requ ired b y the pre vious se nte nce,
the am ou nt t he n on depos it t o t he cred it of the Reb ate Fund exceeds the a m ou nt requ ired to be on
depos it t herein, upon W r itte n Request of the D istr ic t the Truste e sha ll w ithdr aw the exc ess from t he
Rebate Fu nd a nd t he n cr ed it the exces s to t he Paym e nt Fu nd.
30
(iii) Pa yme nt to the Tre asur y. The Trustee s ha ll pa y, as d irected b y Wr itte n
Request of the D is tr ict, t o the U nited States Treasur y, out of a m ounts in the Rebate F u nd :
(A) N ot later tha n 60 da ys a fter t he end of: (X ) the f ifth B ond Year;
and (Y ) e ac h app licab le fifth B ond Y ear therea ft er, a n a m ou nt equ a l to at least 90% of the Reb atab le
Arb itrage ca lcu lated as of t he e nd of suc h B ond Y ear ; a nd
(B) N ot later tha n 60 da ys a fter the pa ym e nt of a ll the 2 0 15 Bo nds,
an am ou nt equal to 100% of the R ebatab le Arb itrage ca lcu lated as of the e nd of suc h app licab le B ond
Y ear, and a ny inc ome at tr ibut ab le to the Reb atab le Arb itrage, c omput ed in a cc orda nce with
Section 148(f) of t he C ode a nd Sec t ion 1.148-3 of th e Treas ur y R egu lations.
In the e ve nt t hat, prior t o t he time of any pa ym e nt re quired t o be made fr om the Reb ate Fund,
the amou nt in t he Reba te Fu nd is not s u ffic ie nt t o m ake suc h pa ym e nt w he n suc h pa ym e nt is due, the
D is tric t s ha ll ca lcu la te or cause t o be ca lcu lated the a mou nt of suc h de fic ie nc y a nd dep os it a n am ou nt
rece ived fr om a ny leg a lly a vailab le s our ce equal t o such de fic ie nc y pr ior to t he time suc h p ayme nt is
due. Eac h pa yme nt requ ir ed t o b e made purs ua nt to this subsect ion (a) s ha ll be m ade to the Inter na l
Reve nu e Service Ce nter, O gde n, U tah 84201 on or before t he date on w hic h such payme nt is due, and
sha ll be acc ompa nied b y Inter na l R eve nue Ser vice F orm 8038-T (prepar ed b y t he D istr ict), or sha ll b e
made in such ot her m a nner as pr ovided u nder the Code.
(b) D is pos ition of U nexpend ed F unds. A ny fu nds re ma ining in the Reb ate F u nd
after redempt ion and pa yme nt of the 2015 Bo nds a nd the pa ym e nts descr ibed in s ubsect ion (a) ab ove
be ing made m a y be w ithdraw n b y the D istr ic t a nd utiliz ed in a ny ma nner b y the D istr ict.
(c) Su rviva l of D efeasa nce. N otw ithsta nd ing anythin g in t his S ection t o the
contr ar y, t he ob ligat ion to co mp ly w ith the requ ir em ents of this Section s ha ll s ur vive the de feasance
or pa ym e nt in fu ll of t he 2015 B o nds.
Section 5.10. App lic ation of F u nds a nd Ac c ou nts W he n N o 2015 Bo nds are O utsta nd ing .
O n the date on w hic h a ll 2015 B onds sha ll be re t ired hereu nd er or provis ion m ade t herefor pursua nt t o
Art ic le X and a fter pa yme nt of a ll am ou nts due the Trus tee hereu nder, a ll m oneys t hen on dep os it in
any of the fu nds or a ccou nts (other t han t he Reb ate F und) es tab lis hed w it h the Trustee pursua nt t o t he
Inde ntur e s ha ll be w it hdraw n b y the Trustee a nd pa id to th e D istr ict for use b y the D istr ict a t a ny t ime
for a ny purp ose perm itted b y law .
Section 5.11. Add it iona l C ontra cts and B o nds. The D is tr ict m a y at an y time execut e a ny
Contract or iss ue a ny B onds, as the case m a y b e, in a ccord a nce herew ith; pr ovided :
(a) T he N et W ater S ys tem Re ve nues for t he most re cent aud it ed F isca l Y ear
preced ing the date of ad op tion b y the Board o f D irec tors of the D is trict of the res olution author iz ing
the is su a nce of suc h B onds or t he date of t he ex ec ut ion of suc h C ontrac t, as t he cas e ma y be, as
evid e nced b y both a ca lcu lat ion pr epared b y the D istr ic t a nd a spec ia l rep ort prep ared b y a n
Indepe nd ent Certified P ublic Acc ou nta nt or a n Indep ende nt Fina nc ia l C onsu lta nt on such c a lcu lat ion
on file w it h the D is tr ict, s ha ll ha ve produced a sum e qual to at least one hu ndr ed tw e nt y-five perc ent
(125%) of the D ebt Ser vice for s uch F is c a l Y ear; a nd
(b) T he N et W ater S ys tem Re ve nues for t he most re cent aud it ed F isca l Y ear
preced ing the date of t he execution of suc h C ontra ct or t he date of ad option b y t he Board of D irect ors
31
of t he Distr ict of the resolu tion author iz ing the is suance of such B onds , as the case ma y b e, inc lud ing
ad justments t o g ive e ffect as o f the first da y of s uc h F isca l Y ear (i) to increas es or decre ases in ra tes
and c har g es for the W ater Service appr oved a nd in e f fect as of the dat e of calcu la tion, as evide nced
b y a c a lcu lat ion prepar ed b y t he D istr ic t a nd (ii) to eac h new c onnectio n to t he W ater S ys tem t hat,
during a ll or a ny part of su ch F isca l Y ear, w as not in e xiste nce a nd that w ou ld have be e n d er ived fr om
such c onnection if it had be e n m ade pr ior t o the b eg inning of suc h F is cal Y ear, s hall ha ve pr oduced a
sum equa l to at leas t one hu ndred tw ent y-five percent (125%) of the D ebt Ser vice for such F is ca l Y ear
plus the D ebt Service w hich wou ld have accru ed on a ny Contracts execu ted or B onds is sued since the
end of such F isca l Y ear assum ing s uc h C ontracts ha d been ex ecuted or B onds had be e n iss ued at the
beginning of su c h Fisca l Y ear, p lus the D ebt S ervic e w hic h w ou ld have accrued had su ch Contrac t
been executed or Bonds bee n iss ued a t the beg inning of suc h F isca l Y ear; a nd
(c) T he es tim a ted N et Wa ter S yst em Re ve nu es for the then curr ent F isca l Y ear a nd
for e ach F is cal Y e ar t here a fter to and inc lud ing the first comp le te F iscal Y ear a fter t he latest date of
operat ion of a ny u nc omp leted P ar ity P roject, as e vid enc ed b y a cert ificate of the G ener al M a nag er of
the D is tr ict on file w ith the D is trict, inc lud ing (a fter giving e ffect t o t he c om p letion of a ll suc h
unc omp leted P ar it y Pr oje cts ) an a llow a nce for estimated N et Water S yste m Reve nues for ea c h of su c h
Fisca l Y e ars aris ing from a ny incr ease in the inc om e, rents , fees , rates a nd c harges estima ted t o b e
fixed, prescr ibed or rece ived for t he Water S ervice a nd w hich are eco nom icall y feas ib le a nd
reasonab l y c ons idered nec essar y based on pr oject ed op erat ions for such per iod, as e vide nced b y a
certificate of t he G enera l M anager on file w ith t he D istr ict, sh a ll pr oduce a su m equa l to at least one
hu ndred tw e nty-five (125%) of t he estimat ed D ebt S ervice for each of suc h F iscal Y ears, after g iving
effe ct to t he ex ecut ion of a ll C ontracts a nd the issuance of a ll B onds est im ated to b e requ ir ed to be
executed or is sued to p a y the costs of co mp leting a ll unc omp leted Par it y Pr ojects w it hin s uc h F is ca l
Years, ass uming t hat a ll suc h C ontracts and B onds ha ve m atur it ies, interes t ra tes and pr op ortionate
princ ipa l repa ym e nt provis ions s im ilar to the C ontr act last executed or t he n be ing ex ecuted or t he
Bonds last is sued or t hen be ing issued for the purpose of acq u iring a nd cons tr uct ing a ny of suc h
unc omp leted P arity Projects; a nd
N otw it hsta nd ing the foreg oing, B onds or C ontr act s may be iss ued or incurred to r e fund
outs ta nd ing B onds or C ontra cts if, a fter g iving e ffec t to t he app lica tio n of t he proc eeds there of, to ta l
D ebt Service w ill not b e increas ed in a ny F isca l Y ear in w hic h B o nds or C o ntracts (outsta nd ing on t he
date of iss ua nce or incurre nc e of suc h refu nd ing B onds or C ontr acts, but exc lud ing suc h r efu nd ing
Bonds or C ontracts) not be ing re fu nded are outst a nd ing in a n am ou nt in excess of 25%.
N otw it hsta nd ing s atis faction of the other c ond it ions to t he execut ion of any Contract or t he
issua nce of B onds s et forth in t his Sect ion 5.11, no such ex ecution or is sua nc e ma y occur if a n E ve nt
of D e fau lt (or a ny e ve nt w hic h, onc e all notice or grace per iods ha ve pas sed, w ou ld c ons titu te a n E ven t
of D e fau lt) ex ists unless such E ve nt of D e fault s ha ll be cured upon such ex ecut ion or is sua nc e.
N othing in this S ection 5.11 sha ll pr ohib it t he D istrict fr om issu ing or e nter ing into n otes,
bonds , c ontra cts or other ob lig ations pa ya b le fr om N et W a ter S ys tem R e ve nues sub ord inate t o B onds
or C ontra cts.
If the C ontract is exe cuted or B ond s ar e iss ued for re fund ing purp oses, there sha ll be de livered
an op inion of Bo nd C ou nse l address ed to t he Insurer (or a re lia nce lett er re lating theret o), or a
cert ificate of d isc harge of the trustee for s uch C ontr acts or B onds to be re fu nded, t o the e ffect that,
upon the ma king of t he requ ired dep os it t o escr ow, the leg al defeasance of suc h Contr acts or B onds t o
be re fu nded s ha ll ha ve occurred. If the C ontra cts or Bonds t o b e r e fu nded are ins ured b y _________,
32
at least t hre e Bus iness Da ys pr ior to the pr op osed date for de liver y of the insurance p olicy w ith respect
to s uc h Contra cts or B onds re fu nd ing s uch C ontracts or Bonds to be refu nded, t he Insurer s ha ll als o
rece ive (i) the verific ation letter, of w hic h the Insur er sha ll be a n addr essee, b y a n Indepe nde nt Certified
Pu blic Accou ntant, of t he adequa c y of the escr ow establis hed to provide for t he payme nt of such
Contracts or B onds to be refu nded in accord a nce w ith the terms a nd provis ions of the escr ow agree me nt
b y whic h s uch C ontr acts or B onds ar e be ing re fu nded , and (ii) the form of an op inion of B ond Cou nse l
add ress ed to t he Insu rer (or a re lia nc e le tter re lating t here to) t o t he e ffect tha t the escrow agr eem e nt b y
w hich suc h C ontracts or B onds are be ing re fu nded is a va lid a nd b ind ing ob ligation of t he par ties
theret o, e nforce ab le in a cc orda nce w ith its term s (su ch escrow agreeme nt s ha ll provide t ha t n o
amendme nts are p erm itted w it hout t he pr ior w ritte n c onse nt of the Ins urer). A n exe cuted cop y of eac h
of suc h op inion a nd r e lia nce letter, if app licab le, or Trustee’s d ischarge c ertificate, as t he case ma y b e,
sha ll b e forw arded to t he Insurer pr ior to de liver y of such C ontracts or B onds.
For purp os es of t his S ection 5.11, any P olic y C osts due a nd ow ing shall b e treated as
O perat ions and M a in te nanc e C osts of t he Water S yst em.
Section 5.12. Cla ims U pon t he Insura nce P o lic y a nd Pa yme nts b y and to the Insurer. If, on
the third Bus iness Da y pr ior to the related s chedu led interes t pa yme nt date or pr inc ipa l pa yme nt dat e
(“Pa ym e nt D ate”) ther e is not on dep os it w it h t he Trustee, a ft er ma king a ll tra ns fers a nd dep os its
requ ired u nder t his Inde nture, m one ys suffic ie nt to pa y t he pr inc ipa l of a nd int erest on t he 2015 B onds
due on su ch Pa yme nt D ate, the Trustee sha ll g ive not ice t o the Insu rer and to its desig nated ag e nt (if
any) (the “Insurer's Fis c a l Ag e nt”) b y telep hone or te lecop y of the am ou nt of such de fic ie ncy b y 12 :00
noon, N ew Y ork C it y time, on suc h Bus iness D a y. If , on the second B us iness Da y pr ior to the re late d
Pa yme nt D ate, there c ont inues to b e a de fic ie nc y in the am ou nt a vailable to pa y t he pr inc ipa l of a nd
interes t on the 2015 Bonds due on such P a yme nt D ate, the Trustee sha ll ma ke a c la im u nder t he
Insura nce Polic y a nd g ive not ice t o t he Insurer a nd t he Insu rer's F isc a l Agent (if a ny) b y te lep hone of
the am ou nt of such defic ie nc y, a nd the a lloc at ion of such de fic ie nc y betwee n t he am ou nt requ ired t o
pa y int erest on the 2015 Bonds and t he a mou n t req u ired to pa y pr inc ip a l of the 2015 Bonds , confir med
in w r iting to t he Ins urer a nd the Insur er 's Fisc a l Ag e nt b y 1 2 :00 noon, N ew Yor k C ity time, o n such
second B us iness D a y b y filling in the form of N ot ice of C la im a nd Cert if icate deliver ed w ith t he
Insura nce P olicy.
T he Trustee sha ll des ig nate any p ortion of pa ym e nt of princ ipa l on the 2015 B onds pa id b y the
Insurer, w hether b y virtu e of ma nd ator y s inking fu nd redempt ion, matur it y or other advanceme nt of
matur ity, on its books as a reduction in the pr inc ipa l amou nt of the 2015 Bonds reg ist ered t o t he the n
current O w ner, w hether D TC or its nom inee or ot her w ise, a nd shall issue a rep la ceme nt 2015 Bond t o
the Insurer, regis tered in the name of ________, in a princ ipa l a m ou nt equal to the a m ou nt of pr inc ip al
so p a id (w ithout regard t o au thor iz ed de nom inat ions ); provid ed th at the Trustee 's failur e to so des ig nate
any pa ym e nt or issue a ny r ep lacement 2015 B ond s ha ll ha ve no e ffect on t he am ou nt o f pr inc ip a l or
interes t pa yab le b y the D istr ict on a ny 2015 B ond or the subrogat ion r ig hts of t he Insurer.
T he Truste e s ha ll ke ep a comp lete and ac curate record of a ll fu nds depos ited b y the Insu rer
into the P olic y Pa ym e nts Acc ou nt (de fined be low ) and t he a lloc ation of suc h fu nds to p a yme nt of
interes t o n and pr inc ipa l of a ny 2015 B ond. T he Insu rer sha ll ha ve t he r ig ht t o inspect s uc h records a t
reasonab le t imes upon r easonab le not ice to the Trustee.
U pon paym e nt of a c la im und er t he Insurance P oli c y, the T rust ee s ha ll estab lis h a separate
special purp ose trust acc ou nt for the be nefit of Ow ners re ferr ed to her ein as the “P olic y P a yme nts
Accou nt ” a nd over w hic h the Trustee sha ll ha ve exclus ive contr ol a nd sole r ig ht of w ithdraw al. T he
33
T rus tee sha ll r ece ive a ny am ou nt pa id u nder the Ins u ranc e Polic y in trust on beha lf of O w ners a nd
sha ll dep os it a ny suc h am ou nt in the P o lic y P a ym e nts Accou nt a nd d istr ibute suc h a m ount only for
purpos es of ma king the pa ym ents for w hic h a c la im was made. Su ch am ou nts sha ll be d isbursed b y
the Trus tee to O w ners in the sa me ma nner as pr inc ip al a nd interest pa ym ents are to b e mad e w it h
respect t o the 2015 Bonds under the s ections here of regard ing pa yme nt of the 2015 Bonds. It s ha ll not
be nec ess ar y for such payme nts to be made b y c hec ks or w ire tra ns fers separate fr om the c he c k or w ire
trans fer used to pa y the pr inc ipa l of a nd interest on the 2015 Bonds w ith ot her fu nds a va ilab le t o ma ke
such pa yme nts. N otw iths ta nd ing a nything here in t o the c ontrar y, t he Dis tr ict agr ees t o pa y to the
Insurer (i) a sum equa l t o the tota l of a ll a m ou nts paid b y the Insurer u nder the Insu ra nc e Po lic y (the
“Ins urer Ad va nces”); and (ii) interest on such Insurer Ad va nc es fr om the date pa id b y t he I nsu rer u nt il
pa ym e nt t hereof in fu ll, pa yab le to t he Insu rer at the Late Pa ym e nt Rate per annum (c ollect ive ly, t he
“Ins urer Re im bursement Am ou nts”). “L ate Pa yme nt R ate” me a ns the lesser of (a) the grea ter of (i) the
per annum rate of interes t, pub lic ly a nnou nc ed fr om time to time b y J P M organ C has e B a nk at its
princ ipa l o ffic e in the C it y of New Y ork, as its prim e or base le nd ing rat e (any c ha ng e in su ch rat e of
interes t t o be e ffec t ive on the da te suc h c ha nge is a nnou nced b y JP M org an C hase B ank) p lus 3 %, a nd
(ii) the the n app licab le hig hest rat e of interes t on the 2 015 Bonds and (b) t he m aximum ra te perm iss ib le
under ap p licab le us ur y or s im ilar law s lim itin g interes t rates. T he Late P a yme nt Rate s hall b e c omputed
on the bas is of t he a ctual number of d a ys elaps ed over a year of 360 days. T he D istr ict hereb y c ovena nts
and agrees t hat th e Insurer Re imb urseme nt Am ou nts ar e secured b y a lie n on a nd p ledg e of the
Reve nu es a nd payab le fr om suc h Reve nues on a par ity w ith the pa ym e nts of p rinc ipa l of a nd inter est
on t he 2015 B onds.
Fu nds he ld in t he P olic y P a ym e nts Accou nt s ha ll not be invested b y the Trustee a nd ma y not
be app lied t o satis fy a ny c osts, exp e nses or liab ilit ies of t he Trustee. A ny fu nds rema ining in t he Polic y
Pa yme nts Acc ou nt follow ing a n Interes t Pa yme nt D a te sha ll pr ompt ly be rem itted to the Ins urer.
Section 5.13. Pa yme nts b y the Insurer as a Result of N onpa yme nt. T he Ins urer shall b e
ent itled t o pa y princ ipa l or interest on the 2015 B ond s that s hall b ecome Du e for Paym e nt but shall b e
unpaid b y reas on of N onpa ym ent b y the D istr ict (as such terms are defined in the Insuranc e Po licy)
and a ny am ou nts d ue on the 2015 B onds as a resu lt of acce lerat ion of the ma turity thereof in ac c orda nce
w it h this Inde ntur e, whether or not t he Ins urer has rece ived a N otice of N onpa ym e nt (as such terms
are de fined in t he Insura nce P olicy) or a c la im up on the Insura nce P olic y.
ART ICLE V I
PARTICU L AR CO V EN AN TS
Section 6.01. Comp lia nce w it h Inde nture. T he Trustee w ill not a uthe ntic ate or d eliver a ny
2015 Bond in a ny m a nner ot her tha n in accorda nc e w it h the pr o vis io ns of this I nde nture, a nd t he
D is tric t will not suffer or p erm it a ny de fau lt b y it to occur u nd er t his Inde nture, but w ill faithfu ll y
obs er ve a nd per form a ll t he c ove na nts, c ond itions a nd requireme nts here of.
