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Home My WebLink About15 Calpers side fund RefinancingAgenda Item # 15 ACTION To: Board of Directors From: Robert Mescher Date: June 01, 2011 Subject: Consideration of Approving Documents Related to the CaIPERS Side Fund Refinancing 1. WHY THIS MATTER IS BEFORE THE BOARD This item involves approving documents for the proposed refunding of the District employees' pension side -fund with CalPERS. 2. HISTORY In 2004, the District and its employees elected to participate in a pooled pension plan with California Public Employees' Retirement System (CaIPERS). In 2010, the District and its employees elected to increase the CalPERS benefit effective January 2011. The District employees agreed to pay the increased costs through increased payroll deductions. CalPERS required the District to pay an additional amount into a special fund, called a "side -fund" in order to catch up to the contributions of the existing pension pool members. The District's side -fund obligation is currently $7.7 million and is amortized through 2021 with a 7.75% rate. The side -fund obligation is paid jointly by the District and District employees. At the April 6, 2011 Board meeting, staff discussed with the Board a proposal to refund the $7.7 million side -fund. The District's financial advisor, Sandra McDonald, requested proposals from several other financing institutions, however, Brandis Tallman offered the most favorable terms. Bob Mescher, Stephen Hollabaugh, and Sandra McDonald discussed the structure and terms of the proposed refunding with Brandis Tallman. The obligation to pay the loan would be recorded as a liability on the Electric Utility's balance sheet and as a deferred pension expense. The loan would be paid similarly to the current method; from the Electric and Water budgeted pension expense and from the employee payroll deductions. 3. NEW INFORMATION Staff has worked with a team to pursue the side -fund refunding. This team consists of: Issuer: Truckee Donner Public Utility District Financial Advisor: McDonald Partners, Inc. , Sandra McDonald Bond Counsel: Stradling Yocca Carlson & Rauth, David Casnocha Broker Dealer: Brandis Tallman LLC, Nicki Tallman, Rick Brandis, Jeff Land Lender: Umpqua Bank, George Diesch, Mac McElroy Lender's Legal Counsel: Seyfarth Shaw LLC, Morgan T. Jones Trustee: The Bank of New York Mellon Trust Company, N.A., Chris Johnson The Bond Counsel has prepared a Resolution (Attachment 1) and Trust Agreement (Attachment 2) for the refunding of the side -fund pension obligations. The issuance costs will be rolled in with the CaIPERS side -fund payment amount for bonding. These documents will be discussed at the Board meeting. 4. FISCAL IMPACT The proposed refunding would save almost $100,000 per year for eleven years. The issuance costs will be rolled into the bonding and therefore won't add any expenses to FY 2011. 5. RECOMMENDATION Authorize the Resolution for 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 substantially to the form presented. /* 4� p 46e, Robert Mescher Michael D. Holley Acting Administrative Services Manager General Manager Attachment 1 ` • UCKEE * w ic Utility District 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 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 t" 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. 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. 2 Resolution 2011-XX 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: AYES: NAYS: ABSENT: ABSTAIN: TRUCKEE DONNER PUBLIC UTILITY DISTRICT Jeff Bender, President ATTEST: Michael D. Holley, P.E., District Clerk Resolution 2011-XX 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 DOCSSF/81082v4/022925-0018 TABLE OF CONTENTS Page 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 Section2.05. Form...............................................................................................................19 Section2.06. [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 Section3.03. 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 ....................................... Section 4.02. Optional Redemption of Bonds.......................................................... 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 setforth below: ................................................................................... Section 4.04. Payment of Bonds Called for Redemption; Effect of Redemption Call...................................................................................................... 22 23 ... 23 ... 24 i DOCSSF/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 ............................. Section 10.02. Reports....................................................... Section 10.03. Valuation and Disposition of Investments. .... 29 .... 29 .... 29 ii DOCSSF/81082v4/022925-0018 Section 10.04. Section 11.01 Section 11.02 Section 12.01. Section 12.02. Section 12.03. Section 12.04. Section 12.05. Section 12.06. Section 12.07. Section 12.08. Section 12.09. Section 12.10. Section 12.11. Section 12.12. Section 13.01. Section 13.02. Section 13.03. Section 13.04. Section 13.05. Section 13.06. Section 13.07. Section 13.08. Section 13.09. Section 13.10. Section 13.11. Section 13.12. Section 13.13. Section 13.14. Section 13.15. Section 13.16. TABLE OF CONTENTS (Cont.) Page Application of Investment Earnings.............................................................. 29 ARTICLE XI DEFEASANCE Discharge of Bonds; Release of Trust Agreement ......................................... 30 BondsDeemed Paid....................................................................................... 30 ARTICLE XII DEFAULTS AND REMEDIES Eventsof Default........................................................................................... 31 Remedies........................................................................................................ 31 Restoration to Former Position...................................................................... 32 Bondholders' Right to Direct Proceedings on their Behalf ........................... 32 Limitation on Bondholders' Rights to Institute Proceedings ......................... 32 No Impairment of Right to Enforce Payment................................................32 Proceedings by Trustee Without Possession of Bonds .................................. 33 NoRemedy Exclusive................................................................................... 33 NoWaiver of Remedies................................................................................. 33 Application of Moneys.................................................................................. 33 Severability of Remedies............................................................................... 34 Additional Events of Default and Remedies .................................................. 34 ARTICLE XIII TRUSTEE; REGISTRAR Acceptance of Trusts ............................................. Duties of Trustee .................................................... Rights of Trustee .................................................... Individual Rights of Trustee .................................................... Trustee's Disclaimer..............................:................................. Noticeof Defaults.................................................................... Compensation of Trustee......................................................... Eligibility of Trustee................................................................ Replacement of Trustee........................................................... Successor Trustee or Agent by Merger .................................... Registrar................................................................................... OtherAgents............................................................................ Several Capacities.................................................................... Accounting Records and Reports of Trustee ........................... No Remedy Exclusive............................................................. Determining Effect on Bondowners........................................ ...................................... 34 .................. 34 .................. 35 .................. 36 .................. 36 .................. 37 .................. 37 .................. 37 .................. 37 .................. 38 .................. 38 .................. 38 .................. 38 .................. 38 .................. 39 .................. 39 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 Section15.02. Severability....................................................................................................41 Section 15.03. No Personal Liability of District Officials; Limited Liability of Districtto Bondholders.................................................................................. 41 Section 15.04. Execution of Instruments; Proof of Ownership ............................................. 41 Section 15.05. Governing Law; Venue.................................................................................. 42 Section15.06. Notices...........................................................................................................42 Section15.07. Holidays.........................................................................................................43 Section15.08. Captions......................................................................................................... 43 Section 15.09. [Reserved.].