HomeMy WebLinkAboutRES 2004-45 - Board TRUCKEE DONNER
DistrictPublic Utility
Resolution No. 2004 - 45
OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
A RESOLUTION OF THE BOARD OF DIRECTORS
APPROVING A BROADBAND PROJECT,
RATIFYINGACTIONS TAKEN IN CONNECTION THEREWITH,
AUTHORIZING THE EXECUTION AND DELIVERY OF
AN INSTALLMENT PURCHASE AGREEMENT
ANDA TRUST AGREEMENT
AND CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the Truckee Donner Public Utility District, a public utility district duly
organized and existing under and pursuant to the Constitution and laws of the State of California
(the "District"), including the Public Utility District Act, Section 15501 et seq. of the Public
Utilities Code of the State of California (the "Public Utilities Code") has previously determined
to develop, acquire, install and operate a system for providing broadband services (including but
not limited to data, voice, video and security services) to customers of the District (the
"Project");
WHEREAS, in furtherance of the Project, the District has entered into agreements with
Eagle Broadband, Inc., Wave 7 Optics, Riviere Jenison Securities Ltd., Aggregate Networks,
Stradling Yocca Carlson & Rauth, Pettit Gilwee Public Relations, Porter Simon, Sierra Pacific
Communications, Tetra Tech and Mas Tec to provide various services and materials with respect
to the Project(collectively, the "Project Agreements");
WHEREAS, in furtherance of the Project, the District has solicited bids from additional
contractors to provide services and materials related to the acquisition and installation of the
Project;
WHEREAS, in connection with the development of the Project, the District was required
to obtain written approval from the Nevada County Local Agency Formation Commission
("LAFCO") to provide telecommunication services via the Project;
WHEREAS, after conducting public hearings and other proceedings whereat materials
provided by the District with respect to the Project were considered, LAFCO unanimously
approved the District's right to provide telecommunication services via the Project (the "LAFCO
Approval");
WHEREAS, in reliance on the LAFCO Approval and in furtherance of the District's
desire to develop, acquire, install and operate the Project, the District now intends to approve the
. execution and delivery of certificates of participation to finance the costs of developing,
acquiring and installing the Project;
WHEREAS, the District is authorized under provisions of the Constitution and laws of
the State of California, including without limitation, Section 16431 of the Public Utilities Code,
to dispose of and acquire certain equipment and facilities as the District may determine is
necessary or proper; and
WHEREAS, the District desires to finance the development, acquisition and installation
of the Project by authorizing and directing the execution and delivery of certificates of
participation (the "Certificates") evidencing fractional interests in the installment payments to be
made by the District to the Truckee Donner Public Utility District Financing Corporation (the
"Corporation")under the Installment Purchase Agreement described below; and
WHEREAS, in the judgment of this Board it is in the best interest of the District to enter
into the Installment Purchase Agreement described below in order to finance the Project; and
WHEREAS, a majority of the Board of Directors of the District (the "Board")
constituting a quorum for the transaction of business, is present, as required by Section 16071 of
the Public Utilities Code; and
WHEREAS, all acts, conditions and things required by the Constitution and law of the
State of California to exist, to have happened and to have been performed precedent to and in
connection with the consummation of the financing authorized hereby, the transactions
contemplated hereby, and the Project, do exist, have happened and have been performed in
regular and due time, form, and manner as required by law, and the District is now duly
authorized and empowered, pursuant to each and every requirement of law, to consummate such
financing for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE the Board of Directors of the Truckee Donner Public Utility
District does hereby resolve as follows:
Section 1. Installment Purchase Agreement. The form of Installment Purchase
Agreement (the "Installment Purchase Agreement"), dated as of November 1, 2004, between the
District and the Truckee Donner Public Utility District Financing Corporation (the
"Corporation"), presented to this meeting and on file with the Clerk of the Board of the District,
and each of the underlying transactions contemplated thereby, are hereby approved. In
accordance with Section 16033 of the Public Utilities Code, the President of the Board (the
"President") is hereby authorized and directed, for and in the name and on behalf of the District,
to sign the Installment Purchase Agreement, and in accordance with Section 16115 of the Public
Utilities Code, the Clerk or Deputy Clerk of the District (the "Clerk") is hereby authorized to
countersign the Installment Purchase Agreement, and both the President and the Clerk are hereby
authorized and directed to deliver to the Corporation the Installment Purchase Agreement in
substantially said form, with such changes therein as the President may require or approve, such
approval to be conclusively evidenced by the execution and delivery thereof.
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Resolution 200445
Section 2. Trust Agreement. The form of Trust Agreement (the "Trust Agreement"),
dated as of November 1, 2004, among the District, the Corporation and the trustee named therein
(the "Trustee"), presented to this meeting and on file with the Clerk, and each of the underlying
transactions contemplated thereby, are hereby approved. In accordance with Section 16033 of
the Public Utilities Code, the President is hereby authorized and directed, for and in the name
and on behalf of the District, to sign the Trust Agreement, and in accordance with Section 16115
of the Public Utilities Code, the Clerk is authorized and directed to countersign the Trust
Agreement, and both the President and the Clerk are hereby authorized and directed to deliver to
the Corporation and the Trustee the Trust Agreement in substantially said form, with such
changes therein as the President may require or approve, such approval to be conclusively
evidenced by the execution and delivery thereof.
Section 3. Certificates. The Trustee is hereby directed to execute and deliver the
Certificates, in the form and pursuant to the provisions of, the above-described Trust Agreement
for the purposes of financing the Project.
Section 4. Purchase Contract. The Purchase Contract, in substantially the form on file
with the District and, upon execution as authorized below, be and the same is hereby approved.
The General Manager is hereby authorized and directed to execute and deliver the Purchase
Contract with such changes, insertions and omissions as may be approved by the General
Manager, said execution being conclusive evidence of such approval; provided, however, that in
no event shall the principal amount of the Certificates exceed $24,000,000 (except such principal
amount may be increased to provide original issue discount), nor shall the net interest cost of the
Certificates exceed 8%per annum.
Section 5. Private Placement Memorandum. The Private Placement Memorandum, in
the form on file with the District, be and the same is hereby approved. The President, Vice-
President or General Manager is hereby authorized and directed to execute, approve and deliver
the final Private Placement Memorandum which, upon execution as authorized below, with such
changes, insertions and omissions as the officer executing said document may require or
approve, such approval to be conclusively evidenced by the execution and delivery thereof.
Section 6. Attestations. The Clerk is hereby authorized and directed to attest the
signature of the President, Vice President or General Manager, if necessary, and to affix and
attest the seal of the District, as may be required or appropriate in connection with the execution
and delivery of the Installment Purchase Agreement, the Trust Agreement, the Purchase Contract
and the Private Placement Memorandum.
Section 7. Other Actions. The President, the Vice-President, the General Manager, the
Clerk and any other proper officer of the District are hereby authorized and directed to do any
and all things and to execute and deliver, and the Clerk is hereby authorized and directed to do
any and all things and to countersign, any and all documents which they may deem necessary or
advisable in order to consummate the sale, execution and delivery of the Certificates by the
Trustee and otherwise to carry out, give effect to and comply with the terms and intent of this
resolution, the Certificates, the Purchase Contract, the Installment Purchase Agreement, the
Private Placement Memorandum and the Trust Agreement. Such actions heretofore taken by
such officers are hereby ratified, confirmed and approved.
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Resolution 200445
Section 8. Project. All of the prior actions taken with respect to the Project (including
but not limited to the District's execution of the Project Agreements and the other actions and
undertakings described in the recitals to this Resolution) are hereby acknowledged and ratified.
The Project is hereby approved and the General Manager is directed to take actions necessary to
cause a portion of the proceeds of the Certificates to be used to finance the Project.
Section 9. Effective Date. This resolution shall take effect immediately upon its
adoption.
PASSED AND ADOPTED this 18th day of October, 2004 by the following majority vote
of the Board, as required by Section 16072 of the Public Utilities Code:
AYES: Directors Aguera, Hemig, Maass and Van Gundy
NOES: Director Sutton
ABSENT: None
TRUCKEE DONNER PUBLIC UTILITY
DISTRICT
By
James A. Maass, President
ATTEST:
Peter L. 14olzmeister, District Clerk
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Resolution 200445
s
8/24/04
w
INSTALLMENT PURCHASE AGREEMENT
by and between
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION
Dated as of November 1,2004
relating to
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
DOCSSF/43372v6/22925-0011
Acquisition Fund
The term "Acquisition Fund" means the fund by that name established pursuant to
Section 3.5 hereof.
Agreement
The term "Agreement" means this Agreement, by and between the District and the
Corporation, dated as of November 1, 2004,as originally executed and as it may from time to time be
amended or supplemented in accordance herewith.
Bonds
The term "Bonds" means all bonds, notes or similar obligations (but not including Contracts)
of the District, the principal of and interest on which are payable from Net Revenues on a parity with
the Installment Payments.
Broadband Service
The term "Broadband Service" means the services made available or provided by the
Broadband System.
Broadband System
The term "Broadband System" means all properties and assets, real and personal, tangible
and intangible, of the District's broadband utility now or hereafter existing, used or pertaining to
providing broadband services (including but not limited to data, voice, video and security services),
including all additions, extensions, expansions, improvements and betterments thereto; provided,
however, that to the extent the District is not the sole owner of an asset or property or to the extent
that an asset or property is used in part for the above described purposes, only the District's
broadband utility ownership interest in such asset or property or only the part of the asset or property
so used for broadband purposes shall be considered to be part of the Broadband System.
Business Day
The term"Business Day"means a day other than: a Saturday or Sunday or a day on which(i)
banks located in the city in which the principal corporate trust office of the Trustee is located are not
required or authorized to remain closed, and (ii) on which The New York Stock Exchange is not
closed.
Certificates
The term "Certificates" means the $ aggregate principal amount of Truckee
Donner Public Utility District Revenue Certificates of Participation, Series 2004, executed and
delivered on behalf of the District and at any time Outstanding pursuant to the Trust Agreement.
Contracts
The term "Contracts" means this Installment Purchase Agreement and all contracts of the
District the Parity Installment Payments under which are payable from Net Revenues on a parity with
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and provided further that if any series or issue of such Bonds or Parity Installment Payments have
twenty-five percent(25%)or more of the aggregate principal amount of such series or issue due in
any one year, Debt Service shall be determined for the Fiscal Year of determination as if the
principal of and interest on such series or issue of such Bonds or Parity Installment Payments were
being paid from the date of incurrence thereof in substantially equal annual amounts over a period of
thirty(30)years from the date of calculation;
and provided further that, as to any such Bonds or Parity Installment Payments or portions thereof
bearing no interest but which are sold at a discount and which discount accretes with respect to such
Bonds or Parity Installment Payments or portions thereof, such accreted discount shall be treated as
interest in the calculation of Debt Service;
and provided further that the amount on deposit in a debt service reserve fund on any date of
calculation of Debt Service shall be deducted from the amount of principal due at the final maturity
of the Bonds and Contracts for which such debt service reserve fund was established and in each
preceding year until such amount is exhausted;
and provided further that Debt Service shall be reduced by an amount equal to earnings on any
reserve fund (including the Reserve Fund)transferred to the corresponding debt service fund
(including the Interest Fund created under the Trust Agreement).
District
The term "District" means Truckee Donner Public Utility District, a public utility district,
duly organized and existing under and by virtue of the laws of the State of California, including the
Law.
Event of Default
The term "Event of Default"means an event described in Section 8.1.
Fiscal Year
The term "Fiscal Year"means the period beginning on January 1 of each year and ending on
the last day of December of the next succeeding year, or any other twelve-month period selected and
designated as the official Fiscal Year of the District.
Independent Certified Public Accountant
The term "Independent Certified Public Accountant" means any firm of certified public
accountants appointed by the District, each of whom is independent of the District and the
Corporation pursuant to the Statement on Auditing Standards No. 1 of the American Institute of
Certified Public Accountants.
Independent Financial Consultant
The term "Independent Financial Consultant" means a financial consultant or firm of such
consultants appointed by the District, and who, or each of whom: (1) is in fact independent and not
under domination of the District; (2)does not have any substantial interest, direct or indirect,with the
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and working order, and including administrative costs of the District, salaries and wages of
employees, payments to any public employee retirement plan, overhead, insurance, taxes (if any),
fees of auditors, accountants, attorneys or engineers and insurance premiums, (2) all other
reasonable and necessary costs of the District or charges (other than Debt Service) required to be
paid by it to comply with the terms of this Agreement or any other Contract or of any resolution or
indenture authorizing the issuance of any Bonds or of such Bonds, and any franchise fees payable by
the District with respect to the Broadband System and (3) all costs paid by the District under the
Service Agreement, dated , 2004, between the District and Eagle Broadband,
Inc., and all cases relating to allocations and/or agreements between the District's broadband utility
and other utilities of the District to pay costs similar to those described in this definition, but
excluding in all cases (a)depreciation, replacement and obsolescence charges or reserves therefor,
(b)amortization of intangibles or other bookkeeping entries of a similar nature, (c)costs of capital
additions, replacements, betterments, extensions or improvements to the Broadband System which
under generally accepted accounting principles are chargeable to a capital account or to a reserve for
depreciation, and (d)charges for the payment of Bonds or Contracts.
Project; Parity Project
The term "Project" means the equipment and facilities of the Broadband System described in
Exhibit B hereto. The term "Parity Project" means any additions, betterments, extensions or
improvements designated by the Board of Directors of the District as a Parity Project,the acquisition
and construction of which is to be paid for with the proceeds of any Contracts or Bonds.
Purchase Price
The term "Purchase Price" means the principal amount plus interest thereon owed by the
District to the Corporation under the terms hereof as provided in Section 4.L
Reserve Requirement
The term "Reserve Requirement" means, initially $ and thereafter shall be equal
to the lesser of such amount and maximum annual Installment Payments in the current or any future
Fiscal Year.
Revenue Fund
The term "Revenue Fund" means all revenue accounts relating to the Broadband System
maintained by the District as of the date of this Agreement, together with any revenue account
created after the date of this Agreement and designated by the Treasurer of the District as a part of
the Revenue Fund.
Revenues
The term "Revenues" means all income, rents, rates, fees, charges and other moneys derived
from the ownership or operation of the Broadband System, including, without limiting the generality
of the foregoing,
(1) all income,rents, rates, fees, charges or other moneys derived from providing
broadband services (including but not limited to data,voice,video and
security services), and commodities sold,furnished or supplied through the
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the District. The District makes the following
representations:
(a) The District is a public utility district duly organized and existing under and
pursuant to the laws of the State of California.
(b) The District has full legal right, power and authority to enter into this
Agreement and carry out its obligations hereunder, to carry out and consummate all other
transactions contemplated by this Agreement, and the District has complied with the provisions of
the Law in all matters relating to such transactions.
(c) By proper action, the District has duly authorized the execution, delivery and
due performance of this Agreement.
(d) The District will not take or, to the extent within its power, permit any action
to be taken which results in the interest paid for the installment purchase of the Project under the
terms of this Agreement being included in the gross income of the Certificate Owners or its assigns
for purposes of federal or State of California income taxation.
(e) The District has determined that it is necessary and proper for District uses
and purposes within the terms of the Law that the District finance the Project in the manner provided
for in this Agreement.
Section 2.2. Representations and Warranties by the Corporation. The Corporation makes
the following representations and warranties:
(a) The Corporation is a nonprofit public benefit corporation duly organized and
in good standing under the laws of the State of California, has full legal right,power and authority to
enter into this Agreement and to carry out and consummate all transactions contemplated by this
Agreement and by proper action has duly authorized the execution and delivery and due performance
of this Agreement.
(b) The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated will not violate any provision of law, any order of any court or
other agency of government, or any indenture, material agreement or other instrument to which the
Corporation is now a party or by which it or any of its properties or assets is bound, or be in conflict
with, result in a breach of or constitute a default (with due notice or the passage of time or both)
under any such indenture, agreement or other instrument, or result in the creation or imposition of
any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Corporation.
(c) The Corporation will not take or permit any action to be taken which results
in interest paid for the installment purchase of the Project under the terms of this Agreement being
included in the gross income of the Certificate Owners or its assigns for purposes of federal or State
of California income taxation.
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When the Project shall have been constructed, installed, developed or acquired in accordance
with the Installment Purchase Agreement, a statement of the District stating the fact and date of such
acquisition, installation, development, construction and acceptance and stating that all of such costs
of acquisition and incidental expenses have been determined and paid (or that all of such costs and
expenses have been paid less specified claims which are subject to dispute and for which a retention
in the Acquisition Fund is to be maintained in the full amount of such claims until such dispute is
resolved), shall be delivered to the Treasurer of the District and the Trustee by the District. Upon the
receipt of such statement, the Treasurer of the District shall transfer any remaining balance in the
Acquisition Fund not needed for Acquisition Fund purposes (but less the amount of any such
retention which amount shall be certified to the Treasurer of the District by the District) to the
Trustee which shall transfer such amounts first to the Reserve Fund until the amount therein equals
the Reserve Requirement, and thereafter to the Certificate Payment Fund for prepayment of
Certificates in accordance with Section 4.1(e) of the Trust Agreement.
ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.1. Purchase Price.
(a) The Purchase Price to be paid by the District hereunder to the Corporation is
the sum of the principal amount of the District's obligations hereunder plus the interest to accrue on
the unpaid balance of such principal amount from the effective date hereof over the term hereof,
subject to prepayment as provided in Article VII.
(b) The principal amount of the payments to be made by the District hereunder is
set forth in Exhibit A hereto.
(c) The interest to accrue on the unpaid balance of such principal amount is as
specified in Section 4.2 and Exhibit A hereto, and shall be paid by the District as and constitute
interest paid on the principal amount of the District's obligations hereunder.
Section 4.2. Installment Payments. The District shall, subject to any rights of prepayment
provided in Article VII, pay the Corporation the Purchase Price in installment payments of interest
and principal in the amounts and on the Installment Payment Dates as set forth in Exhibit A hereto.
Each Installment Payment shall be paid to the Corporation in lawful money of the United
States of America. In the event the District fails to make any of the payments required to be made by
it under this section, such payment shall continue as an obligation of the District until such amount
shall have been fully paid; and the District agrees to pay the same with interest accruing thereon at
the rate or rates of interest then applicable to the remaining unpaid principal balance of the
Installment Payments if paid in accordance with their terms.
The obligation of the District to make the Installment Payments from Revenues is absolute
and unconditional, and until such time as the Purchase Price shall have been paid in full (or provision
for the payment thereof shall have been made pursuant to Article IX), the District will not
discontinue or suspend any Installment Payments required to be made by it under this section when
due, whether or not the Broadband System or any part thereof is operating or operable, or its use is
suspended, interfered with, reduced or curtailed or terminated in whole or in part, and whether or not
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transfer to the Trustee for deposit in the Reserve Fund and to the applicable trustee for such other
reserve funds and/or accounts, if any, as may have been established in connection with Bonds or
Contracts other than this Agreement, that sum, if any, necessary to restore the Reserve Fund to an
amount equal to the Reserve Requirement; provided, however, that the District may provide for the
Reserve Fund by means other than cash and Permitted Investments pursuant to Section 5.4 of the
Trust Agreement.
(c) Surplus. 'Moneys on deposit in the Revenue Fund on each Installment
Payment Date not necessary to make any of the payments required above may be expended by the
District at any time for any purpose permitted by law.
Section 5.3. Additional Contracts and Bonds. The District may at any time execute any
Contract or issue any Bonds, as the case may be, in accordance herewith;provided:
(a) The Net Revenues for the most recent audited Fiscal Year preceding the date
of adoption by the Board of Directors of the District of the resolution authorizing the issuance of
such Bonds or the date of the execution of such Contract, as the case may be, as evidenced by both a
calculation prepared by the District and a special report prepared by an Independent Certified Public
Accountant or an Independent Financial Consultant on such calculation on file with the District, shall
have produced a sum equal to at least one hundred twenty-five percent (125%) of the Debt Service
for such Fiscal Year; and
(b) The Net Revenues for the most recent audited Fiscal Year preceding the date
of the execution of such Contract or the date of adoption by the Board of Directors of the District of
the resolution authorizing the issuance of such Bonds, as the case may be, including adjustments to
give effect as of the first day of such Fiscal Year to increases or decreases in rates and charges for the
Broadband Service approved and in effect as of the date of calculation, as evidenced by both a
calculation prepared by the District and a special report prepared by an Independent Certified Public
Accountant or an Independent Financial Consultant on such calculation on file with the District, shall
have produced a sum equal to at least one hundred twenty-five percent (125%) of the Debt Service
for such Fiscal Year plus the Debt Service which would have accrued on any Contracts executed or
Bonds issued since the end of such Fiscal Year assuming such Contracts had been executed or Bonds
had been issued at the beginning of such Fiscal Year plus the Debt Service which would have
accrued had such Contract been executed or Bonds been issued at the beginning of such Fiscal Year;
and
(c) The estimated Net Revenues for the then current Fiscal Year and for each
Fiscal Year thereafter to and including the first complete Fiscal Year after the latest Date of
Operation of any uncompleted Parity Project to be financed from proceeds of such Contracts or
Bonds, as evidenced by a certificate of the General Manager of the District on file with the District,
including (after giving effect to the completion of all such uncompleted Parity Projects) an allowance
for estimated Net Revenues for each of such Fiscal Years arising from any increase in the income,
rents, fees, rates and charges estimated to be fixed,prescribed or received for Broadband Service and
which are economically feasible and reasonably considered necessary based on projected operations
for such period, as evidenced by a certificate of the Manager on file with the District, shall produce a
sum equal to at least one hundred twenty-five percent (125%) of the estimated Debt Service for each
of such Fiscal Years, after giving effect to the execution of all Contracts and the issuance of all
Bonds estimated to be required to be executed or issued to pay the costs of completing all
uncompleted Parity Projects within such Fiscal Years, assuming that all such Contracts and Bonds
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may at any time, or from time to time, issue Contracts and Bonds as permitted herein, or may issue or
incur evidences of indebtedness or incur other obligations, provided that such pledge and lien shall
be subordinate in all respects to the pledge of and lien thereon provided herein.