Section 6.02. Budgets. O n or pr ior to the fiftee nth d a y of eac h F isc al Y ear, the D istrict s hall
cert ify t o the Truste e tha t t he am ou nts budgeted for pa ym e nt of pr inc ipa l a nd interes t on the 201 5
Bonds are fu lly adequate for t he pa ym ent of a ll pr inc ipal a nd interest on t he 2015 B onds for s uc h F is ca l
Y ear. If t he am ou nts so budge ted are not adequa te for the pa ym e nt of a ll pr inc ipa l a nd interest on the
2015 Bonds, the D istr ict w ill ta ke suc h ac tion as ma y be nec ess ar y to c ause such an nu a l budget t o b e
amended, c orre cted or au gme nted s o as to include t here in the am ou nts requ ired to b e ra ised b y the
34
D is tric t in t he the n e nsu ing F iscal Y ear for t he p a yme nt of a ll pr incipa l a nd interes t on t he 2015 B onds
and w ill notify t he Trustee of t he proceed ings t hen ta ken or pr op osed to be t a ke n b y t he D istrict.
Section 6.03. Pa yme nt of Taxes a nd C omp lia nc e w ith Gover nmenta l Regu lations. The
D is tric t w ill p a y a nd d isch arge a ll taxes, assess ments a nd ot her gover nme nta l c harges w hic h may
here a fter b e law fu ll y imp osed up on the Water S yste m or a ny part t her e of or up on t he Wa ter S ys te m
Reve nu es whe n the same sha ll be c ome due. The D is tr ict w ill du ly obs erve and c omp l y w ith a ll va lid
regu lations a nd requ ireme nts of a ny g over nm e nta l author it y re lat ive to the operat ion of t he W a ter
S ystem or any part t here of, but t he D istr ict s ha ll not be requ ired to c om p ly w ith a ny r egu lations or
requ ireme nts s o lo ng as t he va lid it y or app lication thereof s ha ll be c ontested in g ood faith.
Section 6.04. O bs ervance of Laws a nd Regu la tions . To the exte nt ne cess ary to assure its
perform a nce hereu nder, t he D istr ic t w ill w ell a nd tru ly keep, observe a nd perfor m a ll va lid and law fu l
ob lig at ions or regu lat ions now or hereafter im p osed on it b y c ontra ct, or prescr ibed b y a ny law of the
U nited States of America, or of t he State, or b y a ny of fic er, board or comm is s ion ha ving jur isd ictio n
or c ontr ol, as a c ond it ion of the c ontinued e njoyme nt of a ny a nd ever y r ig ht, pr ivilege or fr anc hise now
ow ned or here after acqu ir ed b y the D istr ic t, includ ing its r ig ht to ex is t a nd carr y on its business , to th e
end t hat suc h c ontracts , rig hts and franchis es s ha ll b e ma inta ined a nd preser ved, a nd s ha ll not become
aband oned, for feited or in a ny ma nner impa ir ed.
Section 6.05. E m ine nt Dom a in P r oceeds. If a ll or a ny par t of the W at er S yst em s ha ll b e
ta ke n b y em ine nt d oma in proceed ings, t he Net Proceeds ther e of s ha ll be ap p lied as follow s :
(a) If (1) the Distr ict files w ith the Trustee a c ert if icate show ing (i) the est imat ed
loss of a nnual N et Water S ystem Re ve nues, if any, s uffered or to be suffered b y t he D istr ict b y reas on
of suc h em ine nt d oma in p roceed ing s, (ii) a ge neral des cript ion of the add it ions, bett erments, extens ions
or improvements to the Wa ter S ys tem pr op osed to be acqu ired a nd c ons tructed b y the D istr ict fr om
such Net Proceeds, and (iii) a n es tima te of the add itiona l annu a l N et Water S yst em Revenues to be
derived fr om s uch add it ions, betterm e nts, extens ions or improvem ents, a nd (2) t he D istr ict, on t he bas is
of suc h certificate filed w ith the Trustee, d eterm ines t hat the est ima ted add itiona l a nnua l N et Wate r
S ystem Re ve nues w ill su ffic ie ntly offset t he estim ated loss of a nnual Net W at er S yst em Re ve nu es
resulting fr om suc h em ine nt d om a in pr oce ed ings s o that t he ab ility of t he D istr ict to mee t its ob ligat ions
hereu nd er w ill not be subs tant ia lly impa ired (w hic h determ ination s ha ll be fina l a nd c onc lus ive), t he n
the D istr ict sha ll pr omp tly pr oce ed w ith t he acqu is it ion and c onstruction of suc h add itions, better me nts ,
exte ns ions or imp r ovem ents subs tant ia lly in acc ord a nce w ith suc h certificat e and such Net Proceeds
sha ll b e app lied for t he pa yme nt of t he c os ts of suc h acqu is ition a nd construc t ion, a nd any ba la nce of
such N et P roceeds not requ ired b y t he D is tr ict for su ch purpose sha ll be dep os ited in t he W ater S yste m
Reve nu e Fund as d ire cted b y t he D istr ict.
(b) If t he for eg oing c ond itions are not met, t he n suc h N et Proceeds s ha ll be app lied
b y the D istr ict in part t o the redem ption of the 2015 Bonds as provid ed in Ar tic le IV a nd in part t o such
ot her fu nd or acc ou nt as ma y b e appropr iate a nd used for the ret ire me nt of B onds a nd Contr acts in the
same prop ortion w hic h the aggr egate u npa id princ ipa l balance of pr inc ipa l a nd Interest due on t he 2015
Bonds t he n bears to the aggrega te u npa id pr in cip al a mou nt of suc h B onds a nd C ontracts .
Section 6.06. Aga ins t Sa le or Other D ispos itio n of Prop erty. T h e D istr ic t w ill not e nter into
any agr ee me nt or le ase w hic h impa irs t he operation of t he W ater S ystem or a ny p art there o f necessar y
to s e cur e adequa te W ater S ystem R e ve nues f or the pa ym ent of t he pr inc ip a l a nd interes t du e on t he
2015 Bonds, or w hic h w ou ld otherw ise impa ir the op eration of the W a ter S ys tem. Any rea l or pers ona l
35
property w hic h has becom e nonopera t ive or w hic h is not needed for the effic ie nt a nd proper op eratio n
of the W a ter S ys te m, or a ny ma teria l or equ ipme nt w hic h has becom e w or n out, m a y b e sold if s uc h
sale w ill not imp air t he ab ility of the D istr ict to pa y t he pr inc ip a l a nd interest on the 2015 B onds w he n
due and if t he pr oceeds of such sa le are dep os ited in the Wa ter S ys tem Reve nue Fund as d irected b y
the D istr ict.
N othing her e in sh all r estr ict t he ab ilit y of the D istric t t o sell a ny p or tion of t he W ater S yste m
if such p ortion is imm ed iat e ly repurchased b y t he D istric t a nd if such arra ngement ca nnot b y its terms
result in t he purc haser of such p ortio n o f t he Water S ys tem exerc is ing a ny r emed y w hic h w ou ld depr ive
the Distr ict of or ot herw is e inter fere w it h its rig ht to ow n and operate such p ortion of t he Wa ter S yste m.
Section 6.07. Aga ins t C omp et itive Fac ilities. To the ext ent perm itted b y law , the D istr ict
cove na nts t hat it w ill not a cqu ire, c onstruct, m a inta in or operat e a nd w ill not, t o the exte nt per m it ted
b y law a nd w it hin the sc ope of its pow ers, perm it any other pub lic or pr ivate age nc y, c orp ora t ion,
distr ict or polit ica l s ubd ivis ion or any pers on w hom soever to acqu ir e, c onstru ct, ma inta in or op erat e
w it hin the D istr ict a ny w a ter s ys tem comp et itive w it h the Wa ter S ys tem; [provided how ever, t hat for
purpos es of t his c ove nant, the E lectr ic S ys tem s ha ll not b e c ons idered to be c ompetitive w ith the Wa ter
S ystem].
Section 6.08. M ainte na nce and O pera tion of the W at er S ystem. The D istr ict w ill m a inta in
and pres er ve t he W ater S ys tem in g ood repa ir a nd w orking order at a ll times a nd w ill op erate t he Wa ter
S ystem in a n efficie nt and ec onom ica l m a nner a nd w ill pay all O peration a nd M a inte nance C osts as
the y b ec ome du e a nd pa yab le.
Section 6.09. Pa yme nt of C la ims . T he D istr ic t w ill pa y a nd d is c harge a ny a nd a ll law fu l
c la ims for lab or, mater ia ls or supplies whic h, if unpa id, m ig ht bec om e a lien on the Water S yste m
Reve nu es or the fu nds or accou nts created hereu nd er or o n a ny fu nds in t he hand s of the D istr ict
pledged to pa y the pr inc ipa l a nd interest on t he 2015 Bonds or to t he O wners pr ior or s uperior to t he
lie n of t he 2015 B onds or w hic h m ig ht im pa ir t he security of the princ ip a l a nd int erest due on t he 2015
Bonds.
Section 6.10. Comp lia nce w ith C ontrac ts. The D istr ict w ill ne it her ta ke nor om it t o t ake a ny
action u nder any c ontr act if the e ffect of s uc h act or fa ilure t o ac t w ou ld in any manner impa ir or
adverse l y a ffe ct the ability of the D istr ict to p a y the pr inc ipa l a nd interest on the 2015 B onds whe n
due; a nd t he D istr ic t w ill c omp ly w ith, keep, ob serve a nd per form a ll agreeme nts, c ond it ions,
cove na nts and t erms, express or imp lied, r equ ired to be performed b y it c onta ined in a ll other c ontr acts
affe ct ing or in volving t he Water S ystem, to the exte nt t hat the D istr ict is a party there to.
N otw it hsta nd ing t he for eg oing, not hing in this S ection 6.10 s ha ll requ ire the D istric t t o c omp ly w ith,
keep, observe or per form any such agreeme nt, cond it ion, c ove nant or term, express or imp lied ,
cont a ined in any s uch c ontracts if the D istr ict is c ont es ting in g ood fa it h the interpre tation, va lid ity or
enforc eab ility of suc h agre eme nt, c ond ition, c ove na nt or term, expr ess or imp lied, u nless req u ired b y
the terms of a fina l order of a c ourt o f c ompete nt ju risd ict ion fr om w hic h no op p ortu nity for further
app ea l ex is ts.
Section 6.11. Insura nce.
(a) The D istr ict w ill pr ocure a nd mainta in or c ause t o be procured a nd m a inta ined
insura nc e on the W ater S yst em w it h respons ib le insurers in suc h am ou nts a nd aga inst suc h ris ks
(inc lud ing damag e to or destruct ion of the W ater S ys tem) as are usually c over ed in connect ion w it h
36
w ater s ys te ms s im ilar to the Water S yst em s o long as s uch ins ura nce is a va ilab le fr om repu tab le
insura nc e c ompa nies.
In the e ve nt of any damage to or destruct ion of the W ater S ys te m caus ed b y t he per ils cover ed
b y s uch insurance, the N et P roceeds there of s ha ll be applied t o the re c onstruction, repair or r ep lac eme nt
of the dam aged or d estroye d portion of the Water S ys tem. The D istr ict sha ll beg in suc h recons truc t ion,
repa ir or rep laceme nt pr omp t ly a ft er s uch da m ag e or destruct ion sha ll occur, a nd s hall c ont inu e a nd
proper ly com p lete suc h re c onstruction, repa ir or replacem e nt as exped itious ly as p ossib le, and s ha ll
pa y out o f suc h N et P roc eeds a ll c osts a nd expe nses in c onnection w ith suc h rec onstruct ion, repair or
replace me nt so t ha t the s am e sha ll be c omp le ted a nd the Wa ter S ystem s ha ll be free a nd c lear of a ll
c la ims a nd lie ns.
If such N e t Pr oceeds ex ceed the c osts of s uch rec ons truct ion, r epair or rep la ceme nt p ortion of
the W ater S ys tem a nd/or the c ost of t he c onstru ct ion of add itions, bett erme nts, extens ions or
impr oveme nts to the W at er S ystem the n the ex ces s N et P roceeds shall be app lied in part t o the
prepa yment of pr inc ip a l a nd interest o n the 2015 B onds as pr ovided in Art ic le X a nd in p art t o su c h
ot her fu nd or acc ou nt as ma y b e appropr iate a nd used for the ret ire me nt of B onds a nd Contr acts in the
same pr opor t ion w hich the aggregate u npa id pr inc ipa l b alance of t he 2015 B onds the n bears t o t he
agg reg ate u npa id p r inc ip a l am ou nt of su ch Bo nds a nd Contracts . If such N et Proc eeds are suffic ie nt
to e nab le t he D istr ict t o r etire t he entire ob liga t io n e vide nced hereb y pr ior t o the fina l due da te of t he
princ ipa l a nd interest on the 2015 Bonds as w ell as the e ntire ob lig at ions e vide nc ed b y B onds a nd
Contracts then rem a ining u npa id pr ior to the ir fina l respect ive due dates, the D istr ict m a y e le ct n ot t o
recons tru ct, rep a ir or rep la ce t he d amag ed or destr oyed port ion of the Wa ter S ys tem a nd/or not t o
construc t ot her add it ions, bet terments, exte ns ions or improve me nts to th e W at er S yst em ; and t hereup on
such N et P roceeds sha ll b e app lied to the prepa yment of pr inc ipa l a nd interes t on t he 2015 B onds as
provided in Artic le X and t o the re t irem e nt of s uc h Bonds a nd C ontracts.
(b) The D is trict w ill p r ocure a nd ma inta in s uch other ins ura nce as it s hall dee m
adv isab le or necessar y to protect its inter ests, w hic h insura nce s ha ll a fford prot ection in suc h a m ounts
and aga inst s uc h r is ks as are u sua ll y c overed in c onnec tion w it h w a ter s ystems s im ilar t o the W a ter
S ystem.
(c) A ny insu rance requ ir ed to be ma inta ined b y par agr aph (a) ab ove a nd, if the
D is tric t determ ines t o pr ocure a nd mainta in insu r ance pursuant to paragrap h (b) above, s uc h ins urance,
ma y be m a inta ined u nder a se lf-insura nc e p r ogram s o long as such se lf-ins urance is ma inta ined in the
amou nts a nd m a nner usua ll y m a inta ined in conne ct ion w ith w ater s yst ems s im ilar to t he Water S yste m
and is, in the op inion of a n accred ited a ctuar y, ac tuar ia lly s ou nd.
Section 6.12. Am ou nt of Rates a nd Charges.
(a) T o the fu llest exte nt perm itted b y law, the D is tr ict sha ll fix and prescr ibe, a t
the c omm e ncem e nt of each F iscal Y ear, ra tes and c harges for the W a ter Servic e pr ovided b y the W ater
S ys tem w hic h are r eas onab ly ex p ected to be at least s uffic ie nt t o yie ld dur ing each F isc a l Y ear N e t
W ater S yst em Revenues equa l to one hu ndred tw e nt y-five per cent (125%) of D ebt Ser vic e pa yab le i n
such F is ca l Y ear; provided, how e ver, t hat for purpos es of t his S ection 6.12, W a ter S ystem Re ve nues
in s uc h F iscal Y ear s ha ll not inc lude an y a m ou nt tra ns ferred fr om the Rate S tab iliz a tion F u nd to t he
W ater S yste m Revenu e Fu nd in exc ess of twe nty-five per cent (25%) of D ebt Service payab le in suc h
Fisca l Y e ar.
37
(b) T he D is tr ic t ma y ma ke ad just me nts fr om t ime t o t ime in s uch ra tes a nd charges
and m a y ma ke suc h c lass ification thereof as it dee ms necess ary, but sha ll not redu ce the ra tes a nd
charg es the n in e ffec t u nless the N et W ater S yste m R eve nu es, from s uc h red uc ed rates a nd c harg es
are reas onab ly expe cted to b e suffic ie nt to me et t he r equir eme nts of this section.
(c) So long as the D istrict has c omp lied w ith its ob ligations set for t h in clause (a )
and (b) above, t he fa ilure of N et Water S ystem Re venues t o equa l one hu ndred tw ent y-five percent
(125%) of D ebt S ervice at t he e nd of a F is cal Y ear s hall not c onstitu te a default or an E ve nt of D efau lt
hereu nd er.
(d) For purposes of t his Section 6.12, a ny Polic y C osts due and ow ing s ha ll be
treated as O perations and M ainte na nce C osts of t he Water S ys tem.
Section 6.13. Collect ion of Ra tes a nd C harg es. T he D istr ict w ill ha ve in effect at a ll tim es
b y-law s, ru les a nd regu lations requ ir ing ea ch customer t o pa y the rates a nd c harges app licab le to the
W ater Servic e a nd pr ovid ing for t he b illing t here of a nd for a d ue date and a de linque nc y da te for eac h
bill.
Section 6.14. E nf orc eme nt of C ontra cts. T he D istr ict w ill not volu nt arily c onse nt to or
perm it a ny res c iss ion of, nor w ill it cons e nt to any am end m e nt to or otherw is e ta ke a ny action u nde r
or in c onnect ion w it h any c ontracts pre vious ly or her e after ent ered into if su ch resc iss ion or ame ndm e nt
w ou ld in any ma nner imp air or ad verse ly a ffe ct t he a bility of the D istr ic t t o pa y pr inc ip a l a nd interes t
on t he 2015 B onds.
Section 6.15. Continu ing D isclosu re. T he D istr ict hereb y c ove na nts a nd agr ees tha t it w il l
com p ly w ith a nd carr y ou t a ll o f t he pr o vis ions of the Cont inu ing D isc losure Certificat e.
N otw it hsta nd ing a ny ot her provis ion of this Inde nt ure, fa ilur e of the D is tr ict to c omp ly w it h the
Continu ing Disc losure C ertificate s ha ll not be c ons id ered a n E ve nt of D e fau lt; how ever, a ny O wner or
Bene f ic ia l O w ner ma y ta ke s uch act ions as may b e necessar y a nd appr opr iate, inc lud in g seeking
mand ate or s pe c ific per forma nc e b y c ourt order, to cau se t he D is trict t o c omp ly w ith its ob lig at ions
under t his S ection. F or purp os es of this Sect ion, “B e ne fic ia l O w ner” m eans a ny per so n w hic h (a) has
the p ow er, d irectly or ind irec t ly, to vote or cons e nt w it h respect to, or to d isp os e of ow nership of, a ny
2015 Bond (inc lud ing pers ons h old ing 2015 B onds t hrough nom inees , dep os itor ies or other
intermed iar ies), or (b) is treated as the ow ner of a ny 2015 Bond for federa l inc ome tax purp oses .
Section 6.16. Pu nctua l P aym e nt. T he D istr ic t s ha ll cause t he Trus tee to pa y the pr inc ip a l and
interes t t o becom e due in res pect of a ll of the 2015 B onds , in str ict c onform ity w ith the terms of t he
2015 Bonds and of the Ind e nture, acc ord ing t o the true inte nt and m ea ning there of, but only out of
W ater S ys tem Re ve nu es and other assets p ledged for such pa yme nt as provided in the Inde nture.
Section 6.17. E xte ns ion of Pa ym e nt of 2015 B onds . T he D is tr ict shall not d ir ectly or
ind ir ectly ext e nd or assent to the exte ns ion of t he m aturity of a ny of the 2015 B onds or the tim e of
pa ym e nt o f any c la ims for interest b y the purc hase of s uc h 2015 B onds or b y any ot her arrang eme nt,
and in c ase t he ma tur it y of a ny of t he 2015 Bonds or the t ime of p a ym ent of an y s uc h c la ims for int erest
sha ll be ex te nded, such 2015 B onds or c laims for interest sha ll not be en t itled, in case of a ny de fau lt
hereu nd er, to t he be ne fits of t he Indenture, excep t subject t o the pr ior pa ym ent in fu ll of the pr inc ipa l
of all of the 2 015 B onds t he n Outsta nd ing and of a ll claims for interest ther eon w hich s ha ll not ha ve
been s o ex te nded.