....................................................................................................43 Section 15.10. Counterparts...................................................................................................43 Exhibit A Exhibit B Exhibit C SignaturePage.............................................................................................. S-1 FORM OF BOND [RESERVED] FORM OF REQUISITION A-1 B-1 C-1 1V 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. DOCSSF/81082v4/022925-0018 "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); DOCS 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 DOCSSF/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 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 DOC S S F/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 DOCSSF/81082v4/022925-0018 (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 AAA by Standard & Poor's Ratings Services ("S&P") b. 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 DOCS 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. 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 liquidation 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. DOC S S F/81082v4/022925-0018 C. Acceptable providers of collateralized investment agreements shall 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 DOCSSF/81082v4/022925-0018 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 exceed the amount required to be in the applicable fund on the applicable valuation date. 13 DOCS SF/81082v4/022925-0018 (ii) The agreement shall include market standard termination 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 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 DOCSSF/81082v4/022925-0018 "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 DOCS SF/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. 16 DOCS SF/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 Jul 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 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 DOCS 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. [Reserved.] 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 DOCS 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 DOCS SF/81082v4/022925-0018 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 fiunished 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 Section 4.02. Optional Redemption of Bonds. The Bonds may be redeemed at the option of the District from any source of funds on any date on or after July 1, 2012 in whole or in part at such principal amount as related by the District from any lawful source of funds and deposited with the Trustee no less than five (5) days prior to the date of redemption, a redemption price equal to the principal amount of Bonds or the portions thereof to be redeemed, together with accrued interest to the date of redemption, with the premium set forth below. Premium Redemption Years 5% July 1, 2012 4% July 1, 2014 3% July 1, 2016 2% July 1, 2018 1% July 1, 2020 0% July 1, 2021 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: Mandatory Redemption Date January 1, 2012 July 1, 2012 January 1, 2013 July 1, 2013 January 1, 2014 July 1, 2014 January 1, 2015 July 1, 2015 January 1, 2016 July 1, 2016 January 1, 2017 July 1, 2017 January 1, 2018 July 1, 2018 January 1, 2019 July 1, 2019 January 1, 2020 July 1, 2020 January 1, 2021 July 1, 2021 January 1, 2022 July 1, 2022' (maturity) Principal Amount to be Redeemed 23 DOCS SF/81082v4/022925-0018 Section 4.04. Payment of Bonds Called for Redemption, Effect of Redemption Call. (a) Upon surrender to the Trustee or the Trustee's agent, Bonds called for redemption shall be paid at the redemption price stated in the notice, plus interest accrued to the redemption date. (b) On the date so designated for redemption, notice having been given in the manner and under the conditions provided herein relating to such Bonds as are to be redeemed and moneys for payment of the redemption price being held in trust to pay the redemption price, the Bonds so called for redemption shall become and be due and payable on the redemption date, interest on such Bonds shall cease to accrue, such Bonds shall cease to be entitled to any lien, benefit or security under this Trust Agreement and the owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price and accrued interest to the redemption date. (c) Bonds which have been duly called for redemption under the provisions of this Article IV and for the payment of the redemption price of which moneys shall be deposited in the Redemption Fund or otherwise held in trust for the holders of the Bonds to be redeemed, all as provided in this Trust Agreement, shall not be deemed to be Outstanding under the provisions of this Trust Agreement. ARTICLE V APPLICATION OF PROCEEDS; SOURCE OF PAYMENT OF BONDS Section 5.01. Application of Proceeds and District Contribution. The net proceeds of the sale of the Bonds received by the Trustee, $ shall be deposited by the Trustee as follows: (i) Issuance Fund; and the sum of $ (ii) the sum of $ Retirement Fund and used to satisfy the Side Fund Liability. shall be deposited into the Costs of shall be deposited into the PERS Section 5.02. Sources of Payment of Bonds; Send -Annual Payments by the District. (a) The District hereby irrevocably assigns and pledges to the Trustee, in trust for the security of the Holders upon the terms hereof, all the District's Net Revenues. The Trustee shall hold all such rights, title and interest received by it under this section and all money and securities (exclusive of money to which the Trustee is entitled in its own right as a fee, indemnity, reimbursement or otherwise) received from the District or derived from the exercise of the District's powers hereunder in trust for the security of the Holders in accordance with the provisions hereof, and the District shall from time to time execute, deliver, file and record such instruments as the Trustee may reasonably require to confirm or maintain the security created hereby and the assignment and pledge hereby of the rights, title and interest assigned and pledged by the District to the Trustee hereunder. 24 DOCSSF/81082v4/022925-0018 (b) If any Bonds are Outstanding, the District shall no later than fifth Business Day prior to each Payment Date, deliver funds to the Trustee for deposit to the Revenue Fund in an aggregate amount equal to the Deposit Amount (less amounts on deposit in the Revenue Fund) due on each such Payment Date. ARTICLE VI CREATION OF CERTAIN FUNDS AND ACCOUNTS Section 6.01. Creation of Costs of Issuance Fund and PERS Retirement Fund. (A) Cost of Issuance Fund. There is hereby created a Fund to be held by the Trustee designated "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 Costs of Issuance Fund" (the "Costs of Issuance Fund"). Funds on deposit in the Costs of Issuance Fund shall be used to pay or to reimburse the District for the payment of Costs of Issuance. Amounts in the Costs of Issuance Fund shall be disbursed by the Trustee upon Written Requisition in the form of Exhibit "C" executed by an Authorized District Representative. At such time as the District delivers to the Trustee written notice that all Costs of Issuance have been paid or otherwise notifies the Trustee in writing that no additional amounts from the Costs of Issuance Fund will be needed to pay Costs of Issuance, or no later than August 1, 2011, the Trustee shall transfer all amounts then remaining in the Costs of Issuance Fund to the Bond Interest Account unless otherwise directed by the District. At such time as no amounts remain in the Costs of Issuance Fund, such Costs of Issuance Fund shall be closed. (B) PERS Retirement Fund. There is hereby created a Fund to be held by the Trustee designated as the "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 PERS Retirement Fund" (the "PERS Retirement Fund"). The Trustee shall keep the PERS Retirement Fund separate and apart from all other funds and moneys held by it; and shall administer such fund as herein provided. The PERS Retirement Fund shall be held and applied by the Trustee in accordance herewith. Moneys in the PERS Retirement Fund shall be expended to satisfy the Side Fund Liability. There shall be credited to the PERS Retirement Fund the following amounts: (1) the proceeds of sale of the Bonds required to be deposited therein pursuant to Section 5.01 hereof, and (2) all investment earnings on moneys held in the PERS Retirement Fund, which shall remain in the PERS Retirement Fund until expended to satisfy the Side Fund Liability or applied as described below. The Trustee shall disburse moneys in the PERS Retirement Fund upon receipt (either by mail or by facsimile transmission) by the Trustee of a Requisition signed by an Authorized District Representative. Section 6.02. Creation of Revenue Fund and Certain Accounts. There is hereby created a Fund to be held by the Trustee designated "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 Revenue Fund" (the "Revenue Fund"). There are hereby created in the Revenue Fund two separate Accounts designated "Bond Interest Account" and "Bond Principal Account". (a) All amounts received by the Trustee from the District in respect of interest payments on the Bonds shall be deposited in the Bond Interest Account and shall be disbursed to the Bondholders to pay interest on the Bonds. All amounts held at any time in the Bond Interest Account 25 DOCS SF/8 1082v4/022925-0018 (including amounts deposited pursuant to Section 6.03) shall be held for the security and payment of interest on the Bonds pursuant to this Trust Agreement. If at any time funds on deposit in the Bond Interest Account are insufficient to provide for the payment of such interest, the District shall promptly deposit funds to such Account to cure such deficiency. (b) All amounts received by the Trustee from the District in respect of principal payments on the Bonds shall be deposited in the Bond Principal Account and all amounts in the Bond Principal Account will be disbursed to pay principal on the Bonds pursuant to this Trust Agreement. If at any time funds on deposit in the Bond Principal Account are insufficient to provide for the payment of such principal, the District shall promptly deposit funds to such Account to cure such deficiency. (c) Interest earned on deposits to the Bond Interest Account and Bond Principal Account shall be retained in such respective account and applied by the Trustee as a credit towards amounts