Section 6.3. Against Sale or Other Disposition of Property. The District will not enter into
any agreement or lease which impairs the operation of the Broadband System or any part thereof
necessary to secure adequate Net Revenues for the payment of the Installment Payments, or which
would otherwise impair the rights of the Corporation hereunder or the operation of the Broadband
System. Any real or personal property which has become nonoperative or which is not needed for
the efficient and proper operation of the Broadband System, or any material or equipment which has
become worn out, may be sold if such sale will not impair the ability of the District to pay the
Installment Payments and if the proceeds of such sale are deposited in the Revenue Fund.
Nothing herein shall restrict the ability of the District to sell any portion of the Broadband
System if such portion is immediately repurchased by the District and if such arrangement cannot by
its terms result in the purchaser of such portion of the Broadband System exercising any remedy
which would deprive the District of or otherwise interfere with its right to own and operate such
portion of the Broadband System.
Section 6.4. Against Competitive Facilities . To the extent permitted by existing law, the
District covenants that it will not acquire, construct, maintain or operate within the boundaries of the
District any broadband system competitive with the Broadband System.
Section 6.5. Tax Covenants. Notwithstanding any other provision of this Agreement,
absent an opinion of Special Counsel that the exclusion from gross income of interest with respect to
the Certificates will not be adversely affected for federal income tax purposes, the District and the
Corporation covenant to comply with all applicable requirements of the Code necessary to preserve
such exclusion from gross income and specifically covenants, without limiting the generality of the
foregoing, as follows:
(a) Private Activity. The District and the Corporation will not take or omit to
take any action or make any use of the proceeds of the Certificates or of any other moneys or
property which would cause the Certificates to be "private activity bonds" within the meaning of
Section 141 of the Code.
(b) Arbitrage. The District and the Corporation will make no use of the proceeds
of the Certificates or of any other amounts or property, regardless of the source, or take or omit to
take any action which would cause the Certificates to be "arbitrage bonds" within the meaning of
Section 148 of the Code.
(c) Federal Guarantee. The District and the Corporation will make no use of the
proceeds of the Certificates or take or omit to take any action that would cause the Certificates to be
"federally guaranteed"within the meaning of Section 149(b) of the Code.
(d) Information Reporting. The District and the Corporation will take or cause to
be taken all necessary action to comply with the informational reporting requirements of
Section 149(e)of the Code.
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improvements to the Broadband System, then the excess Net Proceeds shall be applied in part to the
prepayment of Installment Payments as provided in Article VII and in part to such other fund or
account as may be appropriate and used for the retirement of Bonds and Contracts in the same
proportion which the aggregate unpaid principal balance of Installment Payments then bears to the
aggregate unpaid principal amount of such Bonds and Contracts. If such Net Proceeds are sufficient
to enable the District to retire the entire obligation evidenced hereby prior to the final due date of the
Installment Payments as well as the entire obligations evidenced by Bonds and Contracts then
remaining unpaid prior to their final respective due dates, the District may elect not to reconstruct,
repair or replace the damaged or destroyed portion of the Broadband System, and/or not to construct
other additions, betterments, extensions or improvements to the Broadband System; and thereupon
such Net Proceeds shall be applied to the prepayment of Installment Payments as provided in Article
VII and to the retirement of such Bonds and Contracts.
(b) The District will procure and maintain liability and workers compensation
coverage, if available on commercially reasonable terms from reputable insurance companies, and
such other insurance as it shall deem advisable or necessary to protect its interests and the interests of
the Corporation, which insurance shall afford protection in such amounts and against such risks as
are usually covered in connection with broadband systems similar to the Broadband System.
(c) Any insurance maintained pursuant to paragraph (a) or (b) above may be
maintained under a self-insurance program so long as such self-insurance is maintained in the
amounts and manner usually maintained in connection with broadband systems similar to the
Broadband System and is, in the opinion of an accredited actuary,actuarially sound.
All policies of insurance required to be maintained herein shall provide that the Corporation
and the Trustee shall be given thirty (30) days written notice of any intended cancellation thereof or
reduction of coverage provided thereby.
Section 6.10. Accounting Records; Financial Statements and Other Reports. The District
will keep appropriate accounting records in which complete and correct entries shall be made of all
transactions relating to the Broadband System, which records shall be available for inspection by the
Corporation and the Trustee at reasonable hours and under reasonable conditions.
Section 6.11. Protection of Security and Rights of the Corporation. The District will
preserve and protect the security hereof and the rights of the Corporation to the Installment Payments
hereunder and will warrant and defend such rights against all claims and demands of all persons.
OTHER THAN REVENUES, NO OTHER DISTRICT MONEYS ARE PLEDGED TO THE
PAYMENT OF THE INSTALLMENT PAYMENTS. THE DISTRICT SHALL PAY
INSTALLMENT PAYMENTS AND OTHER AMOUNTS DUE HEREUNDER SOLELY FROM
REVENUES AND IS HEREBY PROHIBITED FROM PAYING INSTALLMENT PAYMENTS
FROM ANY OTHER DISTRICT FUNDS OR MONEYS OR USING SUCH FUNDS OR
MONEYS FOR THE PERFORMANCE OF ANY AGREEMENTS OR COVENANTS REQUIRED
TO BE PERFORMED BY IT CONTAINED HEREIN.
Section 6.12. Payment of Taxes and Compliance with Governmental Regulations. The
District will pay and discharge all taxes, assessments and other governmental charges which may
hereafter be lawfully imposed upon the Broadband System, or any part thereof or upon the Revenues
when the same shall become due. The District will duly observe and conform with all valid
regulations and requirements of any governmental authority relative to the operation of the
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�a
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 7.1. Prepayment.
(a) The District may or shall, as the case may be, prepay from the Net Proceeds
as provided herein on any date, all or any part on any Installment Payment Date, of the principal
amount of the unpaid Installment Payments at a prepayment price equal to the sum of the principal
amount prepaid plus accrued interest thereon to the date of prepayment.
(b) The District may prepay the Installment Payments either in inverse order of
maturity or pro rata among maturities, and by lot within a maturity, as a whole or in part, on any date
on or after November 1, 2014 from any available funds. The principal amount of the unpaid
Installment Payments is payable at a prepayment price (expressed as a percentage of the principal
amount of the Installment Payments to be prepaid) plus accrued interest thereon to the date of
prepayment as set forth below:
Prepayment
Prepayment Period Price
November 1, 2014 through October 31, 2015 102%
November 1, 2015 through October 31,2016 101
Notwithstanding any such prepayment, the District shall not be relieved of its obligations
hereunder, including its obligations under Article IV, until the Purchase Price shall have been fully
paid (or provision for payment thereof shall have been provided to the written satisfaction of the
Corporation).
(c) The District may prepay the Installment Payments in whole or in part on any
date, (i) as a result of changes in the constitutions or laws of the United States or the State of
California, any executive or administrative action by any federal, state or local entity, or any final
decree or judgment of any court after the contest thereof by the District, which materially adversely
affect the ability of the District to own or operate the Broadband System, (ii)the Installment
Purchase Agreement becomes void or unenforceable or impossible of performance in accordance
with the intent and purpose of the parties as expressed therein or (iii)unreasonable burdens or
excessive liabilities are imposed upon the District by reason of its ownership or operation of the
Broadband System, in each case at a Prepayment Price equal to 100%of the principal amount thereof
(together with interest accrued to such dated fixed for prepayment),without premium.
(d) The District shall prepay the Installment Payments in whole upon the
occurrence of a Determination of Taxability on the first date possible subsequent to such a
Determination of Taxability after the giving of notice by the Trustee to Owners pursuant to the Trust
Agreement, at a Prepayment Price equal to 100% of the principal amount thereof (together with
interest accrued to such dated fixed for prepayment),without premium.
Section 7.2. Method of Prepayment. Before making any prepayment pursuant to
Section 7.1(a), the District may, within five (5) days following the event permitting the exercise of
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with their terms, and the reasonable expenses of the Corporation, and any and all other defaults
known to the Corporation (other than in the payment of the entire principal amount of the unpaid
Installment Payments and the accrued interest thereon due and payable solely by reason of such
declaration) shall have been made good or cured to the satisfaction of the Corporation or provision
deemed by the Corporation to be adequate shall have been made therefor,then and in every such case
the Corporation, by written notice to the District, may rescind and annul such declaration and its
consequences; but no such rescission and annulment shall extend to or shall affect any subsequent
default or shall impair or exhaust any right or power consequent thereon.
Section 8.2. Application of Funds Upon Acceleration. Upon the date of the declaration of
acceleration as provided in Section 8.1, all Revenues thereafter received shall be applied in the
following order-
First,to the payment, without preference or priority,and in the event of any insufficiency of
such Revenues ratably without any discrimination or preference, of the fees,costs and
expenses of the Corporation and Trustee, if any, including reasonable compensation to its
accountants and counsel;
Second,to the payment of the Operation and Maintenance Costs; and
Third,to the payment of the entire principal amount of the unpaid Installment Payments and
the unpaid principal amount of all Bonds and Contracts and the accrued interest thereon,with
interest on the overdue installments at the rate or rates of interest applicable to the Installment
Payments and such Bonds and Contracts if paid in accordance with,their respective terms.
Section 8.3. Other Remedies of the Corporation. The Corporation shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the District or any director, officer or employee thereof, and to compel the
District or any such director, officer or employee to perform and carry out its or his duties under the
Law and the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Corporation; or
(c) by suit in equity upon the happening of an Event of Default to require the
District and its directors, officers and employees to account as the trustee of an express trust.
Notwithstanding anything contained herein, the Corporation shall have no security interest in
or mortgage on the Project, the Broadband System or other assets of the District, and no default
hereunder shall result in the loss of the Project,the Broadband System or other assets of the District.
Section 8.4. Non-Waiver. Nothing in this article or in any other provision hereof shall
affect or impair the obligation of the District, which is absolute and unconditional, to pay the
Installment Payments to the Corporation at the respective due dates or upon prepayment from the Net
Revenues, the Revenue Fund and the other funds herein pledged for such payment, or shall affect or
impair the right of the Corporation, which is also absolute and unconditional, to institute suit to
enforce such payment by virtue of the contract embodied herein.
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discharged and satisfied (except for the right of the Trustee and the obligation of the District to have
such moneys and such Permitted Investments applied to the payment of such Installment Payments).
In such event, upon request of the District the Trustee shall cause an accounting for such
period or periods as may be requested by the District to be prepared and filed with the District and
shall execute and deliver to the District all such instruments as may be necessary or desirable to
evidence such total or partial discharge and satisfaction, as the case may be, and, in the event of a
total discharge and satisfaction, the Trustee shall pay over to the District, after payment of all
amounts due the Trustee pursuant to the Trust Agreement, as an overpayment of Installment
Payments, all such moneys or such Permitted Investments held by it pursuant hereto other than such
moneys and such Permitted Investments as are required for the payment or prepayment of the
Installment Payments, which moneys and Permitted Investments shall continue to be held by the
Trustee in trust for the payment of the Installment Payments and shall be applied by the Trustee to
the payment of the Installment Payments of the District.
ARTICLE X
MISCELLANEOUS
Section 10.1. Liability of District Limited to Revenues. Notwithstanding anything
contained herein, the District shall not be required to advance any moneys derived from any source
of income other than the Revenues and the Revenue Fund for the payment of amounts due hereunder
or for the performance of any agreements or covenants required to be performed by it contained
herein. THE DISTRICT IS HEREBY PROHIBITED FROM USING ANY OTHER DISTRICT
FUNDS FOR ANY SUCH PURPOSE.
The obligation of the District to make the Installment Payments is a special obligation of the
District payable solely from the Net Revenues, and does not constitute a debt of the District or of the
State of California or of any political subdivision thereof in contravention of any constitutional or
statutory debt limitation or restriction.
OTHER THAN REVENUES,NO OTHER DISTRICT MONEYS ARE PLEDGED TO THE
PAYMENT OF THE INSTALLMENT PAYMENTS. THE DISTRICT SHALL PAY
INSTALLMENT PAYMENTS SOLELY FROM REVENUES AND IS HEREBY PROHIBITED
FROM PAYING INSTALLMENT PAYMENTS FROM ANY OTHER DISTRICT FUNDS OR
MONEYS.
Section 10.2. Benefits of Installment Purchase Agreement Limited to Parties. Nothing
contained herein, expressed or implied, is intended to give to any person other than the District or the
Corporation any right, remedy or claim under or pursuant hereto, and any agreement or covenant
required herein to be performed by or on behalf of the District or the Corporation shall be for the sole
and exclusive benefit of the other parry.
Section 10.3. Successor Is Deemed Included in all References to Predecessor. Whenever
either the District or the Corporation is named or referred to herein, such reference shall be deemed
to include the successor to the powers, duties and functions that are presently vested in the District or
the Corporation, and all agreements and covenants required hereby to be performed by or on behalf
of the District or the Corporation shall bind and inure to the benefit of the respective successors
thereof whether so expressed or not.
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If to the Corporation: Truckee Donner Public Utility District Financing
Corporation
c/o Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96160
Attention: President
Section 10.11. Effective Date. This Agreement shall become effective upon its execution
and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for
the payment thereof shall have been made to the written satisfaction of the Corporation).
Section 10.12. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one and
the same instrument.
Section 10.13. Indemnification of Corporation. The District hereby agrees to indemnify and
hold harmless the Corporation if and to the extent permitted by law, from and against all claims,
advances, damages and losses, including legal fees and expenses, arising out of or in connection with
the acceptance or the performance of its duties hereunder and under the Trust Agreement; provided
that no indemnification will be made for willful misconduct, negligence or breach of an obligation
hereunder or under the Trust Agreement by the Corporation.
Section 10.14. Amendments Permitted. This Agreement and the rights and obligations of
the Corporation, the District, the Owners of the Certificates and of the Trustee may be modified or
amended at any time by an amendment hereto which shall become binding when the written consents
of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding,
exclusive of Certificates disqualified as provided in the Trust Agreement, shall have been filed with
the Trustee. No such modification or amendment shall (1) extend the stated maturities of the
Certificates, or reduce the rate of interest represented thereby, or change the method of computing the
rate of interest with respect thereto, or extend the time of payment of interest, or reduce the amount
of principal represented thereby, or reduce any premium payable on the prepayment thereof, without
the consent of the Owner of each Certificate so affected, or (2) reduce the aforesaid percentage of
Owners of Certificates whose consent is required for the execution 'of any amendment or
modification of this Agreement without the consent of the Owners of all Certificates then
Outstanding, or (3) modify any of the rights or obligations of the Trustee, the Corporation or the
Bond Insurer without its respective written consent thereto; or (4) modify the limitations on the
liability of the District hereunder or amend Section 10.15 hereof without the consent of the Nevada
County Local Agency Formation Commission.
This Agreement and the rights and obligations of the Corporation, the District and of the
Owners of the Certificates may also be modified or amended at any time by an amendment hereto
which shall become binding upon adoption, without the consent of the Owners of any Certificates,
but only to the extent permitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Corporation or the District
contained in this Agreement other covenants and agreements thereafter to be observed or to surrender
any right or power herein reserved to or conferred upon the Corporation or the District, and which
shall not adversely affect the interests of the Owners of the Certificates;
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IN WITNESS WHEREOF, the parties hereto have executed and attested this Agreement by
their officers thereunto duly authorized as of the day and year first written above.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
President
Clerk
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
FINANCING CORPORATION
President
., Clerk
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EXHIBIT B
DESCRIPTION OF THE PROJECT
The Project comprises the following described equipment and facilities:
COMPONENT CONTRACT COST
TOTAL
B-1
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r
Exhibit A
ACQUISITION FUND DISBURSEMENTS
Item Purpose of
Number Payee Name and Address Obli a tion Amount
C-2
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t
R
µ Table of Contents
(continued)
Page
Section 6.3. Against Sale or Other Disposition of Property...............................................14
Section 6.4. Against Competitive Facilities.......................................................................14
Section6.5. Tax Covenants................................................................................................ 14
Section 6.6. Maintenance and Operation of the Broadband System..................................15
Section 6.7. Payment of Claims......................................................................................... 15
Section 6.8. Compliance with Contracts............................................................................15
Section6.9. Insurance. ....................................................................................................... 15
Section 6.10. Accounting Records;Financial Statements and Other Reports ..................... 16
Section 6.11. Protection of Security and Rights of the Corporation.................................... 16
Section 6.12. Payment of Taxes and Compliance with Governmental Regulations............ 16
Section 6.13. Amount of Rates and Charges........................................................................ 17
Section 6.14. Collection of Rates and Charges.................................................................... 17
Section 6.15. Eminent Domain Proceeds.............................................................................17
Section 6.16. Further Assurances......................................................................................... 17
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
Section7.1. Prepayment..................................................................................................... 1
Section 7.2. Method of Prepayment................................................................................... 18
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 8.1. Events of Default and Acceleration of Maturities.......................................... 19
Section 8.2. Application of Funds Upon Acceleration.......................................................20
Section 8.3. Other Remedies of the Corporation................................................................20
Section8.4. Non-Waiver....................................................................................................20
Section 8.5. Remedies Not Exclusive ................................................................................21
ARTICLE IX
DISCHARGE OF OBLIGATIONS
Section 9.1. Discharge of Obligations................................................................................21
ARTICLE X
MISCELLANEOUS
Section 10.1. Liability of District Limited to Revenues.......................................................22
Section 10.2. Benefits of Installment Purchase Agreement Limited to Parties....................22
Section 10.3. Successor Is Deemed Included in all References to Predecessor...................22
Section 10.4. Waiver of Personal Liability..........................................................................23
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DOCSSF/43372v6/22925-0011
Table of Contents
(continued)
Page
Section 10.5. Article and Section Headings, Gender and References..................................23
Section10.6. Partial Invalidity.............................................................................................23
Section10.7. Assignment.....................................................................................................23
Section10.8. Net Contract...................................................................................................23
Section10.9. California Law................................................................................................23
Section10.10. Notices...:........................................................................................................23
Section10.11. Effective Date.................................................................................................24
Section 10.12. Execution in Counterparts..............................................................................24
Section 10.13. Indemnification of Corporation......................................................................24
Section 10.14. Amendments Permitted..................................................................................24
Section 10.15. No Additional Advances................................................................................24
EXHIBIT A PURCHASE PRICE..................................................................................A-1
EXHIBIT B DESCRIPTION OF THE PROJECT.........................................................B-1
EXHIBIT C FORM OF REQUISITION NO. FOR DISBURSEMENT
FROM ACQUISITION FUND..................................................................C-1
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v
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions..............................................................
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the District...............................
Section 2.2. Representations and Warranties by the Corporation........................................8
ARTICLE III
SALE AND PURCHASE OF THE PROJECT
Section 3.1. Purchase and Sale of the Project......................................................................9
Section3.2. Title..................................................................................................................9
Section 3.3. Acquisition and Construction of the Project....................................................9 "
Section 3.4. Changes to the Project......................................................................................9
Section3.5. Acquisition Fund..............................................................................................9
ARTICLE IV
INSTALLMENT PAYMENTS
Section4.1. Purchase Price................................................................................................ 10
Section 4.2. Installment Payments .......................................................... ......... 10
..................
ARTICLE V
SECURITY
Section 5.1. Pledge of Revenues........................................................................................ 11
Section 5.2. Allocation of Revenues..................................................................................I I
Section 5.3. Additional Contracts and Bonds.....................................................................12
Section5.4. Investments..................................................................................................... 13
ARTICLE VI
COVENANTS OF THE DISTRICT
Section 6.1. Compliance with Installment Purchase Agreement and Ancillary Agreements 13
Section 6.2. Against Encumbrances................................................................................... 13
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EXHIBIT C
[FORM OF REQUISITION NO. FOR
DISBURSEMENT FROM ACQUISITION FUND]
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2000
The undersigned hereby states and certifies:
(i) that he is the duly appointed, qualified and acting General Manager of the Truckee
Donner Public Utility District, a California public utility organized and existing under the laws of the
State of California (the "District"), and as such, is familiar with the facts herein certified and is
authorized to certify the same;
(ii) that,pursuant to Section 3.4 of that certain Installment Purchase Agreement, dated as
of 1, 2004 (the "Trust Agreement"), by and among BNY Western Trust
Company, as trustee (the "Trustee"), the Truckee Donner Public Utility District Public Financing
Corporation and the District, the undersigned hereby requests the Treasurer of the District to disburse
this date the following amounts from the Acquisition Fund established under the Trust Agreement,to
the payees designated on the attached Exhibit A;
(iii) that each obligation mentioned herein has been incurred by the District and is a
proper charge against the Acquisition Fund;
(iv) that any approval required under the California Environmental Quality Act, as
amended (Division 13 of the California Public Resources Code), prior to the expenditure of such
amount for the purpose set forth on the attached Exhibit A has been received and is final;
(v) that there has not been filed with or served upon the District notice of any lien, right
to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys
payable to any of the payees named on the attached Exhibit A, which has not been released or will
not be released simultaneously with the payment of such obligation, other than materialmen's or
mechanics' liens accruing by mere operation of law.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
General Manager
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EXHIBIT A
PURCHASE PRICE
1. The principal amount of payments to be made by the District hereunder is
2. The installment payments of principal and interest are payable in the amounts and on
the Installment Payment Dates as follows:
Installment Amount Attributable to Amount Attributable to
Payment Date Principal Interest
5th Day Prior To:
A-1
DOCSSF/43372v6/22925-0011
(b) to cure, correct or supplement any ambiguous or defective provision
contained in this Agreement or in regard to questions arising under this Agreement, as the
Corporation or the District may deem necessary or desirable and which shall not adversely affect the
interests of the Owners of the Certificates; and
(c) to make such other amendments or modifications as may be in the best
interests of the Owners of the Certificates.
No amendment without consent of the Owners may modify any of the rights or obligations of
the Trustee without its written consent thereto.
Section 10.15. No Additional Advances. The District shall not make any additional
advances or interfund loans for the purpose of funding the capital or operating costs of the
Broadband Service.