38
Section 6.18. Aga ins t Encumbr ances. The D istr ict w ill not ma ke a ny p ledge of or p lace a ny
lie n on W ater S ys tem Re venues or t he m one ys in the W a ter S ystem Re ve nue F u nd or the Ra te
Stabiliz ation F u nd excep t as provid ed herein. T he D is tric t may a t any t ime, or from t ime to t ime,
execute C ontra cts or iss ue B onds as perm itted in S ection 5.11 here of a nd, in add ition, incur notes,
bonds , c ontra cts or other ob ligations for a ny lawfu l p urpose w hic h are p a yab le from N et W ater S yst em
Reve nu es a nd secured b y a p ledge of lie n on Wat er S ystem Reve nues or a ny m one ys in t he W ate r
S ystem Re ve nu e F und a nd the Ra te Stab iliz a tio n Fund as ma y fr om t ime to t ime be dep os it ed t herein,
provided that suc h p ledge and lie n sha ll be sub ord inate in a ll respects to the p ledg e of a nd lie n there on
provided her e in to secur e the 2015 B o nds and other B onds a nd C ontrac ts .
Section 6.19. Pow er to Is sue 2015 Bonds a nd M a ke P ledge a nd Assig nme nt. T he D istr ict is
duly authoriz ed purs uant to law to issu e t he 2015 Bonds and to e nter into the Inde nture and to p ledg e
and assig n the W at er S ys tem Re venues a nd other as sets purported to b e p ledg ed a nd assig ned u nder
the Ind e nture in t he ma nner a nd to the exte nt provi ded in the Inde nture. T he 2015 B onds a nd t he
provis ions of t he Inde nture are a nd w ill be the legal, va lid a nd b ind ing s pec ia l ob liga tions of t he D istr ic t
in acc orda nce w ith the ir terms, a nd the D istr ic t a nd the Trustee s ha ll at a ll times, sub jec t t o the
provis ions of Artic le VIII a nd to t he exte nt per m itted b y law , d efe nd, preserve a nd pr otect sa id p ledge
and ass ig nme nt of Water S ys te m Re ve nues and other assets and a ll the rig hts of the 2015 Bond O w ners
under t he Ind e nture ag a inst all c la ims a nd dema nds of all pers ons w homs oe ver.
Section 6.20. Accou nt ing Records a nd F ina nc ia l S tatements .
(a) T he D istr ict w ill ke ep appr opr iate acc ou nting record s in w hic h c omp le te a nd
corre ct e ntr ies s hall be made of all tra nsac tions r e lating to the D istr ict, wh ic h rec ords s ha ll be a va ilable
for inspect ion b y the Trustee at r eas onable hours and under r e asonab le c ond itio ns.
(b) T he D istr ic t w ill pr epare a nd file w ith the Trustee a nnua lly w it hin tw o hu ndred
seve nt y (270) da ys af ter t he c los e of eac h F iscal Y ea r (c omme ncing w it h t he F iscal Y ear e nd ing J u ne
30, 2015) fina nc ial sta tements of the D istr ict for the p reced ing F iscal Year pr epared in a cc ordance w it h
gener a lly accep ted ac cou nting pr inc ip les, toget her w ith an Ac c ountant’s R ep ort there on.
Section 6.21. T ax Cove na nts. N otw it hs tand ing a ny ot her pr ovis ion of t he Inden ture, a nd
except as ma y otherw ise be appr oved b y a n op inion of B ond C ou ns e l tha t the exc lus ion fr om gros s
income of t he p ortion of interes t on t he 2015 Bonds w ill not be ad verse ly a ffected for federa l inc om e
tax purposes, the D is trict c ove na nts to c omp ly w it h a ll app licab le req u irem e nts of the C ode ne cessar y
to pres erve suc h exc lus ion fr om gr oss inc ome w ith res pect t o the 2015 Bonds a nd s pec if ic a lly
cove na nts, w it hout lim it ing t he g en era lit y of the fore going, as follow s :
(a) Privat e A ct ivity. T he D istr ict w ill ta ke no a ction o r refra in from taking a ny
action or ma ke any us e of the pr oceeds of the 2015 Bonds or of a ny oth er m oneys or property w hic h
w ou ld cause the 2015 B onds to be “pr ivate act ivity b onds” w ithin the m eaning o f Se ct ion 141 of the
Code;
(b) Arb itrage. T he D istrict w ill m a ke no us e of the pr oceeds of t he 2015 B onds or
of a ny other amou nts or pr oper ty, reg ar d less of the source, or ta ke a ny action or re fra in from taking
any action w hic h w ill cause t he 2015 B onds t o b e “ar bitrag e b onds” w ithin the meaning of Sec tion 14 8
of t he C od e;
39
(c) Federa l G uarantee. The D is tr ict w ill ma ke no use of the pr oceeds of the 2015
Bonds or take or om it to ta ke a ny action that w ou ld c ause the 2015 B onds to be “fed erally guar a nteed ”
w it hin the me a ning of Section 149(b) of th e C od e;
(d) Information Rep orting. T he D istr ict w ill ta ke or caus e to be ta ke n a ll necess ar y
action to c omp ly w it h the informa t iona l rep orting req uire me nt of Sect ion 149(e) of the C ode necessar y
to preser ve t he exc lus ion of in ter est on t he 2015 B onds pursuant to Section 103(a) of the C ode;
(e) H edge Bonds. The D istr ic t w ill ma ke n o u se of the pr oceeds of t he 2015 B onds
or a ny other am ou nts or p roper ty, regard less of the source, or ta ke any action or refra in fr om t a king
any actio n that w ou ld c aus e the 2015 B onds to be c ons idered “hedge b onds” w ithin the m eaning of
Section 149(g) of the Code u nless the D is tr ict ta kes all ne cessar y a ction t o assure comp lia nc e w ith t he
requ ireme nts o f Sec tion 149(g) of t he C od e t o m a inta in the exc lus ion fr om gros s inc ome of interest o n
the 2015 Bonds for federa l incom e tax purp os es ; a nd
(f) M isce llaneous . The D istr ict w ill ta ke no action or refra in fr om taking an y
action inc ons ist ent w it h its expe ctat ions sta ted in the Tax Certificate exe cuted b y the D istric t in
con nection w it h the iss ua nce of t he 2015 Bonds and w ill c omp ly w ith the covena nts and requ ire me nts
stated therein a nd inc orp ora ted b y re ference here in.
T his Sect ion a nd the covena nts set forth here in s hall not be app lic ab le to, a nd not hing c ontained
here in s ha ll be deem ed to p revent t he D istr ic t fr om iss uing B onds or C ontracts the interest w ith respect
to w hic h has bee n deter m ined b y B ond C ou nse l to be s ubjec t to feder a l inc ome tax ation.
Section 6.22. W a iver of Law s. T he D is trict sh a ll not a t any tim e ins ist up on or p lead in any
manner w hats oe ver, or c la im or ta ke the bene fit or a dva ntage of, a ny s tay or extens ion law now or at
any time herea fter in force t hat ma y a ffect t he c ove na nts a nd agre em e nts co nta ined in t he Inde nture or
in the 2015 B onds, a nd all b e ne fit or ad va ntage of a ny suc h law or laws is hereb y express ly w a ived b y
the D istr ict to the ext ent permitted b y law .
Section 6.23. Fu rther Assura nces . T he D istr ict w ill ma ke, exe cute a nd d e liver a ny and a ll
such fur ther ass urances, instrum ents a nd res olu t ions as m a y be reas onably neces sar y or p roper to carr y
out t he inte nt ion or to f acilita te t he p erfor m a nce of the Inde nture a nd for the be tter assuring and
con firm ing u nt o t he O w ners of the 2015 B o nds of the r ights and benefits provided in the Inde nture.
Section 6.24. Prosecution a nd D efe ns e of Suits. The D istr ic t s ha ll prompt l y, upon request of
the Trustee or a ny 2015 B ond Ow ner , from tim e t o ti me ta ke s uch action as ma y b e necessar y or proper
to r emedy or cure any de fec t in or cloud upon the title to t he Water S yste m Re ve nues or a ny part
thereo f, w he t her now exist ing or her eafter de velop ing, sha ll pr os ecute a ll s uc h su its, actions and other
proceed ings as ma y b e appr opr ia te for su ch purp ose a nd s hall inde m nify and sa ve t he Trus tee
(inc lud ing all of its emp lo yees , of ficers a nd d irec t ors) a nd ever y 2015 B ond Ow ner harm less fr om a ll
loss, c ost, damage and expe nse, inc lu d ing attorn e ys ’ fees , w hic h the y or a ny of th em may incur b y
reason of a ny suc h defe ct, cloud, su it, act io n or pr oc e ed ing.
T he D is trict sha ll de fe nd aga inst e ver y s u it, action or proceed ing at a ny time br oug ht agains t
the Truste e (inc lud ing a ll of its emp loyees , officers a nd d irect ors) or a ny 2015 B ond O w ner up on a n y
c la im b y a 2015 B ond Ow ner or a third party ar is ing out of t he rece ip t, app lic ation or d is bursem e nt of
any of the pa yme n ts of pr inc ipa l of or interest on the 2015 Bonds or involving t he r ig hts of t he Trust ee
or a ny 2015 B ond O w ner u nder the Inde nture ; pro vided t hat the Trus tee or a ny 2015 B ond O w ner a t
40
such party’s e le ct ion m a y appear in a nd de fend any s uch su it, a ction or pr oceed ing. The D is trict s ha ll
inde m nify a nd hold harm less the Truste e and the 2015 Bond O w ners aga inst a ny a nd a ll liabilit y
c la im ed or asserted b y any suc h pers on, ar is ing out of such rece ipt, app lication or d isburseme nt, a nd
sha ll ind em nify a nd hold harm less the 2015 Bond O w ners aga ins t a ny att or ne ys ’ fe es or other expe nses
w hich a ny of the m ma y incur in c onnection w it h a ny lit ig ation (inc lud ing pr e-litigation ac t ivities) to
w hich a ny of the m ma y becom e a party b y reas on of ow nersh ip of 2015 B onds. The D istr ic t shall
promptl y r e imburse a ny 2015 Bo nd O wner in the fu ll amou nt of any at torne ys’ fe es or other expe nses
w hich suc h O w ner ma y incur in litig ation or ot herw ise in order t o enfor ce s uch part y’s r ig hts under the
Inde ntur e or the 2015 Bonds , pr ovid ed t hat such litig ation sha ll be c onc luded favorably to such part y’s
cont e nt ions ther e in.
ART ICLE V II
EVENTS O F D EF AULT AN D RE MED IES O F 2015 BO NDS O W N ERS
Section 7.01. E ve nts of D e fau lt. T he follow ing even ts sha ll b e E ve nts of D efau lt hereund er :
(a) D efault b y the D istr ict in t he due a nd pu nctua l p aym ent of the pr inc ipa l of a ny
2015 Bond s w he n and as the s ame s ha ll bec ome d ue and pa yab le, whether at matur ity as therein
exp ress ed, b y pr oceed ings for rede mption, b y a cce ler ation, or otherw ise.
(b) D efault b y the D istr ic t in the due a nd p u nctu a l p a ym ent of t he int erest on a ny
2015 Bonds w he n a nd as t he same s ha ll b ec ome du e and pa ya b le.
(c) D efault b y the D istr ict in t he observa nc e of a ny of t he other c ove nants,
agreeme nts or c ond itions o n its part in the Inde nture or in the 2015 Bo nds if suc h d efau lt sha ll ha ve
cont inued for a period of t hir t y (30) da ys a ft er w rit te n notice thereof, specifying suc h de fau lt a nd
requir ing the same to be remedied, s ha ll ha ve been g ive n t o t he D is trict b y the Trustee or b y the
Ow ners of not less tha n a m a jor ity in agg regate princ ipa l am ou nt of 2015 B onds O utsta nd ing ;
provided, how e ver, that if in t he reaso nab le op inion of the D istr ic t the de fau lt sta ted in the notice ca n
be c orrected, but not w ithin suc h th irty (30) d ay p eriod a nd corr ect ive act ion is ins tituted b y t he
Distr ic t, w it h the w ritte n appr ova l o f t he Insurer (s o lo ng as the Ins urer has not defau lted on a ny
ob lig ation u nder the Insur a nce P olic y or the Reser ve S uret y P olicy), w ithin suc h thir ty (30) d a y period
and d ilige ntly pursued in good faith until the de fau lt is corrected suc h de fau lt s hall not be an E ve nt of
Defau lt hereu nder.
(d) T he D istr ict shall file a petitio n or a nsw er s eeking arrangem e nt or
reorga nization u nder the federa l ba nkruptc y laws or any other app licab le law of t he U nited States of
Amer ica or a ny sta te t herein, or if a c ourt of c ompe tent jur isd ic tion s ha ll appr ove a petit io n filed w ith
or w ithout the c onse nt of the D is trict s ee king ar rang e me nt or r eor g a nization u nder the federa l
bankruptc y law s or a ny ot her app lic ab le law of t he U nited States of Amer ic a or a ny st ate t herein, or if
under t he pr ovis ions of a ny other law for the r e lie f or a id of deb tors a ny court of c omp ete nt jur isd ict ion
sha ll assume custod y or c ontr ol of t he D istr ict or of t he w hole or a ny su bsta nt ia l par t of its pr operty.
(e) Pa yme nt of the pr inc ipa l of a ny B ond or w ith respect to a ny C ontra ct is
accelerated in accord ance w ith its terms.
Section 7.02. Remed ies U p on E ve nt of D e fau lt. If a ny E vent of D efau lt specified in Sec tion
7.01(d) or (e) s ha ll oc cur a nd be c ontinu ing, the Tru stee sha ll, w ith the w r itte n c ons e nt of the Insurer
41
(so long as the Ins urer has not de fau lted o n a ny ob ligation u nder t he Insurance P olic y or the R eserve
Su rety Polic y), w hich consent s ha ll b e at t he s ole d is cretion of t he Insurer, and for a ny ot her E ve nt o f
D efault, t he Trustee ma y, w ith the w r it ten c onse nt of the Insur er (so long as t he Insurer has not
defau lted on a ny ob liga t ion und er the Ins ura nce Po li c y or t he Reser ve Su ret y Po lic y), w hich c onse nt
sha ll be at t he s ole d iscretion of t he Insu rer, in eac h c ase, upon not ice in wr iting to the D istr ict, declar e
the p r inc ipa l of a ll of the 2015 B onds the n O uts ta nd ing, and the int erest accru ed there on, to be due a nd
pa yable im med iate ly, and up on a ny su c h dec laration the same sha ll becom e a nd sha ll b e immed iately
due a nd pa yable, anyt hing in the Inde ntur e or in t he 2015 B onds c onta ined t o the c ontrar y
notw it hsta nd ing.
N othing co nta ined here in s ha ll perm it or requ ir e t he Trustee to acce lerate pa yme nts due under
the Ind e nture if the D istr ict is not in de fau lt of its ob lig ation hereu nd er.
A ny s uc h declaration is sub je ct to t he c ond ition t hat if, at a ny t ime a fter suc h d ec laratio n a nd
before a ny judgme nt or d ecr ee for the paym ent of the mone ys due s ha ll ha ve be e n obta ined or e nter ed ,
the D istr ict s ha ll dep os it w it h the Truste e a sum suffic ie nt to p a y a ll t he pr in cip a l of a nd inter est on the
2015 Bonds w hic h is overdue, w ith interest on such overdue pr inc ipa l at t he ra te b or ne b y t he respect ive
2015 Bonds t o the ext ent p erm itted b y law , a nd t he reasonab le charges a nd expe ns es of the Trustee,
and an y a nd a ll ot her E vents of D efau lt know n to the Trustee, shall ha ve be en made g ood or cured t o
the s at isfaction of the Trustee or provis ion de emed b y the Tr uste e t o be adeq uat e s ha ll have bee n m ade
therefor, t he n, a nd in e ver y such case the Truste e s ha ll on beha lf of the O w ners of a ll o f t he 2015
Bonds, resc ind a nd a nnu l suc h dec laration and its cons equ e nc es and w a ive such E vent of D e fau lt; but
no suc h r es c is sion a nd a nnu lme nt sh all exte nd to or s ha ll a ffe ct a ny subsequent E vent of D efault, or
sha ll impa ir or exhaust a ny r ig ht or p ower conseque nt thereon.
Section 7.03. App lic ation of W a ter S ys tem Re ve nues a nd O ther F unds A fter D efault. If an
E ve nt of D e fau lt s ha ll oc cur a nd be c ont inu ing, a ll W ater S ystem Re ve nu es held or thereafter r ece ived
b y t he Trustee, amou nts on dep os it in the R ate Stab iliz a tion Fu nd, a nd a ny other fu nds the n held or
therea fter rece ived b y the Trustee u nder any of the provis ions of t he Inde nture (other than a m ounts
he ld in the Reb ate F u nd) shall be app lied in t he follo w ing order:
(i) T o t he pa ym ent of a ny expe nses ne ces sary in the op inion of the Trus te e
to pr ote ct the int erests of t he O w ners of t he 2 015 Bonds and pa ym e nt of reasonab le fees a nd ex pens es
of the Trustee (inc lud ing r eas onab le fe es a nd d isbur sements of its ac c ounta nts a nd c ou ns e l) incurred
in and ab out t he p erforma nce of its pow ers a nd dutie s under t he Indenture;
(ii) T o the p a yme nt of O peration a nd M ainte na nc e C osts of th e Wa ter
S ystem;
(iii) T o the pa yme nt of the p r inc ipa l of a nd interes t the n due on the 2015
Bonds (upon prese ntation of t he 2015 B onds to be p a id, a nd stam p ing or ot herw ise noting ther e on of
the p aym e nt if onl y partia lly pa id, or surrend er thereof if fu lly pa id), in a ccorda nce w it h the provis ions
of the Inde nture, t he pa ym e nt of the pr inc ipa l and interest t he n due w ith respe ct t o s uc h C ontrac t in
acc ordance w ith the provis ions ther e of a nd the pay ment of the p rinc ipa l of a nd in terest then due on
such Bonds in accorda nce w ith the pr ovis ions ther eof a nd of any inde nture re lated t here t o, in the
follow ing order o f pr ior ity:
First : T o t he p a yme nt to the perso ns e ntitled thereto of a ll ins tallm e nts
of inter est the n due o n the 2015 Bonds , with respect t o such C ontr act or on suc h B onds, as app licab le ,
42
in the or der of the matur ity of such inst a llme nts , a nd, if the am ou nt a va ilab le s ha ll not be su ffic ie nt to
pa y in fu ll an y insta llme nt or ins ta llm e nts ma tur ing on the s ame date, t he n t o the pa ym ent thereof
ratab ly, ac cord ing to the am ou nts due there on, to t he pers ons entitled t here t o, w it hou t a n y
discr im ina tio n or prefere nc e; a nd
Second : T o t he pa yme nt t o t he pers o ns e ntitle d thereto of a ll
insta llm e nts of unp a id pr inc ipal of any 2015 B ond, w ith respect t o such Co ntract or on suc h Bonds, as
app licab le, w hic h sha ll have b ecome due, w hether at matur it y or b y acc e lera tion or redemp t ion, w it h
interes t on the overdue princ ipa l at the rate of e ig ht p ercent (8%) per a nnum , a nd, if the a m ount
ava ilable sha ll not be suff ic ie nt t o pay in fu ll a ll the 2 015 Bonds toge ther w ith s uc h interest, t he n to
the paym e nt thereof ra tab ly, accord ing to t he a m ou nts of pr inc ipal due on suc h da te to t he persons
ent itled t here t o, w ithout a ny d iscr im ina t ion or pre ferenc e; a nd
T hir d : If there s ha ll ex is t a ny rem a ind er a fter t he for egoing p a yme nts,
such rem a inder s ha ll b e pa id to t he D istric t t o be exp ended as described in Sect ion 5.01(d)(iv) here of.
