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HomeMy WebLinkAbout19-2, Attachment Old Greenwood Trust IndentureAttachment 2 TRUST INDENTURE Between TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.03-1 (OLD GREENWOOD) And THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.03-1 (OLD GREENWOOD) 2013 SPECIAL TAX REFUNDING BONDS Dated as of June 1, 2013 DOC S OC/ 15 80566v5/022925 -0019 TABLE OF CONTENTS Attachment 2 Section 1.1. Definitions Section 2.1. Section 2.2. Section 2.3. Section 2.4. Section 2.5. Section 2.6. Section 2.7. Section 2.8. Section 2.9. Section 2.10 Section 2.11 Section 2.12 ARTICLE I DEFINITIONS ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Amount, Issuance, Purpose and Nature of Bonds Type and Nature of Bonds ................................... Equality of Bonds and Pledge of Net Taxes ........ Description of Bonds; Interest Rates ................... Place and Form of Payment ................................. Form of Bonds ..................................................... Execution and Authentication .............................. BondRegister....................................................... Registration of Exchange or Transfer .................. Mutilated, Lost, Destroyed or Stolen Bonds........ Validity of Bonds ................................................. Book -Entry System .............................................. ARTICLE III CREATION OF FUNDS AND APPLICATION OF REVENUES AND GROSS TAXES Page 11 11 11 12 13 13 14 14 14 14 15 15 Section 3.1. Creation of Funds; Application of Proceeds...............................................................16 Section 3.2. Deposits to and Disbursements from Special Tax Fund.............................................17 Section 3.3. Administrative Expense Account of the Special Tax Fund........................................18 Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 18 Section 3.5. Redemption Account of the Special Tax Fund........................................................... 19 Section 3.6. Prepayment Account of the Special Tax Fund............................................................ 20 Section 3.7. Reserve Account of the Special Tax Fund.................................................................. 20 Section3.8. Rebate Fund................................................................................................................ 21 Section3.9. Surplus Fund............................................................................................................... 23 Section 3.10. Costs of Issuance Fund............................................................................................... 24 Section3.11. Investments................................................................................................................. 24 ARTICLE IV REDEMPTION OF BONDS Section 4.1. Redemption of Bonds................................................................................................. 25 Section 4.2. Selection of Bonds for Redemption............................................................................ 27 Section 4.3. Notice of Redemption................................................................................................. 28 Section 4.4. Partial Redemption of Bonds...................................................................................... 29 Section 4.5. Effect of Notice and Availability of Redemption Money ........................................... 29 DOCSOC/1580566v5/022925-0019 Attachment 2 TABLE OF CONTENTS (continued) Page Section 4.6. Purchase of Bonds by District..................................................................................... 29 ARTICLE V COVENANTS AND WARRANTY Section5.1. Warranty..................................................................................................................... 29 Section5.2. Covenants....................................................................................................................29 Section 5.3. Continuing Disclosure and Reporting Requirements.................................................. 33 ARTICLE VI AMENDMENTS TO INDENTURE Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent ................... 33 Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent .......................... 34 Section 6.3. Notation of Bonds; Delivery of Amended Bonds ....................................................... 34 ARTICLE VII TRUSTEE Section 7.1. Duties, Immunities and Liabilities of Trustee............................................................. 35 Section 7.2. Removal of Trustee..................................................................................................... 36 Section 7.3. Resignation of Trustee................................................................................................ 36 Section 7.4. Liability of Trustee..................................................................................................... 36 Section 7.5. Merger or Consolidation.............................................................................................37 ARTICLE VIII EVENTS OF DEFAULT; REMEDIES Section 8.1. Events of Default........................................................................................................ 37 Section 8.2. Remedies of Owners................................................................................................... 38 Section 9.1. Defeasance ARTICLE IX DEFEASANCE ARTICLE X MISCELLANEOUS Section 10.1. Cancellation of Bonds ........................................... Section 10.2. Execution of Documents and Proof of Ownership ii DOC S OC/ 15 80566v5/022925 -0019 39 Attachment 2 TABLE OF CONTENTS (continued) Page Section 10.3. Unclaimed Moneys..................................................................................................... 41 Section 10.4. Provisions Constitute Contract....................................................................................41 Section 10.5. Future Contracts..........................................................................................................42 Section 10.6. Further Assurances...................................................................................................... 42 Section 10.7. Action on Next Business Day.....................................................................................42 Section10.8. Severability................................................................................................................. 42 Section10.9. Notices........................................................................................................................ 42 Section 10.10. General Authorization.................................................................................................42 Section 10.11. Execution in Counterparts...........................................................................................42 SIGNATURES S-1 EXHIBIT A FORM OF 2013 SPECIAL TAX REFUNDING BOND.........................................A-1 EXHIBIT B FORM OF REQUISITION FOR DISBURSEMENT OF COSTSOF ISSUANCE........................................................................................... B-1 EXHIBIT C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES .............. C-1 DOCSOC/1580566v5/022925-0019 Attachment 2 TRUST INDENTURE THIS TRUST INDENTURE, dated as of June 1, 2013, governs the terms of the 2013 Special Tax Refunding Bonds of Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood). RECITALS. WHEREAS, the Board of Directors (hereinafter sometimes referred to as the "legislative body of the District") of the Truckee Donner Public Utility District has heretofore issued Special Tax Bonds in the aggregate principal amount of $12,445,000 (the "Prior Bonds") on behalf of Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) (the "District") pursuant to the terms and provisions of the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the "Act'); and WHEREAS, the legislative body of the District intends to accomplish the refunding of the Prior Bonds through the issuance of bonds in an aggregate principal amount of $XX,XXX,000 to be designated as the "Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) 2013 Special Tax Refunding Bonds" (the "Bonds"); and WHEREAS, the legislative body of the District has determined that the issuance of the Bonds will provide significant public benefits by reducing the total amount of special taxes required to be levied to pay for debt service on indebtedness of the District; and WHEREAS, Upon their issuance, the Bonds will be the only outstanding bonds of the District; and WHEREAS, the Bonds are to be issued and sold in accordance with Resolution No. of the Board, acting in its capacity as the legislative body of the District, and with this Indenture; and WHEREAS, the legislative body of the District has determined all requirements of the Act for the issuance of the Bonds have been satisfied; NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District and The Bank of New York Mellon Trust Company, N.A., as Trustee, hereby covenant and agree, for the benefit of the Owners of the Bonds which may be issued hereunder from time to time, as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings: "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, Sections 53311 et seq. of the California Government Code. DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Administrative Expenses" means the administrative costs incurred by the District or the PUD on behalf of the District with respect to the calculation, levy, and collection of the Special Taxes, including all attorneys' fees and other costs related thereto, the fees and expenses of the Trustee, any fees for credit enhancement for the Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District's compliance with State and federal laws requiring continuing disclosure of information concerning the Bonds and the District and arbitrage rebate, and any other costs otherwise incurred by the District or the PUD on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder. "Administrative Expense Account" means the account by such name in the Special Tax Fund created and established pursuant to Section 3.1. "Administrative Expense Cap" means the amount of $29,877.31, with such amount escalating by 2% per Bond Year beginning September 2, 2013, provided that the District may, in its sole discretion, fund Administrative Expenses, without limitation, from any other funds available to the District, including the Surplus Fund. "Alternative Penalty Account" means the account by such name created and established in the Rebate Fund pursuant to Section 3.1. "Annual Debt Service" means the principal amount of any Outstanding Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds in such Bond Year, if the Bonds are retired as scheduled. "Authorized Investments" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: (a) Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America ("Direct Obligations"); (b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) U.S. Export -Import Bank ("EximbanV) - direct obligations or fully guaranteed certificates of beneficial ownership, (ii) Farmers Home Administration ("FmHA") - certificates of beneficial ownership, (iii) Federal Financing Bank, (iv) Federal Housing Administration Debentures ("FHA"), (v) General Services Administration - participation certificates, 2 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (vi) Government National Mortgage Association ("GNMA" or "Ginnie Mae") - GNMA-guaranteed mortgage -backed bonds and GNMA-guaranteed pass -through obligations, (vii) U.S. Maritime Administration - guaranteed Title XI financing, and (viii) U.S. Department of Housing and Urban Development ("HUD") - project notes, local authority bonds, new communities debentures (U.S. government guaranteed debentures), and U.S. Public Housing Notes and Bonds (U.S. government guaranteed public housing notes and bonds); (c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (i) Federal Home Loan Bank System - senior debt obligations, (ii) Federal Home Loan Mortgage Corporation ("FHLMC" or "Freddie Mac") - participation certificates and senior debt obligations, (iii) Federal National Mortgage Association ("FNMA" or "Fannie Mae") - mortgage -backed securities and senior debt obligations, (iv) Student Loan Marketing Association ("SLMA" or "Sallie Mae") - senior debt obligations, (v) Resolution Funding Corp. ("REFCORP") obligations, and (vi) Farm Credit System Corp. - Consolidated system -wide bonds and notes; (d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933, and having a rating by Standard & Poor's of AAAm-G, AAAm or AAm, and, if rated by Moody's, rated Aaa, Aal or Aa2 (including those of the Trustee and its affiliates or funds for which the Trustee or affiliates provide investment advisory or other management services); (e) Certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the Trustee on behalf of the Bondholders must have a perfected first security interest in the collateral; (f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC or which are with a bank rated AA or better by Standard & Poor's and Aa or better by Moody's (including those of the Trustee and its affiliates); (g) Investment Agreements with any corporation, including banking or financial institutions, provided that: (i) the long-term debt of the provider of any such investment agreement, or in the case of a guaranteed corporation the long-term debt of the guarantor, or in the case of a DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 monoline financial guaranty insurance company the claims paying ability, is rated, at the time of investment, in one of the two highest rating categories offered by each Rating Agency (without regard to gradations of plus or minus, or numerical gradations, within such category), and (ii) any such investment agreement shall include a provisions that in the event that the long-term debt rating or claims paying ability rating of the provider or the guarantor is downgraded below AA- by Standard & Poor's or Aa3 by Moody's during the term of the agreement the provider must either (A) deliver to the Trustee or a third party custodian collateral in the form of Unites States Treasury or agency obligations which at least equal 102% of the principal amount invested thereunder or (B) assign the existing agreement and all of its obligations thereunder to a financial institution mutually acceptable to the provider, the District and the Trustee which is rated in one of the two highest rating categories offered by each Rating Agency (without regard to gradations of plus or minus, or numerical gradations, within such category), and (iii) any such investment agreement shall include a provision that in the event that the long-term debt rating or claims paying ability rating of the provider, or the guarantor, is downgraded below A- by Standard & Poor's or A3 by Moody's during the term of the agreement the provider must repay the principal of and accrued by it unpaid interest on the invested moneys, and (iv) any such agreement shall include a provision to the effect that in the event of default under such Investment Agreement by such provider or in the event of a bankruptcy of such provider, the District has the right to withdraw or cause the Trustee to withdraw all funds invested in such agreement and thereafter to invest such funds pursuant to this Indenture, and (v) any such investment agreement permits withdrawal upon not more than three (3) days notice (excepting only withdrawals from the Acquisition and Construction Fund, from which withdrawals may be permitted upon not more than seven (7) days notice) for any purpose authorized for the use of the invested funds under this Indenture; (h) Commercial paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-l" or better by Standard & Poor's; (i) Bonds or notes issued by any state or municipality which are rated by both Rating Agencies in one of the two highest rating categories assigned by such agencies; 0) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured or unguaranteed obligation rating of "Prime - 1" or "A3" or better by Moody's and "A- I" or "A" or better by Standard & Poor's; (k) Repurchase agreements collateralized by Direct Obligations, GNMAs, FNMAs or FHLMCs with any registered broker/dealer subject to the Securities Investors' Protection Corporation jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated "P-1" or "A3" or better by Moody's, and "A-l" or "A-" by Standard & Poor's; provided: 4 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (i) a master repurchase agreement or specific written repurchase agreement governs the transaction, and (ii) the securities are held free and clear of any lien by the Trustee or an independent third parry acting solely as agent ("Agent") for the Trustee, and such third parry is (i) a Federal Reserve Bank, (ii) a bank which is a member of the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivided profits of not less than $50 million, or (iii) a bank approved in writing for such purpose by the District, and the Trustee shall have received written confirmation from such third party that it holds such securities, free and clear of any lien, as agent for the Trustee, and (iii) a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Trustee, and (iv) the Agent will value the collateral securities no less frequently than weekly and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two Business Days of such valuation, and (v) the fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 103%; (1) The State of California Local Agency Investment Fund; and (m) Any other investment which the District is permitted by law to make. To the extent that any of the requirements concerning Authorized Investments embodies a legal conclusion, the Trustee shall be entitled to conclusively rely upon a certificate from the appropriate party or an opinion from counsel to such parry, that such requirement has been met. "Authorized Representative of the District" means the General Manager of the PUD, the Assistant General Manager of the PUD, [the Treasurer of the PUD] and any other person or persons designated by the legislative body of the District and authorized to act on behalf of the District by a written certificate signed by the President of the legislative body of the District and containing the specimen signature of each such person. "Board of Directors" means the Board of Directories of the PUD. "Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bond Register" means the books which the Trustee shall keep or cause to be kept on which the registration and transfer of the Bonds shall be recorded. "Bondowner" or "Owner" means the person or persons in whose name or names any Bond is registered. 