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HomeMy WebLinkAboutRES 2011-12 - Board t11( TRUCKEE DONNER f _IHH lit ,t , Resolution No. 2011 - 12 RESOLUTION OF THE BOARD OF DIRECTORS AUTHORIZING THE ISSUANCE OF BONDS TO REFUND CERTAIN SIDE FUND PENSION OBLIGATIONS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A TRUST AGREEMENT AND PURCHASE CONTRACT, AND APPROVING ADDITIONAL ACTIONS RELATED THERETO WHEREAS, the Truckee Donner Public Utility District (the "District") has previously elected to become a contracting member of the California Public Employees' Retirement System ("PERS"); and WHEREAS, at the time the District elected to enter PERS, it had an existing unfunded acturial accrued liability which PERS required to be funded through the establishment of a Side Fund with PERS; and WHEREAS, the Side Fund liability (the "Side Fund Liability") of the District is currently being amortized at a rate of 7.75% per annum payable to PERS; and • WHEREAS, such Side Fund Liability is currently being paid by contributions from the District's electric utility, water utility, and a contribution by District employees; and WHEREAS, the District desires to authorize the issuance of its Taxable Pension Obligation Bonds, Series 2011 (the "Bonds") pursuant to the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code (the "Bond Law"), in a maximum principal amount not to exceed that required for the purpose of refunding all or a portion of the District's Side Fund Liability and to pay the costs of issuance of such Bonds; and WHEREAS, the Bonds will be issued under and secured by a Trust Agreement (such Trust Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Trust Agreement"); and WHEREAS, the District desires to further secure the Bonds by ongoing contributions of each of the electric and water utilities as well as employee contributions. NOW, THEREFORE, the Board of Directors of the Truckee Donner Public Utility District does resolve as follows: Section 1. Recitals True and Correct. The Board of Directors does hereby find and declare that the above recitals are true and correct. Section 2. Issuance of the Bonds. The issuance of the Bonds in the aggregate principal amount not-to-exceed $8,000,000 on the terms and conditions set forth in, and subject to the limitations specified in, the Trust Agreement, is hereby authorized and • approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be issued in the form and shall have terms as provided in the Trust Agreement, as the same shall be completed in accordance with this Resolution. (a) The Trust Agreement. The Trust Agreement, by and between the District and The Bank of New York Mellon Trust Company, dated as of June 1, 2011, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, is hereby approved. The President of the Board, the General Manager, the Assistant General Manager, the Administrative Service Manager/Treasurer of the District (the "Authorized Officers") are, and each of them is, hereby authorized and directed, for and in the name of the District, to execute and deliver the Trust Agreement in the form presented to this meeting, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Trust Agreement by such Authorized Officer. The Clerk of the District is hereby authorized and directed to attest the Trust Agreement for and in the name and on behalf of the District. Section 3. Approval of Purchase Agreement. A Bond Purchase Agreement (the "Purchase Agreement") by and between the District and Umpqua Bank (the "Purchaser") is authorized to be prepared relating to the sale of the Bonds to the Purchaser pursuant to the terms and conditions set forth herein. The Authorized Officers are each hereby authorized and directed to evidence the District's acceptance of such S offer made by the Purchaser by executing and delivering the Purchase Agreement in said form with such changes therein as the Authorized Officer or Authorized Officers executing the same may require and approve, and such approval shall be conclusively evidenced by the execution and delivery thereof by any one of the Authorized Officers. Section 4. Authorized Officers to Establish Final Terms of Issuance. The Authorized Officers are each authorized, on behalf of the District, to establish and determine (i) the final principal amount of the Bonds, provided the aggregate initial principal amount of the Bonds shall not be greater than $8,000,000, (ii) the final interest rates on various maturities of the Bonds, so long as such rates for the first 10 years do not exceed 5.25% and that the Reset Rate (as defined in the Trust Agreement) for the 11 th and final year shall not exceed the maximum rate allowed by law, and that the final bond maturity shall not be later than July 1, 2022. Section 5. Repayment Contribution. Consistent with the current allocation of the Side Fund Liability, the District is hereby authorized to deduct 3.5% of all eligible pension payroll on each payroll date and is directed to allocate such funds to the Electric General Fund as a contribution toward each semi-annual principal and interest payment on the Bonds. The District is further directed to transfer 37% of the remaining amount of each semi-annual principal and interest payment on the Bonds, after consideration of the contribution from payroll deductions, from the Water General Fund to the Electric General Fund on each June 15 and December 15 until the Bonds are retired. III 2 Resolution 2011-12 • Section 6. Professional Services. Stradling Yocca Carlson & Rauth, a Professional Corporation is designated to act as Bond Counsel to the District, McDonald Partners is designated to act as financial advisor to the District and Brandis Tallman LLC is designated to act as placement agent to the District in connection with the issuance of the Bonds. Section 7. Additional Authority. The Authorized Officers are, and each of them hereby is, authorized and directed to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated hereby, including, but not limited to the delivery of a continuing disclosure undertaking and the execution and delivery of any documents required by PERS in order to complete the issuance of the Bonds. Section 8. Ratification of Prior Action. All actions heretofore taken by the Authorized Officers and by any other officers, employees or agents of the District with respect to the issuance of the Bonds, or in connection with or related to any of the agreements or documents referenced herein, are hereby approved, confirmed and ratified. Section 9. Effective Date. This Resolution shall take effect from and after the date of approval and adoption hereof. PASSED AND ADOPTED by this 1st day of June, 2011 by the following majority vote with the Board, as required by Section 16072 of the Public Utilities Code: IIIAYES: Directors Aguera, Bender, Hemig, Hillstrom and Laliotis NAYS: None ABSENT: None ABSTAIN: None NER PUBLIC UTILITY DISTRICT Jeff er, resident ATTEST: m O (1----'-' Michael D. Holley, P.E., District Clerk • 3 Resolution 2011-12 • TRUST AGREEMENT by and between TRUCKEE DONNER PUBLIC UTILITY DISTRICT and THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A., • as Trustee Dated as of June 1, 2011 Relating to $ TRUCKEE DONNER PUBLIC UTILITY DISTRICT TAXABLE PENSION OBLIGATION BONDS, SERIES 2011 III DOC S SF/81082v4/022925-0018 TABLE OF CONTENTS Page III ARTICLE I DEFINITIONS; INTERPRETATION Section 1.01. Certain Defined Terms 2 Section 1.02. Other Definitional Provisions 17 ARTICLE II THE BONDS Section 2.01. Issuance of Bonds; Form; Dating. 18 Section 2.02. Description of the Bonds. 18 Section 2.03. Interest on the Bonds. 18 Section 2.04. Medium of Payment 18 Section 2.05. Form 19 Section 2.06. [Reserved.] 19 Section 2.07. Additional Contracts and Indebtednesss 19 ARTICLE III EXECUTION, AUTHENTICATION AND EXCHANGE OF BONDS • Section 3.01. Execution and Authentication; Registration. 20 Section 3.02. Transfer or Exchange of Bonds. 20 Section 3.03. Reserved. 21 Section 3.04. Mutilated, Lost, Stolen or Destroyed Bonds. 21 Section 3.05. Destruction of Bonds 22 Section 3.06. Temporary Bonds. 22 ARTICLE IV REDEMPTION OF BONDS Section 4.01. Notices to Trustee;Notices to Bondholders. 22 Section 4.02. Optional Redemption of Bonds 23 Section 4.03. Mandatory Redemption. The Bonds are subject to mandatory redemption at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective amounts and on each January 1 and July 1 in the years as set forth below: 23 Section 4.04. Payment of Bonds Called for Redemption; Effect of Redemption Call 24 111 i DOC S SF/81082v4/022925-0018 TABLE OF CONTENTS (Cont.) Page ARTICLE V • APPLICATION OF PROCEEDS; SOURCE OF PAYMENT OF BONDS Section 5.01. Application of Proceeds and District Contribution 24 Section 5.02. Sources of Payment of Bonds; Semi-Annual Payments by the District. 24 ARTICLE VI CREATION OF CERTAIN FUNDS AND ACCOUNTS Section 6.01. Creation of Costs of Issuance Fund and PERS Retirement Fund 25 (A) Cost of Issuance Fund 25 Section 6.02. Creation of Revenue Fund and Certain Accounts. 