Fourth: To the exte nt P olic y C osts or Insurer Re imbu rsement Am ou nts
are due a nd payab le t o the Insurer, to t he pa ym ent of such am ou nts ; a nd
Section 7.04. T rus tee t o R epres e nt 2015 B ond Ow ners. T he Tr us tee is h ereb y irre vocab ly
app ointed (a nd the success ive respect ive O w ners o f the 2015 Bonds, b y ta king and hold ing the same ,
sha ll be c onc lus ive ly deem ed to ha ve s o appointed the Trustee) as trustee and true and law fu l att or ney
in fact of the O w ners of t he 2015 B onds for the purpose of exer cis ing and pr osecuting on t he ir be ha lf
such r ights a nd remed ies as ma y b e a va ilab le to s uch Ow ners u nder t he provis ions of t he 2015 B onds
or the Ind e nture a nd app licab le pr ovis ions of law. U pon t he occurre nc e a nd c ontinu ance of an E vent
of D efault or ot her oc cas ion g iving r ise t o a r ig ht in the Trustee to rep rese nt t he 2015 Bond Ow ners,
the Trustee in its dis cre t ion ma y, a nd upon t he w ritte n request of t he O w ners of a ma jor ity in aggregat e
princ ipa l am ou nt of t he 2 015 B onds then O utsta nd ing, and up on be ing indem nified to its satis faction
therefor, sha ll pr oc eed t o protect or e nforce its r ig hts or the r ig hts of suc h O w ners b y s uch appr opriate
action, su it, ma nda mus or ot her pr oceed ings as it s ha ll d eem m ost e ffe ctual to pr otect a nd e nforc e a n y
such r ig ht, a t law or in equ it y, e ither for the spec ific per form ance o f a ny c ove na nt or agr eement
cont a ined here in, or in a id of the execu tion of an y p ow er her e in gra nted, or for t he en forcem e nt of a ny
ot her appr opr iate lega l or equ itab le r ig ht or rem ed y vested in the Trustee or in such O w ners u nder the
2015 Bonds or the Inde nture or any law ; a nd upon inst itut ing suc h proc eed ing, the Trustee shall be
ent itled, as a m atter of r ig ht, t o the app ointm e nt of a r ece iver of the W ater S yst em Reve nues and other
assets pledged u nder the Ind e nture, pend ing such pr oceed ings . A ll r ig hts of ac t ion und er the Inde nture
or t he 2015 B onds or otherw ise ma y be pr osecut ed a nd en forced b y the Trustee w it hou t the p oss ession
of a ny of t he 2015 Bo nds or t he production thereof in a ny pr oc eed ing re la ting t her eto, a nd a ny s uc h
suit, ac tion or proceeding ins tituted b y the Truste e sha ll be broug ht in the name of t he Truste e for the
bene fit and pr otection of a ll t he O w ners o f suc h 2015 Bonds , sub ject to t he provis ions of the Inde ntur e.
Section 7.05. 2015 Bond O w ners’ D irection of Pr oceed ings. A nything in the Inde nture to
the contrar y notw iths ta nd ing, t he O w ners of a ma jor ity in aggregate pr inc ipa l a m ount of t he 2015
Bonds the n O utsta nd ing s ha ll ha ve the r ig ht, b y a n instrum e nt or c oncurre nt ins tru me nts in w r it ing
executed a nd de liver ed to the Trustee, a nd up on indem nificat ion of t he Truste e t o its reas onab le
sat isfa ct ion, t o d ire ct th e me t hod of co nduct in all re m edial pr oc eed ings take n b y the Trustee hereu nder,
provided that suc h d ir ection shall not be otherw ise tha n in acc ord a nce w it h law and the provis io ns o f
the Inde nture, a nd that the Trustee s hall ha ve the r ig ht to de c line to follow a ny suc h d irection w hich i n
43
the op inion of t he Trustee wou ld be u njust ly pr ejud ic ia l t o 2015 B o nd O wners not par ties to suc h
dire ction.
Section 7.06. Su it b y O w ners. N o O wner of a ny 2015 Bonds sha ll ha ve the r ig ht to inst itu te
any su it, action or pr oceeding at law or in equ it y, for t he protect ion or e nforc ement of a ny r ig ht or
remed y u nder t he Inde nture w ith respect t o s uch 2015 Bond s, unless : (a) s uch O w ners sha ll ha ve g ive n
to the Trustee w r itt en not ice of the occu rre nce of a n Event of D ef ault ; (b) the O w ners of not less tha n
fifty perce nt (50%) in aggreg ate princ ipa l am ou nt of the 2 015 B onds then O uts ta nd ing s ha ll ha ve mad e
w ritte n request up on the T rus tee to exerc ise t he pow ers her einbe fore gra nted or to inst itu te suc h s u it,
action or pr oceed ing in its ow n nam e; (c) su c h O w ner or O w ners s ha ll ha ve te ndered t o the Trustee
reasonab le inde m nity aga inst the c osts, exp enses a nd liab ilities to be incurred in c omp liance w ith suc h
requ est; (d) the Truste e s ha ll ha ve fa iled to c omp ly w ith suc h request for a per iod of s ixty (60) d a ys
after s uch w r itte n request s ha ll ha ve bee n rece ived b y, a nd sa id te nder of indem nity s ha ll ha ve been
made t o, t he Trustee ; and (e) no d irec t ion inc ons iste nt w ith s uc h w ritten request sha ll have be e n given
to t he Trustee dur ing s uc h s ixty (60) d a y p er iod b y the O w ners of a ma jor it y in aggr egate princ ip a l
amou nt of t he 2 015 B onds t he n O utsta nd ing.
Su ch notificatio n, req uest, te nder of indem nity a nd re fus a l or om iss ion are hereby de c lared, i n
ever y cas e, to b e c ond itions pre cede nt to t he exerc is e b y a ny O w ner of 2015 Bonds of a ny r em ed y
hereu nd er or und er law; it be ing u nderst ood a nd inte nded that no one or m ore O wners of 2015 B onds
sha ll have a ny r ig ht in a ny m anner w ha te ver b y his or the ir actio n to a ffect, d is turb or pre jud ice the
security of t he Ind e nture or the r ig hts of a ny other O w ners of 2015 B onds , or to e nforce a ny r ig ht u nd er
the 2 015 B onds , the Inde nture, or app licab le law w it h respect to t he 2015 B onds, excep t in t he manner
here in pr ovid ed, and tha t a ll pr oceed ings at law or in e quity t o e nforc e any such rig ht sha ll b e ins tituted ,
had a nd ma inta ined in t he ma nner here in pr ovided a nd for the be nefit and pr ote ction of all O w ners of
the O utsta nd ing 2015 Bonds, s ub jec t to t he pr ovis ions of the Inde ntur e.
Section 7.07. Absolu te O b ligation of the D istr ic t. Not hing in t his S ect ion 7.07 or in any other
provis ion of the Ind e nture or in the 2015 B onds s ha ll affe ct or impa ir the ob lig at ion of the D istr ic t,
w hich is abs olu te a nd u nc ond it ional, to pay t he pr inc ip al of a nd interest on t he 2015 B o nds t o t he
respective O w ners of the 2015 Bonds at the ir respective dates of matur it y, or up on ca ll for redemption,
as here in provided , but only out of t he W a ter S yst e m Reve nues, the am ou nts on dep os it in t he R ate
Stabiliz ation Fu nd a nd other assets herein p ledged t here for, or affect or imp a ir the r ig ht of suc h
O w ners, w h ic h is a ls o abs olute a nd u nc ond it iona l, t o e nforc e suc h paym ent b y virtue of t he c ontra ct
embod ied in the 2015 Bonds.
Section 7.08. Remed ies N ot Exc lus ive. N o remedy here in c onferr ed upon or reserved to t he
T rus tee or t o t he O w ners of t he 2 015 Bonds is in te nded to be exc lus ive of any ot her rem edy or
remed ies, a nd eac h and ever y such remed y, to th e ex te nt per m itt ed b y law , shall be cumu lative a nd in
add it ion to a ny ot her remed y g ive n h ereunder or now or herea fter ex ist ing a t law or in equ ity or
ot herw ise.
Section 7.09. N o Wa iver of D efau lt. No dela y or om iss ion o f the Trustee or of an y Ow ner
of t he 2015 B onds to ex erc ise an y r ig ht or p ower ar is ing up on the oc curre nce of a ny E ve nt of D e fault
sha ll impa ir a ny such right or pow er or s ha ll be c ons trued to be a wa iver of a ny suc h E ve nt of D e fau lt
or a n a cqu iescence therein.
Section 7.10. Insurer R ig hts . The Insurer sha ll b e deem ed to be the sole holder of t he 2015
Bonds insu red under t he Insu ra nce P olic y for t he pur pose of exercis ing a ny voting r ig ht or pr ivilege or
44
giving a ny c onsent or d irec tion or taking a ny ot her a ction that t he holders of the 2015 B onds insure d
b y it are e nt itled to ta ke pursuant t o t he Inde ntur e p erta ining to (i) de fau lts a nd remed ies a nd (ii) the
duties a nd ob ligat ions of the Truste e. In fur therance there of a nd as a t erm of this Ind e nture a nd eac h
2015 Bo nd, the Truste e a nd eac h Ow ner of t he 20 15 Bonds app oint t he Ins urer as t he ir age nt a nd
att or ne y-in-fact a nd agree that t he Insurer m a y at a ny t ime dur ing the c ontinuation of a ny p r oceed ing
b y or agains t the D istr ict u nd er t he U nited S tates Ba nkruptc y C ode or a ny other app licab le bankruptc y,
ins olvenc y, rece ivership , rehab ilitat ion or s im ilar la w (an “Ins olve nc y Pr oceed ing”) d ir ect all m atters
re lating to such Ins olve nc y Pr oce ed ing, inc lud ing w it hout lim itation, (A) a ll m att ers re lat ing t o any
c la im or e nforc emen t proce ed ing in c onnection w ith a n Ins olve nc y Pr oc eed ing (a “C la im”), (B) the
dire ction of a ny appea l of a ny ord er relat ing t o any C la im, (C ) t he posting of any sur et y, supersedes or
perform a nce b ond pe nd ing a ny s uch app ea l a nd (D ) the r ig ht to vot e to a ccep t or re ject any p lan o r
ad justm e nt. In add ition, t he Truste e a nd eac h O w ner of the 2015 B onds de lega te a nd ass ig n to the
Insurer, to t he fu llest ex te nt perm itt ed b y law , the r ig hts of t he Trustee a nd eac h O w ner of t he 2015
Bonds in the c onduct of a ny Ins olvency Proceed ing , inc lud ing, w it hout lim ita tion, a ll rig hts of an y
part y to a n ad versar y pr oceeding or act ion w it h resp ect to a ny c our t order is sued in c onne ct ion w it h
any suc h Ins olve nc y Pr oceed ing. Remed ies gra nted to the O w ner of the 2015 Bo nds s ha ll expressl y
inc lude m and amus.
ART ICLE V III
THE TRU STEE
Section 8.01. D uties, Im munit ies and L iab ilities of Trustee.
(a) T he Trust ee sha ll, pr ior to a n E vent of D efau lt, a nd a fter the cur ing or w aiving
of a ll E ve nts of D e fau lt w hic h m a y ha ve occurred, perform suc h duties a nd only suc h dut ies as are
exp ress ly and s pecifically set for t h in the Ind e nture, and no imp lied co vena nts or duties s ha ll b e rea d
into th e Inde nture aga inst t he Trustee. T he Trustee shall, dur ing the ex istence of a ny E vent of D e fau lt
(whic h has not be e n cured or w a ived), exer c ise s uch of t he r ig hts and pow ers ves ted in it b y t he
Inde ntur e, a nd us e t he s ame d egree of care a nd s kill in t he ir exercise, as a prude nt ma n w ou ld exerc is e
or us e u nder t he c ircums tances in the c onduct of his ow n affa irs.
(b) T he D istr ict may rem ove t he Trustee a t an y t im e, unless an E vent of D e fau lt
sha ll have occurred a nd t hen b e c ontinu ing, a nd s ha ll remove the Truste e if at any time requested t o d o
so b y a n instrum e nt or c oncurre nt instrum e nts in writ ing s ig ned b y the O w ners of not less tha n a
ma jor ity in aggrega te pr inc ipa l am ou nt of the 2015 Bonds t he n Outsta nd ing (or t he ir att or neys du ly
author iz ed in w r it in g) or if a t an y t ime t he Truste e sha ll cease t o be e lig ib le in acc orda nce w it h
subsection (e) o f t his Se ct ion, or s ha ll be come inc apab le of a cting, or shall b e ad judged a ba nkrup t or
ins olvent, or a rece iver of the Truste e or its proper t y s ha ll be app ointed, or a ny pub lic officer s hall ta ke
contr ol or charge of t he Tr uste e or of its pr opert y or a ffa irs for the purp os e o f re hab ilit ation,
conser va t ion or liqu ida tion, in ea c h case b y g iving w ritt e n not ice of suc h remo va l to t he Trust ee a nd
thereup on t he D istr ic t sh all prom p t ly app oint a succe ssor Trustee b y a n instrum e nt in w r iting.
(c) T he Trustee m a y at a ny t ime res ig n b y g iving w ritte n notice of s uc h res ig nat ion
to t he D istr ict a nd b y g iving t he 2015 Bond O w ners not ice of s uc h res ig nation b y m a il a t t he addresses
show n on the Reg istration B ooks. U pon rec e iv ing such notice of resig nat ion, the D istr ict s ha ll
promptl y app oint a s uccessor Trust ee b y a n ins trum e nt in w r it ing.
45
(d) A ny rem ova l or res ig nation of t he Trustee and ap pointme nt of a succ ess or
T rus tee shall b ecome e ffe ctive up on accep ta nce of appoint me nt b y the success or Trustee. If no
success or Trustee s ha ll ha ve bee n app ointed and have accepted app ointme nt wit hin forty five (45) days
of g iving notic e of re moval or notice of res ig nat ion as afor esaid, the res ig n ing Trustee or a ny 201 5
Bond Ow ner (on behalf of hims e lf a nd a ll other 2015 Bond Ow n ers) ma y pe tition a ny court of
com p ete nt ju r isd ict ion for the app ointme nt of a success or Trustee, and such cour t ma y thereup o n, a fte r
such notice (if a ny) as it m a y de em pr oper, appoint such s uccess or Truste e. Any success or Trus tee
app ointed u nder t he Ind e nture s ha ll s ig nify its a ccepta nce of s uc h app ointme nt b y execut ing a nd
de liver ing to the D is tr ic t a nd to its predecessor Tru s tee a w r itte n accep ta nce there of, a nd thereup on
such succ es sor Trustee, w ithout a ny furt her ac t, de ed or c onve ya nce, s ha ll b ec ome vested w ith all the
mone ys , estates, properties, r ights, power s, trusts, duties and ob ligations of s uch p redec ess or Trustee ,
w it h like e f fect as if or ig ina lly nam ed Trust ee here in; but, ne verthe less at t he Wr itte n Request of the
D is tric t or t he r equest of the succ ess or Truste e, such predecessor Trustee s ha ll execut e a nd de liver a n y
and a ll ins trum e nts of c onve ya nce or further assurance a nd do suc h ot her things as ma y reas onably b e
requ ired for m ore fu ll y a nd cer tainly vest ing in and co nfirm ing to s uch successor Trustee a ll the r ight,
tit le a nd inter es t of suc h pred ecessor Trust ee in a nd t o a ny pr opert y he ld b y it u nder the Ind e nture a nd
sha ll pa y over, trans fer, ass ig n a nd de liver to the succes sor Trustee a ny m one y or ot her pr opert y subjec t
to the trusts a nd c ond itions here in set fort h. U p on r equest of the s uccess or T ruste e, the D istr ic t s ha ll
execute a nd d e liver a ny a nd a ll ins trume nts as may b e reas onab ly requ ired for m ore fu lly a nd c ertainly
vesting in a nd c onfirm ing to s uc h successor Trustee a ll such m one ys , estat es , prop erties, r ig hts , pow ers,
trusts, duties a nd ob liga t ions. U p on a ccepta nce of a ppointment b y a successor Trus tee as pr o vided in
this su bsec t ion, the D istr ict shall ma il or cause t he su ccess or trustee to ma il a notic e of the success ion
of suc h Trustee to the trusts h ereu nder to eac h Rating Age nc y w hic h is the n rat ing the 2015 B onds and
to t he 2015 B ond O w ners at t he address es show n on the R eg is tration B ooks. If the D is trict fa ils t o
ma il s uc h not ice w ithin fiftee n (15) da ys after ac cepta nce of app ointme nt b y t he success or Trust ee, the
success or Tr ustee s hall cause suc h notice t o be maile d at the expe nse of t he D istr ict.
(e) A ny Trus te e appointed u nder the provis ions of this S ectio n in succes sion t o t he
T rus tee s ha ll be a trust c omp a ny, ba nking assoc iatio n or ba nk ha vin g the p ow er s of a trust c ompa ny,
ha ving a comb ined cap ita l a nd s urplus of at le ast Seve nt y-F ive M illion D ollars ($75,000,000), and
subject t o supervis io n or exam inat ion for federa l or s tate author ity. If su c h bank, ba nking assoc ia t ion
or trus t c ompa ny pub lis hes a rep ort of cond itio n at lea st annually, pur sua nt to law or t o the requ ir eme nts
of a ny s upervis ing or exam ining author it y ab ove refe rred to, t hen for the purpose of this subsect ion the
com b ined cap ita l a nd su rplus o f s uc h trust company, banking association or bank s ha ll be deem ed to
be its c omb ined cap it a l a nd surplus as s et forth in its mos t rece nt rep ort of c ond ition so pub lis hed. I n
cas e at any time t he Truste e sha ll cease t o be e ligib le in accorda nc e w ith the provis ions of t his
subsection (e), the Truste e sh all res ig n im med iate ly in th e manner a nd w ith the e ffect spec ified in this
Section.
Section 8.02. M erger or Cons olid at ion. A ny trust c ompa ny, ba nking as soc iat ion or ba nk into
w hich the Tr ustee ma y be merged or conver ted or with w hic h it m ay b e cons olid ated or any trust
com p a ny, ba nking associat ion or ba nk res u lt ing fr om an y merger, c onvers ion or c o nsolidat ion t o w hic h
it s ha ll b e a p arty or a ny trust c ompa ny, ba nking assoc iation or ba nk t o w hic h the Trus tee ma y se ll or
trans fer a ll or substant ia lly a ll of its c orp orat e trust business , pr ovided suc h trust c omp a ny, ba nking
assoc ia tion or bank s ha ll be elig ib le u nder subsec tion (e) of Section 8.01, s ha ll b e th e success or t o s uch
T rus tee, w ithout t he execu tion or filing of a ny paper or any further act, a nyt hing herein to the c ontrar y
notw it hsta nd ing.
46
Section 8.03. L iab ility o f Truste e.
(a) T he recita ls of facts here in a nd in t he 2015 B onds s ha ll be ta ke n as s tateme nts
of th e D istr ict, a nd t he Trust ee s hall not ass ume resp ons ib ility for t he c orrect nes s of the s ame, or make
any repres e ntations as to t he va lid it y or suffic ie nc y of t he I ndenture or t he 2015 Bonds, nor s ha ll the
T rus tee incur a ny resp ons ib ilit y in r es pect t here of, other tha n as express ly stated here in in connection
w it h the respective dut ies or ob liga tions here in or in the 2015 Bonds assig ned to or imp os ed upon it.
T he Trustee s ha ll, how e ver, be resp ons ib le for its represent at ions c onta ined in its certificate o f
authe ntication on t he 2015 Bonds . The Trustee shall not be liab le in c onne ct ion w ith t he per forma nce
of its dut ies hereu nder, ex cept for its ow n neg lige nce or w illfu l m is conduct. T he Trustee ma y be come
the O w ner of 2015 B onds w ith the s am e r ig hts it w ould ha ve if it w ere not Trus tee, a nd, t o t he ex te nt
perm itted b y law , ma y act as dep os itor y for a nd p erm it a ny o f its officers or d ire ctors to act as a memb er
of, or in a ny ot her capacity w it h respe ct t o, a ny c om m itte e formed to protect t he r ig hts of 2015 B ond
O w ners, w hether or not suc h c omm ittee s ha ll repres ent the O w ners of a m a jor it y in pr inc ip a l a m ount
of t he 2015 B onds the n O uts ta nd ing.
(b) T he T rustee s ha ll not b e liab le for a ny err or of judgm ent made in g ood fa ith b y
a R espons ib le O f ficer of the Truste e, u nless it sha ll be pr oved t hat t he Trus te e w as neg lig e nt i n
ascerta ining t he pert ine nt facts.