5 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Bonds" means the District's $XX,XXX,000 2013 Special Tax Refunding Bonds issued pursuant to this Indenture. "Bond Year" means the twelve month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds shall begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date, provided that for purposes of Section 3.8 "Bond Year" shall have the meaning ascribed thereto in the Tax Certificate. "Business Day" means a day which is not a Saturday or Sunday or a day of the year on which banks in New York, New York, Los Angeles, California, or the city where the Principal Office of the Trustee is located, are not required or authorized to remain closed. "Certificate of the General Manager" means a written certificate or warrant request executed by the General Manager, or his or her written designee, on behalf of the District. "Code" means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it. "Costs of Issuance" means the costs and expenses incurred in connection with the issuance and sale of the Bonds, including the acceptance and initial annual fees and expenses of the Trustee, legal fees and expenses, costs of printing the Bonds and the preliminary and final official statements for the Bonds, fees of financial consultants, and all other related fees and expenses, as set forth in a Certificate of the General Manager. "Costs of Issuance Fund" means the Account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1. "Delivery Date" means the date on which the Bonds issued and delivered to the initial purchasers thereof. "District" means Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) established pursuant to the Act and the Resolution of Formation. "DTC" means The Depository Trust Company, New York, New York, and its successors and assigns. "DTC Participants" means securities brokers and dealers, banks, trust companies, clearing corporations and other organizations maintaining accounts with DTC. "Federal Securities " means any of the following: (a) Cash, (b) United States Treasury Certificates, Notes and Bonds (including State and Local Government Series — "SLGS"), (c) Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself, e.g., CATS, TIGRS and similar securities, 6 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (d) The interest component of Resolution Funding Corp. strips which have been stripped by request to the Federal Reserve Bank of New York and are in book -entry form, (e) Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by Standard & Poor's, (f) Obligations issued by the following agencies which are backed by the full faith and credit of the United States: (i) U.S. Export -Import Bank - direct obligations or fully guaranteed certificates of beneficial ownership, (ii) Farmers Home Administration - certificates of beneficial ownership, (iii) Federal Financing Bank, (iv) General Services Administration - participation certificates, (v) U.S. Maritime Administration - guaranteed Title XI financing, and (vi) U.S. Department of Housing and Urban Development (HUD) - project notes, local authority bonds, new communities debentures - U.S. government guaranteed debentures, U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next following June 30. "General Manager" means the General Manager of the PUD. "Gross Taxes" means the amount of all Special Taxes received by the District, together with the proceeds collected from the sale of property pursuant to the foreclosure provisions of this Indenture for the delinquency of such Special Taxes remaining after the payment of all the costs related to such foreclosure actions, including, but not limited to, all legal fees and expenses, court costs, consultant and title insurance fees and expenses. "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (a) is in fact independent and not under the domination of the District or the PUD; (b) does not have any substantial interest, direct or indirect, in the District or the PUD; and (c) is not connected with the District or the PUD as a member, officer or employee of the District or the PUD, but who may be regularly retained to make annual or other reports to the District or the PUD. 7 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Indenture" means this Trust Indenture, together with any Supplemental Indenture entered into pursuant to Article VI. "Interest Account" means the account by such name created and established in the Special Tax Fund pursuant to Section 3.1. "Interest Payment Date " means each March 1 and September 1, commencing March 1, 2014; provided, however, that, if any such day is not a Business Day, interest up to, but not including, the Interest Payment Date will be paid on the Business Day next following such date. "Investment Agreement" means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (g) of the definition of Authorized Investments herein. "Maximum Annual Debt Service" means the maximum amount of the Annual Debt Service for any Bond Year prior to the final maturity of the Bonds. "Moody's" means Moody's Investors Service, and its successors and assigns. "Net Taxes " means, for each Fiscal Year, Gross Taxes (exclusive of any penalties and interest accruing with respect to delinquent Special Tax installments) minus amounts (not in excess of the then current Administrative Expense Cap) set aside to pay Administrative Expenses and minus the portion of any Prepayment that is not required to be deposited in the Special Tax Fund pursuant to Section 3.2. "Outstanding" or "Outstanding Bonds" means all Bonds theretofore issued by the District, except: (a) Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1; (b) Bonds for payment or redemption of which moneys shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Indenture; and (c) Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 or for which a replacement has been issued pursuant to Section 2.10. "Person " means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities. "Prepayment" means money received by the PUD or the District as a complete or partial prepayment of Special Taxes permitted pursuant to the RMA. "Prepayment Account" means the Account by such name created and established in the Special Tax Fund pursuant to Section 3.1. "Principal Account" means the Account by such name created and established in the Special Tax Fund pursuant to Section 3.1. 8 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Principal Office of the Trustee" means the office of the Trustee located in Los Angeles, California or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued. "Prior Bonds" means the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Special Tax Bonds originally issued by the District on or about December 22, 2003 in the initial principal amount of $12,445,000. "Prior Indenture" means the Trust Indenture, dated as of December 1, 2003, between the District and the Prior Trustee. "Prior Trustee" means The Bank of New York Mellon Trust Company, N.A., as successor to BNY Western Trust Company, in its capacity as trustee under the Prior Indenture. `PUD" means the Truckee Donner Public Utility District. "Rating Agency" means either Moody's or Standard & Poor's, or both, as the context requires. "Rebate Account" means the Account by such name created and established in the Rebate Fund pursuant to Section 3.1. "Rebate Fund" means the fund by such name created and established pursuant to Section 3.1. "Rebate Regulations " means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code. "Record Date" means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day. "Redemption Account" means the account by such name created and established in the Special Tax Fund pursuant to Section 3.1. "Regulations " means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code. "Representation Letter" means the representation letter or letters from the District to DTC. "Reserve Account" means the account by such name created and established in the Special Tax Fund pursuant to Section 3.1. "Reserve Requirement" means, as of any date of calculation by the District, an amount equal to the lowest of (i) 10% of the principal amount of the Bonds, as calculated pursuant to the Regulations, or (ii) Maximum Annual Debt Service, or (iii) 125% of the average Annual Debt Service. "Resolution of Formation" means the resolution adopted by the Board of Directors on October 14, 2003, pursuant to which the PUD formed the District. 9 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "RMA" means the Rate and Method of Apportionment of Special Taxes approved by the qualified electors of the District at an election conducted on October 14, 2003, a copy of which is attached hereto as Exhibit C. "Sinking Fund Payment" means the annual payment in those years indicated in Section 4.1(b) to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedule set forth herein to retire the Term Bonds. "Six -Month Period" means the period of time beginning on the Delivery Date of each issue of Bonds and ending six consecutive months thereafter, and each six-month period thereafter until the latest maturity date of the Bonds (and any obligations that refund an issue of the Bonds). "Special Tax Administrator" means such person or firm as may be designated by the Board of Directors to administer the calculation and collection of the Special Taxes, or any successor person or entity acting in such capacity. "Special Taxes" means the taxes authorized to be levied by the District in accordance with the RMA, as the RMA may be amended from time to time (if and to the extent such amendment is consistent with the covenant set forth in Section 5.2(g)). "Special Tax Fund" means the fund by such name created and established pursuant to Section 3.1. "Standard & Poor's " means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business and division of McGraw-Hill, and its successors and assigns. "Supplemental Indenture" means any supplemental indenture entered into in accordance with the provisions hereof amending or supplementing this Indenture. "Surplus Fund" means the Fund by such name created and established pursuant to Section 3.1. "Tax Certificate" means the certificate by that name to be executed by the District on the Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code. "Term Bonds" means the Bonds maturing September 1, 20_, September 1, 20_, and September 1, 2033. "Trustee" means The Bank of New York Mellon Trust Company, N.A., a banking corporation organized and existing under the laws of the United States, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3 and any successor thereto. "Underwriter" means the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of the Bonds. 10 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Section 2.1. Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant to the Act, the Bonds in the aggregate principal amount of $XX,XXX,000 shall be issued for the purposes described herein. The Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account of the Special Tax Fund). Section 2.2. Type and Nature of Bonds. Neither the faith and credit nor the taxing power of the PUD, the State of California or any political subdivision thereof other than the District is pledged to the payment of the Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are not general or special obligations of the PUD nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein. The District's limited obligation to pay the principal of, premium, if any, and interest on the Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the PUD or the forfeiture of any of their property. The principal of and interest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of the PUD, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds and interest thereon; and neither the members of the legislative body of the District or the Board of Directors nor any persons executing the Bonds, are liable personally on the Bonds by reason of their issuance. Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. Section 2.3. Equality of Bonds and Pledge of Net Taxes. Pursuant to the Act and this Indenture, the Bonds shall be equally payable from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) without priority for number, date of the Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of (including Sinking Fund Payments) the Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), which are hereby set aside for the payment of the Bonds. The Net Special Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) are hereby pledged to the payment of the principal of, premium, if any, and interest on the Bonds. Such pledge shall constitute a first lien on such assets. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) shall constitute a trust 11 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and so long as any of the Bonds or interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this Indenture to the contrary, Special Taxes deposited in the Administrative Expense Account of the Special Tax Fund, the Rebate Fund and the Surplus Fund shall no longer be considered to be pledged to the Bonds; and none of the Rebate Fund, the Surplus Fund, the Administrative Expense Account of the Special Tax Fund nor the Acquisition and Construction Fund shall be construed as a trust fund held for the benefit of the Owners. Nothing in this Indenture or any Supplemental Indenture shall preclude, subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California. Section 2.4. Description of Bonds; Interest Rates. The Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. The Bonds shall be numbered as desired by the Trustee. The Bonds shall be designated "TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD), 2013 SPECIAL TAX REFUNDING BONDS." The Bonds shall be dated as of the Delivery Date and shall mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on each Interest Payment Date: Maturity Date (September 1) Principal Amount Interest Rate Interest shall be payable on each Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum of that Bond has 12 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 been paid; provided, however, that if at the maturity date of any Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of this Indenture, such Bonds shall then cease to bear interest. Interest due on the Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. Section 2.5. Place and Form of Payment. The Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and any premiums due upon the redemption thereof shall be payable by check of the Trustee upon presentation and surrender thereof at the Principal Office of the Trustee. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond, in which event interest shall be payable from the dated date of such Bond; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on that Bond, interest on that Bond shall be payable from its dated date. Interest on any Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account within the United States designated by such Owner. Section 2.6. Form of Bonds. The definitive Bonds may be printed from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which forms are hereby approved and adopted as the forms of such Bonds and of the certificate of authentication. Notwithstanding any provision in this Indenture to the contrary, the District may, in its sole discretion, elect to issue the Bonds in book entry form. Until definitive Bonds shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the District. Until exchanged for definitive Bonds any temporary bond shall be entitled and subject to the same benefits and provisions of this Indenture as definitive Bonds. If the District issues temporary Bonds, it shall execute and furnish definitive Bonds without unnecessary delay and thereupon any temporary Bond may be surrendered to the Trustee at its office, without expense to the Owner, in exchange for a definitive Bond of the same maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued. 13 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Section 2.7. Execution and Authentication. The Bonds shall be signed on behalf of the District by the manual or facsimile signatures of the President of the Board of Directors and the District Clerk, or any duly appointed deputy clerk. In case any one or more of the officers who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed have been authenticated and delivered by the Trustee (including new Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and may be issued as if the person who signed such Bonds had not ceased to hold such office. Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee. Section 2.8. Bond Register. The Trustee will keep or cause to be kept, at its Principal Office of the Trustee, sufficient books for the registration and transfer of the Bonds which shall upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds as herein provided. The District and the Trustee may treat the Owner of any Bond whose name appears on the Bond Register as the absolute Owner of that Bond for any and all purposes, and the District and the Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Bondowner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Trustee of any change in the Bondowner's address so that the Bond Register may be revised accordingly. Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Trustee, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee and duly executed by the Bondowner or his or her duly authorized attorney. Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations of the same maturity. The Trustee shall not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds shall be surrendered for registration of transfer or exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount; provided that the Trustee shall not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond of 14 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 like tenor, date and maturity in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the District and the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver, a new Bond of like tenor and maturity, numbered and dated as the Trustee shall determine in lieu of and in substitution for the Bond so lost, destroyed or stolen. Any Bond issued in lieu of any Bond alleged to be mutilated, lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all other Bonds issued hereunder. The Trustee shall not treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds. Section 2.11. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any defect in any proceedings taken by the District, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and the recital contained in the Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance. Section 2.12. Book -Entry System. (a) All Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each maturity date of the Bonds. Upon initial issuance, the ownership of each Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC. Except as provided in Section 2.12(d) hereof, all Outstanding Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC. (b) With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the District and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner, as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner, as shown in the Bond Register, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The District and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Bond Register, as provided in Section 2.8 hereof, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the District's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Bond Register, shall receive a certificated Bond evidencing the 15 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the word "Cede & Co." in this Indenture shall refer to such new nominee of DTC. (c) The delivery of the Representation Letter by the District and the Trustee shall not in any way limit the provisions of Section 2.12(b) hereof or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the Bond Register. The Trustee shall take all action necessary for all representations in the Representation Letter with respect to the Trustee to be complied with at all times. (d) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the District and the Trustee and discharging its responsibilities with respect thereto under applicable law. The District, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Bonds if the District determines that either DTC is unable to discharge its responsibilities with respect to the Bonds or a continuation of the requirement that all Outstanding Bonds be registered in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not in the best interest of the beneficial owners of such Bonds. Upon the discontinuation or termination of the services of DTC with respect to the Bonds pursuant to the foregoing after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found which, in the opinion of the District, is willing and able to undertake such functions upon reasonable and customary terms, the District is obligated to deliver Bond certificates, as described in this Indenture and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names DTC shall designate to the Trustee in writing, in accordance with the provisions of this Indenture. (e) Notwithstanding any other provisions of this Indenture to the contrary, as long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal or, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. ARTICLE III CREATION OF FUNDS AND APPLICATION OF REVENUES AND GROSS TAXES Section 3.1. Creation of Funds; Application of Proceeds. (a) There is hereby created and established and shall be maintained by the Trustee the following funds and accounts: (i) the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Special Tax Fund (the "Special Tax Fund") (in which there shall be 16 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 established and created an Interest Account, a Principal Account, a Redemption Account, a Prepayment Account, a Reserve Account and an Administrative Expense Account); (ii) the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Costs of Issuance Fund (the "Costs of Issuance Fund"); (iii) the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Rebate Fund (the "Rebate Fund") (in which there shall be established a Rebate Account and an Alternative Penalty Account); and (iv) the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Surplus Fund (the "Surplus Fund"). The amounts on deposit in the foregoing funds and accounts shall be held by the Trustee and the Trustee shall invest and disburse the amounts in such funds and accounts in accordance with the provisions of this Article III and shall disburse investment earnings thereon in accordance with the provisions of Section 3.11 hereof. (b) The proceeds of the sale of the Bonds received by the Trustee on behalf of the District and the amounts held by the Prior Trustee under the Prior Indenture and transferred to the Trustee at the direction of an Authorized Representative of the District shall be deposited and transferred as follows: (i) $ shall be deposited in the Administrative Expense Account of the Special Tax Fund for the disbursement in accordance with Section 3.3 below; (ii) $ shall be deposited in the Costs of Issuance Fund for disbursement in accordance with Section 3.10 below; (iii) $ shall be deposited in the Reserve Account of the Special Tax Fund (equaling the initial Reserve Requirement) to be disbursed in accordance with Section 3.7 below; (iv) $ shall be deposited into the Surplus Fund; and (v) $ shall be transferred to the Prior Trustee for deposit in the interest account of the special tax fund established pursuant to the Prior Indenture and $ shall be transferred to the Prior Trustee for deposit in the redemption account of the special tax fund established pursuant to the Prior Indenture, said amounts to be applied by the Prior Trustee to the redemption of the Prior Bonds on September 1, 2013. The Trustee may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers. Section 3.2. Deposits to and Disbursements from Special Tax Fund. The Trustee shall, on each date on which the Special Taxes are received from the PUD or the District, deposit the Special Taxes in the Special Tax Fund in accordance with the terms of the Indenture to be held by the Trustee, provided that any Prepayment shall be deposited in the funds and accounts (and in the respective amounts) specified in the certificate of the Special Tax Administrator delivered to the Trustee in connection with the delivery of the Prepayment to the Trustee. The Trustee shall transfer 17 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 the amounts on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to: (a) The Administrative Expense Account, (b) The Interest Account, (c) The Principal Account, (d) The Redemption Account, (e) The Reserve Account, (f) The Rebate Fund, and (g) The Surplus Fund. At the maturity of all of the Bonds and, after all principal and interest then due on the Bonds then Outstanding has been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose. Section 3.3. Administrative Expense Account of the Special Tax Fund. In addition to the amount deposited in the Administrative Expense Account pursuant to Section 3.1, the Trustee shall, commencing in Fiscal Year 2013-2014, not less often than annually transfer from the Special Tax Fund and deposit in the Administrative Expense Account from time to time amounts necessary to make timely payment of Administrative Expenses upon the written direction of the District; provided, however, that the total amount of the transfers from the Special Tax Fund into the Administrative Expense Account in any Bond Year shall not exceed the Administrative Expense Cap until such time as (i) there has been deposited in the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds due in such Bond Year and (ii) there has been deposited in the Reserve Account the amount, if any, required in order to cause the amount on deposit therein to equal the Reserve Requirement. In addition to the foregoing, the Trustee shall also deposit in the Administrative Expense Account the portion of any Prepayment directed to be deposited in the certificate of the Special Tax Administrator delivered to the Trustee in connection with such Prepayment. Section 3.4. Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds until maturity, other than principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account, respectively. For the purpose of assuring that the payment of principal of and interest on the Bonds will be made when due, the Trustee shall make the transfers described below from the Special Tax Fund on each Interest Payment Date first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers then any deficiency shall be made up by an immediate transfer from the Reserve Account: 18 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (a) To the Interest Account, an amount such that the balance in the Interest Account shall be equal to the installment of interest due on the Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on the Bonds as the same become due. (b) To the Principal Account, an amount such that the balance in the Principal Account on September 1 of each year, shall equal the sum of (i) the principal payment due on the Bonds maturing on such September 1, (ii) the Sinking Fund Payment due on any Outstanding Bonds on such September 1, and (iii) any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds as the same become due at maturity or pursuant to the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof and in any Supplemental Indenture. In addition to the transfers to the Interest Account and Principal Account described in the first paragraph of this Section, the Trustee shall also transfer thereto such portions of a Prepayment as may be directed to be so transferred in the certificate of the Special Tax Administrator delivered to the Trustee in connection with the Prepayment. Section 3.5. Redemption Account of the Special Tax Fund. (a) After making the deposits to the Interest Account and the Principal Account of the Special Tax Fund pursuant to Section 3.4 above, and in accordance with the District's election to call Bonds for optional redemption as set forth in Section 4.1(a) hereof the Trustee shall transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be so deposited in the Redemption Account and applied to optionally redeem Bonds only if immediately following such transfer and redemption the amount in the Reserve Account will equal the Reserve Requirement. The Trustee shall also deposit in the Redemption Account moneys other than Special Taxes in the amounts and at the times directed in writing by an Authorized Representative of the District. (b) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and shall be applied on or after the redemption date to the payment of the principal of and premium, if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account as set forth above may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(a) hereof. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date. 19 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Section 3.6. Prepayment Account of the Special Tax Fund. (a) The Trustee shall deposit in the Prepayment Account the portion of each Prepayment directed to be so deposited in the certificate of the Special Tax Administrator delivered to the Trustee in connection with the delivery of such Prepayment. On each date on which Bonds are to be redeemed from moneys on deposit in the Prepayment Account pursuant to subsection (b) of this Section, the Trustee shall withdraw from the Reserve Account and deposit in the Prepayment Account the amount, if any, directed to be so withdrawn and deposited in the certificate of the Special Tax Administrator delivered to the Trustee in connection with the Prepayment giving rise to such redemption. (b) Moneys set aside in the Prepayment Account shall be used solely for the purpose of redeeming Bonds and shall be applied on or after the redemption date to the payment of the principal of and premium, if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Prepayment Account as set forth above may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.1(c) hereof. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account for the payment of interest on such Bonds on the next following Interest Payment Date. Section 3.7. Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account an amount equal to the Reserve Requirement. Notwithstanding any provision hereof to the contrary, the amounts in the Reserve Account shall be applied as follows: (a) Moneys in the Reserve Account shall be used solely for the purpose of (i) paying the principal of, including Sinking Fund Payments, and interest on any Bonds when due in the event that the moneys in the Interest Account and the Principal Account are insufficient therefor, (ii) making any required transfer to the Rebate Fund pursuant to Section 3.8 upon written direction from the District, and (iii) making any transfer to the Prepayment Account required pursuant to the provisions of Section 3.6. If the amounts in the Interest Account or the Principal Account are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the Reserve Account for deposit in the Interest Account or the Principal Account or the Rebate Fund, as applicable, moneys necessary for such purposes. (b) Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in Sections 3.4, 3.6 and 3.8 hereof, the Trustee shall transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to make the deposits required to be made to the Interest Account or the Principal Account for the next succeeding Interest Payment Date. If amounts in the Special Tax Fund or otherwise transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement, then the District shall include the amount necessary fully to 20 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 restore the Reserve Account to the Reserve Requirement in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates and to the extent permitted by the Act. (c) In connection with an optional redemption of the Bonds hereunder or a partial defeasance of the Bonds in accordance with Section 9.1 hereof, amounts in the Reserve Account may be applied to such optional redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such optional redemption or partial defeasance equals the Reserve Requirement. (d) To the extent that the Reserve Account is at the Reserve Requirement as of the first day of the final Bond Year for Outstanding Bonds, amounts in the Reserve Account may be applied to pay the principal of and interest due on the Bonds in such final Bond Year. Moneys in the Reserve Account in excess of the Reserve Requirement not transferred in accordance with the preceding provisions of this paragraph shall be withdrawn from the Reserve Account on each Interest Payment Date and transferred to the Interest Account. Section 3.8. Rebate Fund. (a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternative Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternative Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund with respect to the Bonds shall be governed by this Section and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on such Bonds will not be adversely affected if such requirements are not satisfied. (i) Rebate Account. The following requirements shall be satisfied with respect to the Rebate Account: A. Annual Computation. Within 55 days of the end of the fourth and the fifth Bond Year and each fifth Bond Year thereafter, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for each issue of Bonds in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (�.& the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the "1'/2% Penalty") has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the "Rebatable Arbitrage"). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. B. Annual Transfer. Within 55 days of the end of each Bond Year for which Rebatable Arbitrage must be calculated as required by the Tax Certificate, upon the written direction of an Authorized Representative of the District, an amount shall be deposited to the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with (A) of this Subsection (a)(i). In the event that 21 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee shall withdraw the excess from the Rebate Account and then credit the excess to the Special Tax Fund. C. Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in the Rebate Account, 1. Not later than 60 days after the end of (A) the fifth Bond Year and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for each issue of Bonds; and 2. Not later than 60 days after the payment or redemption of all of the Bonds an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this Subsection (a)(i) shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code. (ii) Alternative Penalty Account. A. Six -Month Computation. If the 1 %2% Penalty has been elected, within 85 days of the Six -Month Period, the District shall determine or cause to be determined whether the 1 %2% Penalty is payable (and the amount of such penalty) as of the close of the Six -Month Period. The District shall obtain expert advice in making such determinations. B. Six -Month Transfer. Within 85 days of the close of the Six -Month Period, the Trustee, at the written direction of an Authorized Representative of the District, shall deposit an amount in Alternative Penalty Account from any source of funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions or provided to it by the District, if and to the extent required, so that the balance in the Alternative Penalty Account equals the amount of 1 %2% Penalty due and payable to the United States Treasury determined as provided in Subsection (a)(ii)(A) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in the Alternative Penalty Account exceeds the amount required to be on deposit therein to make the payments required by Subsection (C) below, the Trustee, at the written direction of an Authorized Representative of the District, shall withdraw the excess from the Alternative Penalty Account and credit the excess to the Special Tax Fund. 22 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 C. Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in the Alternative Penalty Account, specified by the District in writing not later than 90 days after the close of the Six -Month Period the 11/2% Penalty, if applicable and payable, computed in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from the Alternative Penalty Account, the amount therein is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into the Alternative Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this Subsection (a)(ii) shall be made to the Internal Revenue Service, Philadelphia, Pennsylvania 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code. (b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund after redemption and payment of the Bonds and after making the payments described in Subsection (a)(i)(C) or (a)(ii)(C) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any lawful manner pursuant to the Act. (c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance and final payment of the Bonds. (d) Amendment Without Consent of Owners. This Section may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. (e) Trustee Responsibility. The Trustee shall be deemed conclusively to have complied with its obligations with respect to the Rebate Fund and any amounts required to be rebated to the United States Treasury hereunder by following the directions given by the District pursuant to this Section, and no other obligations of the Trustee shall be implied hereunder. Section 3.9. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8 hereof, as soon as practicable after each September 1, and in any event prior to each October 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund, if any, to the Surplus Fund, other than amounts in the Special Tax Fund which the District has deemed available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund may be transferred by the Trustee, (i) to the Interest Account or the Principal Account to pay the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account are insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement, and (iii) to the Administrative Expense Account to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account are insufficient to pay Administrative Expenses. In the event unexpended amounts remain on deposit in the Surplus Fund after the foregoing transfers, if any, the District shall apply such unexpended amounts, in its sole discretion, (i) to redeem Bonds, (ii) to 23 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 reduce the next fiscal year's Special Tax levy by depositing such amount in the Special Tax Fund, or (iii) for any other lawful purpose of the District. The amounts in the Surplus Fund are not pledged to the repayment of the Bonds and may be used by the District for any lawful purpose in the manner described in this Section. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds, upon the written direction of the District, the Trustee will segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall be invested in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or in Authorized Investments at a yield not in excess of the yield on the Bonds unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. Section 3.10. Costs of Issuance Fund. (a) The moneys in the Costs of Issuance Fund shall be applied exclusively to pay the Costs of Issuance. Amounts for Costs of Issuance shall be disbursed by the Trustee from the Costs of Issuance Fund pursuant to a requisition signed by an Authorized Representative of the District substantially in the form of Exhibit B hereto, which must be submitted in connection with each requested disbursement. (b) Upon the earlier of December 1, 2013 or its receipt of a Certificate of the General Manager that all or a specified portion of the amount remaining in the Costs of Issuance Fund is no longer needed to pay Costs of Issuance, the Trustee shall transfer all or such specified portion of said amount to the Administrative Expense Account. Section 3.11. Investments. Moneys held in any of the funds, accounts and subaccounts under this Indenture shall be invested at the written direction of an Authorized Representative of the District in accordance with the limitations set forth below only in Authorized Investments which shall be deemed at all times to be a part of such funds, accounts and subaccounts. Any investment earnings, gains or losses resulting from such Authorized Investments shall be credited or charged to the fund, account or subaccount from which such investment was made. Moneys in the funds, accounts and subaccounts held under this Indenture may be invested by the Trustee on the written direction of the District, from time to time, in Authorized Investments subject to the following restrictions: (a) Moneys in the Interest Account, the Principal Account and the Redemption Account shall be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds as the same become due. (b) One-half of the amount in the Reserve Account may be invested only in Authorized Investments which mature not later than two years from their date of purchase, and one-half of the amount in the Reserve Account may be invested only in Authorized Investments which mature not more than five years from the date of purchase; provided that such amounts may be invested in an Investment Agreement to the final maturity of Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.7 hereof; and provided that 24 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 no such Authorized Investment of amounts in the Reserve Account allocable to the Bonds shall mature later than the final maturity date of the Bonds. Notwithstanding anything herein to the contrary, amounts in the Reserve Fund on the Delivery Date for the Bonds shall not be invested at yields greater than those set forth in the Tax Certificate. (c) Moneys in the Rebate Fund shall be invested only in Authorized Investments of the type described in clause (a) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.8 hereof or in Authorized Investments of the type described in clause (d) of the definition thereof. (d) In the absence of written investment directions from the District, the Trustee shall invest solely in Authorized Investments specified in clause (d) of the definition thereof. The Trustee shall sell, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such funds and accounts or from such funds and accounts. For the purpose of determining at any given time the balance in any such funds and accounts, any such investments constituting a part of such funds and accounts shall be valued at their cost, except that amounts in the Reserve Account shall be valued at the market value thereof and marked to market at least annually. In making any valuations of investments hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Indenture. The Trustee or an affiliate may act as principal or agent in connection with the acquisition or disposition of any Authorized Investments and shall be entitled to its customary fee therefor. Any Authorized Investments that are registrable securities shall be registered in the name of the Trustee or its nominee. For investment purposes, the Trustee may commingle the funds and accounts established hereunder (other than the Rebate Fund) but shall account for each separately. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder. ARTICLE IV REDEMPTION OF BONDS Section 4.1. Redemption of Bonds. (a) Optional Redemption. Subject to the limitations set forth below, the Bonds may be redeemed, at the option of the District from any source of funds on any Interest Payment Date, in whole, or in part in the order of maturity selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices 25 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 In the event the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds to be redeemed. The notice to the Trustee shall be given at least 60 but no more than 90 days prior to the redemption date, or such shorter period as shall be acceptable to the Trustee. (b) Mandatory Sinking Fund Redemption. The Term Bonds maturing on September 1, 20_ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Redemption Date (September 1) Principal Amount The Term Bonds maturing on September 1, 20_ shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: Redemption Date (September 1) Principal Amount The Term Bonds maturing on September 1, 2033 shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, on September 1, 20_, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows: 26 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Redemption Date (September 1) Principal Amount If during the Fiscal Year immediately preceding one of the redemption dates specified in (b) above the District purchases Term Bonds, at least 45 days prior to the redemption date the District shall notify the Trustee as to the principal amount purchased and the amount of Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking Fund Payment for such Term Bonds. All Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof. In the event of a partial redemption of Term Bonds, other than as a result of Sinking Fund Payments, each of the remaining Sinking Fund Payments for such Term Bonds that were partially redeemed, as described above, will be reduced, as nearly as practicable, on a pro rata basis in increments of $5,000. (c) Special Mandatory Redemption From Prepayments. The Bonds are subject to special mandatory redemption on any Interest Payment Date from amounts on deposit in the Prepayment Account, in integral multiples of $5,000, in whole or in part as hereinafter provided, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices The Trustee shall select Bonds for redemption pursuant to the provisions of this subsection from the maturities of all Bonds so that the ratio of Outstanding Bonds to the Bonds initially issued shall be approximately the same in each maturity. The particular Bonds of each maturity to be redeemed shall be selected by lot in whatever manner the Trustee chooses. Section 4.2. Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds for redemption, the Trustee shall treat such Bonds as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The Trustee shall promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption. 27 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Section 4.3. Notice of Redemption. When Bonds are due for redemption under Section 4.1 above, the Trustee shall give notice, in the name of the District, of the redemption of such Bonds; provided, however, that a notice of a redemption to be made from other than from Sinking Fund Payments shall provide that such redemption shall be conditioned on there being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds to be redeemed and may be further conditioned as stated in the notice of redemption. If any condition stated in the redemption notice shall not have been satisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all the Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 60 days prior to the redemption date, the Trustee shall mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, to the original purchaser of the Bonds. The actual receipt by the Owner of any Bond or the original purchaser of any Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such redemption. In addition to the foregoing notice, further notice shall be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption shall be sent by the Trustee by registered or certified mail, overnight delivery service or facsimile transmission to any registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and any national information services as shall be specified by the Trustee that disseminate notice of redemption of obligations such as the Bonds. Upon the payment of the redemption price of any Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number 28 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. Section 4.4. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity. Section 4.5. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (a) The Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture, anything in this Indenture or in the Bonds to the contrary notwithstanding; (b) Upon presentation and surrender thereof at the Principal Office of the Trustee, the redemption price of such Bonds shall be paid to the Owners thereof; (c) As of the redemption date the Bonds or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or portions thereof shall cease to bear further interest; and (d) As of the date fixed for redemption no Owner of any of the Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. Section 4.6. Purchase of Bonds by District. In lieu, or partially in lieu, of optional, mandatory or mandatory sinking fund redemption, the District may elect, prior to the selection of Bonds for redemption by the Trustee, to instruct the Trustee to purchase Bonds at public or private sale at such prices as the District may in its discretion determine; provided that the purchase price thereof (including brokerage or other expenses) shall not exceed the principal amount thereof plus accrued interest to the purchase date and, in the case of purchase with funds in an optional redemption account, applicable premium. ARTICLE V COVENANTS AND WARRANTY Section 5.1. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds against all claims and demands of all persons. Section 5.2. Covenants. So long as any of the Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Bondowners under the provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and tend to make them 29 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund: (a) Punctual Payment; Against Encumbrances. The District covenants that it will receive all Special Taxes in trust and will immediately deposit such amounts with the Trustee, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District. The District further covenants that, in connection with the delivery of any Prepayment to the Trustee, the District will also deliver to the Trustee a certificate of the Special Tax Administrator identifying with respect to the Prepayment: (i) the absence of any "Remaining Facilities Amount" (as defined in the RMA), (ii) the "Administrative Fees and Expenses" (as defined in the RMA), with instructions that said amount shall be deposited in the Administrative Expense Account, (iii) the amount that represents the Special Taxes levied in the current Fiscal Year on the subject Assessor's Parcel which had not been paid, with instructions to deposit portions of said amount in the Interest Account and the Principal Account of the Special Tax Fund, (iv) the amount of the "Reserve Fund Credit" (as defined in the RMA), with instructions to withdraw said amount from the Reserve Account and transfer it to the Prepayment Account in connection with the redemption of Bonds, and (v) the amount to be deposited in the Prepayment Account. The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and in accordance with this Indenture to the extent that Net Taxes are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds and this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds issued hereunder. The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds. Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds. (b) Lew of Special Tax. Beginning in Fiscal Year 2013-2014 and in each Fiscal Year thereafter so long as any Bonds issued under this Indenture are Outstanding, the legislative body of the District covenants to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay (1) the principal (including Sinking Fund Payments) of and interest on the Bonds when due, (2) to the extent permitted by law, the Administrative Expenses, and (3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement. (c) Commence Foreclosure Proceedings. The District covenants for the benefit of the Owners of the Bonds that it (i) will commence judicial foreclosure proceedings against all parcels owned by a property owner where the aggregate delinquent Special Taxes on such parcels is greater than $7,500 by the October 1 following the close of each Fiscal Year in which such Special Taxes were due and (ii) will commence judicial foreclosure proceedings against all parcels with delinquent 30 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied for such Fiscal Year, and (iii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel which is owned by a delinquent property owner whose property is not, in the aggregate, delinquent in the payment of Special Taxes for a period of three years or more or in an amount in excess of $12,000 so long as (1) the amount in the Reserve Account of the Special Tax Fund is at least equal to the Reserve Requirement, and (2) the District is not in default in the payment of the principal of or interest on the Bonds. The District may, but shall not be obligated to, advance funds from any source of legally available funds in order to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement or to avoid a default in payment on the Bonds. The District covenants that it will deposit the proceeds of any foreclosure which constitute Net Taxes in the Special Tax Fund. The District will not, in collecting the Special Taxes or in processing any such judicial foreclosure proceedings, exercise any authority which it has pursuant to Sections 53340, 53344.1, 53344.2, 53356.1 and 53356.5 of the California Government Code in any manner which would materially and adversely affect the interests of the Bondowners and, in particular, will not permit the tender of Bonds in full or partial payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in a reduction in the maximum Special Taxes that may be levied on the taxable property within the District in any Fiscal Year to an amount less than the sum of 110% of Annual Debt Service in the Bond Year ending on the September 1 following the end of such Fiscal Year plus the estimated Administrative Expenses for such Bond Year. (d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might impair the security of the Bonds then Outstanding; provided that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. (e) Books and Accounts. The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts shall at all times during business hours be subject to the inspection of the Owners of not less than 10% of the principal amount of the Bonds then Outstanding or their representatives authorized in writing. (f) Federal Tax Covenants. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds will not be adversely affected for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows: (i) Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or of any other moneys or property which would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code; 31 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (ii) Arbitrage. The District will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code; (iii) Federal Guaranty. The District will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code; (iv) Information Reporting. The District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code; (v) Hedge Bonds. The District will make no use of the proceeds of the Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds to be considered "hedge bonds" within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds; and (vi) Miscellaneous. The District will take no action and will refrain from taking any action inconsistent with its expectations stated in the Tax Certificate and will comply with the covenants and requirements stated therein and incorporated by reference herein, including payment of amounts required to pay the District's pro rata share of any rebate amounts owing to the United States on the Bonds. (vii) Other Tax Exempt Issues. The District will not use proceeds of other tax exempt securities to redeem any Bonds without first obtaining the written opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds. (g) Reduction of Maximum Special Taxes. The District hereby finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the District hereby determines that a reduction in the Maximum Special Tax (as defined in the RMA) authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g) would interfere with the timely retirement of the Bonds. The District determines it to be necessary in order to preserve the security for the Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District hereby does covenant, that it will take no action that would discontinue or cause the discontinuance of the Special Tax levy or the District's authority to levy the Special Tax, including the initiation of proceedings to reduce the Maximum Special Tax rates for the District, unless, in connection therewith, (i) the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in the District as of the July 1 preceding the reduction, the maximum amount of the Special Tax which may be levied on then existing Developed Property (as defined in the RMA) in each Bond Year will equal at least 110% of the sum of the estimated Administrative Expenses and Annual Debt Service in that Bond Year on all Bonds to remain 32 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Outstanding after the reduction is approved, (ii) the Board of Directors finds that any reduction made under such conditions will not adversely affect the interests of the Owners of the Bonds and (iii) the District is not delinquent in the payment of the principal of or interest on the Bonds. For purposes of estimating Administrative Expenses for the foregoing calculations, the Independent Financial Consultant or Special Tax Administrator shall compute the Administrative Expenses for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year. (h) Covenant to Defend. The District covenants that in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the Maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. Section 5.3. Continuing Disclosure and Reporting Requirements. The District covenants to comply with the terms of the Continuing Disclosure Agreement executed by it on the Delivery Date with respect to compliance with the Securities and Exchange Commission's Rule 15c2-12, provided the failure of the District to comply with the terms of said Continuing Disclosure Agreement shall not constitute an event of default under Article VIII hereof. ARTICLE VI AMENDMENTS TO INDENTURE Section 6.1. Supplemental Indentures or Orders Not Requiring Bondowner Consent. The District and Trustee may from time to time, and at any time, without notice to or consent of any of the Bondowners, enter into Supplemental Indentures for any of the following purposes: (a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Bondowners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect or which further secure Bond payments; (c) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds then Outstanding; or (d) to modify, alter or amend the RMA in any manner so long as such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than that permitted under Section 5.2(g) hereof, or (e) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Bondowners. 33 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Section 6.2. Supplemental Indentures or Orders Requiring Bondowner Consent. Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a majority in aggregate principal amount of the Bonds Outstanding shall have the right to consent to and approve the execution and delivery by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal, or the payment date of interest on, any Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond over any other Bond, or (d) a reduction in the aggregate principal amount of the Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds then Outstanding. If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the terms of this Section shall require the consent of the Bondowners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to all Bondowners at their addresses as they appear in the Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the Bonds Outstanding as required by this Section. Whenever at any time within one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of a majority in aggregate principal amount of the Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to and approve the adoption thereof by the District substantially in the form of the copy referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds. In determining whether the Owners of a majority of the aggregate principal amount of the Bonds have consented to the adoption of any Supplemental Indenture, Bonds which are owned by the District or by any person directly or indirectly controlling or controlled by or under the direct or indirect common control with the District shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination. Upon the adoption of any Supplemental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds in instances where such consent is required pursuant to the provisions of this Section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and all Owners of Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. Section 6.3. Notation of Bonds; Delivery of Amended Bonds. After the effective date of any action taken as hereinabove provided, the District may determine that the Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond at such effective date and presentation of his Bond for the purpose at the office of the Trustee or at such additional offices as the Trustee may select and 34 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 designate for that purpose, a suitable notation as to such action shall be made on such Bonds. If the District shall so determine, new Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond at such effective date such new Bonds shall be exchanged at the office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds, upon surrender of such Outstanding Bonds. ARTICLE VII TRUSTEE Section 7.1. Duties, Immunities and Liabilities of Trustee. The Bank of New York Mellon Trust Company, N.A. shall be the Trustee for the Bonds unless and until another Trustee is appointed by the District hereunder. The Trustee shall, prior to an event of default and after curing all events of default which may have occurred, perform such duties and only such duties as are specifically set forth herein. Upon the occurrence and upon the continuance of an event of default, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable corporate trustee would exercise or use as trustee under a trust indenture. The District may, at any time, appoint a successor Trustee satisfying the requirements of Section 7.2 below for the purpose of receiving all money which the District is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Trustee is hereby authorized to and shall mail or cause to be mailed by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Bondowners, to select Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to pay the principal of and premium, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds all as provided in this Indenture, and to provide for the authentication of Bonds, and shall perform such other duties expressly assigned to or imposed on it as provided in this Indenture; provided, however, that no other duties of the Trustee shall be implied or imposed upon the Trustee other than as expressly stated hereunder. The Trustee shall keep accurate records of all funds administered by it and all Bonds paid, discharged and cancelled by it. The Trustee is hereby authorized to redeem the Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof. The District shall from time to time, subject to any agreement between the District and the Trustee then in force, pay to the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Trustee and its officers, directors and employees harmless against costs, claims, expenses (including the reasonable expenses of its counsel) and liabilities not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. The foregoing obligation of the 35 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 District to indemnify the Trustee shall survive the removal or resignation of the Trustee or the discharge of the Bonds. Section 7.2. Removal of Trustee. The District may at any time at its sole discretion remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor, other than the Trustee, shall be a bank or trust company having (or in the case of a financial institution that is part of a bank holding company, such company shall have) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee and notice being sent by the successor Trustee to the Bondowners of the successor Trustee's identity and address. Section 7.3. Resignation of Trustee. The Trustee may at any time resign by giving written notice to the District and by giving to the Owners notice of such resignation, which notice shall be mailed to the Owners at their addresses appearing in the registration books in the office of the Trustee. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. In the event a successor trustee shall not have been designated within 30 Business Days, the Trustee shall have the right to petition any federal court for an order appointing a replacement Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. Section 7.4. Liability of Trustee. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility and shall have no liability for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture, the Bonds, and shall incur no responsibility and have no liability in respect thereof, other than in connection with its express duties or obligations specifically set forth herein, in the Bonds or in the certificate of authentication of the Trustee. The Trustee shall be under no responsibility or duty and shall have no responsibility with respect to the issuance of the Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, Bond, certificate of an Independent Financial Consultant or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel to the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered hereunder in good faith and in accordance therewith. 36 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 The Trustee shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. Whenever in the administration of its duties under this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively proved and established by a written certificate of the District, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. The Trustee shall have no duty or obligation whatsoever to monitor or enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received. The sole obligation of the Trustee with respect thereto shall be limited to the proper accounting for such funds as it shall actually receive. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers. In the event the Trustee shall advance funds in connection with its administration of this trust, the Trustee shall be entitled to interest at the maximum interest rate permitted by law. The Trustee shall not be deemed to have knowledge of any event of default of the type described in Section 8.1(c) unless and until it shall have actual knowledge thereof by receipt of written notice thereof at its corporate trust office. Section 7.5. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. ARTICLE VIII EVENTS OF DEFAULT; REMEDIES Section 8.1. Events of Default. Any one or more of the following events shall constitute an "event of default": (a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) Default in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; or 37 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds, and such default shall have continued for a period of 30 days after the District shall have been given notice in writing of such default by the Owners of 25% in aggregate principal amount of the Outstanding Bonds. The District agrees to give notice to the Trustee immediately upon the occurrence of an event of default under (a) or (b) above and within 30 days of the District's knowledge of an event of default under (c) above. Section 8.2. Remedies of Owners. Following the occurrence of an event of default, any Owner shall have the right for the equal benefit and protection of all Owners similarly situated: (a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (c) By a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust. Nothing in this Article or in any other provision of this Indenture, the Bonds shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the respective Owners thereof at the respective dates of maturity, as herein provided, out of the Net Taxes and other amounts pledged for such payment, or affect or impair the right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and in this Indenture. A waiver of any default or breach of duty or contract by any Owner shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission by any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Act or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the District and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. 38 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 The Trustee's counsel is not and shall not be deemed counsel to the Bondholders. Any communication between the Trustee and its counsel shall be deemed confidential and privileged. In case the moneys held by the Trustee after an event of default pursuant to Section 8.1(a) or (b) shall be insufficient to pay in full the whole amount so owing and unpaid upon the Outstanding Bonds, then all available amounts shall be applied to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. ARTICLE IX DEFEASANCE Section 9.1. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond under this Indenture shall thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District's general fund all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds. Any Outstanding Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond is paid in any one or more of the following ways: (a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, noncallable Federal Securities, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; then, at the election of the District, and notwithstanding that any Outstanding Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owner of any such Bond not so surrendered and paid, all sums due thereon and except for the covenants of the District contained in 39 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Section 5.2(f) or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (b) or (c) above, there shall be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture. If a forward supply contract is employed in connection with an advance refunding to be effected under (c) above, (i) such verification report shall expressly state that the adequacy of the amounts deposited with the bank under (c) above to accomplish the refunding relies solely on the initial escrowed investments and the maturing principal thereof and interest income thereon and does not assume performance under or compliance with the forward supply contract, and (ii) the applicable escrow agreement executed to effect an advance refunding in accordance with (c) above shall provide that, in the event of any discrepancy or difference between the terms of the forward supply contract and the escrow agreement, the terms of the escrow agreement shall be controlling. Upon a defeasance, the Trustee, upon request of the District, shall release the rights of the Owners of such Bonds and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds when due. The Trustee shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the Bondowners whose Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred. ARTICLE X MISCELLANEOUS Section 10.1. Cancellation of Bonds. All Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall destroy such Bonds, and, upon request of the District, furnish to the District a certificate of such destruction. Section 10.2. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Indenture to be signed or executed by Bondowners may be in any number of concurrent instruments of similar tenor may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner: 40 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 (a) The fact and date of the execution by any Owner or his or her attorney of any such instrument and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority. (b) As to any Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond and the interest thereon to the extent of the sum or sums to be paid. Neither the District nor the Trustee shall be affected by any notice to the contrary. Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it being intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of the Owner of any Bond shall bind every future Owner of the same Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent. Section 10.3. Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Outstanding Bonds which remain unclaimed for a period ending at the earlier of two Business Days prior to the date such funds would escheat to the State or two years after the date when such Outstanding Bonds have become due and payable, if such money was held by the Trustee at such date, or for a period ending at the earlier of two Business Days prior to the date such funds would escheat to the State or two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee at the written request of the District or the Trustee shall, at the expense of the District, cause to be mailed by first-class mail, postage prepaid, to the registered Owners of such Outstanding Bonds at their addresses as they appear on the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District. Section 10.4. Provisions Constitute Contract. The provisions of this Indenture shall constitute a contract between the District and the Bondowners and the provisions hereof shall be construed in accordance with the laws of the State of California. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners or the Trustee, then the District, the Trustee and the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. 41 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 After the issuance and delivery of the Bonds this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner. Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Gross Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Gross Taxes and other amounts pledged hereunder. Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture. Section 10.7. Action on Next Business Day. 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 Indenture, is not a Business Day, such payment, with no interest accruing for the period from and after such nominal date, may 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 therefor in this Indenture. Section 10.8. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid rights and benefits accorded to them under the laws of the State of California. Section 10.9. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the General Manager, 11570 Donner Pass Road, Truckee, California 96160, and all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personally delivered to the Trustee, The Bank of New York Mellon Trust Company, N.A., 700 South Flower Street, Suite 500, Los Angeles, California 90017, Attention: Corporate Trust Department. Section 10.10. General Authorization. The President of the Board of Directors, the District Clerk and the General Manager are hereby respectively authorized to do and perform from time to time any and all acts and things consistent with this Trust Indenture necessary or appropriate to carry the same into effect. Section 10.11. Execution in Counterparts. This Trust Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same instrument. [REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 42 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 IN WITNESS WHEREOF, the parties have executed and attested this Trust Indenture by their officers duly authorized as of the date and year first written above. ATTEST: District Clerk of the Truckee Donner Public Utility District TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD) President of the Board of Directors of the Truckee Donner Public Utility District THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer S-1 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 M EXHIBIT A FORM OF SPECIAL TAX BOND UNITED STATES OF AMERICA STATE OF CALIFORNIA TRUCKEE DONNER PUBLIC UTILITY DISTRICT TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.03-1 (OLD GREENWOOD) 2013 SPECIAL TAX REFUNDING BOND UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NO. REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: DOLLARS TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD) (the "District") FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth A-1 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 above. Interest will be paid semiannually on March 1 and September I (each, an "Interest Payment Date"), commencing March 1, 2014, at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the office of The Bank of New York Mellon Trust Company, N.A. (the "Trustee"). Interest on this Bond shall be paid by check of the Trustee mailed by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the "Record Date") at such Registered Owner's address as it appears on the registration books maintained by the Trustee. This Bond is one of a duly authorized issue of "Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) 2013 Special Tax Refunding Bonds" (the "Bonds") issued in the aggregate principal amount of $XX,XXX,000 pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq., of the California Government Code (the "Act"). The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the Board of Directors of the Truckee Donner Public Utility District, acting in its capacity as the legislative body of the District on [ , 2013] and a Trust Indenture dated as of June 1, 2013, by and between the District and the Trustee (the "Indenture"), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Bond are payable solely from the annual special taxes authorized under the Act to be levied and collected within the District and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds. Subject to the further limitations set forth in the Indenture, the Bonds may be redeemed, at the option of the District from any source of funds on any Interest Payment Date, in whole, or in part in the order of maturity selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount thereof, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices In addition, the Term Bonds maturing on September 1, 20_, September 1, 20_ and September 1, 2033 are subject to mandatory sinking fund redemption prior to maturity commencing on September 1, 20, September 1, 20 and September 1, 20, respectively, in part, by lot, from A-2 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Sinking Fund Payments (as defined in the Indenture) at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption, without premium, to the extent, in the manner and subject to the terms of the Indenture. In the event of a partial redemption of Term Bonds, other than as a result of Sinking Fund Payments, each of the remaining Sinking Fund Payments for the Term Bonds that were partially redeemed will be reduced, as nearly as practicable, on a pro rata basis. The Bonds are also subject to special mandatory redemption on any Interest Payment Date, in whole or in part, from certain funds derived from the prepayment of Special Taxes, at the following redemption prices, expressed as a percentage of the principal amount thereof, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 60 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date; provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds. This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary. The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor. The Trustee shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. A-3 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture. THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT OR OF TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD) FOR WHICH THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT OR THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. A-4 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 IN WITNESS WHEREOF, Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) has caused this Bond to be dated as of the Dated Date, to be