25 Section 6.03. Creation of Redemption Fund 26 Section 6.04. Moneys Held in Redemption Fund 26 Section 6.05. Unclaimed Moneys 26 ARTICLE VII RESERVED ARTICLE VIII • RESERVED ARTICLE IX COVENANTS OF THE DISTRICT Section 9.01. Payment of Principal and Interest 27 Section 9.02. Performance of Covenants by District; Authority; Due Execution 27 Section 9.03. Instruments of Further Assurance 27 Section 9.04. No Inconsistent Action 27 Section 9.05. No Adverse Action 27 Section 9.06. Maintenance of Powers 28 Section 9.07. Covenants of District Binding on Successors 28 Section 9.08. Trust Agreement to Constitute a Contract 28 Section 9.09. Amount of Rates and Charges 28 Section 9.10. Provide Audits 28 ARTICLE X INVESTMENTS Section 10.01. Investments Authorized 29 Section 10.02. Reports 29 • Section 10.03. Valuation and Disposition of Investments 29 ii DOCS SF/81082v4/022925-0018 TABLE OF CONTENTS (Cont.) Pane • Section 10.04. Application of Investment Earnings 29 ARTICLE XI DEFEASANCE Section 11.01. Discharge of Bonds; Release of Trust Agreement 30 Section 11.02. Bonds Deemed Paid 30 ARTICLE XII DEFAULTS AND REMEDIES Section 12.01. Events of Default 31 Section 12.02. Remedies 31 Section 12.03. Restoration to Former Position 32 Section 12.04. Bondholders' Right to Direct Proceedings on their Behalf 32 Section 12.05. Limitation on Bondholders' Rights to Institute Proceedings 32 Section 12.06. No Impairment of Right to Enforce Payment 32 Section 12.07. Proceedings by Trustee Without Possession of Bonds 33 Section 12.08. No Remedy Exclusive 33 Section 12.09. No Waiver of Remedies 33 Section 12.10. Application of Moneys. 33 • Section 12.11. Severability of Remedies 34 Section 12.12. Additional Events of Default and Remedies 34 ARTICLE XIII TRUSTEE; REGISTRAR Section 13.01. Acceptance of Trusts 34 Section 13.02. Duties of Trustee 34 Section 13.03. Rights of Trustee 35 Section 13.04. Individual Rights of Trustee 36 Section 13.05. Trustee's Disclaimer 36 Section 13.06. Notice of Defaults 37 Section 13.07. Compensation of Trustee 37 Section 13.08. Eligibility of Trustee 37 Section 13.09. Replacement of Trustee. 37 Section 13.10. Successor Trustee or Agent by Merger 38 Section 13.11. Registrar 38 Section 13.12. Other Agents 38 Section 13.13. Several Capacities 38 Section 13.14. Accounting Records and Reports of Trustee. 38 Section 13.15. No Remedy Exclusive 39 Section 13.16. Determining Effect on Bondowners 39 S 111 DOC S SF/81082v4/022925-0018 TABLE OF CONTENTS (Cont.) Page ARTICLE XIV • MODIFICATION OF THIS TRUST AGREEMENT Section 14.01. Limitations 39 Section 14.02. Supplemental Agreements Not Requiring Consent of Bondholders. 39 Section 14.03. Supplemental Agreement Requiring Consent of Bondholders 40 Section 14.04. Effect of Supplemental Agreements 40 Section 14.05. Supplemental Agreements to be Part of this Trust Agreement 41 ARTICLE XV MISCELLANEOUS PROVISIONS Section 15.01. Parties in Interest 41 Section 15.02. Severability 41 Section 15.03. No Personal Liability of District Officials; Limited Liability of District to Bondholders 41 Section 15.04. Execution of Instruments; Proof of Ownership. 41 Section 15.05. Governing Law; Venue 42 Section 15.06. Notices. 42 Section 15.07. Holidays 43 Section 15.08. Captions 43 Section 15.09. [Reserved.] 43 • Section 15.10. Counterparts 43 Signature Page S-1 Exhibit A FORM OF BOND A-1 Exhibit B [RESERVED] B-1 Exhibit C FORM OF REQUISITION C-1 • iv DOC S SF/81082v4/022925-0018 • TRUST AGREEMENT This TRUST AGREEMENT is dated as of June 1, 2011, and is made by and between the TRUCKEE DONNER PUBLIC UTILITY DISTRICT, a public utility district duly organized and validly existing under and pursuant to the Constitution and the laws of the State of California (the "District"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, as trustee (the"Trustee"). RECITALS WHEREAS, the District is a member of the California Public Employees' Retirement System ("PERS") and, as such, is obligated by the contract between the Board of Administration of PERS and the District, effective August 21, 2004 (as amended, the "PERS Contract"), to make contributions to PERS to (a) fund a "side fund" for pension benefits for its employees who are members of PERS (the "Side Fund Liability"), (b) amortize the unfunded actuarial liability with respect to such pension benefits, and (c) appropriate funds for the purposes described in (a) and (b); and WHEREAS, the District is authorized pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Refunding Law") to issue bonds for the purpose of refunding certain obligations of the • District, including the Side Fund Liability evidenced by the PERS Contract; and WHEREAS, for the purpose of refunding the District's Side Fund Liability, and to pay the costs of issuance, the District has determined to issue its $ Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 (the "Bonds"), all pursuant to and secured by this Trust Agreement providing for the issuance of the Bonds, all in the manner provided herein; and WHEREAS, the District desires to secure the Bonds with a pledge of Net Revenues, a portion of which are currently pledged toward the repayment of the District's outstanding Electric System Revenue Certificates of Participation, Series 2003A and Series 2003B (the "Certificates"); and WHEREAS, prior to January 1, 2013, the date on which the Certificates mature, the Bonds will be a parity obligation of the Certificates and the Bonds are being issued in compliance with the conditions for such additional indebtedness of the Electric System as proscribed in a Trust Agreement by and among the Trustee, the District and the Truckee Donner Public Utility District Financial Corporation, dated as of March 1, 2003 (the "2003 Trust Agreement") pursuant to which the Certificates were executed and delivered; and WHEREAS, in addition to revenues of the Electric System, Net Revenues also includes Water System Pension Contributions and Employee Pension Contributions; NOW THEREFORE, the District and the Trustee agree as follows, each for the benefit of • the other and the benefit of holders of the Bonds (as defined below) issued in accordance with this Trust Agreement. DOCSSF/81082v4/022925-0018 ARTICLE I • DEFINITIONS; INTERPRETATION Section 1.01. Certain Defined Terms. The terms defined in this Article I shall, for all purposes of this Trust Agreement, have the meanings specified unless the context clearly requires otherwise. "Account"means any account established pursuant to this Trust Agreement. "Additional Bonds" means bonds and Indebtedness issued in accordance with Section 2.07 hereof. "Adjusted Revenues" mean, for any Fiscal Year, the Revenues during such Fiscal Year, less, any Payment Agreement Receipts taken into account in calculating Debt Service pursuant to the definition thereof, plus, the amounts which the District has authorized to be deposited in the Revenue Fund from the Rate Stabilization Fund or as of the one hundredth day following the end of such Fiscal Year or twelve month period. "Adjusted Net Revenues" means, for any Fiscal Year, the Adjusted Revenues for such Fiscal Year less Operation and Maintenance Costs for such Fiscal Year. "Assumed RBI — based Rate" means an assumed interest rate equal to 90% of the average Bond Buyer Revenue Bond Index during the twelve calendar months immediately preceding the • month in which the calculation is made. "Authorized District Representative" means the General Manager, Assistant General Manager, Administrative Services Manager/Treasurer or any officer authorized to act on their respective behalves. "Authorized Denominations" means $1,000 and any integral multiple thereof. "Beneficial Owner" means, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant or such person's subrogee. "Bond" or "Bonds" means the bonds issued under this Trust Agreement and designated as "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011." "Bond Counsel" means Stradling Yocca Carlson & Rauth, a Professional Corporation, or a firm of attorneys nationally recognized as experts in the area of municipal finance who are familiar with the transactions contemplated under this Trust Agreement and acceptable to the District. "Bond Interest Account" means the Account of that name established within the Debt Service Fund pursuant to Section 6.02(a)hereof. "Bond Principal Account" means the Account of that name established within the Debt Service Fund pursuant to Section 6.02(a)hereof. • 2 DOC S SF/81082 v4/022925-0018 S "Business Day" means a day (a) other than a day on which banks located in the City of New York, New York or the cities in which the principal offices of the Trustee is located, are required or authorized by law or executive order to close, and (b) on which the New York Stock Exchange is open. "Closing Date" means the date upon which the Bonds are delivered to the Purchaser. "Consultant" means the accountant, attorney, consultant, municipal finance consultant or investment banker, or firm thereof, retained by the District to perform acts and carry out the duties provided for such Consultant in this Trust Agreement. Such accountant, attorney, consultant, municipal finance consultant or investment banker, or firm thereof, shall be nationally recognized within its profession for work of the character required. "Contracts" means the Installment Purchase Agreement by and between the District and the Truckee Donner Public Utility District Financial Corporation, dated as of March 1, 2003, and all contracts of the District the payments under which are payable from Net