(c) T he Trustee sha ll not be liab le w ith respect t o a ny action ta ke n or om itt ed to be
ta ke n b y it in g ood fait h in ac corda nce w it h t he d irect ion of t he O w ners of not less t han a ma jor it y (or
such ot her p er ce ntage pr ovided for here in) in aggrega te p r incip a l a m ount of the 2015 Bonds a t the tim e
O uts tand ing re la ting to t he time, me thod and p la ce of c onducting any proce ed ing for a ny re med y
ava ilable t o the Trustee, or exerc is ing a ny trust or pow er conferr ed upon t he Truste e und er the
Inde ntur e.
(d) T he Trustee s ha ll not be liab le for a ny action ta ken b y it in g ood fa ith and
be lieved b y it t o be author iz ed or w ith in t he d iscreti on or r ig hts or p ow ers conferred up on it b y the
Inde ntur e.
(e) T he Trust ee sha ll not be d eem ed t o ha ve k now ledge of a ny de fau lt or E ve nt o f
D efault hereu nder or a ny ot her event w hic h, w ith t he pas sage of t im e, the g iving of notice, or b oth,
w ou ld c ons titute an E vent of D e fau lt hereu nder u nless and u ntil a Respons ib le O fficer o f the Trustee
sha ll ha ve actu a l know ledg e of s uc h e ve nt or t he Trustee s ha ll ha ve bee n notified in w r iting, in
acc ordance w ith S ection 11.07, of s uc h e ve nt b y t he Distr ic t or the O wners of not less tha n fifty perce nt
(50%) of the 2015 B onds the n O utsta nd ing. Except as ot herw is e express ly provid ed here in, t he Truste e
sha ll not be b ou nd t o asc ertain or inqu ire as to the performa nce or observa nce b y t he D istr ic t of a ny of
the ter ms, c ond it ions, c ove na nts or agre eme nts here in of a ny of t he d ocum e nts ex ecuted in c onnection
w it h t he 2015 B onds, or as t o the ex is te nc e of an E ve nt of D e fau lt t hereu nd er or a n e ve nt w hic h w ou ld,
w it h the g iving of n ot ice, the passage of time, or b ot h, c ons titute a n Eve nt o f De fau lt thereu nder . T he
T rus tee s ha ll not b e resp ons ib le for t he va lid ity, e ffe ctive ness or pr ior ity o f any c ollatera l g ive n t o or
he ld b y it.
(f) N o provis ion of the Ind e nture shall requ ire t he Truste e to expend or r isk its own
fu nd s or otherw is e incur a ny financ ia l liability in the perfor ma nce of its duties hereu nd er, or in t he
exerc ise of a ny of its rig hts or p ow ers.
47
(g) T he Truste e s ha ll be u nd er no ob ligation to exerc ise a ny of t he r ig hts or p ow ers
vested in it b y t he Inde nture at the request or d ir ec tion of O w ners pursuant to the Inde ntur e, unless
such O w ners sha ll have offered to t he T rustee reas o nab le secur ity or indem nity aga inst t he c osts,
exp enses and liab ilit ies w hic h m ig ht be incurred b y it in comp lia nc e w it h s uc h r equest or d irection.
N o perm iss ive pow er, r ig ht or rem ed y c onferred upon t he T rustee hereu nder s ha ll be c ons trued t o
impose a dut y to exer c is e suc h p ow er, r ig ht or remedy and t he Trustee s ha ll not be a nsw erab le for other
than its neg lig e nce or w illfu l m isc onduc t.
(h) W he ther or not here in expr essly so provided, e very p rovis ion of the Inde nture
re lating to t he c onduc t or affecting t he liabilit y of or a fford ing pr ot ection to t he Trustee s ha ll be s ub ject
to the pr ovis ions o f this Artic le V III.
(i) T he Trust ee sha ll ha ve no respons ib ilit y w ith respect t o any in for mation,
stateme nt, or r ecita l in any offic ia l stateme nt, offering mem orand u m or a ny ot her d isc los ure mat eria l
prepared or d is tr ibuted w it h respect t o t he 2015 B onds.
(j) T he immu nities extended to the Trustee a ls o ex te nd to its d irec tors, officers,
emp loyees a nd agents.
(k) T he Tr uste e ma y exe cute a ny of t he trusts or p ow ers of the Ind e nture a nd
perform any of its dut ies thr oug h a ttor ne ys, age nts a nd re ceivers a nd s ha ll not b e a nsw erab le for th e
conduct of the same if app oint ed b y it w it h re asonab le care.
(l) T he Trustee s hall not be c ons idered in bre ach of or in de fau lt in its ob ligat ions
hereu nd er or pr og ress in res pect theret o in t he event of e nforced de la y (“u na void able de lay”) in the
perform a nce of s uc h ob ligat ions due t o u nforese eab le causes be yond its c ontr ol a nd w ithout its fau lt
or neg lige nc e, w hic h a f fect t he Truste e’s ab ilit y t o perform its ob lig ations her eund er, inc lu d ing, but
not lim ited to, A cts of G od or of the pub lic enem y or terror is ts, acts of a g over nme nt, a cts of th e ot her
part y, fir es , floods, ep idem ics, quarant ine restr ic t ions, s trikes, fre ig ht embarg oes, earthqua kes,
exp los ion, m ob viole nce, r iot, inab ility t o pr ocure or gener a l sab otage or r ationing of lab or, eq u ipm e nt,
fac ilities, sourc es of e nerg y, mater ia l or supplies in the op en mar ke t, litig ation or arb itra tion involving
a part y or o thers re lating t o z oning or oth er governmental action or inact ion p erta ining t o t he W ate r
S ystem Re ve nues, ma lic ious m isc hie f, c onde m nat ion, a nd u nusually se vere w eat her or de la ys o f
suppliers or subc ontr actors due to suc h c auses or an y s im ilar e ve nt a nd/or oc curre nces be yond t he
contr ol of the T ruste e.
(m) T he Tr ustee s ha ll hold the fina nc ia l s tatem e nts in comp lia nce w ith Section
6.20(b) s ole ly as an acc om m odat ion to t he B ond O w ners and s ha ll have no dut y or ob ligat ion to re view
such fina nc ia l st ateme nts.
(n) T he Trustee s ha ll have t he rig ht to acc ept and act up o n instruc t ions, inc lud ing
fu nd s tr a nsfer instruc tions (“Instruc t ions”) g ive n p ursuant t o this Ind enture and de liver ed using
E lectr o nic M eans (“E lectr onic M eans” s ha ll mean t he follow ing c ommu nicat ions met hods : S .W.I.F.T.,
e-ma il, facs im ile tr ansm iss ion, secure e le ctr onic tr ans m is s ion c onta ining app lic ab le aut horiz at io n
codes, p ass words and /or authe nticat ion ke ys is sue d b y the Trustee, or a noth er m ethod or s yste m
specified b y the Trustee as a va ilab le for use in connec t ion w it h its servic es hereu nd er); pr ovided ,
how e ver, that the D istr ict s ha ll pro vide to t he Truste e a n incumbe ncy certificate list ing officers w it h
the aut hor ity t o provide such Instructions (“Au th or iz ed O fficers”) a nd co nta ining s pec im e n sig natures
of s uch Au t hor iz ed O fficers, w hic h incu m be ncy certi ficate s ha ll be am e nd ed b y the D istr ict w hene ver
48
a person is t o be ad d ed or d e let ed from the lis ting. If the D istr ict e lects to g ive t he T rustee Instructions
using Ele ctr onic M ea ns a nd t he Trustee in its discret ion ele cts t o act up on such Instructions , th e
T rus tee’s underst a nd ing of such Instr uc tions sha ll b e deemed contr olling. T he D is tr ic t u nderstands
and agrees that the Trustee cannot det erm ine t he ide ntity of the actu a l s e nder of s uc h Ins tru ctions a nd
that t he Truste e sha ll c onc lus ive l y presume t hat directions that purp ort to ha ve been se nt b y a n
Author iz ed O fficer list ed on the incumbency certific a te pr ovided to t he Trustee ha ve b ee n s e nt b y s uc h
Author iz ed O fficer. T he D is tr ict s ha ll be r esp ons ible for e nsur ing tha t only Authoriz ed Officers
transm it such Instructions to t he Trustee a nd that the D is tr ic t and a ll Auth or iz ed O ffic ers are sole ly
respons ib le to sa feguard t he use a nd c onfid e ntia lity of ap p licable user a nd aut hor iz ation c odes,
passw ords and/or aut he nt icatio n keys upon rece ipt by the D istr ict. T he T rus tee s ha ll not be liab le for
any losses, c osts or expe nses ar is ing d irec t ly or ind ire ctly from the T ruste e’s re lia nce up on a nd
com p lia nce w ith s uch I ns tructions notw ithsta nd ing s uch d ir ections conflic t or ar e inc ons iste nt w ith a
subsequent w ritte n instruc tion. T he D istr ict agrees : (i) to as sume a ll r is ks aris ing ou t of the use o f
E lectr o nic Mea ns to s ubm it Instructions t o the Trus tee, inc lud ing w ithout lim itation t he r is k of the
T rus tee acting on unau thor iz ed Instructions , a nd the ris k of interception a nd m isuse b y third parties ;
(ii) t ha t it is fu lly inf ormed o f the pr otectio ns a nd ris ks ass oc iated w ith the var ious meth ods of
transm itting Instruc tions to the Trus tee a nd t hat the re ma y be m ore secure m ethods of tra nsm ittin g
Instructions tha n the method(s ) se le cted b y the D istr ict; (iii) that the s ecur ity pr oc edures (if a ny) to b e
followed in c onnect ion w it h its transm iss ion of I nstr uctions provid e to it a c ommer cia ll y reas onab le
degree of pr otection in lig ht of its particu lar ne eds and c ir cumsta nc es ; a nd (iv) to notify the Trustee
imm ed iate ly up on lear ning of a ny c ompr om is e or u nauthor iz ed use o f the secur it y pr ocedur es.
(o) T he Trus tee s ha ll not be co ncer ned w ith or acc ou ntab le to a nyone for the
subsequent us e or app lication of an y m one ys w hic h s ha ll be re le ased or w ithdraw n in ac c or da nce w ith
the provis ions her e of.
Section 8.04. Rig ht t o Rely on D ocum ents. The Trustee s ha ll be protec ted in act ing up on
any notic e, res olut ion, requ is it ion, reques t, c onse nt, order, certificate, r ep ort, op inion, notes, d irection,
facs im ile tr a nsm iss ion, elec tronic m a il or ot her pap er or d ocu me nt b e lie ved b y it t o be ge nu ine a nd to
ha ve been s ig ned or pres e nted b y the pr oper p arty or parties. T he T ruste e may c onsu lt w it h c ouns el,
w ho ma y be c ou nsel of or to t he D istr ict, w it h regard to lega l quest ions, and the op inion of such c ou nse l
sha ll be fu ll a nd com p lete authoriz at ion a nd protecti on in respect of a ny act ion ta ke n or s uffered b y it
hereu nd er in g ood fa it h a nd in acc ord a nce therew ith.
T he Trus tee ma y tre at t he O wners of t he 2015 Bond s appearing in t he Trustee’s Reg istration
Books as t he abs olu te owners of t he 2 015 B onds for a ll pur p oses a nd the Trustee s ha ll not be a ffecte d
b y any notice to the c ontrar y.
W he ne ver in t he adm inis tration of the trus ts imp os ed upon it b y the Inde nture th e Trustee s ha ll
deem it nec es sar y or d es irab le t hat a m atter be pr oved or estab lis hed pr ior to ta king or su ffer ing a ny
action hereu nder, suc h mat ter (unless ot her e vid enc e in respect there of be herein spec ific a lly
prescrib ed) ma y b e deem ed to be c onc lus ive ly proved a nd estab lis hed b y a Cer t ificate, R eques t or
Requis it ion of t he D is trict a nd such C ertificat e, Re quest or Requ is it ion s ha ll be fu ll w arra nt t o t he
T rus tee for a ny ac t ion ta ke n or s uffer ed in g ood fa it h under the pr ovis ions of the Inde nture in relia nc e
upon s uc h Certificate, Request or R equ is ition, but in its d iscre tion the Trustee ma y, in lieu thereof,
accept other e vide nce of s uc h ma tter or may req uire suc h add it iona l e vide nc e as it may deem
reasonab le.
49
Section 8.05. Preservation a nd Insp ection o f D ocume nts . All d ocum e nts re ceived b y t he
T rus tee u nder t he pr ovis ions of the Inde nture shall be reta ined in its respect ive p ossess ion a nd s ha ll be
subject at a ll r eas onable tim es to the ins pec t ion of the D istr ict, a nd any 2015 B ond O w ner, a nd t he ir
agents and represe ntatives du ly au thor iz ed in w r iting, at reas onab le h ours a nd u nd er reas onab le
cond itions .
Section 8.06. Compe nsa tion a nd Indem nificat ion. T he D istr ict shall pay t o t he Tr ustee fr om
time to tim e a ll reas onable c ompe ns ation for a ll ser vices re ndered u nder t he Inde nture, and als o a ll
reasonab le expenses, c harges, lega l a nd c onsu lting fees and ot her d isburseme nts a nd t hose of the ir
att or ne ys , age nts and emp loye es, incur red in and ab out t he per forma nce of their p ow ers and duties
under t he Ind e nture.
T he D istr ict s ha ll inde m nify, de fe nd and hold harm less the Trus tee, its officers, emp lo yees ,
dire ctors a nd agents fr om a nd aga ins t an y los s, cos ts, cla ims, liab ility or expe nse (inc lud ing fees and
exp enses of its att orneys a nd ad visors) w ithout neg li gence or bad fa ith on its part, aris ing out o f or in
con nection w ith t he execution of t he Inde nture, acc epta nce or adm inis tration of this trust, inc lud ing
costs a nd expens es of defe nd ing itse lf agains t a ny c la im or liab ility in co nnection w it h t he exer c ise or
perform a nce of a ny of its powers hereunder. T he rig hts of t he Trustee a nd t he inde m nific ation
ob lig at ions of the D istr ic t sha ll sur vive rem ova l or res ig na tio n of the Trus te e hereu nder or t he d is charge
of t he 2015 B onds a nd the Inde nture.
Section 8.07. N otic e t o Ins urer b y T rustee. T he Trustee sha ll not ify the Insurer of a ny fa ilu re
of the D istr ict to pr ovide notices, cer t ific ates a nd other informa tion u nder the tra nsaction d ocum e nts
of w hich t he Trustee has ac tua l or de emed know ledg e pursuant to Se ction 8.03(e) her e of.
ART ICLE IX
M O D IFICAT IO N O R AM EN D M EN T OF TH E IND ENTURE
Section 9.01. Amendm e nts P erm itted.
(a) T he Inde ntur e and the r ig hts a nd ob ligations of t he D istr ict, t he O w ners of the
2015 B onds , and the Trustee m a y b e m od ified or a mend ed from tim e t o time a nd at a ny t im e b y a n
inde nture or ind e ntures s upple me nta l thereto, w hic h the D istr ic t and t he Trustee ma y e nter into w he n
the w r itte n c onsent of the Insurer, so long as the Insur er has not de fau lted on any ob ligation u nder the
Insura nce Polic y or the Reserve Surety P olic y, s ha ll ha ve bee n filed w ith the Trustee, sub ject to
subsections (b) – (d) of this Sec t ion. No s uc h m od ificat ion or am end me nt s ha ll: (1) ex te nd the fix ed
matur ity of a ny 2015 B onds, or redu ce the am ou nt of prin cipa l t hereof or pr em ium (if any) there on,
or exte nd the time of payme nt, or c ha nge t he rate of interest or t he me thod of c omputin g t he rate of
interes t t here on, or exte nd the time of pa ym e nt of interest there on, w ithou t t he c ons ent of the O w ner
of ea c h 2015 B ond s o a ffected; (2) e lim in ate t he a foresa id c ons e nt of the Ins urer requ ired t o affect
any s uc h m od ifica tio n or am e ndme nt, or per m it t he cr eat ion of any lie n on t he Water S yste m Re ve nues
and other assets p ledged u nder the Indentur e pr ior to or o n a par ity w it h the lie n created b y the
Inde ntur e excep t as perm it ted herein, or deprive the O w ners o f the 2015 B onds of t he lie n crea ted b y
the Indentur e on s uch W a ter S ystem R e ve nues a nd other ass ets except as perm itt ed her e in, w ith ou t
the c onsent of the Insurer; or (3) reduce t he perce ntage of O w ners requ ired t o pr ovid e c onse nt or
direction u nder t his Inde nture. It s ha ll not b e ne cess ary for t he c ons e nt of t he Ins urer t o approve the
particu lar form of a ny S upp leme nta l Inde nture, but it sha ll be suffic ie nt if suc h cons e nt s ha ll appr ove
the substa nce thereof. P r omp t ly a fter the execu tion b y the D istrict and the Trust ee of a ny
50
Su pplem e nta l Ind e nture pursua nt to th is subsect ion (a), the Trustee s ha ll ma il a notice, se tting forth
in g enera l terms t he subs tance of s uc h S upp lementa l Inde ntur e, t o e ac h Rat ing Ag enc y a nd the Ow ners
of t he 2015 Bonds at the respec tive addresses s how n on the Reg is tra tion Books. A ny fa ilure to g ive
such not ic e, or a ny de fect t here in, s ha ll not, howe ver, in a ny w a y impa ir or affect the va lid ity o f a ny
such Supp leme nta l Inden ture.
(b) T he Inde nture a nd the r ig hts and ob ligat ions of the D istric t, the Trustee a nd t he
Ow ners of the 2015 Bonds ma y a ls o be mod ified or ame nded from t ime to time and at any t ime b y a
Su pplem e nta l Indenture, w hic h the D istr ict a nd the T rustee ma y e nter into w ithout t he co nsent of a ny
2015 B ond O w ners, bu t w it h th e w r itten c onsent of the Ins urer s o long as the Insu rer has not de faulted
on a ny ob liga tion und er the Insura nc e P olic y or t he R eserve Su rety Policy, if the Trus te e sha ll rece ive
an op inion of B ond C ouns el to the e ffec t t ha t the pr ovis ions of su c h S upp lementa l Inde nture s ha ll not
materia lly ad verse ly a ffe ct the interests of the O w ners of t he O utsta nd ing 2015 B onds , inc lud ing,
without lim itation, for a ny one or m ore of the follow ing pur p oses :
(1) to add to t he c ove na nts and agr eeme nts of t he D istr ic t c onta ined in the
Inde ntur e ot her c ovenants a nd agre eme nts therea fte r to b e obs erv ed, to p ledg e or assig n add it iona l
security for the 2015 Bonds (or a ny p ortion there of), or to s urrender a ny r ig ht or p ow er here in reserved
to or conferred upon t he D istr ic t;
(2) to m a ke such pr ovis ions for the purpose of cur ing any amb igu it y,
incons iste nc y or om iss ion, or of cur ing or c orrec ting any def ective provis ion, cont a ined in t he
Inde ntur e, or in regard t o matt ers or questions ar ising under the Inde nture, as the D istr ict ma y dee m
necessar y or des irab le;
(3) to m od if y, amend or supp leme nt t he Inde nture in such m a nn er as to
perm it t he qualific ation here of u nder t he Trust Ind enture Ac t of 1939, as ame nded, or any s im ilar
federal statu te hereunder in e ffect, and to add suc h ot her terms c ond itions a nd pr ovis ions as m ay be
perm itted b y sa id act or s im ilar federa l st atute ; a nd
(4) to m od if y, amend or supp leme nt t he Inde nture in such m a nn er as to
caus e interest on the 2015 Bonds to re ma in ex c ludab le from gr oss inc ome u nder the C ode.
(c) T he Truste e ma y in its discretion, but sha ll not be obligated t o, ent er into a n y
such Supplement a l Inde nture au t hor iz ed b y subsect ions (a) or (b) of this Section w hic h ma ter ia lly
adverse l y a ffects the Trustee’s ow n r ig hts, dut ies or immunit ies under t he Inde nture or otherw ise.