signed on behalf of the District by the President of the Board of Directors of the Truckee Donner Public Utility District by his facsimile signature and attested by the facsimile signature of the Clerk of the Truckee Donner Public Utility District. President of the Board of Directors of the Truckee Donner Public Utility District ATTEST: District Clerk of the Truckee Donner Public Utility District [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION AND REGISTRATION] This is one of the Bonds described in the within -defined Indenture. Dated: , 2013 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Authorized Signatory A-5 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 [FORM OF LEGAL OPINION] The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth, a Professional Corporation, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office. District Clerk of the Truckee Donner Public Utility District [FORM OF ASSIGNMENT] For value received the undersigned do(es) hereby sell, assign and transfer unto (typewrite name, address and social security or federal tax identification number) the within -registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the Bond Register of the Trustee with full power of substitution in the premises. Dated: Signature Guaranteed: Note: Signature(s) must be guaranteed by an eligible guarantor institution. Note: The signature(s) on this assignment must correspond with the name(s) as written on the face of the within -registered Bond in every particular, without alteration or enlargement or any change whatsoever. A-6 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 EXHIBIT B TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO.03-1 (OLD GREENWOOD) REQUISITION FOR DISBURSEMENT OF COSTS OF ISSUANCE The Bank of New York Mellon Trust Company, N.A., Trustee, is hereby requested to pay from the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Costs of Issuance Fund, established by the Trust Indenture between the Trustee and Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood), dated as of June 1, 2013, the amount specified and to the payee named below for payment of [Describe Type of Costs]. Payee: Address: Purpose: Amount: $ The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions to the release of this amount from the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) Costs of Issuance Fund are satisfied. There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen's or mechanic's liens accruing by mere operation of law. Dated: TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD) I:0 Authorized Officer DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 EXHIBIT C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES A Special Tax applicable to each Assessor's Parcel in the Truckee Donner Public Utility District Community Facilities District No. 03-1 (Old Greenwood) [herein "CFD No. 03-1"] shall be levied and collected according to the tax liability determined by the Board of Directors or its designee, through the application of the appropriate amount or rate for Taxable Property, as described below. All of the property in CFD No. 03-1, unless exempted by law or by the provisions of Section G below, shall be taxed for the purposes, to the extent, and in the manner herein provided, including property subsequently annexed to the CFD unless a separate Rate and Method of Apportionment is adopted for the annexation area. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Final Map or other parcel map recorded with the County. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, (commencing with Section 53311), Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means any or all of the following: the fees and expenses of any fiscal agent or trustee (including any fees or expenses of its counsel) employed in connection with any Bonds, and the expenses of the TDPUD carrying out its duties with respect to CFD No. 03-1 and the Bonds, including, but not limited to, levying and collecting the Special Tax, the fees and expenses of legal counsel, charges levied by the County Auditor's Office, Tax Collector's Office, and/or Treasurer's Office, costs related to annexing property into the CFD, costs related to property owner inquiries regarding the Special Tax, amounts needed to pay rebate to the federal government with respect to the Bonds, costs associated with complying with any continuing disclosure requirements for the Bonds and the Special Tax, and all other costs and expenses of the TDPUD in any way related to the establishment or administration of the CFD. "Administrator" means the person or firm designated by the TDPUD to administer the Special Tax according to this Rate and Method of Apportionment of Special Tax. "Affordable Unit" means any Unit within CFD No. 03-1 which, in the sole discretion of the Town, is either deed -restricted to maintain the affordability of the Unit or is determined by the Administrator to have been planned, designed and/or built to be an affordable unit. "Assessor's Parcel" or "Parcel' means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor designating parcels by Assessor's Parcel number. "Association Property" means any property within the CFD that is owned by a homeowners association, excluding Association Property under the pad or footprint of a Unit. "Board of Directors" or "Board" means the Board of Directors of the Truckee Donner Public Utility District. C-1 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Bonds" means bonds or other debt (as defined in the Act), whether in one or more series, issued, insured or assumed by CFD No. 03-1 related to public infrastructure and/or improvements that are authorized to be funded by CFD No. 03-1. "Capitalized Interest" means funds in any capitalized interest account available to pay debt service on Bonds. "CFD Formation" means the date on which the Resolution of Formation to form CFD No. 03-1 was adopted by the Board of Directors. "County" means the County of Nevada. "Developed Property" means, in any Fiscal Year, the following: • for Single Family Detached Property, all parcels for which a Final Map was recorded prior to May 1 of the preceding Fiscal Year • for Single Family Attached Property and Rental Property, all parcels for which a building permit for new construction of a residential structure was issued prior to May 1 of the preceding Fiscal Year. "Excess Public Property" means the acres of Public Property that exceed the acreage exempted in Section G below. In any Fiscal Year in which a Special Tax must be levied on Excess Public Property pursuant to Step 4 in Section E below, Excess Public Property shall be those Assessor's Parcel(s) that most recently became Public Property based on the dates on which Final Maps recorded creating such Public Property. "Expected Land Uses" means the total number of Units expected to be constructed within the CFD as determined from time to time by the Administrator after applying the steps set forth in Section D below. At CFD Formation, the Expected Land Uses were based on the Tentative Map. The Expected Land Uses at CFD Formation are summarized in Attachment 1 hereto; the Administrator shall update Attachment 1 each time a change occurs to the land use plans for property in the CFD. "Expected Maximum Special Tax Revenues" means the amount of annual revenue that would be available if the Maximum Special Tax was levied on the Expected Land Uses. The Expected Maximum Special Tax Revenues as of CFD Formation are shown in Attachment 1 of this Rate and Method of Apportionment of Special Tax. "Final Bond Sale" means the last series of Bonds that will be issued on behalf of CFD No. 03-1 (excluding any Bond refundings), as determined in the sole discretion of the TDPUD. "Final Map" means a final map, or portion thereof, recorded by the County pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots on which building permits for new construction may be issued without further subdivision and for which no further subdivision is anticipated pursuant to the Tentative Map. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Fractional Unit" means a single family detached unit or a single family attached unit for which multiple owners may each purchase a fractional share of ownership (also referred to as a timeshare unit by the California Department of Real Estate). "Golf Course Property" means any property within CFD No. 03-1 that is used as a golf course, including but not limited to, a driving range, clubhouse, parking, lodge, outbuildings, and other golf -related amenities. Golf C-2 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Course Property shall also include any property within the CFD that is used for a swim, tennis, and/or fitness facility. "Maximum Special Tax" means the greatest amount of Special Tax that can be levied on an Assessor's Parcel in any Fiscal Year determined in accordance with Section C below, as may be adjusted pursuant to Step 3 in Section D below. "Other Property" means, in any Fiscal Year, all Parcels of Taxable Property which are not Single Family Detached Property, Single Family Attached Property, Undeveloped Property. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levied in any Fiscal Year to the Maximum Special Tax authorized to be levied in that Fiscal Year is equal for all Assessor's Parcels of Developed Property, and for Undeveloped Property that the ratio of the actual Special Tax to the Maximum Special Tax is equal for all Assessor's Parcels of Undeveloped Property. "Public Property" means any property within the boundaries of CFD No. 03-1 that is owned by the federal government, State of California, County, Town, Truckee Donner Public Utility District, or other public agency. "Rental Property" means, in any Fiscal Year, all Parcels within the CFD for which a building permit was issued for construction of a residential structure with multiple Units that share common walls, all of which are offered or are expected to be offered for rent to the general public and/or employees. Fractional Units within the CFD shall at no time be categorized as Rental Property. "SFD Lot" means an individual residential lot, identified and numbered on a recorded Final Map, on which a building permit has been or is permitted to be issued for construction of a single family detached unit without further subdivision of the lot and for which no further subdivision of the lot is anticipated pursuant to the Tentative Map. "Single Family Attached Property" means, in any Fiscal Year, all Parcels of Developed Property for which a building permit was issued for construction of a residential structure consisting of two or more Units that share common walls and are offered or expected to be offered as for -sale units, including attached Fractional Units and such residential structures that meet that statutory definition of a condominium contained in Civil Code Section 1351. "Single Family Detached Property" means, in any Fiscal Year, all Parcels of Developed Property for which a building permit was issued or is permitted to be issued for construction of a Unit that does not share a common wall with another Unit, including detached Fractional Units. "Special Tax" means a Special Tax levied in any Fiscal Year to pay the Special Tax Requirement. "Special Tax Requirement" means the amount necessary in any Fiscal Year to: (i) pay principal and interest on Bonds which is due in the calendar year that begins in such Fiscal Year; (ii) create and/or replenish reserve funds for the Bonds; (iii) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year or, based on existing delinquencies in the payment of Special Taxes, are expected to occur in the Fiscal Year in which the tax will be collected; (iv) pay Administrative Expenses; and (v) pay the costs of public improvements and public infrastructure authorized to be financed by CFD No. 03-1. The amounts referred to in clauses (i) and (ii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to a Bond indenture, Bond resolution, or other legal document that sets forth these terms; (ii) proceeds received by CFD No. 03-1 from the collection of penalties associated with delinquent Special Taxes; and (iii) any other revenues available to pay debt service on the Bonds as determined by the Administrator. C-3 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 "Taxable Other Property" means, in any Fiscal Year, all Assessor's Parcels of Other Property which had, in prior Fiscal Years, been: (i) developed and taxed as Single Family Detached Property or Single Family Attached Property, or (ii) designated in the Tentative Map as Single Family Detached Property or Single Family Attached Property and, when a change to the Expected Land Uses was proposed designating the Parcel as Other Property, no prepayment was received pursuant to Step 3.b in Section D below. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 03-1 which are not exempt from the Special Tax pursuant to law or Section G below. "Tax Zone" means one of the two mutually exclusive geographic areas defined below and identified in Attachment 2 of this Rate and Method of Apportionment of Special Tax, and any subsequent Tax Zones created to contain property annexed into the CFD after CFD Formation. "Tax Zone #V means the geographic area that is specifically identified in Attachment 2 of this Rate and Method of Apportionment of Special Tax as Tax Zone # 1. "Tax Zone #2" means the geographic area that is specifically identified in Attachment 2 of this Rate and Method of Apportionment of Special Tax as Tax Zone #2. "TDPUD" means the Truckee Donner Public Utility District. "Tentative Map" means the Tentative Map and Conditional Use Permit for the Old Greenwood Planned Development, which was included as Exhibit D to the Development Agreement between East West Partners and the Town which was recorded at the County Recorder's Office on August 23, 2002. "Town" means the incorporated Town of Truckee. "Undeveloped Property" means, in any Fiscal Year, all Parcels of Taxable Property within the CFD that are not Developed Property. "Unit" means (i) for Single Family Detached Property, an individual single-family detached unit, and (ii) for Single Family Attached Property, an individual residential unit within a duplex, triplex, fourplex, townhome, or condominium structure. B. DATA FOR ANNUAL ADMINISTRATION On or about July 1 of each Fiscal Year, the Administrator shall identify the current Assessor's Parcel numbers for all Parcels of Taxable Property. The Administrator shall also determine: (i) whether each Assessor's Parcel of Taxable Property is Developed Property or Undeveloped Property, (ii) for Developed Property, which Parcels are Single Family Detached Property, Single Family Attached Property, and Taxable Other Property, (iii) for Parcels of Single Family Attached Property, the number of Units on each Parcel, (iv) whether there are Parcels of Rental Property, Excess Public Property or Parcels with Affordable Units, and (v) the Special Tax Requirement. For Single Family Attached Property, the number of Units shall be determined by referencing the site plan, condominium plan, or other development plan. If, in any Fiscal Year, an Assessor's Parcel includes both Developed Property and Undeveloped Property, the Administrator shall determine the Acreage associated with the Developed Property, subtract this Acreage from the total Acreage of the Assessor's Parcel, and use the remaining Acreage to calculate the Special Tax that will apply to Undeveloped Property within the Assessor's Parcel. C-4 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 In addition, the Administrator shall, on an ongoing basis, monitor whether changes in land use have been proposed that will affect the Expected Land Uses and whether Final Maps that have been proposed for approval by the Town are consistent with the Expected Land Uses. If changes to the Expected Land Uses are proposed, the Administrator shall apply the steps set forth in Section D below. C. MAXIMUM SPECIAL TAX 1. Single Family Detached Property The Maximum Special Tax for Single Family Detached Property in Zone 1 for Fiscal Year 2004-05 is $3,000 per SFD Lot. The Maximum Special Tax for Single Family Detached Property in Zone 2 for Fiscal Year 2004-05 is $3,400 per SFD Lot. On July 1, 2005 and on each July 1 thereafter, these Maximum Special Tax rates shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year. 2. Single Family Attached Property The Maximum Special Tax for Single Family Attached Property in Zone 1 for Fiscal Year 2004-05 is $3,000 per Unit. The Maximum Special Tax for