due on the succeeding Payment Date. The moneys in such Fund and Accounts shall be held by the Trustee in trust and applied as herein provided and, pending such application, shall be subject to a lien and charge in favor of the holders of the Bonds issued and Outstanding under this Trust Agreement and for the further security of such holders until paid or transferred as hereinafter provided. Section 6.03. Creation of Redemption Fund. A Fund to be held by the Trustee is hereby created and designated the "Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 Redemption Fund" (the "Redemption Fund"). All moneys deposited by the District with the Trustee for the purpose of redeeming Bonds shall be deposited in the Redemption Fund. All amounts deposited in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of redeeming Bonds in the manner, at the times and upon the terms and conditions specified in this Trust Agreement; provided that, at any time prior to giving such notice of redemption, the Trustee shall, upon receipt of written instructions from an Authorized District Representative, apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges) as directed by the District. Section 6.04. Moneys Held in Redemption Fund. All moneys which shall have been withdrawn from the Revenue Fund and deposited in the Redemption Fund for the purpose of paying any of the Bonds hereby secured, either at the maturity thereof or upon call for redemption, shall be held in trust for the respective holders of such Bonds. Section 6.05. Unclaimed Moneys. Any moneys which shall be set aside or deposited in the Redemption Fund, the Bond Principal Account, the Bond Interest Account or any other Fund or Account for the benefit of holders of Bonds and which shall remain unclaimed by the holders of such Bonds for a period of one year after the date on which such Bonds shall have become due and payable (or such longer period as shall be required by State law) shall be paid to the District, and thereafter the holders of such Bonds shall look only to the District for payment and the District shall be obligated to make such payment, but only to the extent of the amounts so received without any interest thereon, and the Trustee shall have no responsibility with respect to any of such moneys. 26 DOCS S1~ /81082v4/022925-0018 ARTICLE VII RESERVED ARTICLE VIII RESERVED ARTICLE IX COVENANTS OF THE DISTRICT Section 9.01. Payment of Principal and Interest. The District covenants and agrees that it will duly and punctually pay or cause to be paid the principal, premium, if any, and interest on every Bond at the place and on the dates and in the manner specified herein and in the Bonds, according to the true intent and meaning thereof, and that it will faithfully do and perform all covenants and agreements contained herein and in the Bonds and the District agrees that time is of the essence of this Trust Agreement. The obligations of the District under the Bonds, including the obligation to make all payments of principal, premium, if any, and interest when due, are absolute and unconditional, without any right of set-off or counter claim. Section 9.02. Performance of Covenants by District: Authority; Due Execution. The District covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Trust Agreement, in any and every Bond executed, authenticated and delivered hereunder and in all of its proceedings pertaining hereto. The District covenants that it is duly authorized under the Constitution and laws of the State to issue the Bonds. Section 9.03. Instruments of Further Assurance. The District covenants that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered such further acts, instruments and transfers as the Trustee may reasonably request for the better assuring and confirming to the Trustee all the rights and obligations of the District under and pursuant to this Trust Agreement. The District shall, upon the reasonable request of the Trustee, from time to time execute and deliver such further instructions and take such further action as may be reasonable and as may be required to effectuate the purposes of this Trust Agreement or any provisions hereof; provided, however, that no such instruments or actions shall pledge the full faith and credit or the taxing powers of the State. Section 9.04. No Inconsistent Action. The District covenants that no contract or contracts will be entered into or any action taken by the District which shall be inconsistent with the provisions of this Trust Agreement. Section 9.05. No Adverse Action. The District covenants that it will not take any action which will have a material adverse effect upon the rights of the holders of the Bonds. 27 DOCSSF/81082v4/022925-0018 Section 9.06. Maintenance of Powers. The District covenants that it will at all times use its best efforts to maintain the powers, functions, duties and obligations now reposed in it pursuant to applicable law and will not at any time voluntarily do, suffer or permit any act or thing the effect of which would be to hinder, delay or imperil either the payment of the indebtedness evidenced by any of the Bonds or the performance or observance of any of the covenants herein contained. Section 9.07. Covenants of District Binding on Successors. (a) All covenants, stipulations, obligations and agreements of the District contained in this Trust Agreement shall be deemed to be covenants, stipulations, obligations and agreements of the District to the full extent authorized or permitted by law. If the powers or duties of the District shall hereafter be transferred by amendment of any provision of the Constitution or any other law of the State or in any other manner there shall be a successor to the District, and if such transfer shall relate to any matter or thing permitted or required to be done under this Trust Agreement by the District, then the entity that shall succeed to such powers or duties of the District shall act and be obligated in the place and stead of the District as provided in this Trust Agreement, and all such covenants, stipulations, obligations and agreements herein shall be binding upon such successor or successors thereof from time to time and upon any officer, board, body, district, authority or commission to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreements shall be transferred by or in accordance with law. (b) Except as otherwise provided in this Trust Agreement, all rights, powers and privileges conferred and duties and liabilities imposed upon the District by the provisions of this Trust Agreement shall be exercised or performed by the District or by such officers, board, body, district, authority or commission as may be required by law to exercise such powers or to perform such duties. Section 9.08. Trust Agreement to Constitute a Contract. This Trust Agreement is executed by the District for the benefit of the Bondholders and constitutes a contract with the Bondholders. Section 9.09. Amount of Rates and Charges. The District shall fix, prescribe and collect rates and charges for the Electricity Service which will be at least sufficient to yield during each Fiscal Year Adjusted Net Revenues equal to one hundred ten percent (110%) of Debt Service for such Fiscal Year. The District may make adjustments from time to time in such rates and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the Adjusted Net Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements of this section. Section 9.10. Provide Audits. So long as any of the Bonds are Outstanding, the District will cause to be prepared annually, complete audited financial statements with respect to such fiscal year. The District will furnish a copy of such financial statements to the Purchaser within six months of the end of such fiscal year. 28 DOCSSF/81082v4/022925-0018 ARTICLE X INVESTMENTS Section 10.01. Investments Authorized. Money held by the Trustee in any fund or account hereunder shall be invested by the Trustee in Permitted Investments pending application as provided herein solely at the prior written direction of an Authorized District Representative, shall be registered in the name of the Trustee where applicable, as Trustee, and shall be held by the Trustee. The District shall direct the Trustee prior to 12:00 p.m. Pacific time on the last Business Day before the date on which a Permitted Investment matures or is redeemed as to the reinvestment of the proceeds thereof. In the absence of such direction, the Trustee shall invest in investments authorized under clause (8) contained in the definition of "Permitted Investments." The Trustee may rely on the District's certification in such investment instructions that such investments are permitted by law and by any policy guidelines promulgated by the District. Money held in any fund or account hereunder may be commingled for purposes of investment only. The Trustee shall, with the prior written direction of an Authorized District Representative, purchase from or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 10.01. Any investments and reinvestments shall be made after giving full consideration to the time at which funds are required to be available hereunder and to the highest yield practicably obtainable giving due regard to the safety of such funds and the date upon which such funds will be required for the uses and purposes required by this Trust Agreement. The Trustee or any of its affiliates may act as agent in the making or disposing of any investment and may act as sponsor or advisor with respect to any Permitted Investment. For investment purposes, the Trustee may commingle the funds and accounts established hereunder, but shall account for each separately. The District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the District waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the District periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder. Section 10.02. Reports. The Trustee shall furnish monthly to the District a report of all investments made by the Trustee and of all amounts on deposit in each fund and account maintained hereunder. Section 10.03. Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account hereunder, all Permitted Investments shall be valued at the market value thereof not later than January 1 of each year. With the prior written approval of an Authorized District Representative, the Trustee may sell at the best price obtainable, or present for redemption, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide money to meet any required payment, transfer, withdrawal or disbursement from any fund or account hereunder, and the Trustee shall not be liable or responsible for any loss resulting from such investment or sale, except any loss resulting from its own negligence or willful misconduct. Section 10.04. Application of Investment Earnings. Investments in any Fund or Account shall be deemed at all times to be a part of such Fund or Account, and any profit realized from such investment shall be credited to such Fund or Account and any loss resulting from such investment shall be charged to such Fund or Account. Interest earnings on investments in any Fund or Account shall be deposited in the Bond Interest Account of the Revenue Fund. 29 DOCS SF/81082v4/022925-0019 ARTICLE XI DEFEASANCE Section 11.01. Discharge of Bonds; Release of Trust Agreement. Bonds or portions thereof (such portions to be in an Authorized Denomination) which have been paid in full or which are deemed to have been paid in full shall no longer be entitled to the benefits of this Trust Agreement except for the purposes of payment from moneys, Defeasance Securities. When all Bonds which have been issued under this Trust Agreement have been paid in full or are deemed to have been paid in full, and all other sums payable hereunder by the District, including all necessary and proper fees, compensation and expenses of the Trustee have been paid or are duly provided for, then the Trustee shall cancel, discharge and release this Trust Agreement, shall execute, acknowledge and deliver to the District such instruments of satisfaction and discharge or release as shall be requisite to evidence such release and such satisfaction and discharge and shall assign and deliver to the District any amounts at the time subject to this Trust Agreement which may then be in the Trustee's possession, except funds or securities in which such funds are invested and held by the Trustee for the payment of the principal, premium, if any, and interest on the Bonds. Section 11.02. Bonds Deemed Paid. (a) A Bond shall be deemed to be paid within the meaning of this Article XI and for all purposes of this Trust Agreement when (i) payment with respect thereto of the principal, interest and premium, if any, either (1) shall have been made or caused to be made in accordance with the terms of the Bonds and this Trust Agreement or (2) shall have been provided for, as certified to the Trustee by a Consultant who is a certified public accountant, by irrevocably depositing with the Trustee in trust and irrevocably setting aside exclusively for such payment: (x) moneys sufficient to make such payment, and/or (y) Defeasance Securities maturing as to principal and interest in such amounts and at such times as will insure the availability of sufficient moneys to make such payment, and (ii) all necessary and proper fees, compensation and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made shall have been paid or provision made for the payment thereof. At such times as Bonds shall be deemed to be paid hereunder, such Bonds shall no longer be secured by or entitled to the benefits of this Trust Agreement, except for the purposes of payment from such moneys, Defeasance Securities. (b) Notwithstanding the foregoing paragraph, no deposit under clause (i)(2) of the immediately preceding paragraph shall be deemed a payment of such Bonds until (i) proper notice of redemption of such Bonds shall have been given in accordance with Section 4.01, or in the event such Bonds are not to be redeemed within the next succeeding 60 days, until the District shall have given the Trustee irrevocable instructions to notify, as soon as practicable, the holders of the Bonds in accordance with Section 4.01, that the deposit required by clause (i)(2) above has been made with the Trustee and that such Bonds are deemed to have been paid in accordance with this Article XI and stating the maturity or redemption date upon which moneys are to be available for the payment of the principal of, premium, if any, and unpaid interest on such Bonds; or (ii) the maturity of such Bonds. (c) To accomplish defeasance, the District shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants ("Accountant") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Agreement, (iii) an opinion of Bond Counsel to the 30 DOCS SF/81082v4/022925-0018 effect that the Bonds are no longer "Outstanding" under the Trust Agreement and (iv) a certification of discharge of the Trustee with respect to the Bonds; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed to the District and Trustee. Bonds shall be deemed "Outstanding" under the Trust Agreement unless and until they are in fact paid and retired or the above criteria are met. ARTICLE XII DEFAULTS AND REMEDIES Section 12.01. Events of Default. Each of the following events shall constitute and is referred to in this Trust Agreement as an "Event of Default": (a) a failure to pay the principal or premium, if any, on any of the Bonds when the same shall become due and payable at maturity or upon redemption; (b) a failure to pay any installment of interest on any of the Bonds when such interest shall become due and payable; (c) a failure by the District to observe and perform any covenant, condition, agreement or provision (other than as specified in clauses (a) and (b) of this Section 12.01) contained in the Bonds or in this Trust Agreement on the part of the District to be observed or performed, which failure shall continue for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the District by the Trustee; provided, however, that the Trustee shall be deemed to have agreed to an extension of such period if corrective action is initiated by the District within such period and is being diligently pursued; or (d) if the District files a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself. Upon its actual knowledge of the occurrence of any Event of Default, the Trustee shall immediately give written notice thereof to the District. Section 12.02. Remedies. (a) Upon the occurrence and continuance of any Event of Default, the Trustee in its discretion may and shall upon the written direction of the holders of a majority of the Total Bond Obligation and, in each case, receipt of indemnity to its satisfaction, in its own name and as the Trustee of an express trust: (i) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Bondholders hereunder, as the case may be, and require the District to carry out any agreements with or for the benefit of the Bondholders and to perform its or their duties under the Refunding Law or any other law to which it is subject and this Trust Agreement; provided that any such remedy may be taken only to the extent permitted under the applicable provisions of this Trust Agreement; 31 DOC S S F/81082v4/022925-0018 (ii) bring suit upon the defaulted Bonds; (iii) commence an action or suit in equity to require the District to account as if it were the trustee of an express trust for the Bondholders; or (iv) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders hereunder. (b) The Trustee shall be under no obligation to take any action with respect to any Event of Default unless the Trustee has actual knowledge of the occurrence of such Event of Default. Section 12.03. Restoration to Former Position. In the event that any proceeding taken by the Trustee to enforce any right under this Trust Agreement shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then the District, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall continue as though no such proceeding had been taken. Section 12.04. Bondholders' Right to Direct Proceedings on their Behalf. Anything in this Trust Agreement to the contrary notwithstanding, holders of a majority in Total Bond Obligation shall have the right, at any time, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting all remedial proceedings on their behalf available to the Trustee under this Trust Agreement to be taken in connection with the enforcement of the terms of this Trust Agreement or exercising any trust or power conferred on the Trustee by this Trust Agreement; provided that such direction shall not be otherwise than in accordance with the provisions of the law and this Trust Agreement and that there shall have been provided to the Trustee security and indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred as a result thereof by the Trustee; provided further that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders not parties to such direction. Section 12.05. Limitation on Bondholders' Rights to Institute Proceedings. No owner of any Bond shall have the right to institute any suit, action or proceeding at law in equity, for the protection or enforcement of any right or remedy under this Trust Agreement, or applicable law with respect to such Bond, unless (a) such owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (b) the owners of not less than a majority in Total Bond Obligation shall have made written request upon the Trustee to exercise the powers heretofore granted or to institute such suit, action or proceeding in its own name; (c) such owner or said owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall have refused or failed to comply with such request for a period of 60 days after such written request shall have been received by and said tender of indemnity shall have been made to, the Trustee and (e) the Trustee shall not have received contrary directions from the owners of a majority in aggregate principal amount of the Bonds then Outstanding. Section 12.06. No Impairment of Right to Enforce Payment. Notwithstanding any other provision in this Trust Agreement, the right of any Bondholder to receive payment of the principal of and interest on such Holder's Bond, on or after the respective due dates expressed therein, or to 32 DOCSSF/81082v4/022925-0018 institute suit for the enforcement of any such payment on or after such respective date, shall not be impaired or affected without the consent of such Bondholder. Section 12.07. Proceedings by Trustee Without Possession of Bonds. All rights of action under this Trust Agreement or under any of the Bonds secured hereby which are enforceable by the Trustee may be enforced by it without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the equal and ratable benefit of the Bondholders, as the case may be, subject to the provisions of this Trust Agreement. Section 12.08. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Trustee or to Bondholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute; provided, however, that any conditions set forth herein to the taking of any remedy to enforce the provisions of this Trust Agreement or the Bonds shall also be conditions to seeking any remedies under any of the foregoing pursuant to this Section 12.08. Section 12.09. No Waiver of Remedies. No delay or omission of the Trustee or of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default, or an acquiescence therein and every power and remedy given by this Article XII to the Trustee and to the Bondholders, respectively, may be exercised from time to time and as often as may be deemed expedient. Section 12.10. Application of Moneys. (a) Any moneys received by the Trustee for the benefit of Bondholders, by any receiver or by any Bondholder pursuant to any right given or action taken under the provisions of this Article XII, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys and of the fees, expenses, liabilities and advances incurred or made by the Trustee (including without limitation reasonable fees and reasonable expenses of its attorneys), shall be deposited in the Revenue Fund and all moneys so deposited in the Revenue Fund during the continuance of an Event of Default shall be applied (i) first, to the payment to the persons entitled thereto of all installments of interest then due on the Bonds, with interest on overdue installments, if lawful, at the rate per annum borne by the Bonds, as the case may be, in the order of maturity of the installments of such interest and if the amount available for such interest shall not be sufficient to make payment thereof, then to the payment thereof ratably according to the respective aggregate amounts due, and (ii) second, to the payment to the persons entitled thereto of the unpaid principal, as applicable, of any of the Bonds which shall have become due with interest on such Bonds at their respective rate from the respective dates upon which they became due (if the amount available for such unpaid principal and interest shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal and interest due on such date, in each case to the persons entitled thereto, without any discrimination or privilege among holders of Bonds), and, if the amount available for such principal and interest shall not be sufficient to make full payment thereof, then to the payment thereof ratably according to the respective aggregate amounts due. (b) Whenever moneys are to be applied pursuant to the provisions of this Section 12.10, such moneys shall be applied at such times, and from time to time, as the Trustee shall 33 DOCS SF/81082v4/022925-0018 determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts to be paid on such date shall cease to accrue. The Trustee shall give notice of the deposit with it of any such moneys and of the fixing of any such date by Mail to all Bondholders and shall not be required to make payment to any Bondholder until such Bonds shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 12.11. Severability of Remedies. It is the purpose and intention of this Article XII to provide rights and remedies to the Trustee and the Bondholders which may be lawfully granted under the provisions of applicable law, but should any right or remedy herein granted be held to be unlawful, the Trustee and the Bondholders shall be entitled, as above set forth, to every other right and remedy provided in this Trust Agreement and by applicable law. Section 12.12. Additional Events of Default and Remedies. So long as any Bonds are Outstanding, the Events of Default and remedies as set forth in this Article XII may be supplemented with additional Events of Default and remedies as set forth from time to time in a supplemental agreement. ARTICLE XIII TRUSTEE; REGISTRAR Section 13.01. Acceptance of Trusts. The Trustee hereby accepts and agrees to execute the trusts specifically imposed upon it by this Trust Agreement, but only upon the additional terms set forth in this Article XIII, to all of which the District agrees and the respective Bondholders agree by their acceptance of delivery of any of the Bonds. Section 13.02. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and powers and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee need perform only those duties that are specifically set forth in this Trust Agreement and no others; and (ii) in the absence of negligence on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Trust Agreement. However, the Trustee shall examine the certificates and opinions to determine whether they conform to the requirements of this Trust Agreement. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 34 DOC S SF/81082v4/022925-0018 (i) this paragraph does not limit the effect of paragraph (b) of this Section 13.02; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action it takes or fails to take in good faith in accordance with a direction received by it from Bondholders or the District in the manner provided in this Trust Agreement; and (iv) no provision of this Trust Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Every provision of this Trust Agreement that in any way relates to the Trustee is subject to all the paragraphs of this Section 13.02. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any cash held by it except as the Trustee may agree with the District. Section 13.03. Rights of Trustee. (a) The recitals of facts contained herein and in the Bonds shall be taken as statements of the District, and the Trustee assumes no responsibility for the correctness of the same (other than the certificate of authentication of the Trustee on each Bond), and makes no representations as to the validity or sufficiency of this Trust Agreement or of the Bonds or of any Permitted Investment and shall not incur any responsibility in respect of any such matter, other than in connection with the duties or obligations expressly assigned to or imposed upon it herein or in the Bonds. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence, willful misconduct or breach of the express terms and conditions hereof. The Trustee and its directors, officers, employees or agents may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owner of a Bond may be entitled to take, with like effect as if the Trustee was not the Trustee under this Trust Agreement. (b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the opinion of such counsel shall be authorization for any action taken or not taken in reliance on such opinion, but the Trustee shall be answerable for the negligence or misconduct of any such attorney, agent or receiver selected by it. (c) No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. 35 DOCS SF/81082v4/022925-0018 (d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the District, personally or by agent or attorney. (e) The Trustee shall not be responsible for the application or handling by the District of any moneys transferred to or pursuant to any requisition or request of the District in accordance with the terms and conditions hereof. (f) Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article XIII. (g) The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, facsimile transmission, electronic mail, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. (h) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, Acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee; provided, that in the event of any such enforced delay, the Trustee shall notify the District in writing within ten Business Days after the occurrence of the event giving rise to such delay. (i) The Trustee agrees to accept and act upon facsimile transmission of written instructions and/or directions pursuant to this Trust Agreement provided, however, that: (x) subsequent to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith receive the originally executed instructions and/or directions, (y) such originally executed instructions and/or directions shall be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (z) the Trustee shall have received a current incumbency certificate containing the specimen signature of such designated person. Section 13.04. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Bonds and may otherwise deal with the District with the same rights it would have if it were not Trustee. Section 13.05. Trustee's Disclaimer. The Trustee makes no representations as to the validity or adequacy of this Trust Agreement or the Bonds, it shall not be accountable for the 36 DOCSSF/81082v4/022925-0018 District's use of the proceeds from the Bonds paid to the District and it shall not be responsible for any statement in any official statement or other disclosure document or in the Bonds other than its certificate of authentication. Section 13.06. Notice of Defaults. If an event occurs which with the giving of notice or lapse of time or both would be an Event of Default, and if the event is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Bondholder notice of the event within 90 days after it occurs. Except in the case of a default in payment or purchase on any Bonds, the Trustee may withhold the notice to Bondholders if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Bondholders. Section 13.07. Compensation of Trustee. The District shall from time to time, but only in accordance with a written agreement in effect with the Trustee, pay to the Trustee reasonable compensation for its services and shall reimburse the Trustee for all its reasonable advances and expenditures, including but not limited to advances to and fees and expenses of independent appraisers, accountants, consultants, counsel, agents and attorneys -at -law or other experts employed by it in the exercise and performance of its powers and duties hereunder. The Trustee shall not otherwise have any claims or lien for payment of compensation for its services against any other moneys held by it in the funds or accounts established hereunder, except as provided in Section 12.10, but may take whatever legal actions are lawfully available to it directly against the District. To the extent permitted by applicable law, the District agrees to indemnify and save the Trustee, its officers, employees, directors and agents, harmless against any costs, expenses, claims or liabilities whatsoever, including, without limitation, fees and expenses of its attorneys, that it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The agreement contained in this Section shall survive the payment of the Bonds, the discharge of this Trust Agreement and the appointment of a successor trustee. Section 13.08. Eligibility of Trustee. This Trust Agreement shall always have a Trustee that is a trust company, a bank or association having trust powers and is organized and doing business under the laws of the United States or any state or the District of Columbia, is subject to supervision or examination by United States, state or District of Columbia authority and has a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. Section 13.09. Replacement of Trustee. (a) The Trustee may resign as trustee hereunder by notifying the District in writing prior to the proposed effective date of the resignation. The holders of a majority in Total Bond Obligation of the Bonds may remove the Trustee by notifying the removed Trustee and may appoint a successor Trustee with the District's. The District may remove the Trustee, by notice in writing delivered to the Trustee 30 days prior to the proposed removal date; provided, however, that the District shall have no right to remove the Trustee during any time when an Event of Default has occurred and is continuing unless (i) the Trustee fails to comply with the foregoing Section, (ii) the Trustee is adjudged a bankrupt or an insolvent, (iii) the Trustee otherwise becomes incapable of acting or (iv) the District determines that the Trustee's services are no longer satisfactory to the District. No resignation or removal of the Trustee under this Section shall be effective until a new Trustee has taken office. If the Trustee resigns or is removed or for any reason is unable or unwilling to perform its duties under this Trust Agreement, the District shall promptly appoint a successor Trustee. 37 DOC S SF/81082v4/022925-0018 (b) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the District. Immediately thereafter, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall then (but only then) become effective and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Trust Agreement. If a Trustee is not performing its duties hereunder and a successor Trustee does not take office within 60 days after the retiring Trustee delivers notice of resignation or the District delivers notice of removal, the retiring Trustee, the District or the holders of a majority in Total Bond Obligation of the Bonds may petition any court of competent jurisdiction for the appointment of a successor Trustee. Section 13.10. Successor Trustee or Agent by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its assets (or, in the case of a bank or trust company, its corporate trust business) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee or Registrar. Section 13.11. Registrar. The District shall appoint the Registrar for the Bonds and may from time to time remove a Registrar and name a replacement upon notice to the Trustee. The District hereby appoints the Trustee as Registrar. Each Registrar, if other than the Trustee, shall designate to the Trustee, and the District its principal office and signify its acceptance of the duties imposed upon it hereunder by a written instrument of acceptance delivered to the District and the Trustee under which such Registrar will agree, particularly, to keep such books and records as shall be consistent with prudent industry practice and to make such books and records available for inspection by the District and the Trustee at all reasonable times. Section 13.12. Other Agents. The District or the Trustee may from time to time appoint other agents to perform duties and obligations under this Trust Agreement which agents may include, but not be limited to, authenticating agents all as provided by resolution of the District. Section 13.13. Several Capacities. Anything in this Trust Agreement to the contrary notwithstanding, the same entity may serve hereunder as the Trustee, Registrar and any other agent as appointed to perform duties or obligations under this Trust Agreement or an escrow agreement, or in any combination of such capacities, to the extent permitted by law. Section 13.14. Accounting Records and Reports of Trustee. (a) The Trustee shall at all times keep, or cause to be kept, proper books of record and account in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds and all Funds and Accounts established pursuant to this Trust Agreement and held by the Trustee. Such books of record and account shall be available for inspection by the District and any Bondholder, or his agent or representative duly authorized in writing, at reasonable hours and under reasonable circumstances. (b) The Trustee shall file and furnish to the District and to each Bondholder who shall have filed his name and address with the Trustee for such purpose (at such Bondholder's cost), on an annual basis (or, with respect to the District, such other interval that the District may request), a complete financial statement (which may be its regular account statements and which need not be audited) covering receipts, disbursements, allocation and application of moneys in any of the funds and accounts established pursuant to this Trust Agreement for the preceding year. 38 DOCS SF/81082v4/022925-0018 Section 13.15. No Remedy Exclusive. No remedy herein conferred upon or reserved to the District is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute. Section 13.16. Determining Effect on Bondowners. In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action under the Trust Agreement would adversely affect the security for the Bonds or the rights of the Bondholders, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy. ARTICLE XIV MODIFICATION OF THIS TRUST AGREEMENT Section 14.01. Limitations. This Trust Agreement shall not be modified or amended in any respect subsequent to the first delivery of fully executed and authenticated Bonds except as provided in and in accordance with and subject to the provisions of this Article XIV. Section 14.02. Supplemental Agreements Not Requiring Consent of Bondholders. (a) The District may, from time to time and at any time, without the consent of or notice to the Bondholders, execute and deliver supplemental agreements supplementing and/or amending this Trust Agreement as follows: (i) to cure any formal defect, omission, inconsistency or ambiguity in this Trust Agreement; (ii) to add to the covenants and agreements of the District in this Trust Agreement other covenants and agreements, or to surrender any right or power reserved or conferred upon the District, and which shall not adversely affect the interests of the Bondholders; (iii) to confirm, as further assurance, any interest of the Trustee in and to the Funds and Accounts held by the Trustee or in and to any other moneys, securities or funds of the District provided pursuant to this Trust Agreement or to otherwise pledge or add as additional security for the Bondholders; (iv) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (v) to modify, alter, amend or supplement this Trust Agreement in any other respect which, in the judgment of the District, is not materially adverse to the Bondholders; (vi) to qualify the Bonds for a rating or ratings by any Rating Agency; and (vii) to authorize the issuance of Additional Bonds in accordance with this Trust Agreement. (b) Before the District shall, pursuant to this Section 14.02, execute any supplemental agreement there shall have been delivered to the District an opinion of Bond Counsel to 39 DOCSSF/81082v4/022925-0018 the effect that such supplemental agreement (i) is authorized or permitted by this Trust Agreement and the Refunding Law, and (ii) will, upon the execution and delivery thereof, be valid and binding upon the District in accordance with its terms, subject to the typical exceptions. Section 14.03. Supplemental Agreement Reauirin2 Consent of Bondholders. (a) Except for any supplemental agreement entered into pursuant to Section 14.02, the holders of not less than a majority in Total Bond Obligation shall have the right from time to time to consent to and approve the execution by the District of any supplemental agreement deemed necessary or desirable by the District for the purposes of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this Trust Agreement or in a supplemental agreement; provided, however, that, unless approved in writing by the holders of all the Bonds then Outstanding, nothing contained herein shall permit or be construed as permitting (i) a change in the times, amounts or currency of payment of the principal of or interest on any Outstanding Bonds or (ii) a reduction in the principal amount or redemption