Revenues on a parity with the obligations of the District to make payments under this Trust Agreement, excluding contracts entered into for operation and maintenance of the Electric System. "Costs of Issuance"means all costs and expenses incurred by the District in connection with the issuance of the Bonds and the refunding of the Side Fund Liability, including, but not limited to, out-of-pocket expenses of the District, costs and expenses of printing and copying documents and the Bonds and the fees, costs and expenses of the Trustee, counsel to the Trustee, Bond Counsel, • financial advisors, placement agents, accountants, municipal finance consultant, and other consultants. "Date of Operation" means, with respect to any uncompleted component Parity Project, the estimated date by which such uncompleted component Parity Project will have been completed and, in the opinion of an engineer, will be ready for operation by or on behalf of the District. "Debt Service"means, for any Fiscal Year, the sum of: (1) the interest on all outstanding Indebtedness, payable during such Fiscal Year (except to the extent that such interest is capitalized); (2) that portion of the principal amounts of all outstanding serial Indebtedness maturing in such Fiscal Year; (3) that portion of the principal amounts of all outstanding term Indebtedness required to be prepaid or paid in such Fiscal Year; and (4) that portion of the Parity Installment Payments required to be made during such Fiscal Year (except to the extent the interest evidenced and represented thereby is capitalized); • 3 DOC S SF/81082v4/022925-0018 provided that, as to any such Indebtedness or Parity Installment Payments bearing or comprising • interest at other than a fixed rate, the rate of interest used to calculate Debt Service shall, for all purposes, be assumed to bear interest at a fixed rate equal to the higher of (i) the actual rate on the date of calculation, or if the Indebtedness or Parity Installment Payments are not yet outstanding, the initial rate (if established and binding), (ii) if the Indebtedness or Parity Installment Payments have been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, and (iii) (1) if interest on the Indebtedness or Parity Installment Payments is excludable from gross income under the applicable provisions of the Code, the most recently published Bond Buyer 25 Bond Revenue Index(or comparable index if no longer published) or (2) if interest is not so excludable, the interest rate on direct United States Treasury obligations with comparable maturities plus fifty (50) basis points; and provided further that if any series or issue of such Indebtedness or Parity Installment Payments have twenty-five percent (25%) or more of the aggregate principal amount of such series or issue due in any one year, Debt Service shall be determined for the Fiscal Year of determination as if the principal of and interest on such series or issue of such Indebtedness or Parity Installment Payments were being paid from the date of incurrence thereof in substantially equal annual amounts over a • period of thirty(30) years from the date of calculation; and provided further that, as to any such Indebtedness or Parity Installment Payments or portions thereof bearing no interest but which are sold at a discount and which discount accretes with respect to such Indebtedness or Parity Installment Payments or portions thereof, such accreted discount shall be treated as interest in the calculation of Debt Service; and provided further that the amount on deposit in a debt service reserve fund on any date of calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of the Indebtedness and Contracts for which such debt service reserve fund was established and in each preceding year until such amount is exhausted; and provided further that Debt Service shall be reduced by an amount equal to earnings on any reserve fund(including any Reserve Fund)transferred to the corresponding debt service fund; and provided further that the amount of interest deemed to be payable on or with respect to any Contract or Indebtedness with respect to which a Payment Agreement is in force shall, so long as the Qualified Counterparty thereto is not in default thereunder, be based on the net economic effect on the District expected to be produced by the terms of such Contract or Indebtedness and such Payment Agreement, including but not limited to the effects that (i) such Contract or Indebtedness would, but for such Payment Agreement, be treated as an obligation bearing interest at a Variable Interest Rate instead shall be treated as an obligation bearing interest at a fixed interest rate, and (ii) such Contract or Indebtedness would, but for such Payment Agreement, be treated as an obligation bearing interest at a fixed interest rate instead shall be treated as an obligation bearing interest at a Variable Interest • Rate; and accordingly, the amount of interest deemed to be payable on any Contract or Indebtedness 4 DOCS SF/81082v4/022925-0018 • with respect to which a Payment Agreement is in force shall, so long as the Qualified Counterparty thereto is not in default thereunder, be an amount equal to the amount of interest that would be payable at the rate or rates stated in such Contract or Indebtedness plus the Payment Agreement Payments minus the Payment Agreement Receipts, and for the purpose of calculating Payment Agreement Receipts and Payment Agreement Payments under such Payment Agreement, the following assumptions shall be made: (1) Counterparty Obligated to Pay Actual Variable Interest Rate on Variable Interest Rate Parity Obligations. If the Payment Agreement obligates a Qualified Counterparty to make payments to the District on the actual Variable Interest Rate on a Contract or Indebtedness that would,but for the Payment Agreement, be treated as a Variable Interest Rate Parity Obligation and obligates the District to make payments to the Qualified Counterparty based on a fixed rate, payment by the District to the Qualified Counterparty shall be assumed to be made at the fixed rate specified by the Payment Agreement and payments by the Qualified Counterparty to the District shall be assumed to be made at the actual Variable Interest Rate on such Contract or Indebtedness, without regard to the occurrence of any event that, under the provisions of the Payment Agreement, would permit the Qualified Counterparty to make payments on any basis other than the actual Variable Interest Rate on such Contract or Indebtedness, and such Contract or Indebtedness shall set forth a debt service schedule based on that assumption; (2) Variable Interest Rate Parity Obligations and Payment Agreements Having the Same Variable Interest Rate Component. If both a Payment Agreement and the related • Contract or Bond that would, but for the Payment Agreement, be treated as a Variable Interest Rate Parity Obligation include a variable interest rate payment component that is required to be calculated on the same basis (including, without limitation, on the basis of the same variable interest rate index), it shall be assumed that the variable interest rate payment component payable pursuant to the Payment Agreement is equal in amount to the variable interest rate component payable on such Contract or Indebtedness; (3) Variable Interest Rate Parity Obligations and Payment Agreements Having the Different Variable Interest Rate Component. If a Payment Agreement obligates either the District or the Qualified Counterparty to make payments of a variable interest rate payment component on a basis different (including, without limitation, on a different variable interest rate index), from the basis that is required to be used to calculate interest on the Contract or Indebtedness that would, but for the Payment Agreement, be treated as a Variable Interest Rate Parity Obligation it shall be assumed that the variable rate index is equal to the higher of (i) the actual rate on the date of calculation, (ii) the average rate over the twelve months immediately preceding the date of calculation, and(iii) (A) if the variable rate index is related to the indebtedness that is excludable from gross income under the applicable provisions of the Code, the most recently published Bond Buyer 25 Bond Revenue Index (or comparable index if no longer published), or (2) if interest is not so excludable, the interest rate on direct United States Treasury obligations with comparable maturities plus fifty(50)basis points. "Defeasance Securities" means any of the following: (a)cash, (b)non-callable direct obligations of the United States of America ("Treasuries"), (c) evidence of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust• company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are 5 DOC S SF/81082v4/022925-0018 not available to any person claiming through the custodian or to whom the custodian may be 411 obligated, and (d)pre-refunded municipal obligations rated"AAA" and"Aaa"by S&P and Moody's, respectively or (e) securities eligible for "AAA" defeasance under then existing criteria of S&P (or any combination thereof),which shall be authorized to be used to effect defeasance of the Bonds. "Deposit Amount" means, the sum of the aggregate amount of principal required to