(d) Prior to the Truste e e ntering int o a ny Supp le m e nta l Inde ntur e hereu nder, ther e
sha ll be d e livered t o t he Trustee an op inion of Bo nd Cou nse l sta ting, in subs tanc e, that suc h
Su ppleme nta l Indenture has been ad opted in c omp lianc e w it h the requ ireme nts of the Inde nture a nd
that the ad opt ion of s uch S upp leme nta l Inde nture w ill not, in a nd of itself, ad versel y a ffect t he
exc lus ion of inter est on t he 2015 B o nds fr om fed era l income taxation a nd fr om s tate income taxat ion.
Section 9.02. E ffe ct of Supp lem enta l Ind entu re. U pon the exe cution of a ny S upp le me nta l
Inde ntur e pursuant to this Ar t ic le, t he Indenture sha ll be deem ed to be m od ified a nd a me nded in
acc ordance t her ew it h, a nd the respect ive r ig h ts, du ties a nd ob liga t ions u nder t he Inde nture of the
D is tric t, t he Trus tee, the Ins urer a nd all O w ners of 2015 B onds O u tstand ing s ha ll t her ea fter b e
determ ined, exerc ised a nd e nforced t hereu nd er s ubject in a ll respects t o s uc h m od ific at ion a nd
51
amendme nt, a nd a ll t he terms a nd c ond it ions of a ny such Supp lem e nta l Indenture s ha ll be d eemed t o
be p art of t he t erms a nd c ond itions of th e Inde nture for a ny a nd all purp oses.
Section 9.03. E nd orsem ent of 2015 B onds ; P reparation o f N ew 2015 Bonds. 2015 Bonds
de livered a fter the exe cution o f a ny Supplement a l Inde ntur e purs uant t o this Article may, a nd if t he
T rus tee so d etermines sha ll, be ar a not at ion b y e nd orseme nt or ot herw ise in form ap pr oved b y the
D is tric t a nd the Trustee as t o a ny m od ifica t ion or ame ndme nt pr ovided for in s uc h Suppleme nta l
Inde ntur e, a nd, in that case, up on dema nd on t he O w ner of a ny 2015 B onds Outsta nd ing at the time of
such ex ecut ion a nd pres e ntation of his or her 2015 B onds for suc h purp ose at th e O f fice of the Trustee
or at suc h add itiona l offic es as the Trustee ma y select a nd d es ignate for suc h purp ose, a su itab le
nota tion sha ll be mad e on suc h 2015 B onds . If the Su pple m e nta l Inde nture s ha ll s o provide, new 2015
Bonds so m od ified as t o c onform, in the op inion of the D istr ict a nd the Trustee, t o a ny m od ificat ion or
amendme nt c onta ined in such Supp lem e nta l Inde ntur e, sha ll be pr epared and executed b y the D is tr ict
and authe ntica ted b y t he T rustee, a nd up on dema nd on t he O wners of a ny 2015 B onds the n O utsta nd ing
sha ll be ex c ha ng ed at the O f fic e of t he Trustee, w ithout cost t o a ny 2015 B ond O w ner, for 2015 Bonds
then Outsta nd ing, up on surre nder for cance llation of s uch 2015 Bonds, in equal aggreg ate pr incip a l
amou nt of t he s am e maturit y.
Section 9.04. Amendm e nt of Part icu lar 2 015 Bonds. The provis io ns of this Art ic le s ha ll not
prevent any 2015 Bond O w ner fr om ac cepting any ame ndme nt as to the particu lar 2015 Bonds he ld
b y s uc h 2015 Bo nd O w ner.
Section 9.05. E ffe ct of Insurance P olic y. In determ ining w he ther any ame ndm ent, c ons ent,
w aiver or ot her action to be ta ke n, or a ny failure t o take action, u nder the Ind e nture w ou ld ad verse ly
affe ct the s ecur ity for the 2015 Bonds or the r ig hts of the Ow ners, the Trustee sha ll c ons ider the e ffec t
of a ny s uc h am endme nt, c onsen t, w a iver, ac tion or inaction as if t here w ere no I nsu ra nce P olic y.
ART ICLE X
D EFEAS AN CE
Section 10.01. D is c harg e of Inde nture. T he 2015 B onds m a y be paid b y the D istr ict in any of
the follow ing w a ys, p rovided that t he D is trict a ls o p a ys or causes to be pa id a ny other s ums pa yab le
hereu nd er b y t he D istr ic t:
(a) b y p a ying or caus ing to be pa id the pr inc ip a l of a nd interest and red empt io n
prem iums (if any) on su ch 2015 Bonds , as a nd w he n the same bec ome due a nd pa ya b le;
(b) b y the dep os it w ith the Trustee, in trust, at or before matur ity, m one y or
securities in the nec ess ar y amou nt (as pr ovided in S ect ion 10.03) to pay or r edeem a ll 2015 B onds t hen
O uts tand ing ; or
(c) b y de liv er ing t o the Truste e, for cance llation b y it, a ll of t he 2015 Bonds the n
O uts tand ing.
If t he D istr ict s ha ll a ls o pa y or c aus e to be pa id a ll other sums pa yab le hereu nd er b y the D istr ict,
then a nd in t hat case, at the e lect ion of the D istr ict (as evidenced b y a Certificate of t he D istr ict file d
w it h the Tr ustee, s ig n ifying the inte ntion of the D is trict to d isc harge a ll suc h ind ebted ness a nd the
Inde ntur e), a nd notw it hs tand ing that a ny s uc h 20 15 B onds sha ll not ha ve b ee n s urrend ered for
52
pa ym e nt, the Ind e nture a nd t he p ledg e of Water S ys tem Re ve nues a nd other as sets made u nder t he
Inde ntur e, a nd a ll c ove nants , agreem ents and other obligations of t he D istr ict u nder the Ind e nture sha ll
cease, term inate, becom e void a nd be c omp lete ly d is charged a nd satis fied. In s uc h eve nt, upon the
W ritte n R eques t of the D istr ic t, the Trustee sha ll ex ec ute and de liver to t he D is tr ict all suc h instrume nts
as ma y be ne cessar y or des irab le t o evid e nce s uc h d is charg e a nd satis fac tion, a nd the Truste e sha ll pa y
over, tra ns fer, assig n or deliver a ll m one ys or secur it ies or other pr opert y he ld b y it pursuant to the
Inde ntur e w hich are not requ ired for t he pa yme nt or redemption of s uc h 2015 B onds not t here t ofore
surrendered for such payme nt or redemp tion to the D istr ict.
T his Inde nture sha ll not be d ischarged unt il a ll a m ounts due or to become due t o t he Ins urer
sha ll have bee n pa id in fu ll in accord ance w ith Section 11.20. The D is tric t’s ob lig ation t o pa y s uc h
amou nts sha ll express ly s ur vive p a ym e nt in fu ll of the pa yments of pr in c ipal of a nd interes t on the
2015 Bonds .
Section 10.02. D is c harg e of L iab ilit y o n 2015 B onds. U pon t he dep os it w ith the Truste e, in
trust, at or before matur ity, of m one y or secur ities in the necessar y am ou nt (as pr ovided in S e ct ion
10.03) to pa y or redee m any O utst and ing 2015 B onds (whether upon or pr ior t o the m atur ity or the
Redempt ion D at e of su c h 2015 B onds), provided t ha t, if suc h O utsta nd ing 2 015 B onds are to be
redeemed prior to matur ity, notic e of suc h redemptio n s ha ll ha ve bee n g ive n as pr ovided in Ar t icle IV
or pr ovis ions satis factory t o the Truste e s ha ll ha ve b een made for the g iving of such notice, the n a ll
liab ility o f the D istr ict in respec t of suc h 2015 Bonds sha ll cease, ter m inate a nd be comp letely
disc harg ed, a nd t he O w ners t here of s hall therea fter b e ent itled only to p ayme nt ou t of such m one y or
securities dep os ited w it h the T rustee as a foresa id for the ir pa yme nt, su b ject how e ver, to the pr ovis ions
of S ection 10.04.
T he D istr ict ma y at a ny t im e s urrend er to the Trus tee for ca nce lla t ion b y it a ny 2015 Bonds
previous ly issued and de livered, w hic h the D istrict m a y ha ve acqu ir ed in a ny ma nner w hats oever, a nd
such 2015 B ond s, up on s uc h surrend er and ca nc e llat ion, sha ll b e deem ed to be pa id a nd ret ired.
Section 10.03. D epos it of M oney or S ecurit ies w it h Trustee. W he never in t he Inde nture it is
provided or perm itted that there b e depos ited w it h or he ld in trust b y the Truste e m one y or s ecur it ies
in the ne cessary am ou nt to pa y or red eem any 2 015 B onds, t he m one y or secur it ies s o t o be depos ited
or he ld s ha ll be invested in D e feas an ce Se cur ities a nd s hall be held b y t he Tr ustee in th e fu nds a nd
acc ou nts estab lis hed p ursua nt to the Inde ntur e. D efeasanc e ma y be acc omp lis hed b y d ep os iting w ith
the Trustee:
(a) law fu l m one y of t he U nit ed S tates of Amer ica in an am ou nt equ al to the
princ ipa l am ou nt of suc h 2015 B onds a nd a ll u npa id interes t t here on to matur it y, except tha t, in t he
cas e of 2015 B o nds w hic h are to be redeem ed pr ior to ma turity a nd in respect of w hic h notice o f suc h
redemption s ha ll ha ve been g ive n as p rovided in Ar tic le IV or provis ions sat is fa ctor y t o the Trust ee
sha ll ha ve been made for the g iving of such notice, the am ou nt t o be depos ited or held sha ll b e t he
princ ipa l am ou nt of s uch 2015 B onds a nd all u npa id interest a nd prem ium, if a ny, there on to t he
Redempt ion D ate; or
(b) D efeas a nce Secur ities the pr inc ip a l of a nd interest on w hich w he n due w ill, in
the w r itten op inion of a n Independ ent Cer t ified Pu blic Accou nta nt or Ind epe nde nt Fina nc ial C onsu lta nt
filed w ith the D is tr ict and the Trustee, pr o vid e m one y su ffic ient to p a y t he princ ipa l of a nd a ll u npaid
interes t to matur it y, or to the Redempt ion D ate (w it h prem ium, if any), as the case may be, on t he 2015
Bonds t o b e p a id or red eemed as d irected b y t he D istric t as suc h princ ipa l, interest a nd prem ium, if
53
any, b ec ome du e, provid ed that in the case of 201 5 Bonds w hic h are to be r edeem ed pr ior t o t he
matur ity t here of, notice of such redemp tion s ha ll ha ve bee n g iven as provided in Artic le IV or provis io n
sat isfa ct or y to t he Trustee s ha ll ha ve bee n made for the g iving of such not ice;
provided, in eac h case, t ha t: (i) the Trustee s ha ll ha ve been irrevocab ly ins truct ed (b y t he terms
of the Ind e nture or b y Wr itte n R equest of t he D is trict) t o ap p ly suc h m oney to t he pa yment of suc h
princ ipa l, interest a nd prem ium, if a ny, w it h res pect t o such 2015 B onds as d irected b y t he D istr ict; (ii)
the D istr ict s ha ll ha ve de livered to the Trustee a n op inion of B ond C ou nse l address ed t o the D istr ic t
and the Trus tee to the effect tha t such 2015 B ond s ha ve been d isc harged in acc orda nce w ith the
Inde ntur e (whic h op inion ma y re l y upon a nd ass ume the accura c y of the Indepe nde nt Certified Pub lic
Accou nt a nt’s or Indepe nde nt F ina nc ial C ons u lta nt’s op inio n referred t o above); (iii) t he D istr ic t sha ll
ha ve de livered a n escr ow agre eme nt (w hic h s ha ll be accep tab le in for m a nd s ubstance to the Insurer,
so long as the I nsurer has n ot d e fau lted on a ny ob ligation u nder t he Insura nce P o licy or th e Reserve
Su rety P olic y); a nd (iv) t he D istr ict s ha ll ha ve de live red a cert ific ate of d isc harge of t he Trustee w it h
respect t o t he 2015 B onds . The op inion of B ond C ou ns e l and Indepe nde nt C ert ified P ub lic
Accou nt a nt’s or Independ e nt F ina nc ia l C onsu lta nt’s op inion re ferred t o ab ove s ha ll b e acceptab le in
form and subs tance, a nd add ress ed, t o the D istr ict, the Trustee and t he Insurer (s o long as the Insurer
has not de fau lted on any ob lig at ion u nder the I nsur anc e Polic y or the Reser ve Surety P olic y). T he
Insurer sha ll be provided w ith final drafts of t he ab ove-referenced d ocum e ntation not less tha n five
Bus iness D a ys pr ior to the fu nd ing of t he es crow .
T he 2015 B onds s ha ll be deem ed O utsta nd ing und er this Inde nture u nless a nd u ntil the y are in
fac t pa id a nd r et ired or the ab ove cr iter ia are m et.
Section 10.04. Pa yme nt of 2015 B onds A fter D isc harge of Inde ntu re. N otw ithsta nd ing a ny
provis ions of t he Ind e nture, a ny m one ys he ld b y the Trustee in trust for t he pa yme nt of t he princ ipa l
of, or interest on, a ny 2015 B o nds a nd remaining u nc la imed for tw o (2) ye ars a fter the pr inc ipa l of a ll
of the 2015 Bonds has become due a nd p a yab le (w hether at m aturity or up on call for r edemption or b y
acceleration as provid ed in the Inde nture), if suc h m one ys w ere so held at suc h da te, or tw o (2) years
after the date of d epos it of s uc h m one ys if d ep osited a ft er s a id d ate w hen a ll of the 2 015 B onds became
due and p a yab le, s ha ll be repa id to t he D is tr ict free fr om the tr usts created b y t he Ind enture upon rec e ipt
of a n ind em nificat ion agre eme nt accept ab le to the D istr ict a nd t he Trustee indem nifying the Trustee
w it h respec t t o cla ims of O w ners of 2015 Bonds w hich ha ve not ye t been pa id , a nd a ll liab ilit y of th e
T rus tee w ith respect t o suc h m one ys s ha ll thereupon ce ase; pr ovided, how e ver, t hat b e for e t he
repa yme nt of s uch m one ys to the District as afores a id, the Trustee sha ll at the w ritte n d irection of the
D is tric t (at the c os t of the D istr ict), first mail t o the Ow ners of 2015 B onds w hich ha ve not ye t bee n
pa id, at the addresses show n on the R egistration B ooks, a not ice, in suc h form as ma y b e deemed
app ropr iate b y the Trustee w ith respect to the 201 5 Bonds s o payab le a nd not prese nted a nd w ith
respect to the pr ovis ions re lating t o the repaym e nt to t he D is tr ic t of the m one ys h eld for the pa ym e nt
thereo f.
ART ICLE X I
M ISCELL AN EOU S
Section 11.01. L iab ility L im it ed. N otw ithsta nd ing a nything in th e Inde nture or the 201 5
Bonds, but sub ject to t he pr ior it y of p a ym e nt w ith r espect to O perat ion a nd M a in tena nce C osts, the
D is tric t sha ll not be required to advance a ny m oney s derived fr om any s ource other tha n t he Wa ter
S ystem R e ve nues, t he Water S ys tem R e ve nue Fu nd , t he Ra te Stab iliz ation Fund a nd ot her m one ys
54
pledged u nder the Ind e nture for a ny of the purp os es me ntioned in the Ind enture, w he ther for t he
pa ym e nt of the pr inc ipa l of or inter est on the 2015 Bonds or for any other p urpose of the Inde nture.
N evert he less , the D istr ict m ay, but sha ll not be requ ir ed to, ad va nce for a ny of the purp oses here of a n y
fu nd s of t he D istr ic t w hich ma y be m ade availab le to it for suc h pur p oses.
Section 11.02. Su ccessor Is D eemed Included in A ll Re fer e nces to P r ed ecessor. W he ne ver in
the Ind e nture e it her the D istr ict or the Trustee is na m ed or referr ed t o, suc h refere nc e sha ll be de emed
to inc lude the success ors or as sig ns there of, a nd a ll the c ove nants and agr eeme nts in the Inde nture
cont a ined b y or on be ha lf of the D istr ict or the Tr ustee sha ll b ind a nd inure t o the be ne fit of the
respective s uccess ors and ass ig ns t her e of w he ther so expressed or not.
Section 11.03. L im it at ion of R ig hts t o Parties a nd 2015 B ond O w ne rs. N othing expressed or
imp lied in the Inde nture or in the 2015 Bonds is intended or s ha ll be c onstrued t o g ive to a ny pers on
ot her t ha n the D istr ict, the Trustee a nd the O w ners of t he 2015 Bonds, a ny legal or equ itab le r ig ht,
remed y or c la im u nder or in respect of t he Inde nture or any co vena nt, c ond ition or pr ovis ion t her ein or
here in co nta ined ; a nd all such co venants, c ond itions and provis io ns are a nd s ha ll be he ld to be for t he
sole a nd exclus ive be ne fit of t he D istr ict, the Trustee and the O w ners o f the 2015 B onds.
Section 11.04. W a iver of N otice; Requ ire me nt o f M a iled N ot ice. Whe ne ver in the Ind e nture
the giving of not ic e b y ma il or otherw ise is requ ired, t he g iving of such not ic e ma y be w a ived in wr iting
b y the person e ntitled to rec e ive such not ice a nd in a ny suc h c ase the g iving or rece ipt of su ch notic e
sha ll not b e a c ond it ion precede nt to the va lid ity of a ny ac tion ta ke n in re liance up on suc h w aiver .
W he ne ver in the Ind enture a ny not ice s ha ll be req u ir ed to b e g ive n b y ma il, s uc h requ ire me nt s ha ll b e
sat isfied b y the dep os it of suc h not ice in the U nited S tates m a il, p os tage prepa id, b y first c lass ma il.
Section 11.05. D estruct ion of 2 015 Bonds. W he never in the Inde nture provis ion is made for
the cance lla t ion b y the Truste e a nd the de livery to the D istr ict of a ny 2015 Bonds, t he Tr ust ee s ha l l
destroy suc h 2015 B onds as ma y be a llow ed b y law, and d e liver a cert ificate of such d estruct ion to the
D is tric t.
Section 11.06. Severab ility of Inva lid Pr ovis ions . If any one or mor e of t he provis ions
cont a ined in the Ind enture or in the 2015 B onds s hall for a ny reason be he ld to be invalid, illega l or
unenforc eab le in any respect, the n suc h pro vis io n or provis ions s ha ll b e de emed se verable from the
rema ining provis ions c onta ined in t he Inde nture a nd s uch inva lid it y, illeg a lit y or u ne nforc eab ilit y s ha ll
not a ffec t any other provis ion of the Inde nture, a nd the Inde nture s ha ll be c o nstrued as if s uc h inva lid
or illega l or u nenforceab le provis ion had ne ver bee n cont a ined herein. T he D is tric t hereby dec lares
that it w ou ld ha ve e ntered into the Inde nture a nd ea ch a nd ever y ot her Sect ion, paragr ap h, sente nce,
c lause or p hrase her e of a nd authoriz ed the is suanc e o f the 2015 Bonds pursuant thereto irrespec tive of
the fact t hat any one or m ore S ec tio ns, parag rap hs, s ent ences, claus es or p hras es of the Inde nture ma y
be he ld illegal, inva lid or u ne nfor ceab le.