price of any Outstanding Bonds or the rate of interest thereon; and provided that nothing contained herein, including the provisions of Section 14.03(b) below, shall, unless approved in writing by the holders of all the Bonds then Outstanding, permit or be construed as permitting (1) a preference or priority of any Bond or Bonds over any other Bond or Bonds or (2) a reduction in the aggregate principal amount of Bonds the consent of the Bondholders of which is required for any such supplemental agreement. Nothing herein contained, however, shall be construed as making necessary the approval by Bondholders of the execution of any supplemental agreement as authorized in Section 14.02. (b) If at any time the District shall desire to enter into any supplemental agreement for any of the purposes of this Section 14.03, the District shall cause notice of the proposed execution of the supplemental agreement to be given by Mail to all Bondholders. Such notice shall briefly set forth the nature of the proposed supplemental agreement and shall state that a copy thereof is on file at the office of the District for inspection by all Bondholders. (c) Within two weeks after the date of the first mailing of such notice, the District may execute and deliver such supplemental agreement in substantially the form described in such notice, but only if there shall have first been delivered to the District (i) the required consents, in writing, of Bondholders and (ii) an opinion of Bond Counsel stating that such supplemental agreement is authorized or permitted by this Trust Agreement and other applicable law, complies with their respective terms and, upon the execution and delivery thereof, will be valid and binding upon the District in accordance with its terms. (d) If Bondholders of not less than the percentage of Bonds required by this Section 14.03 shall have consented to and approved the execution and delivery thereof as herein provided, no Bondholders shall have any right to object to the adoption of such supplemental agreement, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the execution and delivery thereof, or to enjoin or restrain the District from executing the same or from taking any action pursuant to the provisions thereof. Section 14.04. Effect of Supplemental Agreements. Upon execution and delivery of any supplemental agreement pursuant to the provisions of this Article XIV, this Trust Agreement and all supplemental agreements shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Trust Agreement and all 40 DOC S SF/81082v4/022925-0018 supplemental agreements of the District, the Trustee and all Bondholders shall thereafter be determined, exercised and enforced under this Trust Agreement and all supplemental agreements, subject in all respects to such modifications and amendments. Section 14.05. Su lemental A reements to be Part of this Trust Agreement. Any supplemental agreement adopted in accordance with the provisions of this Article XIV shall thereafter form a part of this Trust Agreement or the supplemental agreement which they supplement or amend, and all of the terms and conditions contained in any such supplemental agreement as to any provision authorized to be contained therein shall be and shall be deemed to be part of the terms and conditions of this Trust Agreement which they supplement or amend for any and all purposes. ARTICLE XV MISCELLANEOUS PROVISIONS Section 15.01. Parties in Interest. Except as herein otherwise specifically provided, nothing in this Trust Agreement expressed or implied is intended or shall be construed to confer upon any person, firm or corporation other than the District, the Trustee and the Bondholders any right, remedy or claim under or by reason of this Trust Agreement, this Trust Agreement being intended to be for the sole and exclusive benefit of the District, the Trustee, and the Bondholders. Section 15.02. Severability. In case any one or more of the provisions of this Trust Agreement, or of any Bonds issued hereunder shall, for any reason, be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions of this Trust Agreement or of Bonds, and this Trust Agreement and any Bonds issued hereunder shall be construed and enforced as if such illegal or invalid provisions had not been contained herein or therein. Section 15.03. No Personal Liability of District Officials, Limited Liability of District to Bondholders. (a) No covenant or agreement contained in the Bonds or in this Trust Agreement shall be deemed to be the covenant or agreement of any present or future official, officer, agent or employee of the District in his individual capacity, and neither the members of the District Board of Directors of the District nor any person executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof. (b) Except for the payment when due of the payments and the observance and performance of the other agreements, conditions, covenants and terms required to be performed by it contained in this Trust Agreement, the District shall not have any obligation or liability to the Bondholders with respect to this Trust Agreement or the preparation, execution, delivery, transfer, exchange or cancellation of the Bonds or the receipt, deposit or disbursement of the payments by the Trustee, or with respect to the performance by the Trustee of any obligation required to be performed by it contained in this Trust Agreement. Section 15.04. Execution of Instruments, Proof of Ownership. (a) Any request, direction, consent or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by Bondholders or on their behalf by an attorney -in -fact may be in any number of concurrent instruments of similar tenor and may be signed 41 DOCS SF/81082v4/022925-0018 or executed by such Bondholders in person or by an agent or attorney -in -fact appointed by an instrument in writing or as provided in the Bonds. Proof of the execution of any such instrument and of the ownership of Bonds shall be sufficient for any purpose of this Trust Agreement and shall be conclusive in favor of the Trustee with regard to any action taken by it under such instrument if made in the following manner: (i) the fact and date of the execution by any person of any such instrument may be proved by the certificate of any officer in any jurisdiction who, by the laws thereof, has power to take acknowledgments within such jurisdiction, to the effect that the person signing such instrument acknowledged before him the execution thereof, or by an affidavit of a witness to such execution; and (ii) the ownership of Bonds shall be proved by the registration books kept under the provisions of Section 3.01 hereof, (b) Nothing contained in this Section 15.04 shall be construed as limiting the Trustee to such proof. The Trustee may accept any other evidence of matters herein stated which it may deem sufficient. Any request, consent of, or assignment by any Bondholder shall bind every future Bondholder of the same Bonds or any Bonds issued in lieu thereof in respect of anything done by the Trustee or the District in pursuance of such request or consent. Section 15.05. Governing Law: Venue. This Trust Agreement is made in the State under the Constitution and laws of the State and is to be so construed. If any party to this Trust Agreement initiates any legal or equitable action to enforce the terms of this Trust Agreement, to declare the rights of the parties under this Trust Agreement or which relates to this Trust Agreement in any manner, each such party agrees that the place of making and for performance of this Trust Agreement shall be the County of Placer, State of California, and the proper venue for any such action is the Superior Court of the State of California, in and for the County of Placer. Section 15.06. Notices. (a) Any notice, request, direction, designation, consent, acknowledgment, certification, appointment, waiver or other communication required or permitted by this Trust Agreement or the Bonds must be in writing except as expressly provided otherwise in this Trust Agreement or the Bonds. (b) The Trustee shall give written notice to the Rating Agencies if at any time (i) a successor Trustee is appointed under this Trust Agreement, (ii) there is any amendment to this Trust Agreement, (ii) Bonds are to be redeemed pursuant to Section 4.02, (iv) notice of any defeasance of the Bonds, or (v) if the Bonds shall no longer be Book -Entry Bonds. Notice in the case of an event referred to in clause (ii) hereof shall include a copy of any such amendment. (c) Except as otherwise required herein, all notices required or authorized to be given to the District and the Trustee pursuant to this Trust Agreement shall be in writing and shall be sent by registered or certified mail, postage prepaid, to the following addresses: 42 DOCS SF/81082v4/022925-0018 to the District, to: Truckee Donner Public Utility District P.O. Box 309 11570 Donner Pass Road Truckee, California 96160 Attention: General Manager Telephone: Facsimile: 2. to the Trustee, to: The Bank of New York Mellon Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, CA 90017] Reference: Corporate Trust Services Telephone: (213) 615-6062 Facsimile: (213) 615-6199 or to such other addresses as may from time to time be furnished to the parties, effective upon the receipt of notice thereof given as set forth above. Section 15.07. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Trust Agreement, shall not be a Business Day, such payment may, unless otherwise provided in this Trust Agreement be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the nominal date provided in this Trust Agreement, and no interest shall accrue for the period from and after such nominal date. Section 15.08. Cautions. The captions and table of contents in this Trust Agreement are for convenience only and do not define or limit the scope or intent of any provisions or Sections of this Trust Agreement. Section 15.09. [Reserved.] Section 15.10. Counterparts. This Trust Agreement may be signed in several counterparts, each of which will be an original, but all of them together constitute the same instrument. [Remainder of page intentionally left blank.] 