be paid on Bonds on each Payment Date either at maturity or pursuant to a mandatory sinking fund payment and the interest due on the Bonds on each Payment Date. "Electricity Service" means the electricity distribution service made available or provided by the Electric System. "Electric System"means all properties and assets, real and personal, tangible and intangible, of the District now or hereafter existing, used or pertaining to the acquisition, transmission, distribution and sale of electricity, including all additions, extensions, expansions, improvements and betterments thereto; provided, however, that to the extent the District is not the sole owner of an asset or property or to the extent that an asset or property is used in part for the above described electricity purposes, only the District's ownership interest in such asset or property or only the part of the asset or property so used for electricity purposes shall be considered to be part of the Electric System. "Employee Pension Contributions"means payroll deductions authorized by Resolution "Event of Default"means any occurrence or event specified in Section 12.01 hereof "Federal Payment"means the interest subsidy payments (if any) received by or on behalf of • the District directly from the Secretary of the United States Treasury in connection with the issuance of ay Indebtedness that are issued as "build America bonds" under Section 54AA of the Internal Revenue Code, or that are issued under any similar provision of the Internal Revenue Code now or hereafter in effect. "Fiduciary or Fiduciaries"means the Trustee or any agent thereof, as may be appropriate. "Fiscal Year" means the period of time beginning on January 1 of each given year and ending on December 31 of the immediately subsequent year, or such other period as the District designates as its fiscal year. "Fund"means any fund established pursuant to this Trust Agreement. "Holder," or "Bondholder," "owner" or "registered owner" means the registered owner of any Bonds. "Indebtedness" means all bonds, notes or similar obligations of the District, the principal of and interest on which are payable from Net Revenues on a parity with the Bonds. "Information Services" means any one or more of the national information services that Trustee determines are in the business of disseminating notices of redemption of obligations such as the Bonds. "Independent Financial Consultant" means a financial consultant or firm of such . consultants appointed by the District, and who, or each of whom: (1) is in fact independent and not 6 DOCS SF/81082v4/022925-0018 • under domination of the District; (2) does not have any substantial interest, direct or indirect, with the District; and (3) is not connected with the District as an officer or employee thereof, but who may be regularly retained to make reports thereto. "Installment Payments; Parity Installment Payments" means the Installment Payments scheduled to be paid by the District under and pursuant to an Installment Purchase Agreement, by and between the District and the Truckee Donner Public Utility District Financing Corporation, dated as of March 1, 2003. The term "Parity Installment Payments" means the payments scheduled to be paid by the District under and pursuant to Contracts. "Mail"means by first-class United States mail,postage prepaid. "Moody's"means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, and its successors, and, if such corporation shall for any reason no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized rating agency designated by the District. "Net Revenues" means, for any Fiscal Year, the Revenues for such Fiscal Year less the Operation and Maintenance Costs for such Fiscal Year. "Operation and Maintenance Costs" means (1) costs spent or incurred for maintenance and operation of the Electric System calculated in accordance with generally accepted accounting principles, including (among other things), Purchased Power Costs, fuel expenses, the expenses of management and repair and other expenses necessary to maintain and preserve the Electric System in good repair and working order, and including administrative costs of the District, salaries and wages of employees, employee retirement expenses, overhead, insurance, taxes (if any), fees of auditors, accountants, attorneys or engineers and insurance premiums, and (2) all other reasonable and necessary costs of the District or charges (other than Debt Service) required to be paid by it to comply with the terms of this Agreement or any other Contract or of any resolution or indenture authorizing the issuance of any Indebtedness or of such Indebtedness, but excluding in all cases (a) depreciation, replacement and obsolescence charges or reserves therefor, (b) amortization of intangibles or other bookkeeping entries of a similar nature, (c) costs of capital additions, replacements, betterments, extensions or improvements to the Electric System which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, and(d) charges for the payment of Indebtedness or Contracts. "Opinion of Bond Counsel"means a written opinion of Bond Counsel. "Outstanding," with respect to the Bonds, means all Bonds which have been authenticated and delivered under this Trust Agreement, except: (a) Bonds cancelled or purchased by the Trustee for cancellation or delivered to or acquired by the Trustee for cancellation and, in all cases, with the intent to extinguish the debt represented thereby. (b) Bonds deemed to be paid in accordance with Section 11.02 hereof. • (c) Bonds in lieu of which other Bonds have been authenticated under Sections 3.02 and 3.04 hereof. 7 DOCS SF/81082v4/022925-0018 (d) Bonds that have become due (at maturity, on redemption, or otherwise) and . for the payment of which sufficient moneys, including interest accreted or accrued to the due date, are held by the Trustee. (e) For purposes of any consent or other action to be taken by the holders of a specified percentage of Bonds Outstanding under this Trust Agreement, Bonds held by or for the account of the District or by any person controlling, controlled by or under common control with the District, unless such Bonds are pledged to secure a debt to an unrelated party, in which case such Bonds shall, for purposes of consents and other Bondholder action, be deemed to be Outstanding and owned by the party to which such Bonds are pledged. Nothing herein shall be deemed to prevent the District from purchasing Bonds from any party out of any funds available to the District. "Parity Project" means any improvements designated by the Board of Trustees of the District as a Parity Project, the acquisition and construction of which is to be paid for with the proceeds of any Contract or Indebtedness. "Payment Agreement" means a written agreement for the purpose of managing or reducing the District's exposure to fluctuations in interest rates or for any other interest rate, investment, cash flow, asset or liability managing purposes, entered into either on a current or forward basis by the District and a Qualified Counterparty in connection with, or incidental to, the issuance or incurrence of any Contract or Indebtedness, that provides for an exchange of payments based on interest rates, ceilings or floors on such payments, options on such payments, or any combination thereof or any similar device. • "Payment Agreement Payments" mean the amounts required to be paid periodically by the District to the Qualified Counterparty pursuant to a Payment Agreement. "Payment Agreement Receipts" mean the amounts required to be paid periodically by the Qualified Counterparty to the District pursuant to a Payment Agreement. "Payment Date"means January 1 and July 1 of each year commencing January 1, 2012. "Permitted Investments" means, if and to the extent permitted by law and by any policy guidelines promulgated by the District (which will be specified to the Trustee by the District), the following: (1) Direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America("U.S. Government Securities"). • 8 DOC S S F/81082 v4/022925-0018 • (2) Direct obligations* of the following federal agencies which are fully guaranteed by the full faith and credit of the United States of America: a. Export-Import Bank of the United States — Direct obligations and fully guaranteed certificates of beneficial interest b. Federal Housing Administration—debentures c. General Services Administration—participation certificates d. Government National Mortgage Association ("GNMAs") — guaranteed mortgage-backed securities and guaranteed participation certificates e. Small Business Administration— guaranteed participation certificates and guaranteed pool certificates f. U.S. Department of Housing & Urban Development— local authority bonds g, U.S. Maritime Administration—guaranteed Title XI financings h. Washington Metropolitan Area Transit Authority— guaranteed transit bonds (3) Direct obligations* of the following federal agencies which are not fully guaranteed by the faith and credit of the United States of America: a. Federal National Mortgage Association ("FNMAs") — senior debt obligations rated Aaa by Moody's Investors Service ("Moody's") and • b. AAA by Standard&Poor's Ratings Services ("S&P") Federal Home Loan Mortgage Corporation ("FHLMCs") — participation certificates and senior debt obligations rated Aaa by Moody's and AAA by S&P c. Federal Home Loan Banks—consolidated debt obligations d. Student Loan Marketing Association—debt obligations e. Resolution Funding Corporation—debt obligations (4) Direct, general obligations of any state of the United States of America or any subdivision or agency thereof whose uninsured and unguaranteed general obligation debt is rated, at the time of purchase, A2 or better by Moody's and A or better by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose uninsured and unguaranteed general obligation debt is rated, at the time of purchase, A2 or better by Moody's and A or better by S&P. (5) Commercial paper (having original maturities of not more than 270 days) rated, at the time of purchase, P-1 by Moody's and A-1 or better by S&P. The following are explicitly excluded from the securities enumerated in 2 and 3: (i) All derivative obligations,including without limitation inverse floaters,residuals,interest-only,principal-only and range notes; • (ii) Obligations that have a possibility of returning a zero or negative yield if held to maturity; (iii) Obligations that do not have a fixed par value or those whose terms do not promise a fixed dollar amount at maturity or call date;and (iv) Collateralized Mortgage-Backed Obligations("CMOs"). 