Section 11.07. N otic es. A ny notic e to or dema nd up on t he D is tr i ct or t he Trustee s ha ll be
deemed t o ha ve be e n su ffic ie nt ly g iv e n or ser ved for all purp os es b y b e ing sent b y fa cs im ile or email
or b y be ing dep os ited, first c lass ma il, p os tage pr ep a id, in a p ost office le tter b ox, addressed, as t he
cas e ma y b e, to t he D istr ic t at Truc kee D onner Public U tility D istr ict, 11570 D onner P ass Road,
T ruckee, Ca lifornia 96161, Atte ntion: G e nera l M ana ger (or such other address as ma y ha ve bee n filed
in w r iting b y the Distr ict w ith t he Trus tee) or to t he Trustee at T he Ba nk of N ew Y or k M e llon Tr ust
Compa ny, N .A., 400 H ope Street, Su it e 400, Los A nge les, Ca lifor nia 90071, Atte nt ion: C orp orate
T rus t D epartme nt, Re fere nce : Truc kee D onner Pu bli c U t ilit y D istr ict; Facs im ile : (213) 630-6480, or
55
to t he Insurer at ___________, A tte nt ion: _______, R e : P olic y N o. _______; T e lep hone: __________;
Facsim ile: __________. In e ach c ase in whic h a notic e or other c ommu nication t o t he Ins urer re fers t o
an E ve nt of D ef ault, t he n a c op y of such notice or other c ommu nication s ha ll a ls o be sent to the
atte ntion of t he Insurer’s G eneral Cou ns e l and s ha ll be marked to ind icate “U RG EN T M ATERIAL
E N CLOSED .” N otw it hs tand ing the for eg oing provisions of t his Sect ion 11.07, the Truste e sha ll not
be d eem ed to ha ve rece ived, a nd sha ll not b e liab le for fa iling t o act up on t he c ont e nts of, a ny not ice
unless and u ntil t he Trustee actua lly r ece ives such not ice.
Section 11.08. E vid e nce of R ig hts o f 2015 Bond O w ners. A ny r equest, conse nt or ot her
instrum e nt requ ired or perm itt ed b y t he Indenture to be s igned a nd executed b y 2015 B ond O w ners
ma y be in a ny nu mber of concurre nt ins tr ume nts of subs tant ia lly s im ilar te nor a nd sha ll b e sig ned or
executed b y su c h 2015 Bond O w ners in pers on or b y a n age nt or ag ents du ly app ointed in w r iting.
Proof of t he ex ecu tion o f any su ch request, conse nt or other instrum ent or of a w r it ing app o inting a ny
such age nt, or of the hold ing b y a ny pers on of 2015 Bonds tra nsferab le b y de livery, sha ll b e suffic ient
for a ny purpose of the Inde nture a nd s hall be conclus ive in fa vor of t he Trus tee a nd the D is tr ict if mad e
in the m a nner pr ovid ed in this Sec t ion.
T he fac t a nd date of the execution b y a ny pers on of a ny suc h request, c onsent or other
instrum e nt or w r it ing ma y b e proved b y t he cer tific ate of any notar y pub lic or ot her officer of a ny
jur isd iction, au t hor iz ed b y t he laws t here of to ta ke acknow ledgme nts of deeds, cer t ifying that t he
person s ig ning suc h r eq ues t, cons e nt or other ins tru ment ac know ledged to him t he ex ecutio n t here of,
or b y a n a ffid a vit o f a w itness of s uc h execu tion d uly sw or n t o be fore such notary pub lic or other
offic er.
T he Ow nership of 2015 Bonds s ha ll be pr oved b y t he Reg istration B ooks.
A ny r equest, c onse nt, or ot her instrume nt or w riting of t he O w ner of a ny 2015 B ond sha ll b ind
ever y future O w ner of the sam e 2015 B ond a nd the O w ner of e ver y 2015 B ond iss ued in exc ha ng e
therefor or in lieu thereo f, in r espect of anyt hing d one or su ffered to be d one b y the Trustee or t he
D is tric t in ac c orda nce t herew it h or re lia nc e t here on.
Section 11.09. D is qua lified 2015 B onds. In det erm ining w hether the O w ners of the requ is ite
agg reg ate pr inc ipa l a m ou nt of 2015 B onds ha ve concurred in a ny demand, reques t, d irect ion, c onse nt
or w aiver und er the Ind e nture, 2015 Bonds w hic h are know n b y the Trustee t o be ow ned or held b y or
for the accou nt of the D is tr ict, or b y a ny other ob lig or on t he 2015 Bonds, or b y a ny pers on dir ectl y or
ind ir ectly contr olling or c ontr olled b y, or u nder d irec t or ind irect c omm o n co ntr ol w it h, the D is tr ict or
any other ob lig or on the 2015 B onds, sha ll be d is reg arded and deem ed not to be O utsta nd ing for th e
purpos e of a ny s uc h determ inat ion. 2015 Bo nds s o ow ned w hic h ha ve bee n p ledged in g ood fa ith ma y
be reg arded as O uts tand ing for the purp oses of this Sect ion if t he p ledgee s ha ll estab lis h t o t he
sat isfa ct ion of t he Trustee the p ledgee’s r ig ht to vote su ch 2015 B onds a nd that t he p ledgee is not a
person d ir ect ly or ind ir ectly c ontr olling or c ontr olle d b y, or u nder d ir ect or ind irect comm on c ontr ol
w it h, the D istr ict or any other ob lig or on t he 2015 Bonds. In case of a d ispute as to s uc h r ig ht, a ny
dec is ion b y t he Trust ee ta ke n upon t he ad vice of cou nse l s ha ll be fu ll pr otect ion to the Trustee. U p on
requ est, t he D istr ict s hall cer tify to t he Truste e t hose 2015 Bonds that are d is qua lified pursuant to t his
Section 11.09 a nd the T rust ee ma y c onclus ive ly r e ly o n suc h certific ate.
Section 11.10. M one y H e ld for Part icular 2015 Bonds. The m oney he ld b y t he Trustee for t he
pa ym e nt of the interest, pr inc ipa l or premiu m due on a ny da te w ith respect to par ticu lar 2015 Bonds
(or p or tions of 2 015 B onds in the case of reg istered 2015 Bo nds redeem ed in part only) s ha ll, on a nd
56
after such d ate a nd pe nd ing s uch pa ym e nt, be set a s ide on its books and he ld in trust b y it for t he
O w ners of t he 2 015 Bo nds e ntit led t hereto, sub ject, how e ver, t o t he pr ovis ions of Sec tion 10.04 her e of
but w it hou t a ny liab ility for inter est thereon.
Section 11.11. Fu nds and Ac c ou nts. Any fu nd or acc ou nt requ ired by the Inde nture to be
estab lis hed and ma inta ined b y t he Trustee ma y be est ab lished and ma int ained in t he ac cou nt ing r ec ords
of the Trustee, e it her as a fu nd or a n acc ou nt, a nd m a y, for t he purp oses of s uch records , a ny aud its
thereo f a nd a ny rep orts or statem e nts w ith respect t hereto, be trea ted either as a fu nd or as an a ccou nt ;
but a ll such records w ith respe ct to a ll suc h fu nds and a ccou nts sha ll at a ll times be ma intained in
acc ordance w ith corpor ate trust industr y sta ndards to t he exte nt pra cticab le, a nd w ith due r egard for
the requ irements of S ection 6.21(a) and for t he protection of the secur it y of t he 2015 Bonds a nd t he
rig hts of ever y Ow ner thereo f.
Section 11.12. W a iver of Persona l L iabilit y. N o me mber, officer, ag en t, em p loye e, c ons u lta nt
or a tt or ne y of the D istr ict sha ll b e ind ividua lly or per s ona lly lia b le for t he payme nt of t he pr inc ipa l o f
or prem iu m or interest on the 2015 Bonds or be sub ject t o a ny p ersona l liabilit y or ac c ou ntability b y
reason of the issuance there of; but nothing herein c onta ined s hall re lie ve any suc h memb er, offic er,
agent, emp loye e, consu ltant or a ttorney fr om the performa nce of a ny offic ia l duty pr ovid ed b y law or
b y t he Ind enture.
Section 11.13. E xecution in S e ver a l C ou nterparts . T he Indenture m a y be execu ted in any
number of c ou nterp arts a nd eac h of suc h c ou nterparts sha ll for a ll purp oses be d ee med t o b e a n or ig ina l;
and a ll s uc h c ou nterpar ts , or as many of them as the D is trict a nd t he Trustee sha ll preser ve undestr oyed ,
sha ll toget her c onstitute b ut one a nd the same instru ment.
Section 11.14. CU SIP N umbers. N eit her the Trustee nor t he D istr ict s ha ll b e liab le for a ny
defe ct or inaccurac y in t he CU S IP numb er that appea r s on a ny 2015 B ond or in any r ede mption notic e.
T he Truste e ma y, in its discre tion, inc lu d e in any re dempt ion notic e a stateme nt to the effect t ha t the
CU SIP numbers on the 2015 Bonds ha ve been ass ig ned b y a n ind epe nde nt ser vic e and are inc luded in
such notice so le ly for t he c onve nie nc e of t he 2015 Bond holders a nd tha t ne ith er the D is tr ict nor the
T rus tee sha ll be liab le for a ny inaccurac ies in such numbers.
Section 11.15. Choic e of Law. THE IN D EN TU RE S H ALL BE G O VERN ED BY TH E
L AWS O F THE S TATE O F CAL IF O RN IA.
Section 11.16. Insurer as T hird Party B e nefic iary. T he Insu rer is inte nded as a t hird party
bene fic iar y t o this Inde nture.
Section 11.17. Impa irment of Insurer’s Rig hts . N o c ontrac t sha ll be entered int o or an y actio n
ta ke n b y w hich the r ig hts of the Insurer or s ecur ity for or sources of pa yme nt of the 2015 Bonds ma y
be imp a ired or prejud iced in a ny m ater ia l respect ex cept upon obta ining the prior w r itt en c onse nt of
the Insurer.
Section 11.18. Interest Rate Exch a ng e Agreem ent. A ny interest rate ex c ha nge agr eeme nt
(“Sw ap Agreeme nt”) ent ered int o b y t he D istr ic t shall m e et the follow ing c ond itions : (i) the Sw ap
Agreem e nt must be e ntered into to m a nage interest c os ts re la ted to, or a hedge ag ains t (a) assets t he n
he ld, or (b) d ebt the n outst a nd ing, or (iii) debt r eas onab ly expe cted to be issued w it hin the next tw e lve
(12) mont hs , a nd (ii) the S w ap Agreem e nt sha ll not c onta in a ny le verage e lem e nt or mu ltip lier
com p one nt grea ter tha n 1.0x u nless t her e is a m atc hing hedge arra nge me nt w hic h e ffect ive ly off-sets
57
the exp os ur e fr om any such e lem e nt or c omp one nt. U nless ot herw ise c onsented to in w riting b y the
Insurer (so long as the Insurer has not de faulted on any ob ligatio n und er the Insura nce P olic y or the
Reserve Suret y P o lic y), a ny u ninsured net settle me nt, breakage or ot her term inat ion am ou nt the n in
effe ct s ha ll be sub ord inate to t he pa ym e nt of pr inc ip a l of a nd interes t on the 2015 B onds and on a n y
debt on par it y w it h C ontracts or B onds. T he D istr ict sha ll not ter m inate a Sw ap Agreeme nt u nless it
demonstr ates to the sat isfact ion of the Ins urer pr ior to the pa ym e nt of a ny such t erm ina t ion am ou nt
that such pa yment w ill not caus e the D istr ict t o be in de fau lt u nder this Inde nture or a ny s upp lem e nt
theret o or ame ndment thereof, inc lud ing but not lim ited to, a ny m onetar y ob ligations thereu nd er. A ll
cou nterparties or guar a ntors t o a ny Sw ap Agr eem e nt must ha ve a rating of at le ast “A-” and “A3” b y
S&P and M ood y’s. I f t he c ou nterp arty or g uara nt or's rating fa lls b e low “A-” or “A3” b y e ither S&P or
M ood y’s, the c ou nterparty or gu arant or s ha ll execute a cred it suppor t a nnex to the S w ap Agre em e nt,
w hich cr ed it s upp ort a nnex sha ll b e ac ceptab le to t he Insu rer. I f t he c ou nterparty or t he guara ntor's
long t erm u nsecured rating falls below “Baal” or “B B B+” b y e ither M ood y’s or S &P, a replacem ent
cou nterparty or guarant or, acc eptab le to the Insurer (so long as t he Insurer has not de fau lted on an y
ob lig at ion u nder t he Insura nce P olic y or the Reser ve Su rety P olic y), s ha ll be requ ir ed.
Section 11.19. Insurer Cons id eration. T he r ig hts granted t o t he Ins urer under this I ndentur e
or any su pp leme nt thereto or amend me nt t here of t o r equest, co nse nt to or d irect a ny action are r ig hts
grant ed to the Insurer in c ons idera t ion of its iss ua nce of t he Insura nce P olic y. A ny ex erc ise b y the
Insurer of suc h r ig hts is mere l y a n exerc ise of the Insu rer’s contra ctua l r ig hts and s ha ll not be c onstrued
or d eemed to b e ta ke n for the b e ne fit, or on b e ha lf, of the O w ners a nd suc h action d oes not e vid e nce
any p os it ion of t he Insu rer, a ffirmative or negat ive, as to w hether t he c ons e nt of the O w ners or a ny
ot her p erson is requ ir ed in add it ion to the c onse nt o f the Ins ur er.
Section 11.20. Am ou nts Pa id b y Insurer. Am ou nts pa id b y t he Ins urer under the Insura nce
Po lic y a nd the R eserve Surety P olic y shall not be de emed paid for purp os es of this Inde nture and the
2015 Bonds re lating to s uc h pa ym e nts s ha ll rema in O utstand ing a nd c ontinue to be du e a nd ow ing
unt il paid b y the D is tr ict in a cc orda nc e with this Indentur e. T his Inde nture s hall n ot be d is c harged
unless all am ou nts due or t o be c ome due t o t he Insur er ha ve been pa id in fu ll or du ly pr ovid ed for.
Section 11.21. Cove na nt to Preser ve Prior it y. Eac h of t he D istr ic t and Trustee c ove na nt and
agree to ta ke suc h action (inc lud ing, as app licab le, filing of U niform C om merc ia l C od e fina nc ing
stateme nts a nd c ontinu ations there of) as is necessar y fr om time t o t ime to preser ve t he pr ior ity of the
pledge of t he W a ter S ys tem Re ve nues set for th in Se ct ion 5.01 und er ap p licab le law .
Section 11.22. Su brogation a nd Su rviva l of O b ligations. T he Ins u rer s hall, t o t he exte nt it
makes a ny pa yme nt of pr inc ip a l of or interest on the 2015 Bonds, bec ome subrogat ed t o the r ig hts of
the rec ip ie nts of suc h paym e nts in a ccorda nce w it h the terms of the Ins uranc e Polic y. Eac h ob ligation
of the D istr ict t o the Insurer u nder th is Inde nture or a ny su pp lem e nt t hereto or am e ndme nt ther eof sha ll
survive d is c harg e or termination of this Inde nture or any supp lem e nt t hereto or am e ndme nt t here of.
Section 11.23. Reimburseme nt of Fees. T he D is tr ict s ha ll pa y or r e imburse the Insurer a ny
and a ll c harges , fees, c osts and expe nses t ha t t he Insurer ma y reas o nab ly pa y or incur in c onne ct ion
w it h (a) t he ad m inis tration, e nforce me nt, de fe ns e or preservation of any r ig hts or security in this
Inde ntur e or a ny supp leme nt t here to or am e ndme nt thereof, (b) the pursuit of a ny rem ed ies u nder this
Inde ntur e or a ny supp lement ther eto or am e ndme nt thereo f or otherw is e afford ed b y law or equ ity, (c)
any am e ndme nt, w aiver or ot her ac tion w it h respect t o, or re lated to, t his Indentur e or a ny supp lement
theret o or amendme nt t here of w he ther or not exe cu ted or c omp leted, or (d) any litigation or ot her
dispute in c onnection w it h this Inde ntur e or an y supple me nt thereto or a me ndme nt t here of or t he
58
transa ctions c ontemp lated ther eb y, other than c os ts resulting fr om the fa ilure o f the Insurer to honor
its ob ligat ions u nder t he Insurance Policy. T he Ins ur er reser ves the rig ht to c harge a reas onab le fe e as
a cond it ion t o exe cut ing a ny am e ndme nt, wa iver or conse nt p rop os ed in respect of t his Inde nture or
any supp lem e nt thereto or amendm e nt thereof.
Section 11.24. Provis ion of Inform ation. S o long as the Insurer has not de fau lted on a ny
ob lig at ion u nd er the Insura nce P olic y or the Reser ve Suret y P olic y, the Ins urer s ha ll be pr ovided w it h
the follow ing inf orma t ion b y the D istr ict or Truste e, as the case ma y be :
(a) A nnua l aud ited financ ia l statem e nts w ithin 270 d a ys a fter the end of t he
D istr ic t’s F is ca l Y ear (t ogether w ith a certific ation of the D istric t that it is n ot aw are o f a ny de fau lt
or E ve nt of D efau lt u nder t his Ind e nture), and the D istr ict’s an nual budget w it hin 30 d a ys a fter the
approva l there of toge ther w it h s uc h other inf or mat ion, da ta or r ep orts as the Insurer sha ll re asonably
requ es t fr om t im e t o time;
(b) N otic e of a ny d raw up on t he R eser ve Fu nd w ithin tw o Bus iness D a ys a fter
know ledge t here of other th an (i) w ithdrawa ls of a m ounts in excess of the Reser ve R equ ire me nt a nd
(ii) w ithdrawa ls in c onne ct ion w ith a r e fu nd ing of t he 2015 Bonds ;
(c) N otic e of a ny d efau lt know n to t he Truste e or D is trict w it hin five Bus iness
D a ys after know ledge t here of;
(d) Prior not ice of t he advance re fu nd ing or rede mp tion of a ny of the 2015 Bonds ,
inc lud ing the pr inc ipa l amou nt, matur it ies a nd CU SIP numbers t here of;
(e) N otic e of the res ig na t ion or rem ova l of t he Trustee a nd the app ointme nt of, a nd
accept a nce of duties b y, a ny su cc ess or thereto;
(f) N otic e o f the c om me nce me nt of a ny pr oce ed ing b y or aga inst the D is tric t
com me nced u nder the U nited States B a nkruptc y Code or any other app lic ab le ba nkruptc y,
ins olve ncy, rece ivership, re hab ilita tion or s im ilar law (an “Ins olve nc y Proc eed ing”);
(g) N otic e of the ma king of any c la im in c onnec t ion wit h any Insolve nc y
Proceed ing see king the a void a nce as a prefere ntia l trans fer o f any p a yme nt of pr inc ipa l of, or interest
on, the 2015 B o nds;
(h) A fu ll or ig ina l tr a ns cr ipt of a ll pr oceed ings re lating to t he exe cution of an y
ame ndme nt, su pp lement, or w a iver t o this Inde ntu re or an y supp leme nt ther et o or ame nd me nt
there of; a nd
(i) A ll rep orts, notices and c orrespond e nce t o be de livered to O w ners u nder the
terms o f this Ind e nture a nd a ny s upp le me nt thereto or ame ndme nt thereof.
In add ition, to the extent t hat the D istr ic t has executed into a C ontinu ing D is c losure Cer tific ate,
cove na nt or u nderta kin g w ith res pect to t he 2015 B onds, a ll infor m ation furnis hed pursua nt to suc h
agreeme nts sha ll a ls o be provided to t he Insurer, s imu lt ane ous ly w ith the fur nis hing of suc h
inform ation.
Section 11.25. Add it iona l Information. The Insu rer sh a ll ha ve the r ig ht to rece ive such
add it iona l informa tion as it m a y reas onably requ est.
59
Section 11.26. D is cus sion of a nd Access t o Information. T he D istr ict w ill perm it t he Insurer
to d is cus s the a ffa irs, fina nc es a nd acc ou nts of the Distr ict or an y infor mat ion t he Ins urer ma y
reasonab l y request regard ing the s ecur it y for the 201 5 Bonds w it h appropr iate officers of the D is tr ict
and w ill use comm ercia lly reas onable effor ts to e nab l e the Insu rer to ha ve acc ess to t he fac ilit ies, books
and r e c ords of the D is tr ict o n an y Bus iness D a y up on reasonab le pr ior not ice.
S-1
IN W ITN ESS WH ER E O F, the D istr ict has caus ed the Indentur e t o be s ig ned in its name b y its
Preside nt, a nd the Truste e, in t oke n of its acc epta nc e of the trusts created hereu nder, has cau sed the
Inde ntur e t o be s ig ned in its c orp orate name b y its officers thereu nt o du ly authoriz ed, a ll as of t he day
and year first abo ve w r itte n.