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Section 10.4. Waiver of Personal Liability. No director, officer or employee of the District
shall be individually or personally liable for the payment of the Installment Payments, but nothing
contained herein shall relieve any director, officer or employee of the District from the performance
of any official duty provided by any applicable provisions of law or hereby.
Section 10.5. Article and Section Headings, Gender and References. The headings or titles
of the several articles and sections hereof and the table of contents appended hereto shall be solely
for convenience of reference and shall not affect the meaning, construction or effect hereof, and
words of any gender shall be deemed and construed to include all genders. All references herein to
"Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections,
subdivisions or clauses hereof; and the words "hereby", "herein," "hereof," "hereto,"."herewith" and
other words of similar import refer to this Agreement as a whole and not to any particular article,
section, subdivision or clause hereof.
Section 10.6. Partial Invalidity. If any one or more of the agreements or covenants or
portions thereof required hereby to be performed by or on the part of the District or the Corporation
shall be contrary to law, then such agreement or agreements, such covenant or covenants or such
portions thereof shall be null and void and shall be deemed separable from the remaining agreements
and covenants or portions thereof and shall in no way affect the validity hereof. The District and the
Corporation hereby declare that they would have executed this Agreement, and each and every other
article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact
that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof
or the application thereof to any person or circumstance may be held to be unconstitutional,
unenforceable or invalid. "-
Section 10.7. Assignment. This Agreement and any rights hereunder may be assigned by
the Corporation, as a whole or in part, without the necessity of obtaining the prior consent of the
District.
Section 10.8. Net Contract. This Agreement shall be deemed and construed to be a net
contract, and the District shall pay absolutely net during the term hereof the Installment Payments
and all other payments required hereunder, free of any deductions and without abatement, diminution
or set-off whatsoever.
Section 10.9. California Law. THE INSTALLMENT PURCHASE AGREEMENT
SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.
Section 10.10. Notices. All written notices to be given hereunder shall be given by mail to
the party entitled thereto at its address set forth below, or at such other address as such party may
provide to the other party in writing from time to time,namely:
If to the District: Truckee Donner Public Utility District
P.O. Box 309
11570 Donner Pass Road
Truckee, CA 96160
Attention: General Manager
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A waiver of any default or breach of duty or contract by the Corporation shall not affect any
subsequent default or breach of duty or contract or impair any rights or remedies on any such
subsequent default or breach of duty or contract. No delay or omission by the Corporation to
exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any
such right or remedy or shall be construed to be a waiver of any such default or breach of duty or
contract or an acquiescence therein, and every right or remedy conferred upon the Corporation by the
Law or by this article may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Corporation.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or
determined adversely to the Corporation, the District and the Corporation shall be restored to their
former positions, rights and remedies as if such action, proceeding or suit had not been brought or
taken.
Section 8.5. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Corporation is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity or by statute or otherwise and may be exercised without exhausting and
without regard to any other remedy conferred by the Law or any other law.
If any remedial action is discontinued or abandoned,the Trustee and Certificate Owners shall
be restored to their former positions.
ARTICLE IX
DISCHARGE OF OBLIGATIONS
Section 9.1. Discharge of Obli atg ions.
(a) When all or any portion of the Installment Payments shall have become due
and payable in accordance herewith or a written notice of the District to prepay all or any portion of
the Installment Payments shall have been filed with the Trustee; and
(b) there shall have been deposited with the Trustee at or prior to the Installment
Payment Dates or date (or dates) specified for prepayment, in trust for the benefit of the Corporation
or its assigns and irrevocably appropriated and set aside to the payment of all or any portion of the
Installment Payments, sufficient moneys and non-callable Permitted Investments, issued by the
United States of America and described in clause (A) of the definition thereof, the principal of and
interest on which when due will provide money sufficient to pay all principal, prepayment premium,
if any, and interest of such Installment Payments to their respective Installment Payment Dates or
prepayment date or dates as the case may be; and
(c) provision shall have been made for paying all fees and expenses of the
Trustee,
then and in that event, the right, title and interest of the Corporation herein and the
obligations of the District hereunder shall, with respect to all or such portion of the Installment
Payments as have been so provided for, thereupon cease, terminate, become void and be completely
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DOCSSF/43372v6/22925-0011
such right to prepay or creating such obligation to prepay, give written notice to the Corporation and
the Trustee describing such event and specifying the date on which the prepayment of the Certificates
will be paid, which date shall be not less than sixty (60) days from the date such notice is given,
unless such prepayment must occur on an Interest Payment Date, in which case such date shall be the
next Interest Payment Date with respect to which notice of prepayment may be timely given pursuant
to the Trust Agreement.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Section 8.1. Events of Default and Acceleration of Maturities. If one or more of the
following Events of Default shall happen,that is to say--
(a) if default shall be made by the District in the due and punctual payment of
any Installment Payment or any Contract or Bond when and as the same shall become due and
payable;
(b) if default shall be made by the District in the performance of any of the other
agreements or covenants required herein by it or in any Contract or Bond to be performed by it, and
such default shall have continued for a period of sixty (60) days after the District shall have been
given notice in writing of such default by the Corporation;
(c) if the District shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States of
America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with
or without the consent of the District seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state therein, or
if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction shall assume custody or control of the District or of the whole or any substantial part of
its property; or
(d) if payment of the principal of any Contract or Bond is accelerated in
accordance with its terms;
then and in each and every such case during the continuance of such Event of Default specified in
clauses (c) and (d) above, the Corporation shall, and for any other such Event of Default the
Corporation may, and in each and every such case the Corporation, by notice in writing to the
District, shall declare the entire principal amount of the unpaid Installment Payments and.the accrued
interest thereon to be due and payable immediately, and upon any such declaration the same shall
become immediately due and payable, anything contained herein to the contrary notwithstanding.
This subsection however, is subject to the condition that if at any time after the entire principal
amount of the unpaid Installment Payments and the accrued interest thereon shall have been so
declared due and payable and before any judgment or decree for the payment of the moneys due shall
have been obtained or entered the District shall deposit with the Corporation a sum sufficient to pay
the unpaid principal amount of the Installment Payments and/or the unpaid payment of any other
Contract or Bond referred to in clause (a) above due prior to such declaration and the accrued interest
thereon, with interest on such overdue installments, at the rate or rates applicable to the remaining
unpaid principal balance of the Installment Payments or such Contract or Bond if paid in accordance
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Broadband System or any part thereof, but the District shall not be required to comply with any
regulations or requirements so long as the validity or application thereof shall be contested in good
faith.
Section 6.13. Amount of Rates and Charges. To the fullest extent permitted by law, the
District shall fix, prescribe and collect rates and charges for the Broadband Service which will be at
least sufficient to yield during each Fiscal Year Net Revenues equal to one hundred twenty five
percent (125%) of Debt Service for such Fiscal Year. The District may make adjustments from time
to time in such rates and charges and may make such classification thereof as it deems necessary,but
shall not reduce the rates and charges then in effect unless the Net Revenues from such reduced rates
and charges will at all times be sufficient to meet the requirements of this section.
Section 6.14. Collection of Rates and Charges. The District will have in effect at all times
by-laws, rules and regulations requiring each customer to pay the rates and charges applicable to the
Broadband Service and providing for the billing thereof and for a due date and a delinquency date for
each bill.
Section 6.15. Eminent Domain Proceeds. If all or any part of the Broadband System shall
be taken by eminent domain proceedings,the Net Proceeds thereof shall be applied as follows:
(a) If (1) the District files with the Corporation and the Trustee a certificate
showing (i) the estimated loss of annual Net Revenues, if any, suffered or to be suffered by the
District by reason of such eminent domain proceedings, (ii) a general description of the additions,
betterments, extensions or improvements to the Broadband System proposed to be acquired and
constructed by the District from such Net Proceeds, and (iii) an estimate of the additional annual Net
Revenues to be derived from such additions, betterments, extensions or improvements, and (2) the
District, on the basis of such certificate filed with the Corporation and the Trustee, determines that
the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net
Revenues resulting from such eminent domain proceedings so that the ability of the District to meet
its obligations hereunder will not be substantially impaired (which determination shall be final and
conclusive), then the District shall promptly proceed with the acquisition and construction of such
additions, betterments, extensions or improvements substantially in accordance with such certificate
and such Net Proceeds shall be applied for the payment of the costs of such acquisition and
construction, and any balance of such Net Proceeds not required by the District for such purpose
shall be deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds shall be
applied by the District in part to the prepayment of Installment Payments as provided in Article VII
and in part to such other fiend or account as may be appropriate and used for the retirement of Bonds
and Contracts in the same proportion which the aggregate unpaid principal balance of Installment
Payments then bears to the aggregate unpaid principal amount of such Bonds and Contracts.
Section 6.16. Further Assurances. The District will adopt, deliver, execute and make any
and all further assurances, instruments and resolutions as may be reasonably necessary or proper to
carry out the intention or to facilitate the performance hereof and for the better assuring and
confirming unto the Corporation of the rights and benefits provided to it herein.
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(e) Miscellaneous. The District and the Corporation will take no action
inconsistent with the expectations stated in any Tax Certificate executed with respect to the
Certificates and will comply with the covenants and requirements stated therein and incorporated by
reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the District and the Corporation from issuing
Certificates, the interest with respect to which has been determined by Special Counsel to be subject
to federal income taxation.
Section 6.6. Maintenance and Operation of the Broadband System. The District will
maintain and preserve the Broadband System in good repair and working order at all times and will
operate the Broadband System in an efficient and economical manner and will pay all Operation and
Maintenance Costs as they become due and payable.
Section 6.7. 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 on the Revenues or the
funds or accounts created hereunder or on any funds in the hands of the District or the Trustee
pledged to pay the Installment Payments or to the Owners prior or superior to the lien of the
Installment Payments or which might impair the security of the Installment Payments,but the District
shall not be required to pay such claims if the validity thereof shall be contested in good faith.
Section 6.8. Compliance with Contracts. The District will neither take nor omit to take
any action under any contract if the effect of such act or failure to act would in any manner impair or
adversely affect the ability of the District to pay Installment Payments; and the District will comply
with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by it contained in all other contracts affecting or involving the Broadband
System, to the extent that the District is a party thereto, including but not limited to the
Agreement.
Section 6.9. Insurance.
(a) The District will procure and maintain or cause to be procured and
maintained insurance on the Broadband System with responsible insurers in such amounts and
against such risks (including damage to or destruction of the Broadband System) as are usually
covered in connection with facilities similar to the Broadband System so long as such insurance is
available from reputable insurance companies.
In the event of any damage to or destruction of the Broadband System caused by the perils
covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction, repair or
replacement of the damaged or destroyed portion of the Broadband System. The District shall begin
such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and
shall continue and properly complete such reconstruction, repair or replacement as expeditiously as
possible, and shall pay out of such Net Proceeds all costs and expenses in connection with such
reconstruction, repair or replacement so that the same shall be completed and the Broadband System
shall be free and clear of all claims and liens.
If such Net Proceeds exceed the costs of such reconstruction,repair or replacement portion of
the Broadband System, and/or the cost of the construction of additions, betterments, extensions or
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have maturities, interest rates and proportionate principal repayment provisions similar to the
Contract last executed or then being executed or the Bonds last issued or then being issued for the
purpose of acquiring and constructing any of such uncompleted Parity Projects.
(d) This Section 5.3 notwithstanding, Bonds or Contracts may be issued or
incurred to refund outstanding Bonds or Contracts if, after giving effect to the application of the
proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Bonds or
Contracts (outstanding on the date of issuance or incurrence of such refunding Bonds or Contracts,
but excluding such refunding Bonds or Contracts)not being refunded are outstanding.
(e) Nothing herein shall preclude the District from issuing any bonds or
installment purchase contracts the payments under which are subordinate to any Bonds or Contracts
of the District.
Section 5.4. Investments. All moneys held by the District in the Revenue Fund and the
Acquisition Fund shall be invested in Permitted Investments and the investment earnings thereon
shall remain on deposit in such fund, except as otherwise provided herein.
ARTICLE VI
COVENANTS OF THE DISTRICT
Section 6.1. Compliance with Installment Purchase Agreement and Ancillm Agreements.
The District will punctually pay the Installment Payments in strict conformity with the terms hereof,and will faithfully observe and perform all the agreements, conditions, covenants .and terms
contained herein required to be observed and performed by it, and will not terminate this Agreement
for any cause including, without limiting the generality of the foregoing, any acts or circumstances
that may constitute failure of consideration, destruction of or damage to the Broadband System,
commercial frustration of purpose, any change in the tax or other laws of the United States of
America or of the State of California or any political subdivision of either or any failure of the
Corporation to observe or perform any agreement, condition, covenant or term contained herein
required to be observed and performed by it, whether express or implied, or any duty, liability or
obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or
bankruptcy or liquidation of the Corporation or any force majeure, including acts of God, tempest,
storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo,
strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or
regulations of governmental authorities.
It is expressly understood and agreed by and among the parties to this Agreement that,
subject to Section 10.6 hereof, each of the agreements, conditions, covenants and terms contained in
this Agreement is an essential and material term of the purchase of and payment for the Project and
by the District pursuant to, and in accordance with, and as authorized under the Law.
The District will faithfully observe and perform all the agreements, conditions, covenants and
terms required to be observed and performed by it pursuant to all outstanding Contracts and Bonds as
such may from time to time be executed or issued, as the case may be.
Section 6.2. Against Encumbrances. The District will not make any pledge of or place
any lien on Revenues or the moneys in the Revenue Fund except as permitted hereby. The District
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the Project has been completed, and such payments shall not be subject to reduction whether by
offset or otherwise and shall not be conditional upon the performance or nonperformance by any
parry of any agreement for any cause whatsoever.
ARTICLE V
SECURITY
Section 5.1. Pledge of Revenues. All Revenues and all amounts on deposit in the
Revenue Fund are hereby irrevocably pledged to the payment of the Installment Payments as
provided herein and the Revenues shall not be used for any other purpose while any of the
Installment Payments remain unpaid; provided that out of the Revenues there may be apportioned
such sums for such purposes as are expressly permitted herein. This pledge, together with the pledge
created by all other Contracts and Bonds, shall constitute a lien on Revenues and, subject to
application of Revenues and all amounts on deposit therein as permitted herein, the Revenue Fund.
OTHER THAN REVENUES, NO OTHER DISTRICT MONEYS ARE PLEDGED TO THE
PAYMENT OF THE INSTALLMENT PAYMENTS. THE DISTRICT SHALL PAY
INSTALLMENT PAYMENTS SOLELY FROM REVENUES AND IS HEREBY PROHIBITED
FROM PAYING INSTALLMENT PAYMENTS FROM ANY OTHER DISTRICT FUNDS OR
MONEYS.
Section 5.2. Allocation of Revenues. In order to carry out and effectuate the pledge and
lien contained herein, the District agrees and covenants that all Revenues shall be received by the
District in trust hereunder and shall be deposited when and as received in a special fund designated as
the "Revenue Fund," which fund includes the accounts described in the definition thereof and which
fund the District agrees and covenants to maintain and to hold separate and apart from other funds so
long as any Contracts or Bonds remain unpaid. Moneys in the Revenue Fund shall be used and
applied by the District as provided in this Agreement.
The District shall, from the moneys in the Revenue Fund, pay all Operation and Maintenance
Costs (including amounts reasonably required to be set aside in contingency reserves for Operation
and Maintenance Costs, the payment of which is not then immediately required) as such Operation
and Maintenance Costs become due and payable. All remaining moneys in the Revenue Fund
thereafter shall be set aside by the District at the following times for the transfer to the following
respective special funds in the following order of priority; and all moneys in each of such funds shall
be held in trust and shall be applied, used and withdrawn only for the purposes set forth in this
Section.
(a) Installment Payments. Not later than each Installment Payment Date, the
District shall, from the moneys in the Revenue Fund, transfer to the Trustee the Installment Payment
due and payable on that Installment Payment Date. The District shall also, from the moneys in the
Revenue Fund, transfer to the applicable trustee for deposit in the respective payment fund, without
preference or priority, and in the event of any insufficiency of such moneys ratably without any
discrimination or preference, any other Debt Service in accordance with the provisions of any Bond
or Contract.
(b) Reserve Funds. On or before each Installment Payment Date the District
shall, from the remaining moneys in the Revenue Fund, thereafter, without preference or priority and
in the event of any insufficiency of such moneys ratably without any discrimination or preference,
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ARTICLE III
SALE AND PURCHASE OF THE PROJECT
Section 3.1. Purchase and Sale of the Project. In consideration for the Installment
Payments as set forth in Section 4.2, the Corporation agrees to sell, and hereby sells, to the District,
and the District agrees to purchase, and hereby purchases, from the Corporation, the Project at the
purchase price specified in Section 4.1 hereof and otherwise in the manner and in accordance with
the provisions of this Agreement.
Section 3.2. Title. All right, title and interest in each component of the Project shall vest
in the District immediately upon execution and delivery of this Agreement.
Section 3.3. Acquisition and Construction of the Project. The Corporation hereby agrees
to cause the Project, and any additions or modifications thereto to be constructed, acquired or
installed by the District as its agent, and the District shall enter into contracts and provide for, as
agent of the Corporation, the complete construction, acquisition and installation of the Project. The
District hereby agrees that it will cause the construction, acquisition and installation of the Project to
be diligently performed after the deposit of funds pursuant to Section 3.2 of the Trust Agreement,
upon satisfactory completion of design work and compliance with CEQA and approval by the Board
of Directors of the District, unforeseeable delays beyond the reasonable control of the District only
excepted. It is hereby expressly understood and agreed that the Corporation shall be under no
liability of any kind or character whatsoever for the payment of any cost of the Project and that all
such costs and expenses shall be paid by the District's Broadband System, regardless of whether the
funds deposited in the Acquisition Fund are sufficient to cover all such costs and expenses.
Section 3.4. Changes to the Project. The District may substitute other improvements for
those listed as components of the Project in Exhibit B hereto, but only if the District first files with
the Corporation and the Trustee a statement of the District:
(a) identifying the improvements to be deleted from such Exhibit and the
improvements to replace such deleted improvements; and
(b) stating that the estimated costs of construction, acquisition and installation of
the substituted improvements are not less than such costs for the improvements previously planned.
Section 3.5. Acquisition Fund. There is hereby established with the District the
Acquisition Fund. The moneys in the Acquisition Fund shall be held by the District in trust shall be
applied to the payment of the costs of acquisition, installation, development and construction of the
Project (including reimbursement of related start-up costs previously advanced by the District), and
of expenses incidental thereto, including Delivery Costs. Before any payment is made from the
Acquisition Fund by the Treasurer of the District, the Manager shall cause to be filed with the
Treasurer of the District a Written Requisition of the District in the form set forth in Exhibit C hereto.
Upon receipt of each such Written Requisition, the Treasurer of the District will pay the
amount set forth in such Written Requisition as directed by the terms thereof. The Treasurer of the
District need not make any such payment if it has received notice of any lien, right to lien or
attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid,
which has not been released or will not be released simultaneously with such payment.
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facilities of the Broadband System including allocable to the Broadband
System,plus
(2) except as set forth in(z)below,taxes or assessments, if any,the imposition of
which is permitted by law,and
(3) the earnings on and income derived from the investment of the amounts
described in clauses (1) and (2) above and the general unrestricted funds of
the District,
but excluding in all cases
(y) customers' deposits or any other deposits subject to refund until such
deposits have become the property of the District,and
(z) reserves, surcharges,taxes or assessments specifically pledged to the
payment of debt service with respect to notes,bonds or other
obligations of the District and which reserves,taxes or assessment are
not available for any other purpose of the District.
Trust Agreement
The term "Trust Agreement" means the Trust Agreement,dated as of November 1, 2004, by
and between the District, the Corporation and the Trustee, relating to the Certificates, as originally
executed and as it may from time to time be amended or supplemented in accordance with its terms.
Trustee
The term "Trustee" means BNY Western Trust Company, acting in its capacity as Trustee
under and pursuant to the Trust Agreement, and its successors and assigns.
Written Consent of the Corporation or District, Written Order of the Corporation or District,Written
Request of the Corporation or District,Written Requisition of the Corporation or District
The terms "Written Consent of the Corporation or District," "Written Order of the
Corporation or District," "Written Request of the Corporation or District," and "Written Requisition
of the Corporation or District" mean, respectively, a written consent, order, request or requisition
signed by or on behalf of(i) the Corporation by its President or Vice President or(ii) the District by
the President of its Board of Directors or its General Manager or by the Secretary of its Board of
Directors or by any two persons (whether or not officers of the Board of Directors of the District)
who are specifically authorized by resolution of the District to sign or execute such a document on its
behalf.
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District; and (3)is not connected with the District as an officer or employee thereof, but who may be
regularly retained to make reports thereto.
Installment Payment Date; Parity Installment Payment Date
The term "Installment Payment Date" means the fifth day prior to each Interest Payment
Date, or if said date is not a Business Day, then the preceding Business Day. The term "Parity
Installment Payment Date" means each date on which Parity Installment Payments are scheduled to
be paid by the District under and pursuant to any Contract.
Installment Payments; Parity Installment Payments
The term "Installment Payments" means the Installment Payments of interest and principal
scheduled to be paid by the District under and pursuant hereto. The term "Parity Installment
Payments" means the payments of interest and principal scheduled to be paid by the District under
and pursuant to the Contracts.
Interest Payment Date
The term "Interest Payment Date" means May 1 and November 1 of each year, commencing
May 1,2005.
Law
The term "Law" means the Public Utility District Act of the State of California (being
Division 7 of the Public Utilities Code of the State of California, as amended) and all laws
amendatory thereof or supplemental thereto.
Manager
The term "Manager" means the General Manager of the District, or any other person
designated by the General Manager to act on behalf of the General Manager.
Net Proceeds
The term "Net Proceeds" means, when used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award remaining after
payment of all expenses (including attorneys fees)incurred in the collection of such proceeds.
Net Revenues
The term "Net Revenues" means, for any Fiscal Year, the Revenues for such Fiscal Year less
the Operation and Maintenance Costs for such Fiscal Year.