9 DOC S SF/81082v4/022925-0018 (6) Certificates of deposit, savings accounts, deposit accounts or money market • deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance Corporation ("FDIC"), including the Bank Insurance Fund and the Savings Association Insurance Fund, and including funds for which the Trustee or its affiliates provide investment advisory or other management services. (7) Certificates of deposit, deposit accounts, federal funds or bankers' acceptances (in each case having maturities of not more than 365 days following the date of purchase) of any domestic commercial bank or United States branch office of a foreign bank, provided that such bank's short-term certificates of deposit are rated P-1 by Moody's and A-1 or better by S&P (not considering holding company ratings). (8) Investments in money-market funds rated AAAm or AAAm-G by S&P, including funds for which the Trustee and its affiliates provide investment advisory or other management services. (9) State-sponsored investment pools rated AA- or better by S&P. (10) Repurchase agreements that meet the following criteria: a. A master repurchase agreement or specific written repurchase agreement, substantially similar in form and substance to the Public Securities Association or Bond Market Association master repurchase agreement, governs the transaction. • b. Acceptable providers shall consist of (i)registered broker/dealers subject to Securities Investors' Protection Corporation ("SIPC") jurisdiction or commercial banks insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed rating of A3/P-1 or better by Moody's and A-/A-1 or better by S&P, or (ii) domestic structured investment companies rated Aaa by Moody's and AAA by S&P. c. The repurchase agreement shall require termination thereof if the counterparty's ratings are suspended, withdrawn or fall below A3 or P-1 from Moody's, or A- or A-1 from S&P. Within ten(10) days, the counterparty shall repay the principal amount plus any accrued and unpaid interest on the investments. d. The repurchase agreement shall limit acceptable securities to U.S. Government Securities and to the obligations of GNMA, FNMA or FHLMC described in 2(d), 3(a) and 3(b) above. The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and accrued interest, is equal to a collateral level of at least 104% for U.S. Government Securities and 105% for GNMAs, FNMAs or FHLMCs. The repurchase agreement shall require (i) the Trustee or the Agent to value the collateral securities no less frequently than weekly, (ii)the delivery of • additional securities if the fair market value of the securities is below 10 DOCS SF/81082v4/022925-0018 • • the required level on any valuation date, and (iii) liquidation of the repurchase securities if any deficiency in the required percentage is not restored within two (2)business days of such valuation. e. The repurchase securities shall be delivered free and clear of any lien to the Trustee or to an independent third party acting solely as agent ("Agent") for the Trustee, and such Agent is (i) a Federal Reserve Bank, or (ii) a bank which is a member of the FDIC and which has combined capital, surplus and undivided profits or, if appropriate, a net worth, of not less than $50 million, and the Trustee shall have received written confirmation from such third party that such third party holds such securities, free and clear of any lien, as agent for the Trustee. f. A perfected first security interest in the repurchase securities shall be created for the benefit of the Trustee, and the District and the Trustee shall receive an opinion of counsel as to the perfection of the security interest in such repurchase securities and any proceeds thereof. g. The repurchase agreement shall have a term of one year or less, or shall be due on demand. h. The repurchase agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate IIIliquidation of the repurchase securities: (i) insolvency of the broker/dealer or commercial bank serving as the counterparty under the repurchase agreement; (ii) failure by the counterparty to remedy any deficiency in the required collateral level or to satisfy the margin maintenance call under item 10(d) above; or (iii) failure by the counterparty to repurchase the repurchase securities on the specified date for repurchase. (11) Investment agreements (also referred to as guaranteed investment contracts), that meet the following criteria: a. A master agreement or specific investment agreement. b. Acceptable providers of uncollateralized investment agreements shall consist of (i) domestic FDIC-insured commercial banks, or U.S. branches of foreign banks, rated at least Aa2 by Moody's and AA by S&P; (ii) domestic insurance companies rated Aaa by Moody's and AAA by S&P; and (iii) domestic structured investment companies rated Aaa by Moody's and AAA by S&P. S 1 1 DOC S SF/81082 v4/022925-0018 c. Acceptable providers of collateralized investment agreements shall III consist of(i)registered broker/dealers subject to SIPC jurisdiction, if such broker/dealer has an uninsured, unsecured and unguaranteed rating of Al or better by Moody's and A+ or better by S&P; (ii) domestic FDIC-insured commercial banks, or U.S. branches of foreign banks, rated at least Al by Moody's and A+ by S&P; (iii) domestic insurance companies rated at least Al by Moody's and A+ by S&P; and (iv) domestic structured investment companies and rated Aaa by Moody's and AAA by S&P. Required collateral levels shall be as set forth in 11(f)below. d. The investment agreement shall provide that if the provider's ratings fall below Aa3 by Moody's or AA- by S&P, the provider shall within ten (10) days either (i)repay the principal amount plus any accrued and interest on the investment; or (ii) deliver Permitted Collateral as provided below. e. The investment agreement must provide for termination thereof if the provider's ratings are suspended, withdrawn or fall below A3 from Moody's or A- from S&P. Within ten (10) days, the provider shall repay the principal amount plus any accrued interest on the agreement, without penalty to the District. f. The investment agreement shall provide for the delivery of collateral described in (i) or (ii) below ("Permitted Collateral") which shall be • maintained at the following collateralization levels at each valuation date: (i) U.S. Government Securities at 104% of principal plus accrued interest; or (ii) Obligations of GNMA, FNMA or FHLMC (described in 2(d), 3(a) and 3(b) above) at 105% of principal and accrued interest. g. The investment agreement shall require the Trustee to determine the market value of the Permitted Collateral not less than weekly and notify the investment agreement provider on the valuation day of any deficiency. Permitted Collateral may be released by the Trustee to the provider only to the extent that there are excess amounts over the required levels. Market value, with respect to collateral, may be determined by any of the following methods: • (i) the last quoted"bid"price as shown in Bloomberg, Interactive Data Systems, Inc., The Wall Street Journal or Reuters; (ii) valuation as performed by a nationally recognized pricing service, whereby the valuation method is based on a composite average of various bid prices; or . (iii) the lower of two bid prices by nationally recognized dealers. Such dealers or their parent holding companies shall be rated 12 DOCS SF/81082v4/022925-0018 III investment grade and shall be market makers in the securities being valued. h. Securities held as Permitted Collateral shall be free and clear of all liens and claims of third parties, held in a separate custodial account and registered in the name of the Trustee or the Agent. i. The provider shall grant the Trustee a perfected first security interest in any collateral delivered under an investment agreement. For investment agreements collateralized initially and in connection with the delivery of Permitted