43 DOCS SF/81082v4/022925-0018 IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement by their officers thereunto duly authorized as of the date first above written. DISTRICT ATTEST: District Clerk TRUCKEE DONNER PUBLIC UTILITY THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer S-1 DOCS SF/81082v4/022925-0018 No. EXHIBIT "A" FORM OF BOND TRUCKEE DONNER PUBLIC UTILITY DISTRICT TAXABLE PENSION OBLIGATION BOND, SERIES 2011 Interest Rate Dated Maturity Per Annum Date July 1, 2022_ REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: AND NO/ 100 DOLLARS 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, for value received, hereby promises to pay to the registered owner named above or registered assigns, on the maturity date specified above, the principal sum specified above together with interest on such principal sum at the rates determined as herein provided on each Payment Date (hereinafter defined) from the Payment Date 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 Dated 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 Dated Date. The principal hereof and premium, if any, hereon are payable when due upon presentation hereof at the Principal Office of The Bank of New York Mellon Trust Company, N.A., as trustee (together with any successor as trustee under the Trust Agreement (hereinafter defined), the "Trustee"), in lawful money of the United States of America. This Bond is one of a duly authorized issue of Truckee Donner Public Utility District Taxable Pension Obligation Bonds, Series 2011 (the "Bonds") of the designation indicated on the face hereof. Said authorized issue of Bonds is limited in aggregate principal amount as provided in the Trust Agreement and consists or may consist of one or more series of varying denominations, dates, maturities, interest rates and other provisions, as provided in the Trust Agreement, all issued and to be issued pursuant to the provisions of 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"). This Bond is issued pursuant to the Trust Agreement dated as of June 1, 2011 by and between the Truckee Donner Public Utility District and The Bank of New York Mellon Trust Company, N.A., as trustee, providing for the issuance of the Bonds and setting forth the terms and * Except during the Floating Rate Period. A-1 DOCS SF/81082v4/022925-0018 authorizing the issuance of the Bonds (said Trust Agreement as amended, supplemented or otherwise modified from time to time being the "Trust Agreement"). Reference is hereby made to the Trust Agreement and to the Refunding Law for a description of the terms on which the Bonds are issued and to be issued, and the rights of the registered owners of the Bonds; and all the terms of the Trust Agreement and the Refunding Law are hereby incorporated herein and constitute a contract between the District and the registered owner from time to time of this Bond, and to all the provisions thereof the registered owner of this Bond, by its acceptance hereof, consents and agrees. All capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Trust Agreement. The Bonds are special obligations of the District and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Net Revenues and other funds as provided in the Indenture, and the District is not obligated to pay them except from the Net Revenues and such other funds. The Bonds are equally secured by a pledge of, and charge and lien upon, the Net Revenues, and the Net Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Prior to January 1, 2013, the Bonds are parity obligations and secured on parity with the District's Electric System Revenue Certificates of Participation, Series 2003A and 2003B. The District hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds issued under the Trust Agreement when due, there has been created and will be maintained by the Trustee a special fund (the "Revenue Fund") into which all Deposit Amounts shall be deposited, and as an irrevocable charge the District has allocated the Net Revenues to the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the District will pay promptly when due the interest on and principal of and redemption premium, if any, on this Bond and all other Bonds of this issue out of the Revenue Fund and such other funds, all in accordance with the terms and provisions set forth in the Trust Agreement. This Bond is one of the Bonds described in the Trust Agreement. Interest on Bonds Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The Bonds or the principal portion thereof called for redemption will cease to bear interest after the specified redemption date, provided that notice has been given pursuant to the Trust Agreement and sufficient funds for redemption are on deposit at the place of payment on the redemption date. [Add reset rate language] Redemption of Bonds Optional Redemption. To Come Mandatory Sinking Fund Redemption of Bonds. To Come A-2 ROCS SF/81082v4/022925-0018 Certain Defined Terms "Payment Date" means January 1 and July 1 of each year, commencing January 1, 2012. "Record Date" means the fifteenth of the calendar month preceding each Payment Date. Other Provisions The rights and obligations of the District and of the holders and registered owners of the Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Trust Agreement, which provide, in certain circumstances, for modifications and amendments without the consent of or notice to the registered owners of the Bonds. It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed, precedent to and in the incurring of the indebtedness evidenced by this Bond, and in the issuing of this Bond, do exist, have happened and have been performed in due time, form and manner, as required by the Constitution and statutes of the State of California, and that this Bond, is within every debt and other limit prescribed by the Constitution and the statutes of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Trust Agreement or the Refunding Law. This Bond shall not be entitled to any benefit under the Trust Agreement, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee. IN WITNESS WHEREOF, 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, has caused this Bond to be executed in its name and on its behalf by the President of the Board of Directors, and attested by the District Clerk, and this Bond to be dated as of the Dated Date. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: Its: President ATTEST: Clerk A-3 DOCSSF/81082v4/022925-0018 [FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within -mentioned Trust Agreement and authenticated the date set forth below. Dated: .2011 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Authorized Signatory A-4 DOCSSF/81082v4/022925-0018 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. Clerk of the Truckee Donner Public Utility District A-5 DOCS SF/81082v4/022925-0018 [FORM OF ASSIGNMENT] For value received hereby sells, assigns and transfers unto (Tax I.D. No.: ) the within Bond and hereby irrevocably constitute and appoints attorney, to transfer the same on the books of the District at the office of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed by: NOTE: The signature to this Assignment must correspond with the name on the face of the within Registered Bond in every particular, without alteration or enlargement or any change whatsoever. NOTE: Signature must be guaranteed by an eligible guarantor institution. A-6 DOCS SF/81082v4/022925-0018 EXHIBIT "B" FORM OF WRITTEN DELIVERY COST REQUISITION The Bank of New York Mellon Trust Company 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attention: Corporate Trust Department RE: Disbursement from the PERS Retirement Fund pursuant to Section 3.03 of the Trust Agreement, dated as of June 1, 2011 (the "Agreement"), by and among THE BANK OF NEW YORK MELLON TRUST COMPANY, as trustee (the "Trustee") and TRUCKEE DONNER PUBLIC UTILITY DISTRICT (the "District") REQUISITION NO. You are hereby instructed to pay to the District, or to at $ from the PERS Retirement Fund as provided in Section 6.01(B) of the Agreement. This cost has been properly incurred, is a proper charge against the PERS Retirement Fund and has not been the basis of any previous disbursements. The amount remaining in the PERS Retirement Fund, together with interest earnings on the PERS Retirement Fund will, after payment of the amount set forth in this requisition, be transferred to the District. Very truly yours, Authorized District Representative B-1 DOC S SF/81082v4/022925-0018 EXHIBIT "C" FORM OF REQUISITION TO: The Bank of New York Mellon Trust Company, N.A.Truckee Donner Public Utility District Use Only Request No. _ DISBURSEMENT REQUEST: REGARDING $ TRUCKEE DONNER PUBLIC UTILITY DISTRICT TAXABLE PENSION OBLIGATION BONDS, SERIES 2011 You are hereby requested to pay from the Costs of Issuance Fund established by the Trust Agreement with respect to the above -referenced bonds, to the person, corporation or other entity designated below as Payee, the sum set forth below such designation, in payment of all ( ) or a portion () of the Costs of Issuance described below. Such amounts shall be paid upon receipt of an invoice from each payee. Name of Payee: Address: Amount: Method of Payment: Service Provided: The undersigned hereby certifies that: (i) s/he is an Authorized District Representative; (ii) this requisition for payment is in accordance with the terms and provisions of Section 6.01 of the Trust Agreement; (iii) each item to be paid with the requisitioned funds represents either incurred or due and payable Costs of Issuance; (iv) such Costs of Issuance have not been paid from other funds withdrawn from the Costs of Issuance Fund; and (v) to the best of the signatory's knowledge no Event of Default has occurred and is continuing under the Trust Agreement. Dated: TRUCKEE DONNER PUBLIC UTILITY DISTRICT Bv: Its: General Manager DOCS SF/81082v4/022925-0018 C-1