Operation and Maintenance Costs
The term "Operation and Maintenance Costs" means (1) costs spent or incurred for
maintenance and operation of the Broadband System calculated in accordance with generally .-.
accepted accounting principles, including (among other things) the expenses of management and
repair and other expenses necessary to maintain and preserve the Broadband System in good repair
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the obligations of the District to make payments under this Agreement, excluding contracts entered
into for operation and maintenance of the Broadband System.
Corporation
The term "Corporation" means the Truckee Donner Public Utility District Financing
Corporation, a nonprofit public benefit corporation duly organized and existing under and by virtue
of the laws of the State of California.
Date of Operation
The term "Date of Operation" means, with respect to any uncompleted component Parity
Project, the estimated date by which such uncompleted component Parity Project will have been
completed and, in the opinion of an engineer, will be ready for operation by or on behalf of the
District.
Debt Service
The term"Debt Service"means, for any Fiscal Year,the sum of
(1) the interest on all outstanding Bonds,payable during such Fiscal Year(except to the
extent that such interest is capitalized);
(2) that portion of the principal amounts of all outstanding serial Bonds maturing in such
Fiscal Year;
(3) that portion of the principal amounts of all outstanding term Bonds required to be
prepaid or paid in such Fiscal Year; and
(4) that portion of the Parity Installment Payments required to be made during such
Fiscal Year(except to the extent the interest evidenced and represented thereby is
capitalized);
provided that, as to any such Bonds or Parity Installment Payments bearing or comprising interest at
other than a fixed rate,the rate of interest used to calculate Debt Service shall, for all purposes,be
assumed to bear interest at a fixed rate equal to the higher of
(i) the actual rate on the date of calculation,or if the Bonds or Parity Installment
Payments are not yet outstanding,the initial rate (if established and binding),
(ii) if the Bonds or Parity Installment Payments have been outstanding for at least
twelve months,the average rate over the twelve months immediately
preceding the date of calculation, and
(iii) (1) if interest on the Bonds or Parity Installment Payments is excludable from
gross income under the applicable provisions of the Code,the most recently
published Bond Buyer 25 Bond Revenue Index (or comparable index if no
longer published)plus fifty (50)basis points, or(2) if interest is not so
excludable, the interest rate on direct United States Treasury obligations with
comparable maturities plus fifty(50)basis points;
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DOCSSF/43372v6/22925-0011
INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT, made and entered into as of
November 1, 2004 by and between TRUCKEE DONNER PUBLIC UTILITY DISTRICT, a public
utility district duly organized and existing under and by virtue of the laws of the State of California
(the "District"), and TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING
CORPORATION, a nonprofit public benefit corporation duly organized and existing under and by
virtue of the laws of the State of California(the"Corporation").
WITNESSETH.-
WHEREAS, the District proposes to finance certain equipment and facilities as described in
Exhibit B hereto(the"Project");
WHEREAS,the Corporation has agreed to assist the District in financing the Project;
WHEREAS, the District is authorized by Division 7 of the Public Utilities Code of the State
of California, including but not limited to Section 16431 to dispose of and acquire property;
WHEREAS, the District and the Corporation have duly authorized the execution of this
Agreement;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to - ..
have been performed precedent to and in connection with the execution and delivery of this
Installment Purchase Agreement do exist, have happened and have been performed in regular and
due time, form and manner as required by law, and the parties hereto are now duly authorized to
execute and enter into this Installment Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS
FOLLOWS:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this
section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any
report or other document mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the
terms defined herein. Unless the context otherwise requires, all capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the Trust Agreement.
Accountant's Report
The term "Accountant's Report" means a report signed by an Independent Certified Public
Accountant.
DOCSSF/43372v6/22925-0011
8/24/04
TRUST AGREEMENT
by and among
BNY WESTERN TRUST COMPANY,
as Trustee
and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION,
as Corporation
and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT,
Dated as of November 1,2004
Relating to
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
DOCSSF/43383v5/22925-0011
delivery of the Certificates, including but not limited to costs of preparation and reproduction of
documents, printing expenses, filing and recording fees, initial fees and charges of the Trustee and
counsel to the Trustee, legal fees and charges, fees and disbursements of consultants and
professionals, rating agency fees, title insurance premiums, letter of credit fees and bond insurance
premiums (if any), fees and charges for preparation, execution and safekeeping of the Certificates
and any other cost, charge or fee in connection with the original execution and delivery of the
Certificates.
Depository or DTC. The term "Depository" or "DTC" means The Depository Trust
Company, New York, New York, a limited purpose trust company organized under the laws of the
State of New York in its capacity as securities depository for the Certificates.
Determination of Taxability. The term "Determination of Taxability" means the Trustee's
obtaining actual knowledge of a judgment or order of a court or an order, ruling, regulation or
decision of the United States Department of the Treasury or the Internal Revenue Service which is
binding with respect to the Certificates and which declares or determines, as applicable, that interest
with respect to the Certificates is includable in gross income for federal income tax purposes (other
than interest on any Certificate for any period during which such Certificate is held by a "substantial
user" of any facility financed with the proceeds of the Certificates or a "related person," as such
terms usd in Section 147(a) of the Code).
Information Services. The term "Information Services" means national information services
that disseminate securities redemption notices; or, in accordance with then-current guidelines of the
Securities and Exchange Commission, such other services providing information with respect to
called bonds as the District may specify in a Written Request to the District and the Trustee as the
Trustee may select.
Installment Payments. The term "Installment Payments" means the installment payments
payable by the District pursuant to the Installment Purchase Agreement and in the amounts and at the
times set forth in the Installment Purchase Agreement.
Installment Payment Date. The term "Installment Payment Date" means each date on which
Installment Payments are scheduled to be paid by the District pursuant to the Installment Purchase
Agreement.
Installment Purchase Agreement. The term "Installment Purchase Agreement" means the
Installment Purchase Agreement, dated as of November 1, 2004, by and between the District and the
Corporation, as originally executed or as it may from time to time be amended or supplemented in
accordance with its terms.
Interest Fund. The term "Interest Fund" means the fund by that name established in
Section 5.2 hereof.
Letter of Representations. The term "Letter of Representations" means the letter of the
District and the Trustee delivered to and accepted by the Depository on or prior to delivery of the
Certificates as book-entry certificates setting forth the basis on which the Depository serves as
depository for such book-entry certificates, as originally executed or as it may be supplemented or
revised or replaced by a letter from the District and the Trustee delivered to and accepted by the
Depository.
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(5) investments in a money market fund rated "AAAm" or "AAAm-G" or better by S&P, including
such funds for which the Trustee or an affiliate acts as investment advisor or provides other services;
(6) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any
state of the United States of America or of any agency, instrumentality or local governmental unit of
any such state which are not callable at the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to call on the date specified in the notice and
which are rated, based on the escrow, in the highest rating category of S&P and Moody's or any
successor thereto; (7) any Investment Agreement; and (8)the Local Agency Investment Fund.
Prepayment Fund. The term "Prepayment Fund" means the fund by that name established in
Section 5.2 hereof.
Prepayment Price. The term "Prepayment Price" means the principal amount with respect to
such Certificate (or portion thereof) plus the applicable premium, if any, payable upon prepayment
thereof pursuant to the provisions of such Certificate and this Agreement.
Principal Corporate Trust Office. The term "Principal Corporate Trust Office" means the
principal corporate trust office of the Trustee in Los Angeles, California, or such other office as the
Trustee may from time to time designate in writing to the District,the Corporation and the Owners.
Principal Fund. The term "Principal Fund" means the fund by that name established in
Section 5.2 hereof.
Project. The term "Project" means the facilities and equipment described in Exhibit B to the
Installment Purchase Agreement. The term "Parity Project" means any additions, betterments,
extensions or improvements designated by the Board of Directors of the District as a Parity Project,
the acquisition and construction of which is to be paid for with the proceeds of any Contracts or
Bonds.
Rebate Fund. The term "Rebate Fund" means the fund by that name established in
Section 5.6 hereof.
Record Date. The term "Record Date" means, with respect to any Payment Date for a
Certificate,the fifteenth day of the calendar month prior to such Payment Date.
Reserve Fund. The term "Reserve Fund" means the fund by that name established in
Section 5.2 hereof.
Securities Depositories. The term "Securities Depositories" means The Depository Trust
Company or, in accordance with then-current guidelines of the Securities and Exchange
Commission, such other securities depositaries, or no such depositaries as the Corporation or the
District may designate in a Written Request of the Corporation or a Written Request of the District,
as the case may be,to the Trustee.
Special Counsel. The term "Special Counsel" means any attorney at law or firm of attorneys
selected by the District, of nationally-recognized standing in matters pertaining to the federal tax
exemption of interest on bonds issued by states and political subdivisions, and duly admitted to
practice law before the highest court of any state of the United States of America.
State. The term"State"means the State of California.
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DOCSSF/43383v5/22925-0011
n
upon which his statement or opinion may be based, as aforesaid, are erroneous. Any such statement
or opinion made or given by counsel, accountants or consultants may be based, insofar as it relates to
factual matters, upon information with respect to which is in the possession of the Corporation, or
upon the statement or opinion of or representations by an officer or officers of the Corporation,
unless such counsel, accountant or consultant knows, or in the exercise of reasonable care should
have known, that the statement or opinion or representations with respect to the matters upon which
his opinion may be based as aforesaid are erroneous.
Section 1.4. Recitals.
(a) Installment Purchase Agreement. The Corporation and the District have
entered into the Installment Purchase Agreement whereby the Corporation has agreed to assist the
District in financing the Project and the District has agreed to purchase the Project from the
Corporation.
(b) Installment Payments. Under the Installment Purchase Agreement, the
District is obligated to pay to the Corporation or its assigns Installment Payments for the purchase of
the Project.
(c) Assignment Agreement. For the purpose of obtaining the moneys required to
be deposited by the Corporation with the Trustee, and for the purpose of securing the obligations of
the Corporation hereunder,the Corporation has assigned and transferred certain of its rights under the
Installment Purchase Agreement to the Trustee, pursuant to the Assignment Agreement; and in
consideration of such assignment and the execution of this Agreement, the Trustee has agreed to
execute and deliver certificates of participation, each evidencing an interest in the Installment
Payments in an aggregate amount equal to the aggregate principal amount of certificates of
participation so executed and delivered.
(d) Conditions Precedent Satisfied. The District and the Corporation hereby
certify that all acts, conditions and things required by law to exist, happen and be performed
precedent to and in connection with the execution and entering into of this Agreement have happened
and have been performed in regular and due time, form and manner as required by law, and the
parties hereto are now duly empowered to execute and enter into this Agreement.
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates. The Trustee is hereby authorized to execute
certificates of participation, to be denominated "Revenue Certificates of Participation, Series 2004"
in an aggregate principal amount of $ evidencing undivided interests in Installment
Payments to be paid by the District under the Installment Purchase Agreement.
Section 2.2. Denominations; Medium and Place of Payment; Dating. The Certificates
shall be delivered in the form of fully registered Certificates, in the denomination of$5,000 each or
any integral multiple thereof; provided that no Certificate shall have principal represented thereby
maturing in more than one year.
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Section 2.4. Form of Certificates. The Certificates and the form of assignment to appear
thereon shall be in substantially the form set forth in Exhibit A hereto with necessary or appropriate
variations, omissions and insertions as permitted or required by this Agreement.
Section 2.5. Execution. The Certificates shall be executed by and in the name of the
Trustee, as trustee under this Agreement, by the manual signature of an authorized officer or
signatory of the Trustee.
Section 2.6. Transfer of Certificates. Any Certificate may, in accordance with its terms,
be transferred, upon the books required to be kept pursuant to the provisions of Section 2.8, by the
person in whose name it is registered, in person or by such person's duly authorized attorney, upon
surrender of such Certificate for cancellation at the Principal Corporate Trust Office of the Trustee,
accompanied by delivery of a duly executed written instrument of transfer in a form approved by the
Trustee.
Whenever any Certificate or Certificates shall be surrendered for transfer, the Trustee shall
execute and deliver a new Certificate or Certificates of the same maturity, for a like aggregate
principal amount and of authorized denomination or denominations. The Trustee may charge a sum
for each new Certificate executed and delivered upon any transfer. The Trustee may require the
payment by any Certificate Owner requesting any such transfer of any tax or other governmental
charge required to be paid with respect to such transfer. Following any transfer of Certificates the
Trustee shall cancel and destroy the Certificates it has received.
Section 2.7. Exchan-Re of Certificates. Certificates may be exchanged at the Principal
Corporate Trust Office of the Trustee, for a like aggregate principal amount of Certificates of other
authorized denominations of the same maturity. The Trustee may charge a sum for each new
Certificate executed and'delivered upon any exchange except in the case of any exchange of
temporary Certificates for definitive Certificates. The Trustee may require the payment by the Owner
requesting such exchange of any tax or other governmental charge required to be paid with respect to
such exchange. Following any exchange of Certificates the Trustee shall cancel and destroy the
Certificates it has received.
The Trustee shall not be required to register the exchange, or transfer pursuant to Section 2.6
hereof, of any Certificate (i) within 15 days preceding selection of Certificates for prepayment or(ii)
selected for prepayment.
Section 2.8. Certificate Registration Books. The Trustee will keep or cause to be kept, at
the office of the Trustee in Los Angeles, California, sufficient books for the registration and transfer
of the Certificates, which shall upon reasonable prior notice and at all reasonable times be open to
inspection by the Corporation or the District; and, upon presentation for such purpose, the Trustee
shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be
registered or transferred, on said books, Certificates as hereinbefore provided.
The person in whose name any Certificate shall be registered shall be deemed the Owner
thereof for all purposes hereof, and payment of or on account of the interest with respect to and
principal of and Prepayment Price represented by such Certificate shall be made only to or upon the
order in writing of such registered Owner, which payments shall be valid and effectual to satisfy and
discharge liability upon such Certificate to the extent of the sum or sums so paid.
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r
book-entry Certificates. The District and the Trustee may treat and consider the person in whose
name each book-entry Certificate is registered in the Certificate registration books as the absolute
Owner of such book-entry Certificate for the purpose of payment of principal, premium, if any, and
interest with respect to such Certificate, for the purpose of giving notices of prepayment and other
matters with respect to such Certificate, for the purpose of registering transfers with respect to such
Certificate, and for all other purposes whatsoever. The Trustee shall pay all principal, premium, if
any, and interest with respect to the Certificates only to or upon the order of the respective Owner, as
shown in the Certificate register, or his respective attorney duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and discharge the District's obligations with
respect to payment of principal of, premium, if any, and interest evidenced and represented by the
Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in
the Certificate registration books, shall receive a Certificate evidencing the obligation to make
payments of principal, premium, if any, and interest evidenced and represented by the Certificates.
Upon delivery by the Depository to the Owner and the Trustee, of written notice to the effect that the
Depository has determined to substitute a new nominee in place of the Nominee,and subject to the
provisions herein with respect to Record Dates, the word Nominee in this Trust Agreement shall
refer to such nominee of the Depository.
(b) Delivery of Letter of Representations. In order to qualify the book-entry
Certificates for the Depository's book-entry system, the District and the Trustee shall execute and
deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of
Representations shall not in any way impose upon the District or the Trustee any obligation
whatsoever with respect to persons having interests in such book-entry Certificates other than the
Owners, as shown on the Certificate registration books. By executing a Letter of Representations,
the Trustee shall agree to take all action necessary at all times so that the District will be in
compliance with all representations of the District in such Letter of Representations. In addition to
the execution and delivery of a Letter of Representations, the District and the Trustee shall take such
other actions, not inconsistent with this Trust Agreement, as are reasonably necessary to qualify
Book-Entry Certificates for the Depository's book-entry program.
(c) Selection of Depository. In the event (i) the Depository determines not to
continue to act as securities depository for book-entry Certificates, or(ii) the District determines that
continuation of the book-entry system is not in the best interest of the beneficial owners of the
Certificates or the District, then the District will discontinue the book-entry system with the
Depository. If the District determines to replace the Depository with another qualified securities
depository, the District shall prepare or direct the preparation of a new single, separate, fully
registered Certificate for each of the maturity dates of such book-entry Certificates, registered in the
name of such successor or substitute qualified securities depository or its Nominee as provided in
subsection (e)hereof. If the District fails to identify another qualified securities depository to replace
the Depository, then the Certificates shall no longer be restricted to being registered in such
Certificate register in the name of the Nominee, but shall be registered in whatever name or names
the Owners transferring or exchanging such Certificates shall designate, in accordance with the
provisions of Sections 2.6 and 2.7 hereof.
(d) Payments To Depository. Notwithstanding any other provision of this
Agreement to the contrary, so long as all Outstanding Certificates are held in book-entry form and
registered in the name of the Nominee, all payments with respect to principal,prepayment premium,
if any, and interest with respect to such Certificate and all notices with respect to such Certificate
shall be made and given, respectively to the Nominee, as provided in the Letter of Representations or
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Trustee or the District; and the District and the Trustee shall not have responsibility for transmitting
payments to, communicating with, notifying, or otherwise dealing with any beneficial owners of the
Certificates. Neither the District nor the Trustee shall have any responsibility or obligation, legal or
otherwise, to any such beneficial owners or to any other parry, including DTC or its successor (or
Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may
rely conclusively on its records as to the identity of the Owners of the Certificates.
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates. The Trustee is hereby authorized to execute and
deliver Certificates in an aggregate principal amount of$ , upon the Written Order of the
District.
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys. The
proceeds received from the sale of the Certificates being $ which represents
$ face amount of the Certificates, plus accrued interest of$ , less original issue
discount of$ and less Underwriter's discount of$ , shall be deposited with the
Trustee, who shall deposit the sum of$ , representing accrued and capitalized interest, in
the Certificate Payment Fund, shall deposit the sum of$ in the Delivery Cost Fund, shall
deposit the sum of$ in the Reserve Fund, and shall transfer the remaining proceeds to
the District for deposit in the Acquisition Fund to finance the cost of the Project. The Trustee may,
in its discretion, establish a temporary fund or account in its books and records to properly account
for or to facilitate the foregoing deposits and transfers.
Section 3.3. Validity of Certificates. The validity of the execution and delivery of the
Certificates is not dependent on and shall not be affected in any way by any proceedings taken by the
District,the Corporation or the Trustee with respect to or in connection with the Installment Purchase
Agreement. The recital contained in the Certificates that all acts, conditions and things required by
the Constitution and statutes of the State of California and this Agreement to exist, to have happened
and to have been performed precedent to and in the delivery thereof do exist, have happened and
have been performed in due time, form and manner as required by law shall be conclusive evidence
of their validity and of compliance with the provisions of law in their delivery.
Section 3.4. Delivery Cost Fund. There is hereby established with the Trustee the
Delivery Cost Fund which the Trustee shall establish and maintain and hold in trust separate and
apart from other funds held by it. The moneys in the Delivery Cost Fund shall be used and withdrawn
by the Trustee to pay Delivery Costs upon submission of Written Requisitions of the District stating
the person to whom payment is to be made, the amount to be paid, the purpose for which the
obligation was incurred, that such payment is a proper charge against said fund and that payment for
such charge has not previously been made. On , or upon the earlier Written
Request of the District, all amounts remaining in the Delivery Cost Fund shall be transferred by the
Trustee to the Certificate Payment Fund.
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thereof plus accrued interest evidenced and represented thereby to the date fixed for prepayment,
without premium. Such Certificates shall be prepaid in the amounts and upon the dates as follows:
Mandatory Prepayment Date
(November 1) Principal Amount
* Final maturity
(e) The Certificates are subject to prepayment in part on the next May 1 or
November 1 for which timely notice of prepayment can be given after the date on which the Trustee
receives the statement of the District from proceeds transferred by the District from the Acquisition
Fund in accordance with Section 3.5 of the Installment Purchase Agreement, in the order of maturity
as directed by the District and by lot within each maturity in integral multiples of $5,000 at a
Prepayment Price of the principal amount thereof plus accrued interest evidenced and represented
thereby,to the date fixed for prepayment,without premium.
(f) The Certificates are subject to prepayment prior to maturity upon the Written
° - Order of the District, in whole or in part on any date, (i) as a result of changes in the constitutions or
laws of the United States or the State of California, any executive or administrative action by any
federal, state or local entity, or any final decree or judgment of any court after the contest thereof by
the District, which materially adversely affect the ability of the District to own or operate the
Broadband System, (ii)the Installment Purchase Agreement becomes void or unenforceable or
impossible of performance in accordance with the intent and purpose of the parties as expressed
therein or (iii) unreasonable burdens or excessive liabilities are imposed upon the District by reason
of its ownership or operation of the Broadband System, in each case at a Prepayment Price equal to
100% of the principal amount thereof (together with interest accrued to such dated fixed for
prepayment), without premium.
(g) The Certificates are subject to prepayment in whole upon the occurrence of a
Determination of Taxability on the first date possible subsequent to such a Determination of
Taxability after the giving of notice to Owners pursuant to Section 4.3 hereof, at a Prepayment Price
equal to 100% of the principal amount thereof(together with interest accrued to such dated fixed for
prepayment),without premium.
Section 4.2. Selection of Certificates for Prepayment. Whenever less than all of the
Certificates are called for prepayment, the Trustee shall select the Certificates or portions thereof to
be prepaid from the Outstanding Certificates in accordance with Section 4.1 hereof. The Trustee shall
promptly notify the District in writing of the numbers of the Certificates or portions thereof so
selected for prepayment.
Section 4.3. Notice of Prepayment. Notice of prepayment shall be mailed, first class
postage prepaid, to the respective Owners of any Certificates designated for prepayment at their
addresses appearing on the Certificate registration books and to the Information Services and by
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All Installment Payments to which the Corporation may at any time be entitled (including
income or profit from investments pursuant to Section 5.3) shall be paid directly to the Trustee
pursuant to the terms of the-Assignment Agreement, and if received by the Corporation at any time
shall be deposited by the Corporation with the Trustee within one business day after the receipt
thereof, and the Trustee shall deposit all Installment Payments as and when received in the
Certificate Payment Fund. All moneys at any time deposited in the Certificate Payment Fund shall be
held by the Trustee in trust for the benefit of the Owners from time to time of the Certificates, but
shall nevertheless be disbursed, allocated and applied solely for the uses and purposes herein set
forth.