Collateral under 11(f) above, the Trustee shall receive an opinion of counsel as to the perfection of the security interest in the collateral. (12) Forward delivery agreements in which the securities delivered mature on or before each interest payment date (for debt service or debt service reserve funds) or draw down date(construction funds)that meet the following criteria: (a) A specific written investment agreement governs the transaction. (b) Acceptable providers shall be limited to (i) any registered broker/dealer subject to the Securities Investors' Protection Corporation jurisdiction, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated A3/P-1 or . better by Moody's and A-/A-1 or better by S&P; (ii) any commercial bank insured by the FDIC, if such bank has an uninsured, unsecured and unguaranteed obligation rated A3/P-1 or better by Moody's and A-/A-1 or better by S&P; and (iii)domestic structured investment companies rated Aaa by Moody's and AAA by S&P. (c) The forward delivery agreement shall provide for termination or assignment (to a qualified provider hereunder) of the agreement if the provider's ratings are suspended, withdrawn or fall below A3 or P-1 from Moody's or A- or A-1 from S&P. Within ten (10) days, the provider shall fulfill any obligations it may have with respect to shortfalls in market value. There shall be no breakage fee payable to the provider in such event. (d) Permitted securities shall include the investments listed in 1, 2 and 3 above. (e) The forward delivery agreement shall include the following provisions: (i) The permitted securities must mature at least one (1) business day before a debt service payment date or scheduled draw. The maturity amount of the permitted securities must equal or III exceed the amount required to be in the applicable fund on the applicable valuation date. 13 DOCSSF/81082v4/022925-0018 (ii) The agreement shall include market standard termination1111/ provisions, including the right to terminate for the provider's failure to deliver qualifying securities or otherwise to perform under the agreement. There shall be no breakage fee or penalty payable to the provider in such event. (iii) Any breakage fees shall be payable only on debt service payment dates and shall be subordinated to the payment of debt service and debt service reserve fund replenishments. (iv) The provider must submit at closing a bankruptcy opinion to the effect that upon any bankruptcy, insolvency or receivership of the provider, the securities will not be considered to be a part of the provider's estate. (13) Forward delivery agreements in which the securities delivered mature after the funds may be required but provide for the right of the District or the Trustee to put the securities back to the provider under a put, guaranty or other hedging arrangement. (14) Maturity of investments shall be governed by the following: a. Investments of monies (other than reserve funds) shall be in securities and obligations maturing not later than the dates on which such monies will be needed to make payments. b. Investments shall be considered as maturing on the first date on which they are redeemable without penalty at the option of the holder or the III date on which the Trustee may require their repurchase pursuant to repurchase agreements. (15) Any other investment which the District is permitted by law to make, including without limitation investment in the Local Agency Investment Fund of the State of California (LAIF), provided that any investment of the type authorized pursuant to paragraphs (d), (f), (h) and (i) of Section 53601 of the California Government Code are additionally restricted as provided in the appropriate paragraph or paragraphs above applicable to such type of investment and provided further that investments authorized pursuant to paragraphs (k) and(m) of Section 53601 are not permitted. To the extent that any of the requirements concerning Permitted Investments embodies a legal conclusion, the Trustee shall be entitled to conclusively rely upon a certificate from the appropriate party or an opinion from counsel to such party, that such requirement has been met. "PERS"means the California Public Employees' Retirement System. "PERS Contract"means the contract for the PERS Side Fund Obligation. "Principal Office or Principal Corporate Trust Office"means the corporate trust office of the Trustee located at 700 South Flower Street, Suite 500, Los Angeles, California, 90017-4104 Attention: Corporate Trust Services, or such other or additional offices as may be designated in • writing by the Trustee. 14 DOCS SF/81082v4/022925-0018 0 "Purchased Power Costs" means (1) costs associated with any power purchase contract for capacity and/or energy with respect to the Electric System, excluding any termination payments due pursuant to any such contract; (2) all costs associated with the transmission of energy to the Electric System; (3) all costs to schedule energy with respect to the Electric System; and (4)net payments due under any hedging contract executed by the District to reduce energy or fuel price risk, excluding any termination payments due pursuant to any such hedging contract. "Purchaser"means Umpqua Bank, a . "Qualified Counterparty" means a party(other than the District) who is the other party to a Payment Agreement and (1) (a)whose senior debt obligations are rated in one of the three (3)highest rating categories of each of the Rating Agencies then rating the Certificates (without regard to any gradations within a rating category), or (b) whose obligations under the Payment Agreement are guaranteed for the entire term of the Payment Agreement by a bond insurer or other institution which has been or whose debt service obligations have been assigned a credit rating in one of the three highest rating categories of each of the Rating Agencies then rating the Certificates (without regard to any gradations within a rating category), and (2) who is otherwise qualified to act as the other party to a Payment Agreement with the District under any applicable laws. "Rate Stabilization Fund" means the fund by such name established by the District pursuant to Resolution No. 9533 of the District. "Rating Agencies"means Moody's and S&P. • "Rating Category" means (a)with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier and (b)with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier. "Record Date"means the fifteenth day of the calendar month preceding each Payment Date. "Redemption Fund" means the Fund of that name established pursuant to Section 6.03 hereof. "Refunding Law" has the meaning assigned that term in the Recitals to this Trust Agreement. "Registrar" means, for purposes of this Trust Agreement, the Trustee or its successor or assignee. "Requisition" or "Written Requisition" means a Requisition or Written Requisition, substantially in the form of Exhibit"C"hereto. "Reset Rate" means, on the first Business Day of the Reset Rate Period, the fluctuating rate per annum equal to the "Prime Rate" listed daily in the "Money Rate" section of The Wall Street Journal or, if The Wall Street Journal is not published on a particular Business Day, then, the "prime • rate"published in any other national financial journal or newspaper selected by the Trustee. 15 DOCSSF/81082v4/022925-0018 "Reset Rate Period" means the period commencing on July 1, 2021 and ending on the final • maturity of the Bonds. "Responsible Officer" means an officer of the Trustee assigned by the Trustee to administer this Trust Agreement. "Revenues" (A) means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Electric System, including, without limiting the generality of the foregoing, (1) all income, rents, rates, fees, charges or other moneys derived from the sale, distribution, furnishing and supplying of electricity or other services, facilities, and commodities sold, furnished or supplied through the facilities of the Electric System including standby charges and facility fees allocable to the Electric System, plus (2) except as set forth in(z)below, taxes or assessments, if any, the imposition of which is permitted by law, (3) the earnings on and income derived from the investment of the amounts described in clauses (1) and (2) above, the Rate Stabilization Fund and the general unrestricted funds of the District, and (4) Payment Agreement Receipts, . but excluding in all cases (x) connection fees; (y) customers' deposits or any other deposits subject to refund until such deposits have become the property of the District, and (z) reserves, taxes or assessments specifically pledged to the payment of debt service with respect to notes, bonds or other obligations of the District and which reserves, taxes or assessment are not available for any other purpose of the District;plus (B) All Employee Pension Contributions; (C) All Water System Pension Contributions;plus (D) All Federal Payments. "S&P" means Standard& Poor's Corporation, a corporation organized and existing under the laws of the State of New York, and its successors, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the District. "State"means the State of California. 