TRU CK EE D ONNER P U BLIC U TIL ITY D ISTR IC T
B y:
Its : P reside nt of t he B oard of D irect ors
Attest:
Secretary of the B oard of D ire ctors
THE BAN K O F N EW YO RK M ELLO N TRU ST
CO M PAN Y , N .A., as Trustee
B y:
Its : Author iz ed O fficer
A-1
EX HIB IT A
FOR M OF 2015 B ON D
U NL ESS T H IS B OND IS P RESEN TED B Y AN AUTH ORIZ ED R EP RESE NTA T IVE OF T H E
D EP OSIT O RY (AS D EFIN ED IN T H E IN DEN T URE) T O TH E T RU STEE FOR
R EG IST RA TION OF T R A NSFER , EX C H AN GE, OR P AYM ENT , AN D ANY BOND ISSUED
IS REGIST ER ED IN T H E NA M E O F CEDE & C O. OR IN SUCH OT H ER NAME AS IS
R EQ U ESTED BY AN AUT H ORIZ ED REP RESENTA T IV E O F T H E D EP OSITO RY (A ND
A NY P AY M EN T IS M AD E T O CEDE & CO. OR TO SU CH OT H ER EN TITY AS IS
R EQ U ESTED BY AN A U TH ORIZ ED REP RESENT AT IV E O F T H E D EP OSIT O RY), A N Y
T RA N SFER , PL EDGE, OR OTH ER USE H ER EOF FO R VAL U E O R OT HER WISE BY OR
T O A NY P ER SON IS WRO NG FUL INASMUCH AS THE REG IST ER ED OW N ER HER EOF,
C ED E & CO ., H A S AN INT EREST HEREIN.
N o. ____ $__________
U N IT ED S TAT ES O F AM ER ICA
STATE O F CAL IF O RN IA
T RU CK E E DO NN ER P U BLIC UTIL ITY D ISTR IC T
W ATER SY S TEM REFU N D IN G REV ENU E B O ND S , SERIES 2015
IN TEREST R AT E M ATU R ITY D AT E O RIG IN A L ISS U E D ATE CU SIP
____% November 15, 20__ ________, 2015 _______
REG ISTERED O WN ER CED E & C O .
PR IN CIP A L AM O U N T: _________________________________________ D O LL ARS
T he TRU CK EE D O N N ER P UBLIC U T IL ITY D ISTR ICT, a pub lic utilit y d is trict du ly
orga niz ed a nd ex ist ing und er the law s of th e State of Ca lifor n ia (the “D istr ict”), for va lue rece ived,
hereb y pr om is es to pa y t o t he R egis tered Ow ner spec ified ab ove or reg is tered ass ig ns (the “Reg is tered
O w ner”), on t he M aturity D ate s pe c ified ab ove (s ubject to a ny r ig ht o f pr ior red em p tion here ina fte r
provided for), the P rinc ipa l Am ou nt spec ified ab ove, in law fu l m one y of t he U nited S tat es of Amer ica,
and t o pa y in ter es t there on in like law fu l m one y fr om the interest payme nt date next prec ed ing the dat e
of aut he ntication of th is B ond (u nless : (i) this B ond is aut hentic ated a fter the fiftee nth d ay of the
ca le ndar m onth preced ing a n inter est pa yme nt date, w hether or not suc h da y is a bus iness da y, a nd on
or be fore the follow ing interes t pa ym ent da te, in w hic h e vent it s ha ll b ear int erest fr om suc h interes t
pa ym e nt da te; or (ii) this B ond is aut he nticated on or before N ovem ber 1 , 2015, in w hic h e ve nt it s hall
bear interest from t he O rig ina l Is sue D ate ident ified a bove; pr ovided, how e ver, t hat if as of the date of
authe ntication of this B ond, inter est is in de fau lt on this B ond, t his B ond s ha ll bear interest fr om the
interes t pa ym e nt date to w hic h int erest has pre vious ly been pa id or made a vailab le for paym e nt on t his
Bond), at the Interest Rate p er a nnum s pec ified ab ove, pa yable s em ia nnu a lly o n N ove mber 15, 2015
and on eac h Ma y 15 a nd N ove mber 15 there a fter. Interes t on t his Bond s ha ll be calcu lated on t he bas is
of a 360 da y year c omp osed of tw e lve 30 day m onths . P r inc ipa l here of and pre m ium, if a ny, u p on
ear ly rede mp t ion her e of are p a yab le b y c heck of t he T rustee up on prese ntatio n and surre nder hereof a t
A-2
the Offic e of t he Trustee (as de fined in t he here ina fter des crib ed Inde nture) T he Ba nk of N ew Y ork
M ellon Tr ust C omp a ny, N .A., as trustee (the “Trust ee”). Interes t here on is payab le b y c heck of th e
T rus tee se nt b y firs t c lass m a il on t he app licab le inter est pa yme nt da te t o t he R eg is tered O w ner her eo f
at t he R eg istered Ow ner ’s address as it appears on the r eg istration b ooks of t he Trustee as of t he close
of b us iness on t he fiftee nth day of t he m onth pre ced ing ea ch interest pa ym e nt d at e (except that in t he
cas e of a reg is tered ow ner of one m illion d ollars ($1,000,000) or mor e in pr inc ip a l am ou nt, suc h
pa ym e nt ma y, at s uch reg ister ed ow ner’s opt ion, be mad e b y w ir e tra ns fer of im med iate ly availab le
fu nd s t o an accou nt in t he U nited S ta tes in acc orda nc e w ith w r itte n instruc t ions pr ovided t o t he Truste e
b y such r egis tered ow ner pr ior t o the f ifteent h (15th) da y of the m ont h pre ced ing such interes t pa yme nt
date).
T his B ond is not a deb t of the S tate of Ca lif or nia, or an y of its p olitic a l s ubd ivis ions (other t ha n
the Distr ict), and ne it her the Sta te, nor a ny of its politica l subd iv is ions (other than t he D is tr ic t), is liab le
here on, n or in any e vent s hall this B ond b e pa yab le out of a ny fu nds or properties of t he D istr ict othe r
than the N et Water S ystem Re ve nu es (as such term is de fined in the Ind e nture of Trust, Dated as of
June 1, 2015 (t he “Inde ntur e”), b y a nd be tw een the D istr ict a nd t he Trust ee) a nd ot her m one ys p ledged
therefor under the I ndenture. The ob ligation of the D istr ic t t o ma ke pa yme nts in a cc ordance w ith the
Inde ntur e is a lim it ed ob ligation of the D istr ic t as s et for th in the Ind e nture a nd the D is tr ic t s ha ll have
no liab ilit y or ob ligation in c onnection herew it h ex cept w ith res pec t to su ch pa yme nts t o be made
pursuant to t he Inde nture. T he B onds d o not c onstitu te an ind ebted nes s of the D istr ict in c ontra ve nt ion
of a ny c ons titut iona l or statu tor y d ebt lim it at ion or re striction.
T his B ond is one of a du l y aut hor iz ed iss ue of bonds of t he D is tr ict des ig nated as t he “Truc kee
D onner Public U tilit y D istr ic t Water S yst em Re fu nd ing Reve nue B onds, Series 2015” (the “B onds”),
of a n aggregat e pr inc ip a l a mou n t of _________ Dollars ($__________), a ll of lik e te nor a nd dat e
(except for such var iat ion, if a ny, as ma y b e requ ir e d to des ig na te var ying ser ies, numb ers or int erest
rates) a nd a ll issu ed pursu a nt to the provis ions of Artic le 11 of C hap ter 3 of Part 1 o f D ivis ion 2 of
T itle 5 o f the G overnme nt C ode of the S tate of Ca lifor nia, inc lud ing bu t not lim ited t o Sect ion 53583,
and pursua nt to t he Inde nture a nd t he res olut ion aut horiz ing the iss uance of th e Bonds . Reference is
hereb y m ad e t o t he Inde nture (c op ies of w hic h ar e on file a t the office of t he D istr ic t) and a ll
supplem e nts thereto for a des cription of the terms on w hich the B onds are iss ued, t he provis ions w ith
regard to the nature a nd exte nt of the W ater S yst em Reve nu es, and t he r ig hts ther eu nder of the Ow ners
of the B onds a nd t he r ig hts, duties a nd im munities of t he Trus tee a nd t he r ig hts and ob ligations of the
D is tric t her eu nder, to a ll of t he pr ovis ions of w hich t he R eg is tered O wner of this B ond, b y acc eptanc e
here of, assents a nd agr ees . T he Bonds ha ve bee n is sued in fu lly reg istered form w ith out c oup ons in
denom inations of $5,000 or any int egra l mu lt ip le t he reof.
T he B onds ha ve bee n iss ued b y the D istrict to re fu nd certa in ob lig ations of the D istr ict, as mor e
fu lly d escribed in the Inde nture.
T his B ond a nd the interest, pr e m ium, if a ny, hereo n and a ll ot her B onds and t he interest and
prem ium, if a ny, t here on (to the exte nt s et for t h in t he Inde nture) are specia l ob lig ations of the D istr ict,
secured b y a p led ge and lie n on and p a yable fr om the Water S ys tem Re ve nues a nd a ny ot her am ou nts
on dep os it in certa in fu nds a nd ac c ou nts created u nd er t he Inde nture. As and t o the exte nt set forth in
the I nde nture, all of t he W ater S ys tem R e ve nues are e xc lus ive ly a nd irre voc ab ly p ledged in ac c or da nc e
w it h the terms here of and t he pro vis io ns of t he Ind e nture, to t he pa yme nt of the pr inc ipa l of a nd int erest
and pre m ium (if a ny) on t he B onds.
A-3
T he Inde nture and t he r ig hts and ob ligations of t he Distr ic t a nd of t he Ow ners of the B onds
and of the Trustee m a y be m od ified or am end ed from time to t im e and a t any time b y a n ind entu re or
inde ntur es suppleme nta l ther eto, w hic h the D istr ic t and the Trustee m ay e nter into w hen the w ritte n
conse nt of _________ (the “Insurer”), s o long as the Ins urer has not de fau lted on a ny ob ligation u nder
the Ins ura nce P olic y or the R eserve S uret y P olic y (as s uch terms are defined in t he Inde nture). No
such m od ificat ion or ame nd me nt s ha ll: (i) ex te nd the fix ed matur it y of a ny B onds , or r edu ce the am ou nt
of p rinc ip a l t her e of or prem ium (if a ny) ther e on, or e xtend the t ime of pa yme nt, or c ha ng e the rat e o f
interes t or the meth od of c ompu ting t he rate of interes t thereon, or exte nd t he time of pa yme nt of
interes t t here on, w ithout the c onse nt of th e O w ner of each B ond so affected; (ii) e lim inate t he a for esaid
conse nt o f the Insurer requ ired t o a ffec t a ny such m od ificat ion or ame ndme nt, or perm it the cre at ion
of a ny lie n on the Wa ter S ys tem Re ve nu es a nd other ass ets pledg ed u nder t he Ind enture pr ior to or on
a par ity w it h t he lie n cre ated b y the Ind enture except as perm itted her e in, or depr ive t he O w ners of the
Bonds of t he lie n created b y the Ind e nture on s uc h W ater S ys tem Re ve nu es and other as sets excep t as
perm itted in the Inde ntur e or (iii) reduc e the perce nt age of O w ners requ ired t o provid e cons e nt or
dire ction u nder t he Inde nture, w it hou t t he co nse nt of the Insurer.
T he Ind e nture a nd t he r ig hts a nd ob lig ations of t he D istr ict, t he Trustee a nd t he O w ners of t he
Bonds ma y als o be m od ified or am e nded from time to time and a t an y t im e b y a supp le me ntal
inde ntur e, w hic h the D is tr ic t and th e Trustee ma y e nter into w ithou t the c onse nt of a ny B ond O w ners,
but w it h the w ritt e n c ons e nt of the Insurer s o long a s the Insurer has not de fau lted on any ob ligation
under the Insura nce P olicy or the Reser ve S urety P olic y, if t he Trust ee sha ll rece ive a n op inion of B ond
Cou nse l to the e ffe ct t ha t t he provis ions of such s upp leme nta l inde ntu r e sha ll not mater ially ad verse ly
affe ct the interests of t he Ow ners of the Outsta nd ing Bonds.
T he B onds are sub je ct to ex tra ord inar y red empt ion prior to the ir respect ive sta ted ma tur it ies ,
as a w hole or in p art on a ny date in t he order of m atur it y a nd w it hin ma tur ities as dir ected b y t he
D is tric t in a W r itt e n Request provided t o the Truste e at le ast 60 da ys (or suc h lesser nu mb er of d a ys
accept ab le to t he Trus tee in the s ole d is cr etion of t he Tr ustee, s uch not ice for the c onvenie nc e of the
T rus tee) pr ior t o suc h date and b y lot w it hin eac h m atur ity in integra l mu lt ip les of $5,000 fr om N e t
Proceeds, up o n t he terms a nd c ond itions of, a nd as provided for in, the Inde nture at a r edem ption pr ic e
equ al to t he pr inc ipa l am ou nt thereof p lus a ccrued interest t her eon t o the date fixed for red em ption,
w it hout prem ium.
T he B onds wit h stated ma tur ities on or a ft er N ove mber 15, 20__ are subject t o redemp tion
prior to t he ir respect ive s tated m atur ities, as a w hole or in part on a ny date as in t he ord er o f m aturit y
as dire cted b y the D istr ict in a W r itte n Requ es t pr ovided to the Trustee a t leas t 60 da ys (or such less er
number of da ys acceptable t o t he Trustee in t he sole dis cr etion of the Trustee, such n otice for the
con ven ie nce of t he Trustee) pr ior to such date and by lot w it hin eac h maturit y in integra l mu lt ip les of
$5,000, on or a ft er N ove mber 15, 20__, at a rede m pt ion p r ice equa l to the pr inc ipa l am ou nt there o f
plus accrued interest thereo n to t he date fixed for redemption, w it hout prem ium.
A-4
T he B onds w ith stat ed matur ities on N ovember 15, 2 0 __ are s ub ject to m a ndat or y s inking fu nd
redemption in par t (b y lot) o n e ac h N ovember 15 on a nd a fter N ovemb er 15, 20__, in int egral mu ltip les
of $5,000 at a R ede mpt ion P r ic e of t he princ ip a l am ou nt there of p lu s accrued interest e vide nced a nd
represented t hereb y to the d at e fixed for redemption, w ithout pr em ium, in acc orda nc e w it h t he
follow ing sc hedu le :
Rede mption Date
(Novemb er 15)
Principal
Amount
$
*
* F in a l M a turity.
As provid ed in t he Inden ture, notic e of redemp tion sh all be m a iled b y the Trustee b y first c lass
ma il at least 20 da ys but not m ore t ha n 60 days pr ior to the R edempt ion D ate t o the respect ive O w ners
of an y B onds des ig na ted for red em ption a t the ir add res ses appearing on t he reg istr ation b ooks of the
T rus tee, b ut ne it her t he fa ilure t o rec e ive such not ice nor a ny d e fect in the not ice or t he ma iling t her eof
sha ll affec t t he va lid ity of the proceed ings for r edemp tion or t he cessation of ac crua l of inter est there on
fr om a nd after the date fix ed for redempt ion.
If t his B ond is c a lled for r edempt ion a nd pa yme nt is duly pr ovid ed therefor as specified in the
Inde ntur e, inter est s hall c eas e t o accrue here on fr om and a fter t he d ate f ix ed for redem ption.
If a n E ve nt of D e fau lt, as defined in t he Inde nture, s ha ll occur, the pr inc ipa l of a ll of the Bo nds
and the interes t accrued t hereon m a y be de clared due and pa yab le up o n the cond it ions, in the ma nne r
and w it h t he e ffec t provided in t he Ind e nture, but such dec laration a nd its c onsequences ma y b e
rescind ed and annu lled as fur ther pr ovided in the Ind enture.
T his B ond is trans ferab le b y th e Reg istered O w ner hereof, in person or b y his or her du ly
author iz ed att or ne y in w rit ing, at s a id Office of the Trustee bu t only in the ma nner sub ject to the
lim itations a nd up on pa ym e nt of t he t axes a nd c harg es provided in the Inde nture and upon s urrender
and c ance llation of this B ond. U pon reg istr at ion of such trans fer, a new B ond or B onds of t he same
series, of auth or iz ed den om ination or de nom inations , for the same aggreg at e princ ipa l am ou nt of the
same matur ity w ill be issued to the tra ns feree in exc hange therefor.
Bonds may b e exc hang ed at said O ffice of t he Truste e for a like aggreg ate pr inc ipa l a mou nt of
Bonds of other authoriz ed den om inations of t he s ame series a nd sam e maturit y, b ut only in the ma nner ,
subject t o t he lim itat ions a nd upon p a ym e nt of th e ta x es and c harg es provid ed in the Inde nture.
T he Trus tee sha ll not b e requ ired to reg is ter t he tr ansfer or exc ha nge of a ny B ond during t he
period in w hic h t he Trustee is s e lect ing B onds for re dempt ion or a ny B ond t hat has be e n s e le cted for
redemption.
T he D istr ict a nd the Truste e ma y trea t t he Reg ister ed O w ner her e of as t he ab s olu te ow ne r
here of f or all purp os es, and t he D istr ict and t he Trustee sha ll not be a ffe cted b y any notice to t he
contr ar y.
A-5
It is hereb y cert ified tha t a ll of t he th ings, c ond it i ons and a cts requ ired to ex ist, t o ha ve
happen ed or to have been per form ed precede nt to and in the is suance of t his B ond do exis t, ha ve
happen ed or ha ve been performed in due a nd reg ular t ime, form a nd m a nner as requ ired b y t he
Inde ntur e and t he laws of the S tate of Ca lifor nia a nd that the am ou nt of t his B ond, t oget her w it h all
ot her indebted ness of t he D istr ict, d oes not ex ceed any lim it u nder an y laws of the S tate of C a lifor nia,
and is not in exces s of t he am ou nt of Bonds perm itte d to be issued u nder t he Inde nture.
T his B ond shall not be e nt it led t o any bene fit u nder t he Inde nture or bec ome va lid or ob liga t or y
for any p urp ose u ntil the c ert ificat e of au the ntica t ion here on e nd orsed s ha ll ha ve bee n ma nua ll y s ig ned
b y t he Trustee.
A-6
IN W ITN ESS WH ER E O F, the D istr ict has caus ed this B ond t o be executed in its name a nd on
its beha lf w ith the manual or facs im ile s ig nature of it s P reside nt as of this [___] da y of _______, 2015.
T RU CK E E DO NN ER P U BLIC UTIL ITY D ISTR IC T
B y:
Its : P res ide nt of the B oard of D irect ors
[FO R M O F TRUS TEE’S CER TIF ICATE OF AU TH EN TICAT IO N
TO APP EAR O N BO ND S]
T his is one of the B onds descr ib ed in the w ithin-me nt ioned Inde nture.
D ated : ____________, 2015
T H E B AN K OF N E W YO RK M E LLO N TRU S T
CO M PAN Y , N .A., as T rus tee
B y:
Its : Author iz ed S ig nator y
A-1
STATEM EN T OF IN SU RAN CE
[TO CO M E.]
A-2
[FO RM O F ASS IG N M EN T ]
For va lue rece ived t he u nders ig ned hereb y sells, assigns a nd tra ns fers u nto
(N ame, Address a nd Tax Ide ntifica tion or
Soc ia l Secu r it y N u mber of Assig nee)
the w ithin r egistered B ond a nd hereby irre vocab ly c onstitu te(s ) and app oint(s ) __________________
_________________________ attor ne y, to tr a ns fer the same o n t he r egis tration b ooks of t he Truste e
w it h fu ll p ow er of subst itu tio n in the prem ises.
D ated :
N ote: The s ig nature(s) on t his As s ig nme nt must
corresp ond w it h the name(s) as w r itte n on t he
fac e of t he w ithin B ond in e ver y p articu lar
w it hout a lteration or e nlarge me nt or a ny
cha ng e w ha tsoe ver.
Sig natur e G uara nteed :
N ote: Sig natu re g uara ntee s ha ll be m ade b y a
guarantor institu tion part ic ip ating in t he
Securit ies Tra ns fer Ag ents M eda llion Progr am
or in su ch other guarant ee pr ogram accep tab le
to the Trustee.