Section 5.2. Certificate Payment Fund. There is hereby established with the Trustee each
of the Certificate Payment Fund and the Reserve Fund each of which the Trustee covenants to
maintain and hold in trust separate and apart from other funds held by it so long as any Installment
Payments remain unpaid. All moneys on deposit in the Certificate Payment Fund (including income
or profit from investments) shall be retained therein except as expressly provided herein.
The Trustee shall transfer from the Certificate Payment Fund the following amounts at the
times and in the manner hereinafter provided, and shall deposit such amounts in one or more of the
following respective funds, each of which the Trustee shall establish and maintain and hold in trust
separate and apart from other funds held by it, and each of which shall be disbursed and applied only
as hereinafter authorized. Such amounts shall be so transferred to and deposited in the following
respective funds in the following order of priority, the requirements of each such fund at the time of
.._. deposit to be satisfied before any transfer is made to any fund subsequent in priority:
(a) Interest Fund. The Trustee, on the last business day before each Interest
Payment Date (commencing on the last business day of April 2005), shall deposit in the Interest Fund
an amount representing the portion of the Installment Payments designated as interest coming due on
the next succeeding May 1 or November 1, as the case may be. No deposit need be made into the
Interest Fund so long as there shall be in such fund moneys sufficient to pay the interest portion of
Certificates then Outstanding due, if any, on the next May 1 or November 1, as the case may be.
Except as hereinafter provided, moneys in the Interest Fund shall be used and
withdrawn by the Trustee solely for the purpose of paying the interest with respect to the Certificates
when due and payable (including accrued interest on any Certificates prepaid prior to maturity
pursuant to this Agreement).
(b) Principal Fund. The Trustee, on the last business day before each
November 1 (commencing on the last business day of October 200__), shall deposit in the Principal
Fund an amount equal to the principal coming due with respect to the Certificates on the next
succeeding November 1. No deposit need be made into the Principal Fund so long as there shall be
in such fund moneys sufficient to pay the portion of all Certificates then Outstanding designated as
principal,and coming due on the next succeeding November 1.
Except as hereinafter provided, moneys in the Principal Fund shall be used and
withdrawn by the Trustee solely for the purpose of paying the principal with respect to the
Certificates when due and payable.
(c) Prepayment Fund. Moneys to be used for prepayment pursuant to Section 4.1
hereof and paid by the District pursuant to Section 7.1 of the Installment Purchase Agreement shall
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deem appropriate, and in any event on or before each Payment Date in each year. In addition, the
Trustee shall, on the date all or any portion of the Certificates are discharged in accordance with
Section 10.2 hereof, value the Reserve Fund in accordance with this Section and withdraw the
excess, if any, on deposit in the Reserve Fund and transfer such amount to or in accordance with the
written direction of the District. Except for such withdrawals, all moneys in the Reserve Fund shall
be used and withdrawn by the Trustee solely for the purpose of paying principal, Prepayment Price
and interest with respect to the Certificates in the event that no other moneys of the District are
available therefor.
For the purpose of determining the amount in the Reserve Fund, all Permitted Investments
credited to the Reserve Fund shall be valued at the lower of cost (inclusive of all interest accrued but
not paid), or market value.
The District may substitute a municipal bond debt service reserve fund policy or a surety
bond or a letter of credit (a "Reserve Insurance Policy") or money for any Reserve Insurance Policy
or money held by the Trustee in the Reserve Fund; provided, that (i) in the case of a municipal bond
debt service reserve fund policy or a surety bond, bonds which are insured by the issuer thereof are
rated in the highest rating category by Standard & Poor's and Moody's Investors Service
(collectively, the "Rating Agencies"), or, in the case of a letter of credit, the unsecured debt
obligations of the issuing bank thereof are rated in the highest short-term rating category by the
Rating Agencies; (ii) the sum of the money and face amount of any Reserve Insurance Policy in
effect after such substitution will be equal to the Reserve Requirement; and (iii) in the case of the
substitution of a new Reserve Insurance Policy for money or an existing Reserve Insurance Policy,
the Trustee receives an opinion of Special Counsel to the effect that such substitution will not
adversely affect the exclusion from gross income for federal income tax purposes of interest with
respect to the Certificates.
Section 5.5. Pledgee of Moneys in Funds. All amounts on deposit in the Delivery Cost
Fund, the Certificate Payment Fund, the Interest Fund, the Principal Fund, the Prepayment Fund and
the Reserve Fund are hereby irrevocably pledged to the Owners of the Certificates as provided
herein. This pledge shall constitute a first and exclusive lien on the Delivery Cost Fund, the
Certificate Payment Fund, the Interest Fund, the Principal Fund, the Prepayment Fund and the
Reserve Fund for the benefit of the Owners of the Certificates in accordance with the terms hereof
and of the Installment Purchase Agreement.
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(2) Not later than 60 days after the payment of all the Certificates,
an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable
Certificate Year, and any income attributable to the Rebatable Arbitrage, computed in accordance
with Section 148(f) of the Code.
In the event that, prior to the time of any payment required to be made from the
Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such
payment is due, the District shall calculate or cause to be calculated the amount of such deficiency
and deposit an amount received from any legally available source equal to such deficiency prior to
the time such payment is due. Each payment required to be made pursuant to this Subsection(a)
shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255 on or before
the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form
8038-T, or shall be made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund
after redemption and payment of the Certificates and the payments described in Subsection(a) above
being made may be withdrawn by the District and utilized in any manner by the District.
(c) Survival of Defeasance. Notwithstanding anything in this Section to the
contrary, the obligation to comply with the requirements of this Section shall survive the defeasance
or payment in full of the Certificates.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform Under Installment Purchase Agreement.
The Corporation and District covenant and agree with the Owners of the Certificates to perform all
obligations and duties imposed on them under the Installment Purchase Agreement and, together
with the Trustee, to enforce such Installment Purchase Agreement against the other party thereto in
accordance with its terms.
The Corporation and the District will in all respects promptly and faithfully keep,perform
and comply with all the terms, provisions, covenants, conditions and agreements of the Installment
Purchase Agreement to be kept,performed and complied with by it.
The Corporation and the District agree not to do or permit anything to be done, or omit or
refrain from doing anything, in any case where any such act done or permitted to be done, or any
such omission of or refraining from action, would or might be a ground for cancellation or
termination of the Installment Purchase Agreement.
Section 6.2. Bud pets. On or prior to the fifteenth day of each Fiscal Year, the District
shall certify to the Trustee that the amounts budgeted for payment of Installment Payments are fully
adequate for the payment of all Installment Payments due under the Installment Purchase Agreement
for such Fiscal Year. If the amounts so budgeted are not adequate for the payment of Installment
Payments due under the Installment Purchase Agreement,the District will take such action as may be
necessary to cause such annual budget to be amended, corrected or augmented so as to include
therein the amounts required to be raised by the District in the then ensuing Fiscal Year for the
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Y
Section 6.6. Observance of Laws and Regulations. To the extent necessary to assure their
performance hereunder, the Corporation and the District will well and truly keep, observe and
perform all valid and lawful obligations or regulations now or hereafter imposed on them by contract,
or prescribed by any law of the United States of America, or of the State, or by any officer,board or
commission having jurisdiction or control, as a condition of the continued enjoyment of any and
every right, privilege or franchise now owned or hereafter acquired by the Corporation or the
District, respectively, including its right to exist and carry on its business, to the end that such
contracts, rights and franchises shall be maintained and preserved, and shall not become abandoned,
forfeited or in any manner impaired.
Section 6.7. Compliance with Contracts. The District shall comply with the terms,
covenants and provisions, express or implied, of all contracts for the use of the Project by the
District, and all other contracts and agreements affecting or involving the Project to the extent that
the District is a party thereto.
Section 6.8. Prosecution and Defense of Suits. The District shall promptly, upon request
of the Trustee or any Certificate Owner, from time to time take such action as may be necessary or
proper to remedy or cure any defect in or cloud upon the title to the Broadband System or any part
thereof, whether now existing or hereafter developing, shall prosecute all such suits, actions and
other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee
(including all of its employees, officers and directors), the Corporation and every Certificate Owner
harmless from all loss, cost, damage and expense, including attorneys' fees, which they or any of
them may incur by reason of any such defect, cloud, suit, action or proceeding.
The District shall defend against every suit, action or proceeding at any time brought against
the Trustee (including all of its employees, officers and directors), the Corporation or any Certificate
Owner upon any claim arising out of the receipt, application or disbursement of any of the
Installment Payments or involving the rights of the Trustee,the Corporation or any Certificate Owner
under this Agreement; provided that the Trustee, the Corporation or any Certificate Owner at such
party's election may appear in and defend any such suit, action or proceeding. The District shall
indemnify and hold harmless the Trustee,the Corporation and the Certificate Owners against any and
all liability claimed or asserted by any person, arising out of such receipt, application or
disbursement, and shall indemnify and hold harmless the Certificate Owners against any attorneys'
fees or other expenses which any of them may incur in connection with any litigation (including pre-
litigation activities)to which any of them may become a party by reason of ownership of Certificates.
The District shall promptly reimburse the Corporation or any Certificate Owner in the full amount of
any attorneys' fees or other expenses which the Corporation or such Owner may incur in litigation or
otherwise in order to enforce such partying rights under this Agreement or the Certificates, provided
that such litigation shall be concluded favorably to such parry's contentions therein.
Section 6.9. Recordation and Filing. The Trustee, upon written direction of the District,
shall record, register, file, renew, refile and re-record all such documents, including financing
statements, as may be required by law in order to maintain a security interest in this Agreement and
the Assignment Agreement, all in such manner, at such times and in such places as may be required
by, and to the extent permitted by, law in order fully to preserve, protect and perfect the security of
the Certificate Owners and the rights and security interests of the Trustee. The Trustee, upon written
direction of the District, shall (subject to Section 8.5 hereof) do whatever else may be necessary or be
reasonably required in order to perfect and continue the lien of this Agreement and the Assignment
Agreement.
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R-
Upon declaration of the entire principal amount of the unpaid Installment Payments and the
accrued interest thereon to be due and payable immediately and provided such declaration is not
rescinded or annulled, all in accordance with Section 8.1 of the Installment Purchase Agreement, the
Trustee shall apply all moneys received as Installment Payments and all moneys held in any fund or
account hereunder as directed in Section 8.2 of the Installment Purchase Agreement.
Section 7.3. Other Remedies of the Trustee. The Trustee shall have the right--
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the District or any board member, officer or employee thereof, and to
compel the District or any such board member, officer or employee to perform or carry out its or his
duties under law and the agreements and covenants required to be performed by it or him contained
herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the
rights of the Trustee; or
(c) by suit in equity upon the happening of any default hereunder to require the
District and its directors, officers and employees to account as the trustee of an express trust.
Section 7.4. Non-Waiver. A waiver of any default or breach of duty or contract by the
Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or
remedies on any such subsequent default or breach of duty or contract. No delay or omission by the
Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall
impair any such right or remedy or shall be construed to be a waiver of any such default or breach of
duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by
law or by this article may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Trustee.
If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned
or determined adversely to the Trustee, the Trustee and the District shall be restored to their former
positions,rights and remedies as if such action, proceeding or suit had not been brought or taken.
Section 7.5. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity or by statute or otherwise and may be exercised without exhausting and
without regard to any other remedy conferred by any law.
Section 7.6. No Obligation by the District to Owners. Except for the payment of
Installment Payments when due in accordance with the Installment Purchase Agreement and the
performance of the other covenants and agreements of the District contained in said Installment
Purchase Agreement and herein, the District shall have no obligation or liability to the Owners of the
Certificates with respect to this Agreement or the execution, delivery or transfer of the Certificates,
or the disbursement of Installment Payments to the Owners by the Trustee; provided however that
nothing contained in this Section shall affect the rights, duties or obligations of the Trustee expressly
set forth herein.
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such Owner, notwithstanding the foregoing provisions of this Section or Section 7.10 or any other
provision of this Agreement.
Section 7.10. No Obligation with Respect to Performance by Trustee. Neither the District
nor the Corporation shall have any obligation or liability to any of the other parties hereto or to the
Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon
it under this Agreement.
Section 7.11. No Liability to Owners for Pam. The Corporation shall not have any
obligation or liability to the Owners of the Certificates with respect to the payment of the Installment
Payments by the District when due, or with respect to the performance by the District of any other
covenant made by it in the Installment Purchase Agreement or herein. Except as provided in this
Agreement, the Trustee shall not have any obligation or liability to the Owners of the Certificates
with respect to the payment of the Installment Payments by the District when due, or with respect to
the performance by the District of any other covenant made by it in the Installment Purchase
Agreement or herein.
Section 7.12. No Responsibility for Sufficiency. . The Trustee shall not be responsible for
the sufficiency of this Agreement,the Installment Purchase Agreement, or of the assignment made to
it by the Assignment Agreement of rights to receive Installment Payments pursuant to the Installment
Purchase Agreement, or the value of or title to the Project. The Trustee shall not be responsible or
liable for selection or liquidation of investments or any loss suffered in connection with any
investment of funds made by it under the terms of and in accordance with this Agreement.
Section 7.13. Indemnification of Trustee. The District shall indemnify the Trustee
(including all of its employees, officers and directors) and hold it harmless against any loss, liability,
expenses or advances, including but not limited to fees and expenses of counsel and other experts,
incurred or made without negligence or willful misconduct on the part of the Trustee, (i) in the
exercise and performance of any of the powers and duties hereunder or under the Installment
Purchase Agreement by the Trustee, (ii) relating to or arising out of the Project, or the conditions,
occupancy, use, possession, conduct or management of, or work done in or about, or from the
planning, design, acquisition, installation or construction of the Project or any part thereof, or (iii)
arising out of or relating to any untrue statement or alleged untrue statement of any material fact or
omission or alleged omission to state a material fact necessary to make the statements made, in light
of the circumstances under which they were made, not misleading in any official statement or other
offering circular utilized in connection with the sale of the Certificates, including the costs and
expenses of defending itself against any claim of liability arising under this Agreement. Such
indemnity shall survive payment of the Certificates and discharge of this Agreement or resignation or
removal of the Trustee.
ARTICLE VIII
THE TRUSTEE
Section 8.1. Employment of Trustee. In consideration of the recitals hereinabove set forth
and for other valuable consideration, the District hereby agrees to employ the Trustee to receive,
hold, invest and disburse the moneys received pursuant to the Installment Purchase Agreement for
credit to the various funds and accounts established by this Agreement; to execute, deliver and
transfer the Certificates; and to apply and disburse the Installment Payments received from the
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Section 8.5. Protection of the Trustee. The Trustee shall be protected and shall incur no
liability whatsoever in acting or refraining from acting or proceeding in good faith upon any
resolution, notice, telegram, request, consent, waiver, certificate, statement, order, facsimile
transmission, electronic mail, affidavit, voucher, bond, requisition or other paper or document which
it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the
proper party or pursuant to any of the provisions of this Agreement, and the Trustee shall be under no
duty to make any investigation or inquiry as to any statements contained or matters referred to in any
such instrument, but may accept and rely upon the same as conclusive evidence of the truth and
accuracy of such statements. The Trustee shall not be bound to recognize any person as an Owner of
any Certificate or to take any action at the request of any such person unless such Certificate shall be
deposited with the Trustee or satisfactory evidence of the ownership of such Certificate shall be
furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the
Corporation or the District, with regard to legal questions, and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith in accordance therewith.
Whenever in the administration of its duties under this Agreement, the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed)
shall be deemed to be conclusively proved and established by a certificate of the Corporation or the
District and such certificate shall be full warranty to the Trustee for any action taken or suffered
under the provisions of this Agreement upon the faith thereof, but in its discretion the Trustee may
(but shall have no duty), in lieu thereof, accept other evidence of such matter or may require such
additional evidence as to it may seem reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Certificates provided pursuant to
this Agreement, and may join in any action which any Owner may be entitled to take with like effect
as if the Trustee were not a party to this Agreement. The Trustee, either as principal or agent, may
also engage in or be interested in any financial or other transaction with the District or the
Corporation, and may act as depository, trustee, or agent for any committee or body of Owners of
Certificates or of obligations of the Corporation or the District as freely as if it were not Trustee
hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers
hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers,
and shall be entitled to advice of counsel concerning all matters of trust and its duties hereunder, and
the Trustee shall not be answerable for the default or misconduct of any such attorney, agent or
receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of
any discretion or power under this Agreement or in the performance of its duties hereunder or for
anything whatever in connection with the funds and accounts established hereunder, except only for
its own willful misconduct or negligence.
The recitals, statements and representations by the District or the Corporation contained in
this Agreement or in the Certificates shall be taken and construed as made by and on the part of the
District or Corporation and not by the Trustee and the Trustee does not assume, and shall not have,
any responsibility or obligations for the correctness of any thereof.
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DOCSSF/43383v5/22925-0011
instructions and/or directions shall be signed by a person as may be designated and authorized to sign
for the parry signing such instructions and/or directions, and (c)the Trustee shall have received a
current incumbency certificate containing the specimen signature of such designated person.
Section 8.6. 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 (provided such company is
eligible under Section 8.3 hereof), shall be the successor to the Trustee without the execution or
filing of any paper or further act, anything herein to the contrary notwithstanding.
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted.
(a) This Agreement and the rights and obligations of the District and of the
Owners of the Certificates and of the Trustee may be modified or amended at any time by an
amendment hereto which shall become binding when the written consents of the Owners of a
majority in aggregate principal amount of the Certificates then Outstanding, exclusive of Certificates
disqualified as provided in Section 11.4 hereof, shall have been filed with the Trustee. No such
modification or amendment shall (1) extend the stated maturities of the Certificates, or reduce the
rate of interest or yields-to-maturity, as the case may be, represented thereby, or extend the time of
payment of interest, or reduce the amount of principal represented thereby, or reduce any premium
payable on the prepayment thereof, without the consent of the Owner of each Certificate so affected,
or (2) reduce the aforesaid percentage of Owners of Certificates whose consent is required for the
execution of any amendment or modification of this Agreement, or (3) modify any of the rights or
obligations of the Trustee or the Corporation without its written consent thereto, or (4) modify the
limitations on the liability of the District hereunder without the consent of the Nevada County Local
Agency Formation Commission.
(b) This Agreement and the rights and obligations of the Corporation and the
District and of the Owners of the Certificates may also be modified or amended at any time by an
amendment hereto which shall become binding upon adoption, without the consent of the Owners of
any Certificates, but only to the extent permitted by law and only for any one or more of the
following purposes—
(i) to add to the covenants and agreements of the Corporation or the
District contained in this Agreement other covenants and agreements thereafter to be observed or to
surrender any right or power herein reserved to or conferred upon the Corporation or the District, and
which shall not adversely affect the interests of the Owners of the Certificates;
(ii) to cure, correct or supplement any ambiguous or defective provision
contained in this Agreement or in regard to questions arising under this Agreement, as the
Corporation or the District may deem necessary or desirable and which shall not adversely affect the
interests of the Owners of the Certificates; and
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DOCSSF/43383v5/22925-0011
definition of Permitted Investments so held by it, and (c) that this Agreement has been released in
accordance with the provisions of this Section.
Section 10.2. Deposit of Money or Securities with Trustee. Whenever in this Agreement or
the Installment Purchase Agreement it is provided or permitted that there be deposited with or held in
trust by the Trustee money or securities in the necessary amount to pay or prepay any Certificates,
the money or securities to be so deposited or held may include money or securities held by the
Trustee in the funds and accounts established pursuant to this Agreement and shall be—
(a) lawful money of the United States of America in an amount equal to the
principal amount represented by such Certificates and all unpaid interest represented thereby to
maturity, except that, in the case of Certificates which are to be prepaid prior to maturity and in
respect of which notice of such prepayment shall have been given as in Article IV provided or
provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount
to be deposited or held shall be the principal amount or Prepayment Price and all unpaid interest to
such date of prepayment if any,represented by such Certificates; or
(b) non-callable securities described in clause (i) (a) or (d) of the definition of
Permitted Investments which will provide money sufficient to pay the principal at maturity or upon
prepayment plus all accrued interest to maturity or to the prepayment date, as the case may be,
represented by the Certificates to be paid or prepaid, as such amounts become due, plus premium, if
any, provided that, in the case of Certificates which are to be prepaid prior to the maturity thereof,
notice of such prepayment shall have been given as in Article IV provided or provision satisfactory
to the Trustee shall have been made for the giving of such notice;
provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this
Agreement and the Installment Purchase Agreement or by Written Request of the District) to apply
such money or securities to the payment of such principal or Prepayment Price and interest
represented by such Certificates.
Section 10.3. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of the
interest, principal or Prepayment Price represented by any of the Certificates which remain
unclaimed for two years after the date of deposit of such moneys if deposited with the Trustee after
the date when the interest, principal or Prepayment Price represented by such Certificates have
become payable, shall at the Written Request of the District be repaid by the Trustee to the District as
its absolute property free from trust, and the Trustee shall thereupon be released and discharged with
respect thereto and the Owners shall look only to the District for the payment of the interest and
principal or Prepayment Price represented by much Certificates; provided, however, that before
being required to make any such payment to the District, the Trustee shall, at the written request and
expense of the District, first mail a notice to the owners of the Certificates so payable that such
moneys remain unclaimed and that after a date named in such notice, which date shall not be less
than thirty (30) days after the date of the mailing of such notice, the balance of such moneys then
unclaimed will be returned to the District.
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DOCSSF/43383v5/22925-0011
or the prepayment premiums, if any, represented by the Certificates, but nothing contained herein
shall relieve any director, officer or employee of the District or Corporation from the performance of
any official duty provide&by any applicable provisions of law or by the Installment Purchase
Agreement or hereby.
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates. All
Certificates acquired by the District, whether by purchase or gift or otherwise shall be surrendered to
the Trustee for cancellation. Whenever in this Agreement provision is made for the cancellation by
the Trustee of any Certificates, the Trustee shall destroy such Certificates and upon written request
deliver a certificate of such destruction to the District.