10 16 DOCSSF/81082v4/022925-0018 . "Total Bond Obligation" means, as of any date of calculation, the aggregate principal amount of the Bonds then Outstanding. "Trust Agreement" means this Trust Agreement dated as of June 1, 2011 between the District and the Trustee, as it may be amended, supplemented or otherwise modified from time to time. "Trustee" means the entity named as such in the heading of this Trust Agreement until a successor replaces it, and thereafter means such successor. "Side Fund Liability" has the meaning assigned that term in the Recitals to this Trust Agreement. "Variable Interest Rate" means any variable interest rate or rates to be paid under any Contract or Indebtedness, the method of computing which variable interest rate shall be as specified in the applicable Contract or Indebtedness, which Contract or Indebtedness shall also specify either (i) the payment period or periods or time or manner of determining such period or periods or time for which each value of such variable interest rate shall remain in effect, and (ii) the time or times based upon which any change in such variable interest rate shall become effective, and which variable interest rate may, without limitation, be based on the interest rate on certain bonds or may be based on interest rate, currency, commodity or other indices. "Variable Interest Rate Parity Obligations" mean, for any period of time, all in accordance with the definition of Debt Service" set forth in this Section, any Contract or • Indebtedness that bear a Variable Interest Rate during such period, except that (i) Contracts or Indebtedness shall not be treated as Variable Interest Rate Parity Obligations if the net economic effect of interest rates on particular payments of the Contracts or Indebtedness and interest rates on other payments of the same Contracts or Indebtedness, as set forth in such Contracts or Indebtedness, or the net economic effect of a Payment Agreement with respect to particular Contracts or Indebtedness, in either case, is to produce obligations that bear interest at a fixed interest rate, and (ii) Contracts or Indebtedness with respect to which a Payment Agreement is in force shall be treated as Variable Interest Rate Parity Obligations if the net economic effect of the Payment Agreement is to produce obligations that bear interest at a Variable Interest Rate. "Water System Pension Contributions" means the semi-annual transfers to be made from the Water General Fund to the Electric General Fund pursuant to Resolution No. . Section 1.02. Other Definitional Provisions. Except as otherwise indicated, references to Articles and Sections are to the Articles and Sections of this Trust Agreement. Any of the terms defined in Section 1.01 may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. • 17 DOC S SF/81082v4/022925-0018 ARTICLE II THE BONDS Section 2.01. Issuance of Bonds; Form; Dating. Bonds may be issued by the District under the terms of this Trust Agreement to refund the District's Side Fund Liability under the PERS Contract and to pay the Costs of Issuance in connection with the issuance of the Bonds. The Bonds shall be designated "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011" and shall be issued in Authorized Denominations. The Bonds shall be issued hereunder in the aggregate principal amount of $ . Principal of and interest on the Bonds shall be payable on each January 1 and July 1, commencing January 1, 2012. Section 2.02. Description of the Bonds. Each Bond shall be issued in fully registered form and shall be numbered as determined by the Trustee. The Bonds shall be dated the Closing Date. The Bonds shall be issued in Authorized Denominations. The Bonds shall issued as a single term bond maturing on the dates, in the principal amount, and bearing interest thereon shall be computed at the rates, as shown below: Maturity Date (July 1) Principal Amount Interest Rate • 2022 $ 5.0%* * Interest on the Bonds during the Reset Rate Period shall bear interest at the Reset Rate. Section 2.03. Interest on the Bonds. Interest on the Bonds shall be payable at the per annum rates set forth in Section 2.02 hereof, except during the Reset Rate Period the Bonds shall bear interest at the Reset Rate, and shall be payable on each Payment Date until maturity or earlier redemption, computed using a year of 360 days comprised of twelve 30-day months. Interest on each Bond shall accrue from the Payment Date for the Bonds next preceding the date of authentication and delivery thereof, unless (i)it is authenticated after a Record Date and before the close of business on the immediately following Payment Date, in which event interest thereon shall be payable from such Payment Date; or (ii) it is authenticated prior to the close of business on the first Record Date, in which event interest thereon shall be payable from the Closing Date; provided, however, that if at the time of authentication of any Bond interest thereon is in default, interest thereon shall be payable from the Payment Date to which interest has previously been paid or made available for payment or, if no interest has been paid or made available for payment, from the Closing Date. Section 2.04. Medium of Payment. Principal, premium, if any, and interest on the Bonds shall be payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Payments of interest on any of 411 the Bonds will be made on each Payment Date by check or draft of the Trustee sent by Mail, or by wire transfer to any Owner of$1,000,000 or more of Bonds, to the account specified by such Owner 18 DOC S SF/81082v4/022925-0018 • in a written request delivered to the Trustee on or prior to the Record Date for such Payment Date, to the Owner thereof on the Record Date; provided, however, that payments of defaulted interest shall be payable to the person in whose name such Bond is registered at the close of business on a special record date fixed therefor by the Trustee which shall not be more than 15 days and not less than ten days prior to the date of the proposed payment of defaulted interest. Payment of the principal of the Bonds upon redemption or maturity will be made upon presentation and surrender of each such Bond, at the Principal Office of the Trustee. Section 2.05. Form. The Bonds shall be substantially in the form set forth in Exhibit"A" attached hereto and by this reference incorporated herein. The Bonds may be printed, lithographed, photocopied or typewritten and shall be in such Authorized Denominations as may be determined by the District. Section 2.06. fReserved.l Section 2.07. Additional Contracts and Indebtednesss. The District may at any time, execute any Contract or issue any Indebtedness, as the case may be,provided: (a) The Adjusted Net Revenues for the most recent audited Fiscal Year preceding the date of adoption by the Board of Directors of the District of the resolution authorizing the issuance of such Indebtedness or the date of the execution of such Contract, as the case may be, as evidenced by both a calculation prepared by the District and a special report prepared by an Independent Certified Public Accountant or an Independent Financial Consultant, shall have • produced a sum equal to at least one hundred ten percent (110%) of the Debt Service for such Fiscal Year plus the Debt Service which would have accrued on any Contracts executed or Indebtedness issued since the end of such Fiscal Year or proposed to be issued, assuming such Contracts had been executed or Bonds had been issued at the beginning of such Fiscal Year; or (b) The estimated Adjusted Net Revenues for the then current Fiscal Year and for each Fiscal Year thereafter to and including the first complete Fiscal Year after the latest Date of Operation of any uncompleted Parity Project to be financed from proceeds of such Contracts or Bonds, as evidenced by both a certificate of the General Manager of the District on file with the District and a special report prepared by an Independent Certified Public Accountant or an Independent Financial Consultant, including (after giving effect to the completion of all such uncompleted Parity Projects) an allowance for estimated Net Revenues for each of such Fiscal Years arising from any increase in the income, rents, fees, rates and charges estimated to be fixed, prescribed or received for Electricity Service and which are economically feasible and reasonably considered necessary based on projected operations for such period, as evidenced by a certificate of the General Manager on file with the District and a special report prepared by an Independent Certified Public Accountant or an Independent Financial Consultant, shall produce a sum equal to at least one hundred ten percent (110%) of the estimated Debt Service for each of such Fiscal Years, after giving effect to the execution of all Contracts and the issuance of all Indebtedness estimated to be required to be executed or issued to pay the costs of completing all uncompleted Parity Projects within such Fiscal Years, assuming that all such Contracts and Indebtedness have maturities, interest rates and proportionate principal repayment provisions similar to the Contract last executed or then being executed or the Indebtedness last issued or then being issued for the purpose of acquiring and • constructing any of such uncompleted Parity Projects. 