Single Family Attached Property in Zone 2 for Fiscal Year 2004-05 is $3,400 per Unit. On July 1, 2005 and on each July 1 thereafter, these Maximum Special Tax rates shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year. 3. Taxable Other Property The Maximum Special Tax for Taxable Other Property shall be the amount needed on a per -acre basis to maintain the Maximum Special Tax that was assigned to the Parcel prior to the Parcel becoming Taxable Other Property. After the Maximum Special Tax has been determined for a Parcel of Taxable Other Property, the Maximum Special Tax shall be increased each Fiscal Year thereafter by an amount equal to two percent (2%) of the amount in effect the prior Fiscal Year. 4. Undeveloped Property The Maximum Special Tax for Undeveloped Property for Fiscal Year 2004-05 is $11,325 per Acre. On July 1, 2005 and on each July I thereafter, this Maximum Special Tax shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year. Pursuant to Section 53321 (d) of the Act, the Special Tax levied against a Parcel used for private residential purposes shall under no circumstances increase more than ten percent (10%) as a consequence of delinquency or default by the owner of any other Parcel or Parcels and shall, in no event, exceed the Maximum Special Tax in effect for the Fiscal Year in which the Special Tax is being levied. D. BACK-UP FORMULA The Maximum Special Taxes set forth in Section C above were calculated based on the Expected Land Uses at CFD Formation. The Administrator shall review Tentative Map revisions and other changes to the land uses proposed within the CFD and compare the revised land uses to the Expected Land Uses to evaluate the impact on the Expected Maximum Special Tax Revenues. In addition, the Administrator shall review Final Maps to ensure they reflect the number of residential lots that was anticipated in the Tentative Map. C-5 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 If, prior to the Final Bond Sale, a change to the Expected Land Uses (a "Land Use/Entitlement Change") is proposed that will result in a reduction in the Expected Maximum Special Tax Revenues, no action will be needed pursuant to this Section D as long as the reduction in Expected Maximum Special Tax Revenues does not reduce debt service coverage on outstanding Bonds below the amount committed to in the Bond documents. Upon approval of the Land Use/Entitlement Change, the Administrator shall update Attachment 1 to show the reduced Expected Maximum Special Tax Revenues, and the reduced Expected Maximum Special Tax Revenues shall be the amount used to determine the amount of the Final Bond Sale. If a Land Use/Entitlement Change is proposed after the Final Bond Sale, the following steps shall be applied: Step 1: By reference to Attachment 1 (which will be updated by the Administrator each time a Land Use/Entitlement Change has been processed according to this Section D), the Administrator shall identify the Expected Maximum Special Tax Revenues for CFD No. 03-1; Step 2: The Administrator shall calculate the Maximum Special Tax revenues that could be collected from property in the CFD if the Land Use/Entitlement Change is approved; Step 3: If the amount determined in Step 2 is higher than that calculated in Step 1, the Land Use/Entitlement Change may be approved without further action. If the revenues calculated in Step 2 are less than those calculated in Step 1, and if. (a) The landowner does not withdraw the request for the Land Use/Entitlement Change that was submitted to the Town; or (b) Before approval of the Land Use/Entitlement Change, the landowner requesting the Land Use/Entitlement Change does not prepay a portion of the Special Tax for the CFD in an amount that corresponds to the lost Maximum Special Tax revenue, as determined by applying the steps set forth in Section H below; or (c) The Land Use/Entitlement Change proposes that a Parcel of Single Family Detached Property or Single Family Attached Property be developed as another land use (other than Public Property), and the landowner requesting the Land Use/Entitlement Change fails to submit a written request to the TDPUD to designate the Parcel as Taxable Other Property, thereby maintaining the Expected Maximum Special Tax Revenues for the Parcel; then, the amount of the prepayment determined in Step 3.b shall be allocated on a per - acre basis and included on the next property tax bill for all Assessor's Parcels within the property affected by the Land Use/Entitlement Change. The amount allocated to each Assessor's Parcel shall be added to and, until paid, shall be a part of, the Maximum Special Tax for the Assessor's Parcel. If multiple Land Use/Entitlement Changes are proposed at one time (which may include approval of multiple Final Maps at one time), the Administrator may consider the combined effect of all the Land Use/Entitlement Changes to determine if there is a reduction in Expected Maximum Special Tax Revenues that necessitates implementation of Step 3.b or 3.c. If, based on this comprehensive analysis, the Administrator determines that there is a reduction in Expected Maximum Special Tax Revenue, and all of the Land Use/Entitlement Changes are being proposed by the same land owner, the Administrator shall determine the required prepayment (pursuant to Step 3.b) by analyzing the combined impact of all of the proposed Land Use/Entitlement Changes. Notwithstanding the foregoing, if the Administrator analyzes the combined impacts of C-6 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 multiple Land Use/Entitlement Changes, and the Town subsequently does not approve one or more of the Land Use/Entitlement Changes that was proposed, the Administrator shall once again apply the three steps set forth above to determine the combined impact of those Land Use/Entitlement Changes that were approved simultaneously by the Town. If, based on the comprehensive analysis, the Administrator determines that there is a reduction in Expected Maximum Special Tax Revenue, and the Land Use/Entitlement Changes are not all being proposed by the same land owner, the Administrator shall consider the proposed Land Use/Entitlement Changes individually to determine the required prepayment from each owner. E. METHOD OF LEVY OF THE SPECIAL TAX Each Fiscal Year, the Administrator shall determine the Special Tax Requirement to be collected in that Fiscal Year, and the Special Tax shall be levied according to the steps outlined below. Step 1: The Special Tax shall be levied Proportionately on each Parcel of Developed Property within the CFD up to 100% of the Maximum Special Tax for each Parcel for such Fiscal Year until the amount levied on Developed Property is equal to the Special Tax Requirement prior to applying any Capitalized Interest that is available in the CFD accounts. Step 2: If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property within the CFD, up to 100% of the Maximum Special Tax for Undeveloped Property for such Fiscal Year determined pursuant to Section C; Step 3: If additional revenue is needed after applying the first two steps, the Special Tax shall be levied Proportionately on each Parcel of Association Property within the CFD, up to 100% of the Maximum Special Tax for Undeveloped Property for such Fiscal Year determined pursuant to Section C; Step 4: If additional revenue is needed after applying the first three steps, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Excess Public Property, exclusive of property exempt from the Special Tax pursuant to Section G below, up to 100% of the Maximum Special Tax for Undeveloped Property for such Fiscal Year determined pursuant to Section C. F. COLLECTION OF SPECIAL TAX The Special Taxes for CFD No. 03-1 shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that prepayments are permitted as set forth in Section H below and provided further that the TDPUD may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner, and may collect delinquent Special Taxes through foreclosure or other available methods. The Special Tax for Fractional Units may be billed either directly to individual fractional owners or to a homeowners association, which shall then bill the individual fractional owners; non-payment of Special Taxes billed by the homeowners association shall result in interest and penalties, and the fractional ownership shall be subject to foreclosure proceedings as set forth in the Bond covenants. C-7 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 The Special Tax shall be levied and collected until principal and interest on Bonds have been repaid, costs of constructing or acquiring authorized facilities from Special Tax proceeds have been paid, and all administrative expenses have been reimbursed. However, in no event shall a Special Tax be levied after Fiscal Year 2039-2040. G. EXEMPTIONS Notwithstanding any other provision of this Rate and Method of Apportionment of Special Tax, no Special Tax shall be levied on up to 30.31 Acres of Public Property. A separate amount of public acreage may be exempted each time property annexes into CFD No. 03-1, and such additional exemption shall only apply to property within the annexation area. A Special Tax may be levied on Excess Public Property pursuant to Step 4 of Section E; however, a public agency may require that the special tax obligation on land conveyed to it that would be classified as Excess Public Property be prepaid pursuant to Section H below. In addition, no Special Tax shall be levied in any Fiscal Year on (i) Golf Course Property, (ii) Rental Property, (iii) Affordable Units, or (iv) Other Property unless the Parcel is determined to be Taxable Other Property. H. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section H: "Outstanding Bonds" means all Previously Issued Bonds which remain outstanding, with the following exception: if a Special Tax has been levied against, or already paid by, an Assessor's Parcel making a prepayment, and a portion of the Special Tax will be used to pay a portion of the next principal payment on the Bonds that remain outstanding (as determined by the Administrator), that next principal payment shall be subtracted from the total Bond principal that remains outstanding, and the difference shall be used as the amount of Outstanding Bonds for purposes of this prepayment formula. "Previously Issued Bonds" means all Bonds that have been issued on behalf of the CFD prior to the date of prepayment. "Public Facilities Requirements" means either $9,850,000 in 2003 dollars, which shall increase on January 1, 2004, and on each January 1 thereafter by the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering Record is discontinued or otherwise not available, or such lower number as shall be determined by the TDPUD as sufficient to fund improvements that are authorized to be funded by the CFD. The Public Facilities Requirements shown above may be adjusted or a separate Public Facilities Requirements identified each time property annexes into CFD No. 03-1; at no time shall the added Public Facilities Requirement for that annexation area exceed the amount of public improvement costs that are expected to be supportable by the Maximum Special Tax revenues generated within that annexation area. "Remaining Facilities Costs" means the Public Facilities Requirements (as defined above), minus public facility costs funded by Outstanding Bonds (as defined above), developer equity, and/or any other source of funding. The Special Tax obligation applicable to an Assessor's Parcel in the CFD may be prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein, provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel C-8 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the TDPUD with written notice of intent to prepay. Within 30 days of receipt of such written notice, the TDPUD or its designee shall notify such owner of the prepayment amount for such Assessor's Parcel. Prepayment must be made not less than 75 days prior to any redemption date for Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount shall be calculated as follows: (capitalized terms as defined below): Bond Redemption Amount plus Remaining Facilities Amount plus Redemption Premium plus Defeasance Requirement plus Administrative Fees and Expenses less Reserve Fund Credit equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount shall be determined by application of the following steps: Step 1. Compute the total Maximum Special Tax that could be collected from the Assessor's Parcel prepaying the Special Tax in the Fiscal Year in which prepayment would be received by the TDPUD or, in the event of a prepayment pursuant to Step 3.b in Section D, compute the amount by which the Maximum Special Tax revenues would be reduced by the Land Use/Entitlement Change and use the amount of this reduction as the figure for purposes of this Step 1. Step 2. Divide the Maximum Special Tax from Step 1 by the then -current Expected Maximum Special Tax Revenues for the CFD. Step 3. Multiply the quotient computed pursuant to Step 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). Step 4. Compute the current Remaining Facilities Costs (if any). Step S. Multiply the quotient computed pursuant to Step 2 by the amount determined pursuant to Step 4 to compute the amount of Remaining Facilities Costs to be prepaid (the "Remaining Facilities Amount"). Step 6. Multiply the Bond Redemption Amount computed pursuant to Step 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). Step 7. Compute the amount needed to pay interest on the Bond Redemption Amount starting with the first Bond interest payment date after which the prepayment has been received until the earliest redemption date for the Outstanding Bonds, which, depending on the Bond offering document, may be as early as the next interest payment date. Step 8. Compute the amount of interest the TDPUD reasonably expects to derive from reinvestment of the Bond Redemption Amount plus the Redemption Premium from the first Bond interest payment date after which the prepayment has been received until the redemption date for the Outstanding Bonds. C-9 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 Step 9. Take the amount computed pursuant to Step 7 and subtract the amount computed pursuant to Step 8 (the "Defeasance Requirement"). Step 10. Determine the costs of computing the prepayment amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). Step IL If and to the extent so provided in the indenture pursuant to which the Outstanding Bonds to be redeemed were issued, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). Step 12. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 3, 5, 6, 9, and 10, less the amount computed pursuant to Step 11 (the "Prepayment Amount"). A partial prepayment may be made in an amount equal to any percentage of full prepayment desired by the party making a partial prepayment. The Maximum Special Tax that can be levied on an Assessor's Parcel after a partial prepayment is made is equal to the Maximum Special Tax that could have been levied prior to the prepayment, reduced by the percentage of a full prepayment that the partial prepayment represents, all as determined by or at the direction of the Administrator. I. INTERPRETATION OF SPECIAL TAX FORMULA The TDPUD reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning Special Taxes. In addition, the interpretation and application of any section of this document shall be left to the TDPUD's discretion. Interpretations may be made by the TDPUD by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this Rate and Method of Apportionment of Special Tax. C-10 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 ATTACHMENT 1 TRUCKEE DONNER PUBLIC UTILITY DISTRICT COMMUNITY FACILITIES DISTRICT NO. 03-1 (OLD GREENWOOD) EXPECTED LAND USES AND EXPECTED MAXIMUM SPECIAL TAX REVENUES AT CFD FORMATION Total Expected Maximum Special Tax Maximum Number of Per Unit/Acre for Special Tax Expected Land Uses Expected Units/Acres Fiscal Year 2004-05* Revenues* Single Family Detached Property and Single Family 104 Units $3,000 per SFD Lot $312,000 Attached Property in Zone 1 Single Family Detached Property and Single Family 154 Units $3,400 per SFD Lot $523,000 Attached Property in Zone 2 Taxable Other Property 0 Acres N/A $0 Total Expected Maximum Special Tax Revenues $835,000 * Figures are shown in fiscal year 2004-05 dollars and will escalate two percent (201o) per year thereafter. C-11 DOC S OC/ 15 80566v5/022925 -0019 Attachment 2 ATTACHMENT 2 IDENTIFICATION OF TAX ZONES C-12 DOC S OC/ 15 80566v5/022925 -0019