Section 11.7. Headings. Headings preceding the text of the several Articles and Sections
hereof, and the table of contents, are solely for convenience of reference and shall not constitute a
part of this Agreement or affect its meaning, construction or effect.
All references herein to "Articles," "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or subdivision hereof.
Section 11.8. Funds and Accounts. Any fund required by this Agreement to be established
and maintained by the Trustee may be established and maintained in the accounting records of the
Trustee either as a fund or an account, and may, for the purposes of such records, any audits thereof
and any reports or statements with respect thereto,be treated either as a fund or as an account; but all
such records with respect to all such funds shall at all times be maintained in accordance with sound
corporate trust industry practices and with due regard for the protection of the security of the
Certificates and the rights of every Owner thereof.
Section 11.9. Partial Invalidity. If any one or more of the agreements, conditions,
covenants or terms required herein to be observed or performed by or on the part of the District, the
Corporation or the Trustee shall be contrary to law, then such agreement or agreements, such
condition or conditions, such covenant or covenants or such term or terms shall be null and void and
shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof
and shall in no way affect the validity hereof or of the Certificates, and the Owners shall retain all the
benefit,protection and security afforded to them under any applicable provisions of law. The District,
the Corporation and the Trustee hereby declare that they would have executed this Agreement, and
each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and
would have authorized the execution and delivery of the Certificates pursuant hereto irrespective of
the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or
phrases hereof or the application thereof to any person or circumstances may be held to be
unconstitutional,unenforceable or invalid.
Section 11.10. California Law. THIS AGREEMENT SHALL BE CONSTRUED AND
GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE.
Section 11.11. Notices. All written notices to be given under this Agreement to the parties
hereto shall be given by mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other parties in writing from time to time.
34
DOCSSF/43383v5/22925-0011
IN WITNESS WHEREOF, the parties have executed and attested this Agreement by their
officers hereunto duly authorized as of the date and year first written above.
BNY WESTERN TRUST COMPANY, as Trustee
By:
Authorized Officer
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
FINANCING CORPORATION
By:
President
By:
Clerk
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
President
By:
Clerk
36
DOCSSF/43383v5/22925-0011
Interest with respect to this Certificate shall be paid on May 1 and November 1 in each year,
commencing May 1 (each, an "Interest Payment Date"), and continuing to and including the
Certificate Payment Date or the date of prior prepayment hereof, whichever is earlier. Interest with
respect to this Certificate shall be calculated on the basis of a 360-day year of twelve 30-day months.
The principal with respect hereto and prepayment premiums, if any, are payable in lawful money of
the United States of America upon presentation and surrender at the principal corporate trust office of
the Trustee in Los Angeles, California or such other office as the Trustee may from time to time
designate in writing to the District, the Corporation and the registered owners (the "Principal
Corporate Trust Office"). Interest with respect hereto is payable by check or draft of the Trustee
mailed by first class mail on each Interest Payment Date to the Registered Owner hereof as of the
close of business on the fifteenth day of the calendar month prior to such Interest Payment Date (the
"Record Date") at the address shown on the books maintained by the Trustee or, upon the written
request received by the Trustee of an Owner of at least $1,000,000 in aggregate principal amount of
Certificates, by wire transfer of immediately available funds to an account in the United States
designated by such Owner prior to the applicable Record Date, except, in each case that, if and to the
extent that there is a default in the payment of the interest due on such Interest Payment Date, such
defaulted interest shall be paid to the owner in whose name this Certificate is registered at the close
of business on a special record date as determined by the Trustee.
This Certificate has been executed by the Trustee pursuant to the terms of the Trust
Agreement. Copies of the Trust Agreement and the Installment Purchase Agreement are on file at
the corporate trust office of the Trustee in Los Angeles, California, and reference is made to the Trust
.. Agreement and the Installment Purchase Agreement and any and all amendments thereto for a
description of the pledges and covenants securing the Certificates, the nature, extent and manner of
enforcement of such pledges, the rights and remedies of the registered owners of the Certificates with
respect thereto and the other terms and conditions upon which the Certificates are delivered
thereunder.
The Certificates are payable from Installment Payments payable by the District and other
amounts on deposit in certain funds and accounts held under the Trust Agreement, including but not
limited to the Reserve Fund, all in accordance therewith. All Revenues and all amounts on deposit in
the Revenue Fund (as such terms are defined in the Installment Purchase Agreement) are irrevocably
pledged to the payment of the Installment Payments and the Revenues shall not be used for any other
purpose while any of the Installment Payments remain unpaid; provided that out of Revenues there
may be apportioned such sums for such purposes as are expressly permitted in the Installment
Purchase Agreement. This pledge, together with the pledge created by all other Contracts and Bonds
(as such terms are defined in the Installment Purchase Agreement) constitutes a first lien on
Revenues, subject to application of Revenues and all amounts on deposit in the Revenue Fund as
permitted in the Installment Purchase Agreement, and the Revenue Fund for the payment of the
Installment Payments and all other Contracts and Bonds in accordance with the terms of the
Installment Purchase Agreement.
The obligation of the District to make Installment Payments is a special obligation of the
District payable solely from Net Revenues (as defined in the Installment Purchase Agreement) on a
parity with certain outstanding Contracts as described in the Installment Purchase Agreement and
does not constitute a debt of the District or of the State of California or of any political subdivision
thereof in contravention of any constitutional or statutory debt limitation or restriction. The District
may at any time incur Contracts or issue Bonds, the payments of which are on a parity with the
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DOCSSF/43383v5/22925-0011
prepaid)plus accrued interest evidenced and represented thereby to the date fixed for prepayment, as
set forth below:
Prepayment Dates Prepayment Price
The Certificates with a stated maturity of November 1, 20_ are subject to mandatory
prepayment prior to such stated maturity in part (by lot) on any November 1 on and after November
1, 20_, in integral multiples of$5,000 at a prepayment price of the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium, in the amounts set forth in the Trust Agreement.
The Certificates with a stated maturity of November 1, 20_ are subject to mandatory
prepayment prior to such stated maturity in part (by lot) on any November 1 on and after November
1, 20_, in integral multiples of$5,000 at a prepayment price of the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium, in the amounts set forth in the Trust Agreement.
As provided in the Trust Agreement, notice of prepayment hereof shall be mailed, first class
e. postage prepaid, not less than 30 days nor more than 60 days prior to the prepayment date, to the
Registered Owner of this Certificate at the address thereof appearing on the Certificate registration
books. If this Certificate is called for prepayment and payment is duly provided therefor as specified
in the Trust Agreement, interest represented hereby shall cease to accrue from and after the date fixed
for prepayment. Any defect in the notice or the mailing thereof will not affect the validity of the
prepayment of this Certificate.
To the extent and in the manner permitted by the terms of the Trust Agreement and the
Installment Purchase Agreement, as the case may be, the Trust Agreement and the rights and
obligations of the District and of the registered owners of the Certificates and of the Trustee or the
Installment Purchase Agreement and the rights and obligations of the Corporation and the District
and the registered owners of the Certificates and the Trustee, respectively, may be modified or
amended with the written consents of the registered owners of a majority in aggregate principal
amount of the Certificates then outstanding, but no such modification or amendment shall (1) extend
the stated maturities of the Certificates, or reduce the rate of interest or yield-to-maturity represented
thereby, or extend the time of payment of interest, or reduce the amount of principal represented
thereby, or reduce any premium payable on the prepayment thereof, without the consent of the
registered owner of each Certificate so affected, or (2) reduce the percentage of registered owners of
Certificates whose consent is required for the execution of any amendment or modification of the
Trust Agreement or the Installment Purchase Agreement, or (3) modify any of the rights or
obligations of the Trustee or the Corporation without its written consent thereto.
To the extent and in the manner permitted by the terms of the Trust Agreement and the
Installment Purchase Agreement, as the case may be, the Trust Agreement and the rights and
obligations of the Corporation and the District and of the registered obligations of the Corporation
and the District and of the registered owners of the Certificates or the Installment Purchase
Agreement and the rights and obligations of the Corporation and the District also be modified or
A-4
DOCSSF/43383v5/22925-0011
.wew;e.,.,....,:-..x».u.x.:.,w....w»weuxi;'asM.w,..>>.w..,. ...... ,. ... ..:..:... .........+..s.,...w... .;..,....:... ....... ... ...,..,>..._.,...v..»..wvas.........,...,,,»...:>.,w...:..,.m.........��>ww�.+..... ..—.
IN WITNESS WHEREOF, this Certificate has been executed by the manual signature of an
authorized signatory of the Trustee, all as of the date set forth below.
Execution date: BNY WESTERN TRUST COMPANY,
as Trustee
By:
Authorized Signatory
A-6
DOCSSF/43383v5/22925-0011
Table of Contents
Paize
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; CONTENTS OF CERTIFICATES AND
OPINIONS; RECITALS
Section1.1. Definitions .................................................................................................................... I
Section 1.2. Rules of Construction...................................................................................................5
Section 1.3. Content of Statements and Opinions.............................................................................5
Section1.4. Recitals..........................................................................................................................6
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates............................................................................................6
Section 2.2. Denominations; Medium and Place of Payment; Dating..............................................6
Section 2.3. Payment of Principal and Interest with Respect to Certificates....................................7
Section2.4. Form of Certificates......................................................................................................8
.. Section 2.5. Execution......................................................................................................................8
Section 2.6. Transfer of Certificates.................................................................................................8
Section 2.7. Exchange of Certificates...............................................................................................8
Section 2.8. Certificate Registration Books......................................................................................8
Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen ........................................................9
Section2.10. Book-Entry System.......................................................................................................9
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates............................................................................................... 12
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys........................... 12
Section 3.3. Validity of Certificates................................................................................................ 12
Section3.4. Delivery Cost Fund..................................................................................................... 12
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section 4.1. Terms of Prepayment.................................................................................................. 13
Section 4.2. Selection of Certificates for Prepayment.................................................................... 14
Section4.3. Notice of Prepayment................................................................................................. 14
Section 4.4. Partial Prepayment of Certificate................................................................................ 15
Section 4.5. Effect of Prepayment.................................................................................................. 15
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(continued)
Paize
Section 7.13. Indemnification of Trustee..........................................................................................26
ARTICLE VIII
THE TRUSTEE
Section 8.1. Employment of Trustee...............................................................................................26
Section 8.2. Acceptance of Employment.................................................................
Section 8.3. Trustee: Duties, Removal and Resignation................................................................27
Section 8.4. Compensation of the Trustee......................................................................................27
Section 8.5. Protection of the Trustee.............................................................................................28
Section 8.6. Merger or Consolidation.............................................................................................30
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted...............................................................................................30
Section 9.2. Endorsement or Replacement of Certificates After Amendment or Supplement.......31
g .. Section 9.3. Amendment of Particular Certificates ........................................................................31
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement....................................................................................31
Section 10.2. Deposit of Money or Securities with Trustee.............................................................32
Section10.3. Unclaimed Moneys.....................................................................................................32
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties.........................................................33
Section 11.2. Successor Deemed Included in all References to Predecessor...................................33
Section 11.3. Execution of Documents by Owners..........................................................................33
Section 11.4. Disqualified Certificates.............................................................................................33
Section 11.5. Waiver of Personal Liability.......................................................................................33
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates......................34
Section11.7. Headings.....................................................................................................................34
Section 11.8. Funds and Accounts....................................................................................................34
Section11.9. Partial Invalidity .........................................................................................................34
,. Section 11.10. California Law............................................................................................................34
Section11.11. Notices........................................................................................................................34
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(continued)
Page
ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments.............................................................. 15
Section 5.2. Certificate Payment Fund............................................................................................ 16
Section 5.3. Investment of Moneys in Special Funds.....................................................................17
Section5.4. Reserve Fund.............................................................................................................. 17
Section 5.5. Pledge of Moneys in Funds......................................................................................... 18
Section5.6. Rebate Fund................................................................................................................ 19
Section 5.7. Reserved...................................................................... Error! Bookmark not defined.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform Under Installment Purchase Agreement...........20
Section6.2. Budgets.......................................................................................................................20
Section6.3. Tax Covenants............................................................................................................21
Section 6.4. Accounting Records and Reports.................................................
Section 6.5. Compliance with Trust Agreement.............................................................................21
Section 6.6. Observance of Laws and Regulations.........................................................................22
Section 6.7. Compliance with Contracts.........................................................................................22
Section 6.8. Prosecution and Defense of Suits ...............................................................................22
Section6.9. Recordation and Filing................................................................................................22
Section6.10. Eminent Domain.........................................................................................................23
Section 6.11. Further Assurances .....................................................................................................23
Section 6.12. Continuing Disclosure................................................................................................23
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.1. Notice of Non-Payment..............................................................................................
23
Section 7.2. Action on Default or Termination...............................................................................23
Section 7.3. Other Remedies of the Trustee ...................................................................................24
Section7.4. Non-Waiver................................................................................................................24
Section 7.5. Remedies Not Exclusive.............................................................................................24
Section 7.6. No Obligation by the District to Owners....................................................................24
Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings ............25
Section 7.8. Power of Trustee to Control Proceedings...................................................................25
Section 7.9. Limitation on Certificate-owners' Right to Sue..........................................................25
Section 7.10. No Obligation with Respect to Performance by Trustee............ ...............................26
Section 7.11. No Liability to Owners for Payment...........................................................................26
Section 7.12. No Responsibility for Sufficiency..............................................................................26
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(continued)
Paize
Section 7.13. Indemnification of Trustee..........................................................................................26
ARTICLE VIII
THE TRUSTEE
Section 8.1. Employment of Trustee.....................................
Section 8.2. Acceptance of Employment....................
Section 8.3. Trustee: Duties, Removal and Resignation................................................................27
Section 8.4. Compensation of the Trustee......................................................................................27
Section 8.5. Protection of the Trustee.............................................................................................28
Section 8.6. Merger or Consolidation.............................................................................................30
ARTICLE IX
AMENDMENT OF TRUST AGREEMENT
Section 9.1. Amendments Permitted...............................................................................................30
Section 9.2. Endorsement or Replacement of Certificates After Amendment or Supplement.......31
Section 9.3. Amendment of Particular Certificates ........................................................................31
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement.......................................................
Section 10.2. Deposit of Money or Securities with Trustee.............................................................32
Section10.3. Unclaimed Moneys.....................................................................................................32
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties.........................................................33
Section 11.2. Successor Deemed Included in all References to Predecessor...................................33
Section 11.3. Execution of Documents by Owners..........................................................................33
Section 11.4. Disqualified Certificates.............................................................................................33
Section 11.5. Waiver of Personal Liability.......................................................................................33
Section 11.6. Acquisition of Certificates by the District; Destruction of Certificates......................34
Section11.7. Headings.....................................................................................................................34
Section11.8. Funds and Accounts....................................................................................................34
Section11.9. Partial Invalidity.........................................................................................................34
Section11.10. California Law............................................................................................................34
Section11.11. Notices........................................................................................................................34 ,
Section 11.12. Liability of District Limited to Revenues...................................................................35
Section 11.13. Execution in Counterparts...........................................................................................35
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(continued)
Page
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; CONTENTS OF CERTIFICATES AND
OPINIONS; RECITALS
SectionI.I. Definitions .................................................................................................................... I
Section 1.2. Rules of Construction...................................................................................................5
Section 1.3. Content of Statements and Opinions.............................................................................5
Section1.4. Recitals..........................................................................................................................6
ARTICLE II
CERTIFICATES; TERMS AND PROVISIONS
Section 2.1. Preparation of Certificates............................................................................................6
Section 2.2. Denominations; Medium and Place of Payment; Dating..............................................6
Section 2.3. Payment of Principal and Interest with Respect to Certificates....................................7
Section2.4. Form of Certificates......................................................................................................8
Section2.5. Execution......................................................................................................................8
Section 2.6. Transfer of Certificates.................................................................................................8
Section 2.7. Exchange of Certificates...............................................................................................8
Section 2.8. Certificate Registration Books......................................................................................8
Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen........................................................9
Section2.10. Book-Entry System.......................................................................................................9
ARTICLE III
DELIVERY OF CERTIFICATES; DELIVERY COST FUND
Section 3.1. Delivery of Certificates............................................................................................... 12
Section 3.2. Application of Proceeds of Certificates and Certain Other Moneys........................... 12
Section 3.3. Validity of Certificates................................................................................................ 12
Section3.4. Delivery Cost Fund..................................................................................................... 12
ARTICLE IV
PREPAYMENT OF CERTIFICATES
Section4.1. Terms of Prepayment.................................................................................................. 13
Section 4.2. Selection of Certificates for Prepayment.................................................................... 14
Section4.3. Notice of Prepayment................................................................................................. 14
Section 4.4. Partial Prepayment of Certificate................................................................................ 15
Section4.5. Effect of Prepayment.................................................................................................. 15
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Page
ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments.............................................................. 15
Section 5.2. Certificate Payment Fund........................................................................................... 16
Section 5.3. Investment of Moneys in Special Funds..................................................................... 17
Section5.4. Reserve Fund.............................................................................................................. 17
Section 5.5. Pledge of Moneys in Funds......................................................................................... 18
Section5.6. Rebate Fund................................................................................................................ 19
Section5.7. Reserved...................................................................... Error! Bookmark not defined.
ARTICLE VI
COVENANTS
Section 6.1. Corporation and District to Perform Under Installment Purchase Agreement...........20
Section6.2. Budgets.......................................................................................................................20
Section6.3. Tax Covenants ............................................................................................................21
Section 6.4. Accounting Records and Reports................................................................................21w
Section 6.5. Compliance with Trust Agreement.............................................................................21
Section 6.6. Observance of Laws and Regulations.........................................................................22
Section 6.7. Compliance with Contracts.........................................................................................22
Section 6.8. Prosecution and Defense of Suits ...............................................................................22
Section 6.9. Recordation and Filing................................................................................................22
Section6.10. Eminent Domain.........................................................................................................23
Section 6.11. Further Assurances .....................................................................................................23
Section 6.12. Continuing Disclosure................................................................................................23
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.1. Notice of Non-Payment..............................................................................................23
Section 7.2. Action on Default or Termination...............................................................................23
Section 7.3. Other Remedies of the Trustee ...................................................................................24
Section7.4. Non-Waiver ................................................................................................................24
Section 7.5. Remedies Not Exclusive.............................................................................................24
Section 7.6. No Obligation by the District to Owners....................................................................24
Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings ............25
Section 7.8. Power of Trustee to Control Proceedings...................................................................25
Section 7.9. Limitation on Certificate-owners' Right to Sue..........................................................25
Section 7.10. No Obligation with Respect to Performance by Trustee............ ...............................26
Section 7.11. No Liability to Owners for Payment......................................
Section 7.12. No Responsibility for Sufficiency..............................................................................26
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DOCSSF/43383v5/22925-0011
[FORM OF ASSIGNMENT]
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
the within mentioned Certificate and
hereby irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the Certificate register of the Trustee with full power of substitution
in the premises.
Dated:
Note: The signature(s) to this Assignment
must correspond with the name(s) as written
on the face of the within Certificate in every
particular,without alteration or enlargement or
any change whatsoever.
Signature Guaranteed:
Note: Signature(s)must be guaranteed by an
eligible guarantor institution.
A-7
DOCSSF/43383v5/22925-0011
amended, without the consent of the registered owners of any Certificates, but only to the extent
permitted by law and only for any one or more of the following purposes --
(1) to add to the covenants and agreements of the Corporation or the District contained in
the Trust Agreement or the Installment Purchase Agreement other covenants and
agreements thereafter to be observed or to surrender any right or power in the Trust
Agreement or the Installment Purchase Agreement reserved to or conferred upon the
Corporation or the District, and which shall not adversely affect the interests of the
registered owners of the Certificates;
(2) to cure, correct or supplement any ambiguous or defective provision contained in the
Trust Agreement or the Installment Purchase Agreement or in regard to questions arising
under the Trust Agreement or the Installment Purchase Agreement, as the Corporation or
the District may deem necessary or desirable and which shall not adversely affect the
interests of the registered owners of the Certificates; and
(3) to make such other amendments or modifications as may be in the best interests of the
registered owners of the Certificates.
Upon acceleration, the Installment Payments and the Certificates shall become due and
payable immediately from the sources described in the Installment Purchase Agreement and the Trust
Agreement, respectively.
The Trustee has no obligation or liability to the registered owners of the Certificates for the
payment of interest, principal or prepayment premium, if any, with respect to the Certificates out of
the Trustee's own funds; the Trustee's sole obligations are those described in the Trust Agreement.
The recitals of facts herein shall be taken as statements of the District and the Corporation and the
Trustee does not have any responsibility for the accuracy thereof.
The District has certified that all acts, conditions and things required by the Constitution and
statutes of the State of California and the Trust Agreement to exist, to have happened and to have
been performed precedent to and in the delivery of this Certificate, do exist, have happened and have
been performed in due time, form and manner as required by law.
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DOCSSF/43383v5/22925-0011
Installment Payments and which are secured by a pledge of and lien on the Revenues in accordance
with the Installment Purchase Agreement.
The Certificates are authorized to be executed and delivered in the form of fully registered
Certificates in the denomination of$5,000 each or any integral multiple thereof; provided that no
Certificate shall have principal represented thereby maturing in more than one year. Subject to the
limitations and conditions and upon payment of the taxes and governmental charges provided in the
Trust Agreement, Certificates may be exchanged for a like aggregate principal amount of Certificates
of the same Certificate Payment Date of other authorized denominations at the Principal Corporate
Trust Office of the Trustee.
This Certificate is transferable by the Registered Owner hereof, in person or by such person's
duly authorized attorney, but only in the manner, subject to the limitations and conditions and upon
payment of the taxes and governmental charges provided in the Trust Agreement, and upon surrender
of this Certificate for cancellation at the Principal Corporate Trust Office of the Trustee,
accompanied by delivery of a duly executed written instrument of transfer, in a form approved by the
Trustee. Upon such transfer a new Certificate or Certificates of the same Certificate Payment Date
and of authorized denomination or denominations, for a like aggregate principal amount will be
delivered to the transferee in exchange herefor.
The Trustee may treat the Registered Owner hereof as the absolute owner hereof for all
purposes, and the Trustee shall not be affected by any notice to the contrary.