19 DOC S SF/81082v4/022925-0018 (c) This Section 2.07 notwithstanding, Indebtedness or Contracts may be issued • or incurred to refund outstanding Indebtedness or Contracts if, after giving effect to the application of the proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Indebtedness or Contracts (outstanding on the date of issuance or incurrence of such refunding Indebtedness or Contracts, but excluding such refunding Indebtedness or Contracts) not being refunded are outstanding. (d) Nothing herein shall preclude the District from issuing any bonds or executing and delivering any contracts the payments under which are subordinate to any Indebtedness or Contracts of the District. ARTICLE III EXECUTION,AUTHENTICATION AND EXCHANGE OF BONDS Section 3.01. Execution and Authentication; Registration. (a) The Bonds will be signed for the District with the manual or facsimile signature of the General Manager of the District. The District may deliver to the Trustee or its agent duly executed Bonds for authentication from time to time by the Trustee or its agent as such Bonds may be required. Bonds executed and so delivered and authenticated will be valid. In case any officer of the District whose signature or whose facsimile signature shall appear on any Bonds shall cease to be such officer before the authentication of such Bonds, such signature or the facsimile signature thereof shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in office until authentication. Also, if a person signing a Bond is the proper officer on • the actual date of execution, the Bond will be valid even if that person is not the proper officer on the nominal date of action and even though, at the date of this Trust Agreement, such person was not such officer. (b) A Bond will not be valid until the Trustee or its agent executes the certificate of authentication on such Bond by manual signature. Such signature will be conclusive evidence that such Bond has been authenticated under this Trust Agreement. The Trustee may appoint an authenticating agent acceptable to the District to authenticate Bonds. An authenticating agent may authenticate Bonds whenever the Trustee may do so. Each reference in this Trust Agreement to authentication by the Trustee includes authentication by such agent. (c) Bonds may be presented at the Principal Office of the Trustee, unless a different office has been designated for such purpose, for registration, transfer and exchange. The Trustee will keep, in accordance with its general practices and procedures in effect from time to time, at its Corporate Trust Office, sufficient books for the registration, transfer and exchange of the Bonds, which shall be open to inspection by the District during regular business hours upon reasonable prior written notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register, transfer or exchange the Bonds on such books as hereinbefore provided. Section 3.02. Transfer or Exchange of Bonds. (a) All Bonds shall be issued in fully registered form. Upon surrender for • transfer of any Bond at the Principal Office of the Trustee, the Trustee shall deliver in the name of 20 DOC S SF/81082v4/022925-0018 1111 the transferee or transferees a new fully authenticated and registered Bond or Bonds of Authorized Denominations of the same maturity for the aggregate principal amount which the Bondholder is entitled to receive. (b) All Bonds presented for transfer, redemption or payment shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the District, duly executed by the Bondholder or by his duly authorized attorney. The Trustee also may require payment from the Bondholder of a sum sufficient to cover any tax, or other governmental fee or charge that may be imposed in relation thereto. Such taxes, fees and charges shall be paid before any such new Bond shall be delivered. (c) Bonds delivered upon any transfer as provided herein, or as provided in Section 3.04, shall be valid obligations of the District, evidencing the same debt as the Bond surrendered, shall be secured by this Trust Agreement and shall be entitled to all of the security and benefits hereof to the same extent as the Bond surrendered. (d) The District and the Trustee shall treat the Bondholder, as shown on the registration books kept by the Trustee, as the person exclusively entitled to payment of principal, premium, if any, and interest with respect to such Bond and to the exercise of all other rights and powers of the Bondholder, except that all interest payments will be made to the party who, as of the Record Date, is the Bondholder. Section 3.03. Reserved. • Section 3.04. Mutilated,Lost, Stolen or Destroyed Bonds. (a) In the event any Bond is mutilated or defaced but identifiable by number and description, the District shall execute and the Trustee shall authenticate and deliver a new Bond of like date, maturity and denomination as such Bond, upon surrender thereof to the Trustee; provided that there shall first be furnished to the District and the Trustee proof satisfactory to the Trustee that the Bond is mutilated or defaced. The Bondholder shall accompany the above with a deposit of money required by the District for the cost of preparing the substitute Bond and all other expenses connected with the issuance of such substitute. The District shall then cause proper record to be made of the cancellation of the original, and thereafter the substitute shall have the validity of the original. (b) In the event any Bond is lost, stolen or destroyed, the District may execute and the Trustee may authenticate and deliver a new Bond of like date, maturity and denomination as that Bond lost, stolen or destroyed; provided that there shall first be furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Trustee, together with indemnity satisfactory to it. (c) The District and the Trustee shall charge the holder of such Bond all transfer taxes, if any, and their reasonable fees and expenses in this connection. All substitute Bonds issued and authenticated pursuant to this Section shall be issued as a substitute and numbered, if numbering is provided for by the Trustee, as determined by the Trustee. In the event any such Bond has matured or has been called for redemption, instead of issuing a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee. • 21 DOCS SF/81082v4/022925-0018 Section 3.05. Destruction of Bonds. Whenever any Outstanding Bonds shall be delivered • to the Trustee for cancellation pursuant to this Trust Agreement, upon payment of the principal amount and interest represented thereby or for replacement pursuant to Section 3.04 or transfer pursuant to Section 3.02, such Bond shall be cancelled and destroyed by the Trustee and counterparts of a certificate of destruction evidencing such destruction shall, upon the District's request, be furnished by the Trustee to the District. Section 3.06. Temporary Bonds. (a) Pending preparation of definitive Bonds, the District may execute and the Trustee shall authenticate and deliver, in lieu of definitive Bonds and subject to the same limitation and conditions, interim receipts, certificates or temporary bonds which shall be exchanged for the Bonds. (b) If temporary Bonds shall be issued, the District shall cause the definitive Bonds to be prepared and to be executed and delivered to the Trustee, and the Trustee, upon presentation to it of any temporary Bond, shall cancel the same and deliver in exchange therefor at the place designated by the Bondholder, without charge to the Bondholder thereof, definitive Bonds of an equal aggregate principal amount, of the same series, maturity and bearing interest at the same rate or rates as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all respects be entitled to the same benefit and security of this Trust Agreement as the definitive Bonds to be issued and authenticated hereunder. ARTICLE IV • REDEMPTION OF BONDS Section 4.01. Notices to Trustee; Notices to Bondholders. (a) Notice of redemption shall be mailed: (i) by first class mail by the Trustee not less than thirty (30) nor more than sixty (60) days prior to the redemption date to the respective owners of the Bonds designated for redemption at their addresses appearing on the registration books of the Trustee; and (ii) by registered or certified mail or overnight delivery service to one or more Information Services not later than the date of mailing required by clause (i) above. (b) Each notice of redemption shall state the Bonds or designated portions thereof to be redeemed, the date of redemption, the place of redemption, the redemption price, the CUSIP number (if any) of the Bonds to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, the original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or part. Each such notice shall also state that on said date there will become due and payable on each of the Bonds to be redeemed the redemption price, and redemption premium, if any, thereof, and that from and after such redemption date interest thereon shall cease to accrue. (c) Failure to give the notices described in this Section 4.01 or any defect therein shall not in any manner affect the redemption of any Bonds. Any notice sent as provided herein will • be conclusively presumed to have been given whether or not actually received by the addressee. 22 DOCS SF/81082v4/022925-0018