The Trustee shall not be required to register the transfer or exchange of any Certificate
(i) within 15 days preceding selection of Certificates for prepayment or(ii) selected for prepayment.
The Certificates are subject to prepayment prior to their respective stated maturities, as a
whole or in part on any date in the order of maturity as directed by the District in a written request to
the Trustee and by lot within each maturity in integral multiples of$5,000, from prepaid Installment
Payments made by the District from Net Proceeds (as defined in the Installment Purchase
Agreement), under the circumstances and upon the terms prescribed in the Trust Agreement and the
Installment Purchase Agreement, at a prepayment price equal to the principal amount thereof plus
accrued interest evidenced and represented thereby to the date fixed for prepayment, without
premium.
The Certificates shall be subject to prepayment in part on the next May 1 or November 1 for
which timely notice of prepayment can be given after the date on which the Trustee receives the
statement of the District referred to in the Trust Agreement in the order of maturity as directed by the
District and by lot within each maturity in integral multiples of $5,000 from proceeds transferred
from the Acquisition Fund to the Certificate Payment Fund for deposit into the Prepayment Fund at a
Prepayment Price of the principal amount thereof plus accrued interest evidenced and represented
thereby to the date fixed for prepayment, without premium.
The Certificates are subject to prepayment prior to their respective stated maturities, as a
whole or in part on any date in the order of maturity as directed by the District in a written request to
the Trustee and by lot within each maturity in integral multiples of$5,000, on or after November 1,
20_, from amounts prepaid by the District pursuant to the Installment Purchase Agreement, at a
prepayment price (expressed as a percentage of the principal amount of such Certificates to be
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DOCSSF/43383v5/22925-0011
EXHIBIT A
[FORM OF CERTIFICATE OF PARTICIPATION]
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATE OF PARTICIPATION, SERIES 2004
Evidencing an Interest of the Owner Hereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
CERTIFICATE
INTEREST RATE PAYMENT DATE DATED CUSIP
% , 2004
REGISTERED OWNER:
PRINCIPAL AMOUNT: AND NO/100 DOLLARS
THIS IS TO CERTIFY that the Registered Owner (specified above) of this Certificate of
Participation (herein called the "Certificate") is the owner of an undivided interest in the right to
receive certain Installment Payments (as that term is defined in the Trust Agreement hereinafter
mentioned) under that certain Installment Purchase Agreement (the "Installment Purchase
Agreement"), dated as of November 1, 2004, by and between Truckee Donner Public Utility District
Financing Corporation (the "Corporation") and the Truckee Donner Public Utility District (the
"District"). The Installment Payments to be made thereunder have been assigned to BNY Western
Trust Company, as trustee (the "Trustee"), having a corporate trust office in Los Angeles, California.
The Trustee has executed and delivered $ aggregate principal amount of Certificates.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the
Installment Purchase Agreement and the Trust Agreement, dated as of November 1, 2004, by and
among the Trustee, the Corporation and the District (the "Trust Agreement") on the Certificate
Payment Date (specified above) the Principal Amount (specified above) representing a portion of the
Installment Payments designated as principal coming due on the Certificate Payment Date, and to
receive an interest component on such principal component at the interest rate per annum specified
above, from the Interest Payment Date (as hereinafter defined)preceding the date of execution hereof
by the Trustee, unless such date of execution is after a Record Date (as hereinafter defined) and on or
before the succeeding Interest Payment Date, in which case interest shall be payable from such
Interest Payment Date, or unless such date of execution is on or before the first Record Date, in
which case interest shall be payable from ; provided, however, that if, as shown by
the records of the Trustee, interest represented by this Certificate is in default, Certificates executed
in exchange for this Certificate surrendered for transfer or exchange shall represent interest from the
last date to which interest has been paid in full or duly provided for with respect to this Certificate,
or, if no interest has been paid or duly provided for with respect to this Certificate, from - -
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DOCSSF/43383v5/22925-0011
If to the District: Truckee Donner Public Utility District
P.O. Box 309
11570 Donner Pass Road
Truckee,CA 96160
Attention: General Manager
If to the Corporation: Truckee Donner Public Utility District Financing Corporation
c/o Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee,CA 96160
Attention: President
If to the Trustee: BNY Western Trust Company
700 South Flower Street, Suite 500
Los Angeles, CA 90017-4104
Attention: Corporate Trust
Section 11.12. Liability of District Limited to Revenues. Notwithstanding anything
contained herein, the District shall not be required to advance any moneys derived from any
source of income other than the Revenues for the payment of amounts due hereunder and/or for
the performance of any agreements or covenants required to be performed by it contained herein
and is hereby prohibited from using any other District moneys for any such purpose.
Section 11.13. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.
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DOCSSF/43383v5/22925-0011
ARTICLE XI
MISCELLANEOUS
Section 11.1. Benefits of Trust Agreement Limited to Parties. Nothing contained herein,
expressed or implied, is intended to give to any person other than the District, the Trustee, the
Corporation and the Owners any claim, remedy or right under or pursuant hereto, and any agreement,
condition, covenant or term required herein to be observed or performed by or on behalf of the
District shall be for the sole and exclusive benefit of the Trustee,the Corporation and the Owners.
Section 11.2. Successor Deemed Included in all References to Predecessor. Whenever
either the District, the Corporation or the Trustee or any officer thereof is named or referred to
herein, such reference shall be deemed to include the successor to the powers, duties and functions
that are presently vested in the District, the Corporation or the Trustee or such officer, and all
agreements, conditions, covenants and terms required hereby to be observed or performed by or on
behalf of the District, the Corporation or the Trustee or any officer thereof shall bind and inure to the
benefit of the respective successors thereof whether so expressed or not.
Section 11.3. Execution of Documents by Owners. Any declaration, request or other
instrument which is permitted or required herein to be executed by Owners may be in one or more
instruments of similar tenor and may be executed by Owners in person or by their attorneys
appointed in writing. The fact and date of the execution by any Owner or such Owner's attorney of
any declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to take acknowledgments of
deeds to be recorded in the state or territory in which he or she purports to act that the person signing
such declaration, request or other instrument or writing acknowledged to him or her the execution
thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or
other officer, or by such other proof as the Trustee may accept which it may deem sufficient.
The ownership of any Certificates and the amount,payment date, number and date of owning
the same may be proved by the books required to be kept by the Trustee pursuant to the provisions of
Section 2.8.
Any declaration, request or other instrument in writing of the Owner of any Certificate shall
bind all future Owners of such Certificate with respect to anything done or suffered to be done by the
District or the Trustee in good faith and in accordance therewith.
Section 11.4. Disqualified Certificates. Certificates owned or held by or for the account of
the Corporation or the District (but excluding Certificates held in any pension or retirement fund)
shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of
Outstanding Certificates provided for in this Agreement, and shall not be entitled to consent to or
take any other action provided for in this Agreement.
The Trustee may adopt appropriate regulations to require each Owner of Certificates, before
his or her consent provided for in this Agreement shall be deemed effective, to reveal if the
Certificates as to which such consent is given are disqualified as provided in this Section.
Section 11.5. Waiver of Personal Liability. No director, officer or employee of the District
or the Corporation shall be individually or personally liable for the payment of the interest, principal
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DOCSSF/43383v5/22925-0011
�r
(iii) to make such other amendments or modifications as may be in the
best interests of the Owners of the Certificates.
Section 9.2. Endorsement or Replacement of Certificates After Amendment or
Supplement. After the effective date of any action taken as hereinabove provided, the Trustee may
determine that the Certificates may bear a notation by endorsement in form approved by the Trustee
as to such action, and in that case upon demand of the Trustee to the Owner of any Outstanding
Certificate and presentation of such Owner's Certificate for such purpose at the principal corporate
trust office of the Trustee a suitable notation as to such action shall be made on such Certificate. If
the Trustee shall so determine, new Certificates so modified as in the opinion of the Trustee shall be
necessary to conform to such action shall be prepared, and in that case upon demand of the Trustee to
the Owner of any Outstanding Certificates such new Certificates shall be exchanged at the principal
corporate trust office of the Trustee without cost to each Owner for Certificates then Outstanding
upon surrender of such Outstanding Certificates.
Section 9.3. Amendment of Particular Certificates. The provisions of this article shall not
prevent any Owner from accepting any amendments to the particular Certificates held by him or her,
provided that due notation thereof is made on such Certificates.
ARTICLE X
DEFEASANCE
Section 10.1. Discharge of Trust Agreement. When the obligations of the District under the
Installment Purchase Agreement shall cease pursuant to Article IX of the Installment Purchase
Agreement (except for the right of the Trustee and the obligation of the District to have the money
and Permitted Investments mentioned therein applied to the payment of Installment Payments as
therein set forth and the obligation to apply moneys on deposit in the Rebate Fund as provided in
Section 5.6), then and in that case the obligations created by this Agreement shall thereupon cease,
terminate and become void except for the obligation of the District to direct the Trustee to apply
money on deposit in the Rebate Fund as provided herein which shall continue until such moneys are
so applied and the right of the Owners to have applied and the obligation of the Trustee to apply such
moneys and Permitted Investments to the payment of the Certificates as herein set forth, and subject
to application of moneys on deposit in the Rebate Fund as provided in Section 5.6, the Trustee shall
turn over to the District, after provision for payment of amounts due the Trustee hereunder, as an
overpayment of Installment Payments, any surplus in the Certificate Payment Fund and all balances
remaining in any other funds or accounts other than moneys and Permitted Investments held for the
payment of the Certificates at maturity or on prepayment, which moneys and Permitted Investments
shall continue to be held by the Trustee in trust for the benefit of the Owners and shall be applied by
the Trustee to the payment, when due, of the principal or interest and premium, if any,represented by
the Certificates, and after such payment, this Agreement shall become void.
If moneys or securities described in clause (i) (a) or (d) of the definition of Permitted
Investments are deposited with and held by the Trustee as hereinabove provided, the Trustee shall
within thirty (30) days after such moneys or Permitted Investments shall have been deposited with it,
mail a notice, first class postage prepaid, to the Owners at the addresses listed on the registration
books kept by the Trustee pursuant to Section 2.8, setting forth (a) the date fixed for prepayment of
the Certificates, (b) a description of the moneys or securities described in clause (i) (a) or (d) of the
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DOCSSF/43383v5/22925-0011
The Trustee undertakes to perform such duties, and only such duties as are specifically set
forth in this Agreement and no implied duties or obligations shall be read into this Agreement against
the Trustee.
No provision in this Agreement shall require the Trustee to risk or expend its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not assured to it.
In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and
not in its individual capacity and all persons, including without limitation the Owners and the District
or the Corporation having any claim against the Trustee arising from this Agreement shall look only
to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided
herein. Under no circumstances shall the Trustee be liable in its individual capacity for the
obligations evidenced by the Certificates.
The Trustee makes no representation or warranty, express or implied as to the title, value,
design, compliance with specifications or legal requirements, quality, durability, operation,
condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by
the District or the Corporation of the Project. In no event shall the Trustee be liable for incidental,
indirect, special or consequential damages in connection with or arising from the Installment
Purchase Agreement or this Agreement for the existence, furnishing or use of the Project.
The Trustee shall not be deemed to have knowledge of any Event of Default hereunder or
under the Installment Purchase Agreement unless and until it shall have actual knowledge thereof or
have received notice thereof at its corporate trust office at the address set forth in Section 11.11
hereof. The Trustee shall, during the existence of any Event of Default (which has not been cured)
use the same degree of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
The Trustee shall not be accountable for the use or application by the District, or the
Corporation or any other party of any funds which the Trustee has released in accordance with the
terms of this Agreement.
The Trustee shall not be considered in breach of or in default in its obligations hereunder or
progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of
such obligations due to unforeseeable causes beyond its control and without its fault or negligence,
including,but not limited to,Acts of God or the public enemy or terrorists, acts of a government, acts
of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of
labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or
arbitration involving a party or others relating to zoning or other governmental action or inaction
pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays
of suppliers or subcontractors due to such causes or similar event and/occurrences beyond the control
of the Trustee.
The Trustee agrees to accept and act upon facsimile transmission of written instructions
and/or directions pursuant to this Trust Agreement provided, however, that: (a) subsequent to such
facsimile transmission of written instructions and/or directions, (b) such originally executed
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DOCSSF/43383v5/22925-0011
District to the Owners of Certificates; and to perform certain other functions; all as herein provided
and subject to the terms and conditions of this Agreement.
Section 8.2. Acceptance of Employment. In consideration of the compensation herein
provided for, the Trustee accepts the employment above referred to subject to the terms and
conditions of this Agreement.
Section 8.3. Trustee: Duties, Removal and Resi ng ation. By executing and delivering this
Agreement, the Trustee accepts the duties and obligations of the Trustee provided in this Agreement,
but only upon the terms and conditions set forth in this Agreement.
The District may, by written request to the Trustee, remove the Trustee and appoint a
successor Trustee; provided, however, that if the District is in default under the Installment Purchase
Agreement, the Owners of a majority in aggregate principal amount of all Certificates Outstanding
may,by written request to the Trustee,remove the Trustee and appoint a successor Trustee. Any such
successor shall be a bank or trust company doing business and having a corporate trust office in
California, which has (or the parent holding company of which has) a combined capital (exclusive of
borrowed capital) and surplus of at least twenty million dollars ($20,000,000) and subject to
supervision or examination by federal or state authorities. If such bank or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or
examining authority above referred to,then for the purposes of this Section the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
The Trustee may at any time resign by giving written notice to the District and by giving to
the Certificate Owners notice of such resignation by mail at the addresses shown on the registration
books maintained by the Trustee. Upon receiving such notice of resignation, the District shall
promptly appoint a successor Trustee by an instrument in writing; provided, however, that in the
event that the District does not appoint a successor Trustee within thirty (30) days following receipt
of such notice of resignation, the resigning Trustee may at the expense of the District petition the
appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective upon written acceptance
of appointment by the successor Trustee.
Section 8.4. Compensation of the Trustee. The District shall from time to time, subject to
any agreement in effect with the Trustee, pay to the Trustee reasonable compensation for its services
and shall reimburse the Trustee (including all of its employees, officers and directors) for all its
advances and expenditures, including but not limited to advances to and fees and expenses of
independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other
experts employed by it in the exercise and performance of its powers and duties hereunder. Such
compensation and reimbursement shall be paid by the District and amounts owing therefor shall
constitute a charge on the moneys in the Acquisition Fund and payable by the District; provided,
however, that the Trustee shall not otherwise have any claims, except in accordance with
Section 7.13 hereof and Section 8.2 of the Installment Purchase Agreement, or lien for payment of
compensation for its services against any other moneys held by it in the funds or accounts established
hereunder but may take whatever legal actions are lawfully available to it directly against the
District. The obligations of the District under this Section shall survive resignation or removal of the
Trustee and payment of the Certificates and discharge of this Agreement.
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DOCSSF/43383v5/22925-0011
Section 7.7. Trustee Appointed Agent for Certificate-owners: Direction of Proceedings.
The Trustee is hereby appointed the agent and attorney of the Owners of all Certificates outstanding
hereunder for the purpose of filing any claims relating to the Certificates. The Owners of a majority
in aggregate principal amount of the Certificates Outstanding hereunder shall, upon tender to the
Trustee of reasonable indemnity against the costs, expenses and liabilities to be incurred in
compliance with such direction, have the right to direct the method and place of conducting all
remedial proceedings by the Trustee,provided such direction shall be in accordance with law and the
provisions of this Trust Agreement and that the Trustee shall have the right to decline to follow any
such direction which in the opinion of the Trustee would be unjustly prejudicial to Certificate-owners
not parties to such a direction.
Section 7.8. Power of Trustee to Control Proceedings. In the event that the Trustee, upon
the happening of an Event of Default, shall have taken any action, by judicial proceedings or
otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of
the Owners of a majority in aggregate principal amount of the Certificates then outstanding pursuant
to Section 7.7 hereof, it shall have full power, in the exercise of its discretion for the best interests of
the Owners of the Certificates, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action; provided, however, that the Trustee shall
not, unless there no longer continues an Event of Default hereunder, discontinue, withdraw,
compromise or settle, or otherwise dispose of, any litigation pending at law or in equity, if at the time
there has been filed with it a written request signed by the Owners of at least a majority in principal
amount of the Certificates Outstanding hereunder opposing such discontinuance, withdrawal,
compromise, settlement or other disposal of such litigation.
Section 7.9. Limitation on Certificate-owners' Right to Sue. No Owner of any Certificate
executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law
or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have
previously given to the Trustee written notice of the occurrence of an Event of Default hereunder; (b)
the Owners of at least a majority in aggregate principal amount of all the Certificates then
Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have
tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with
such request for a period of sixty (60) days after such written request shall have been received by,
and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender or indemnity and refusal or omission are hereby declared,
in every case, to be conditions precedent to the exercise by any Owner of Certificates of any remedy
hereunder; it being understood and intended that no one or more Owners of Certificates shall have
any right in any manner whatever by his or their action to enforce any right under this Agreement,
except in the manner herein provided, and that all proceedings at law or in equity to enforce any
provision of this Agreement shall be instituted, had and maintained in the manner herein provided
and for the equal benefit of all owners of the Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of the principal of (and
premium, if any) and interest with respect to such Certificate, as herein provided, on and after the
respective due dates expressed in such Certificate, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected without the consent of
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DOCSSF/43383v5/22925-0011
y
Notwithstanding anything to the contrary above, the Trustee shall have no duty or liability
whatsoever to monitor or notify any party with respect to the timeliness, sufficiency or validity of
any such recording, re-recording, filing, filing of continuation statements and the like with respect to
this Agreement; it being expressly understood and agreed that the Trustee's duties under this Section
shall be exclusively limited to following the express written filing or recording instructions of the
District, from time to time with respect to the above described actions so long as the District shall
supply said recording or filing instruments.
Section 6.10. Eminent Domain. If all or any part of the Broadband System shall be taken
by eminent domain proceedings (or sold to a government threatening to exercise the power of
eminent domain),the Net Proceeds therefrom shall be applied in the manner specified in Section 6.15
of the Installment Purchase Agreement.
Section 6.11. Further Assurances. Whenever and so often as requested so to do by the
Trustee or any Certificate Owner, the Corporation and the District will promptly execute and deliver
or cause to be executed and delivered all such other and further instruments, documents or
assurances, and promptly do or cause to be done all such other and further things, as may be
necessary or reasonably required in order to further and more fully vest in the Trustee and the
Certificate Owners all rights, interest, powers, benefits, privileges and advantages conferred or
intended to be conferred upon them by this Agreement.
Section 6.12. Continuing Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of its obligations under the continuing disclosure certificate to be
executed and delivered by the District in connection with the delivery of the Certificates. "
Notwithstanding any other provision of this Agreement, failure of the District to comply with the
continuing disclosure certificate shall not be considered an Event of Default; however, any Owner or
Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the District to comply with its obligations
under this Section 6.12. For purposes of this Section, "Beneficial Owner" means any person which
has or shares the power, directly or indirectly,to make investment decisions concerning ownership of
any Certificates (including persons holding Certificates through nominees, depositories or other
intermediaries).
ARTICLE VII
DEFAULT AND LIMITATION OF LIABILITY
Section 7.1. Notice of Non-Payment. In the event of delinquency in the payment of any
Installment Payments due by the District pursuant to the Installment Purchase Agreement, the
Trustee shall, after one business day following the date upon which such delinquent Installment
Payment was due, as soon as practicable give written notice of the delinquency and the amount of the
delinquency to the District and the Corporation.
Section 7.2. Action on Default or Termination. Upon the occurrence of an Event of
Default (as that term is defined in the Installment Purchase Agreement), which event shall constitute
a default hereunder, and in each and every such case during the continuance of such Event of
Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of -
Certificates at the time Outstanding shall be entitled, upon notice in writing to the District, to
exercise the remedies provided to the Corporation in the Installment Purchase Agreement.
23
DOCSSF/43383v5/22925-0011
payment of Installment Payments due under the Installment Purchase Agreement and will notify the
Trustee of the proceedings then taken or proposed to be taken by the District.
Section 6.3. Tax Covenants. Notwithstanding any other provision of this Agreement,
absent an opinion of Special Counsel that the exclusion from gross income of interest with respect to
the Certificates will not be adversely affected for federal income tax purposes, the District covenants
to comply with all applicable requirements of the Code necessary to preserve such exclusion from
gross income and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The District will not take or omit to take any action or make
any use of the proceeds of the Certificates or of any other moneys or property which would cause the
Certificates to be"private activity bonds"within the meaning of Section 141 of the Code.
(b) Arbitrage. The District will make no use of the proceeds of the Certificates or
of any other amounts or property, regardless of the source, or take or omit to take any action which
would cause the Certificates to be "arbitrage bonds"within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The District will make no use of the proceeds of the
Certificates or take or omit to take any action that would cause the Certificates to be "federally
guaranteed"within the meaning of Section 149(b) of the Code.
(d) Information Reporting. The District will take or cause to be taken all
necessary action to comply with the informational reporting requirement of Section 149(e) of the
Code.
(e) Miscellaneous. The District will take no action inconsistent with its
expectations stated in any Tax Certificate executed with respect to the Certificates and will comply
with the covenants and requirements stated therein and incorporated by reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing
contained herein shall be deemed to prevent the District from causing the Trustee to execute and
deliver, Certificates the interest with respect to which has been determined by Special Counsel to be
subject to federal income taxation.
Section 6.4. Accounting Records and Reports. The Trustee shall keep or cause to be kept
proper books of record and account in which complete and correct entries shall be made of all
transactions made by it relating to the receipts, disbursements, allocation and application of the
Installment Payments, and such books shall be available upon reasonable prior notice for inspection
by the District and by any Owner of Certificates, or his agent or representative, at reasonable hours
and under reasonable conditions. Each month, so long as the Certificates are Outstanding,the Trustee
shall furnish to the District a statement covering receipts, disbursements, allocation and application
of amounts on deposit in the funds and accounts created hereunder held by it.
Section 6.5. Compliance with Trust Agreement. The Trustee will not execute, or permit
to be executed, any Certificates in any manner other than in accordance with the provisions of this
Agreement, and the District will not suffer or permit any default by it to occur under this Agreement,
but will faithfully observe and perform all the covenants, conditions and requirements hereof.
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Section 5.6. Rebate Fund.
(a) Establishment. The Trustee shall establish a separate account for the
Certificates designated the "Rebate Fund." Absent an opinion of Special Counsel that the exclusion
from gross income for federal income tax purposes of interest with respect to the Certificates will not
be adversely affected, the District shall cause to be deposited in the Rebate Fund such amounts as are
required to be deposited therein pursuant to this Section and the Tax Certificate. All money at any
time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to the United
States Treasury. All amounts on deposit in the Rebate Fund for the Certificates shall be governed by
this Section and the Tax Certificate for the Certificates, unless and to the extent that the District
delivers to the Trustee an opinion of Special Counsel that the exclusion from gross income for
federal income tax purposes of interest with respect to the Certificates will not be adversely affected
if such requirements are not satisfied. Notwithstanding anything to the contrary contained herein or
in the Tax Certificate, the Trustee (i) shall be deemed conclusively to have complied with the
provisions thereof if it follows all Written Requests of the District, and (ii) shall have no liability or
responsibility to enforce compliance by the District with the terms of the Tax Certificate, and
(iii)may rely conclusively on the District's calculations and determinations and certifications relating
to rebate matters, and (iv) shall have no responsibility to independently make any calculations or
determinations or to review the District's calculations or determinations thereunder.
(i) Annual Computation. Within 55 days of the end of each Certificate
Year (as such term is defined in the Tax Certificate), the District shall calculate or cause to be
calculated the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and
Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with
respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate
(e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking
into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the "1'/z%
Penalty") has been made), for this purpose treating the last day of the applicable Certificate Year as a
computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations (the
"Rebatable Arbitrage"). The District shall obtain expert advice as to the amount of the Rebatable
Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each Certificate Year,
upon the written Request of the District, an amount shall be deposited to the Rebate Fund by the
Trustee from any Revenues legally available for such purpose (as specified by the District in the
aforesaid written Request), if and to the extent required so that the balance in the Rebate Fund shall
equal the amount of Rebatable Arbitrage so calculated in accordance with (i) of this Subsection (a).
In the event that immediately following the transfer required by the previous sentence, the amount
then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein,
upon written Request of the District, the Trustee shall withdraw the excess from the Rebate Fund and
then credit the excess to the Revenue Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by
Request of the District, to the United States Treasury, out of amounts in the Rebate Account,
(1) Not later than 60 days after the end of(X)the fifth Certificate
Year, and (Y)each applicable fifth Certificate Year thereafter, an amount equal to at least 90% of the
Rebatable Arbitrage calculated as of the end of such Certificate Year; and
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be transferred by the Trustee from the Certificate Payment Fund and deposited in the Prepayment
Fund on the prepayment date specified in the Written Request of the District filed with the Trustee
pursuant to Section 7.2 of the Installment Purchase Agreement. Said moneys shall be set aside in the
Prepayment Fund solely for the purpose of prepaying the Certificates in advance of their respective
stated maturities and shall be applied on or after the date specified for prepayment pursuant to
Section 4.1 hereof to the payment of the Prepayment Price with respect to the Certificates to be
prepaid upon presentation and surrender of such Certificates.
Section 5.3. Investment of Moneys in Special Funds. Any moneys in the Delivery Cost
Fund, the Certificate Payment Fund, the Interest Fund, the Principal Fund, the Reserve Fund and the
Prepayment Fund shall be invested upon the Written Request of the District, by the Trustee, in
Permitted Investments which will mature on or before the dates when such moneys are scheduled to
be needed for payment from such fund. Securities acquired as an investment of moneys in a fund
shall be credited to such fund.
In the absence of written investment direction from the District, the Trustee shall invest
moneys held by it solely in Permitted Investments specified in clause (b)(5) of the definition thereof.
Any interest, profit or other income on such investments will be deposited when received by
the Trustee in the Reserve Fund to the extent the amount available and contained therein is less than
the Reserve Requirement and thereafter in the Certificate Payment Fund established hereunder.
Subject to the further provisions of Section 6.3 hereof, the Trustee may sell or present for
prepayment any obligations so purchased at the direction of the District whenever it shall be
necessary in order to provide moneys to meet any payment, and the Trustee shall not be liable or
responsible for any loss resulting from such investment. The Trustee or an affiliate may act as
principal or agent in the acquisition or disposition of any investment and should be entitled to its
customary fee therefor. The Trustee may commingle any of the funds or accounts established
pursuant to this Agreement into a separate fund or funds for investment purposes only; provided,
however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately
notwithstanding such commingling.
Section 5.4. Reserve Fund. The Trustee shall deposit in the Reserve Fund the amounts
required to be deposited therein pursuant to the Installment Purchase Agreement and this Agreement
and apply moneys in the Reserve Fund in accordance with this Section.
If one business day prior to any Payment Date the moneys in the Certificate Payment Fund
are insufficient to make the payments required by this Agreement with respect to Certificates on such
Payment Date, the Trustee shall transfer from the Reserve Fund to the Certificate Payment Fund the
amount of such insufficiency. In the event that the Trustee has transferred moneys from the Reserve
Fund to the Certificate Payment Fund in accordance with this Section, upon receipt of the moneys
from the District to increase the balance in the Reserve Fund to the Reserve Requirement,the Trustee
shall deposit such moneys in the Reserve Fund.
If the amount available and contained in the Reserve Fund exceeds an amount equal to the
Reserve Requirement and if the District is not then in default under the Installment Purchase
Agreement, the Trustee shall semiannually on or before each Payment Date withdraw the amount of �
such excess from the Reserve Fund and shall deposit such amount in the Certificate Payment Fund,
and for this determination the Trustee shall make a valuation of the Reserve Fund as often as it may
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registered or certified or overnight mail to the Securities Depositories at least 30 days but not more
than 60 days prior to the prepayment date.
Each notice of prepayment shall state the date of notice, the prepayment date, the place or
places of prepayment and the Prepayment Price, shall designate the maturities, CUSIP numbers, if
any, and, if less than all Certificates of any such maturity are to be prepaid, the serial numbers of the
Certificates of such maturity to be prepaid by giving the individual number of each Certificate or by
stating that all Certificates between two stated numbers, both inclusive, have been called for
prepayment and, in the case of Certificates to be prepaid in part only, the portions thereof to be
prepaid. Each such notice shall also state that on said date there will become due and payable on each
of said Certificates the Prepayment Price thereof or of said specified portion of the principal .
represented thereby in the case of a Certificate to be prepaid in part only, together with interest
accrued with respect thereto to the prepayment date, and that (provided that moneys for prepayment
have been deposited with the Trustee) from and after such prepayment date interest with respect
thereto shall cease to accrue, and shall require that such Certificates be then surrendered to the
Trustee. Any defect in the notice or the mailing thereof will not affect the validity of the prepayment
of any Certificate.
Notice of prepayment of Certificates shall be given by the Trustee on behalf of and at the
expense of the District.
Section 4.4. Partial Prepayment of Certificate. Upon surrender of any Certificate prepaid
in part only, the Trustee shall execute and deliver to the Owner thereof, at the expense of the District,
a new Certificate or Certificates of authorized denominations equal in aggregate principal amount to
the unprepaid portion of the Certificate surrendered and of the same maturity.
Section 4.5. Effect of Prepayment. When notice of prepayment has been duly given as
aforesaid, and moneys for payment of the Prepayment Price of, together with interest accrued to the
prepayment date with respect to, the Certificates (or portions thereof) so called for prepayment are
held by the Trustee, the Certificates (or portions thereof) so called for prepayment shall, on the
prepayment date designated in such notice, become due and payable at the Prepayment Price
specified in such notice and interest accrued thereon to the prepayment date; and from and after the
prepayment date interest represented by the Certificates so called for prepayment shall cease to
accrue, said Certificates (or portions thereof) shall cease to be entitled to any benefit or security
under this Agreement, and the Owners of said Certificates shall have no rights in respect thereof
except to receive payment of said Prepayment Price and accrued interest.
All Certificates prepaid pursuant to the provisions of this Article shall be canceled upon
surrender thereof and destroyed by the Trustee.
ARTICLE V
INSTALLMENT PAYMENTS
Section 5.1. Pledge and Deposit of Installment Payments. The Installment Payments are
hereby irrevocably pledged to, and shall be used for,the punctual payment of the Certificates, and the
Installment Payments shall not be used for any other purpose while any of the Certificates remain
Outstanding. This pledge shall constitute a first and exclusive lien on the Installment Payments in
accordance with the terms hereof.
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ARTICLE-IV
PREPAYMENT OF CERTIFICATES
Section 4.1. Terms of Prepayment.
(a) The Certificates shall be subject to extraordinary prepayment prior to their
respective stated maturities, as a whole or in part on any date in the order of maturity as directed by
the District in a Written Request provided to the Trustee at least 60 days prior to such date and by lot
within each maturity in integral multiples of$5,000 from prepaid Installment Payments made by the
District from Net Proceeds, upon the terms and conditions of, and as provided for in, Section 6.10 of
this Agreement, and Sections 6.09 and 6.15 of the Installment Purchase Agreement, at a Prepayment
Price equal to the principal amount thereof plus accrued interest evidenced and represented thereby
to the date fixed for prepayment,without premium.
(b) The Certificates shall further be subject to prepayment prior to their
respective stated maturities, as a whole or in part on any date in the order of maturity as directed by
the District in a Written Request provided to the Trustee at least 60 days prior to such date and by lot
within each maturity in integral multiples of$5,000, on or after November 1, 20_, from amounts
prepaid by the District pursuant to the Installment Purchase Agreement at a Prepayment Price
(expressed as a percentage of the principal amount of such Certificates to be prepaid) plus accrued
interest evidenced and represented thereby to the date fixed for prepayment, as set forth below:
Prepayment Dates Prepayment Price
(c) The Certificates with a stated maturity of November 1, 20_ are subject to
mandatory prepayment prior to such stated maturity in part (by lot) on any November 1 on or after
November 1, 20_, in integral multiples of $5,000 at a Prepayment Price of the principal amount
thereof plus accrued interest evidenced and represented thereby to the date fixed for prepayment,
without premium. Such Certificates shall be prepaid in the amounts and upon the dates as follows:
Mandatory Prepayment Date
(November 1) Principal Amount
* Final maturity
(d) The Certificates with a stated maturity of November 1, 20_ are subject to
mandatory prepayment prior to such stated maturity in part (by lot) on any November 1 on and after -
November 1, 20_, in integral multiples of $5,000 at a Prepayment Price of the principal amount
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as otherwise instructed by the Depository and agreed to by the Trustee notwithstanding any
inconsistent provisions herein.
(e) Transfer of Certificates to Substitute Depository.
(i) The Certificates shall be initially executed and delivered as provided
in Section 2.1 hereof. Registered ownership of such Certificates, or any portions thereof, may not
thereafter be transferred except:
(1) to any successor of DTC or its nominee, or of any substitute
depository designated pursuant to clause (B) of subsection (i) of this Section 2.10(e) ("Substitute
Depository"); provided that any successor of DTC or Substitute Depository shall be qualified under
any applicable laws to provide the service proposed to be provided by it;
(2) to any Substitute Depository, upon (1) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its functions as depository, or
(2) a determination by the District that DTC (or its successor) is no longer able to carry out its
functions as depository; provided that any such Substitute Depository shall be qualified under any
applicable laws to provide the services proposed to be provided by it; or
(3) to any person as provided below, upon (1) the resignation of
DTC or its successor (or any Substitute Depository or its successor) from its functions as depository,
or (2) a determination by the District that DTC or its successor (or Substitute Depository or its
successor) is no longer able to carry out its functions as depository.
(ii) In the case of any transfer pursuant to clause (A) or clause (B) of
subsection (i) of this Section 2.10(e), upon receipt of all Outstanding Certificates by the Trustee,
together with a written request of the District to the Trustee designating the Substitute Depository, a
single new Certificate, which the District shall prepare or cause to be prepared, shall be executed and
delivered for each maturity of Certificates then Outstanding, registered in the name of such successor
or such Substitute Depository or their Nominees, as the case may be, all as specified in such written
request of the District. In the case of any transfer pursuant to clause (C) of subsection (i) of this
Section 2.10(e), upon receipt of all Outstanding Certificates by the Trustee, together with a written
request of the District to the Trustee, new Certificates, which the District shall prepare or cause to be
prepared, shall be executed and delivered in such denominations and registered in the names of such
persons as are requested in such written request of the District, subject to the limitations of Section
2.1 hereof, provided that the Trustee shall not be required to deliver such new Certificates within a
period of less than sixty (60) days from the date of receipt of such written request from the District.
(iii) In the case of a partial prepayment or an advance refunding of any
Certificates evidencing a portion of the principal maturing in a particular year, DTC or its successor
(or any Substitute Depository or its successor) shall make an appropriate notation on such
Certificates indicating the date and amounts of such reduction in principal, in form acceptable to the
Trustee, all in accordance with the Letter of Representations. The Trustee shall not be liable for such
Depository's failure to make such notations or errors in making such notations.
(iv) The District and the Trustee shall be entitled to treat the person in
whose name any Certificate is registered as the Owner thereof for all purposes of this Trust
Agreement and any applicable laws, notwithstanding any notice to the contrary received by the
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Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall
become mutilated, the Trustee shall execute and deliver a new Certificate of like tenor, maturity and
principal amount in exchange and substitution for the Certificate so mutilated, but only upon
surrender to the Trustee of the Certificate so mutilated.
Every mutilated Certificate so surrendered to the Trustee shall be canceled by it and
destroyed. If any Certificate shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and
indemnity satisfactory to the Trustee shall be given indemnifying the Trustee, the Corporation and
the District, the Trustee, at the expense of the Certificate Owner, shall execute and deliver a new
Certificate of like tenor and maturity, and numbered as the Trustee shall determine, in lieu of and in
substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of a
sum not exceeding the actual cost of preparing each new Certificate executed under this Section and
of the expenses which may be incurred by the Trustee under this Section. Any Certificate executed
under the provisions of this Section in lieu of any Certificate alleged to be lost, destroyed or stolen
shall be equally and proportionately entitled to the benefits of this Agreement with all other
Certificates secured by this Agreement. The Trustee shall not be required to treat both the original
Certificate and any replacement Certificate as being Outstanding for the purpose of determining the
principal amount of Certificates which may be executed hereunder or for the purpose of determining
any percentage of Certificates Outstanding hereunder, but both the original and replacement
Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section,
in lieu of delivering a new Certificate for a Certificate which has been mutilated, lost, destroyed or
stolen and which has matured or has been selected for prepayment,the Trustee may make payment of
such Certificate upon receipt of indemnity satisfactory to the Trustee.
Section 2.10. Book-Entry System.
(a) Election of Book-Entry System. Prior to the execution and delivery of the
Certificates, the District may provide that such Certificates shall be initially executed and delivered
as book-entry Certificates. If the District shall elect to deliver any Certificates in book-entry form,
then the District shall cause the delivery of a separate single fully registered certificate (which may
be typewritten) for each maturity date of such Certificates in an authorized denomination
corresponding to that total principal amount of the Certificates designated to mature on such date.
Upon initial execution and delivery, the ownership of each such Certificate shall be registered in the
Certificate registration books in the name of the Nominee, as nominee of the Depository and
ownership of the Certificates, or any portion thereof may not thereafter be transferred except as
provided in Section 2.10(e).
With respect to book-entry Certificates, the District and the Trustee shall have no
responsibility or obligation to any Participant or to any person on behalf of which such a Participant
holds an interest in such book-entry Certificates. Without limiting the immediately preceding
sentence, the District and the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, the Nominee, or any Participant with respect to any
ownership interest in book-entry Certificates, (ii) the delivery to any Participant or any other person,
other than an Owner as shown in the Certificate registration books, of any notice with respect to
book-entry Certificates, including any notice of prepayment, (iii) the selection by the Depository and
its Participants of the beneficial interests in book-entry Certificates to be prepaid in the event the
District prepays the Certificates in part, or (iv) the payment by the Depository or any Participant or
any other person, of any amount with respect to principal, premium, if any, or interest with respect to
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The principal and Prepayment Price with respect to the Certificates shall be payable in lawful
money of the United States of America upon presentation and surrender thereof at the Principal
Corporate Trust Office of the Trustee. Interest with respect to the Certificates shall be payable by
check or draft of the Trustee mailed by first class mail on each Payment Date of such Certificates to
the respective Certificate Owners of record thereof as of the close of business on the Record Date at
the addresses shown on the books required to be kept pursuant to Section 2.8 or, upon the written
request received by the Trustee of an Owner of at least $1,000,000 in aggregate principal amount of
Certificates, by wire transfer of immediately available funds to an account in the United States
designated by such Owner prior to the applicable Record Date.
The Certificates shall be dated their date of delivery. Interest with respect to the Certificates
shall be payable from the Payment Date preceding their date of execution, unless such date shall be
after a Record Date and on or before the succeeding Payment Date, in which case interest shall be
payable from such Payment Date or unless such date shall be on or before the first Record Date, in
which case interest shall be payable from , provided, however, that if, as shown by
the records of the Trustee, interest represented by the Certificates shall be in default, Certificates
executed in exchange for Certificates surrendered for transfer or exchange shall represent interest
from the last date to which interest has been paid in full or duly provided for with respect to the
Certificates, or, if no interest has been paid or duly provided for with respect to the Certificates, from
Section 2.3. Payment of Principal and Interest with Respect to Certificates. The
Certificates shall become payable on November 1 in the years, in the amounts and at the rates, as
follows:
Payment Date
(November 1) Principal Amount Interest Rate
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Statement of the Corporation or District. The term"Statement of the Corporation or District"
means a statement signed by or on behalf of(i) the Corporation by its President or a Vice President
or (ii) the District by the President and by the Secretary or by any two persons (whether or not
members of the Board of Directors) who are specifically authorized by resolution of the District to
sign or execute such a document on its behalf. If and to the extent required by the provisions of
Section 1.3, each Statement of the Corporation or District shall include the statements provided for in
Section 1.3.
Tax Certificate. The Term "Tax Certificate" means the Tax Certificate dated November
2004, concerning certain matters pertaining to the use and investment of proceeds of the Certificates
executed by and delivered to the District on the date of execution and delivery of the Certificates,
including any and all exhibits attached thereto.
Trustee. The term "Trustee" means BNY Western Trust Company, a banking corporation
duly organized and existing under and by virtue of the laws of the State of California having a
principal corporate trust office in Los Angeles, California, or such other office as the Trustee may
from time to time designate in writing to the District, the Corporation and the Owners, or its
successor as Trustee hereunder.
Written Consent of the Corporation or District, Written Order of the Corporation or District.
Written Request of the Corporation or District, Written Requisition of the Corporation or District.
The terms "Written Consent of the Corporation or District," "Written Order of the Corporation or
District," "Written Request of the Corporation or District," and "Written Requisition of the
Corporation or District"mean, respectively, a written consent, order, request or requisition signed by
or on behalf of (i) the Corporation by its President or a Vice President or (ii) the District by the
President or General Manager or its Treasurer or by the Secretary or by any two persons (whether or
not members of the Board of Directors) who are specifically authorized by resolution of the District
to sign or execute such a document on its behalf.
Section 1.2. Rules of Construction. Words of any gender shall be deemed and construed
to include all genders, and words importing persons shall include corporations and associations,
including public bodies, as well as natural persons. Unless the context otherwise indicates, words
importing the singular number shall include the plural number and vice versa.
Section 1.3. Content of Statements and Opinions. Every statement or opinion with respect
to compliance with a condition or covenant provided for in this Agreement, including each Statement
of the Corporation, shall include (a) a statement that the person or persons making or giving such
statement or opinion have read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such statement or opinion are based; (c) a statement that, in the
opinion of the signers, they have made or caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (d) a statement as to whether, in the opinion of the signers,
such condition or covenant has been complied with.
Any such statement or opinion made or given by an officer of the Corporation may be based,
insofar as it relates to legal or accounting matters, upon a statement or opinion of or representations '
by counsel, accountants or consultants, unless such officer knows, or in the exercise of reasonable
care should have known, that the statement or opinion or representations with respect to the matters
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Nominee. The term "Nominee" means the nominee of the Depository, which may be the
Depository, as determined from time to time pursuant to Section 2.10 hereof.
Outstanding. The term "Outstanding," when used as of any particular time with reference to
Certificates, means (subject to the provisions of Section 11.4) all Certificates except: (1)certificates
canceled by the Trustee or delivered to the Trustee for cancellation; (2)Certificates paid or deemed
to have been paid within the meaning of Section 10.1; and (3) Certificates in lieu of or in substitution
for which other Certificates shall have been executed and delivered by the Trustee pursuant to
Section 2.10.
Owner. The term "Owner" or"Certificate Owner" or"Owner of Certificates" or any similar
term, when used with respect to the Certificates, means any person who shall be the registered owner
of any Outstanding Certificate.
Participants. The term "Participants" means those broker-dealers, banks and other financial
institutions from time to time for which the Depository holds book-entry certificates as securities
depository.
Payment Dates; Payment Date. The term "Payment Dates"means May 1 and November 1 in
each year commencing May 1, 2005 and any date on which the unpaid Installment Payments are
declared to be due and payable immediately and provided such declaration is not rescinded or
annulled, all in accordance with Section 8.1 of the Installment Purchase Agreement.
Permitted Investments. The term"Permitted Investments" means any of the following which -
at the time of investment are legal investments under the laws of the State for the moneys proposed
to be invested therein:
(a) for all purposes, including but not limited to defeasance investments in refunding
escrow accounts: (1) cash (insured at all times by the Federal Deposit Insurance Corporation or
otherwise collateralized with obligations described in paragraph (2) below), or (2) direct obligations
of(including obligations issued or held in book entry form on the books of) the Department of the
Treasury of the United States of America; and
(b) for all purposes other than defeasance investments in refunding escrow accounts:
(1) obligations of any of the following federal agencies which obligations represent full faith and
credit of the United States of America, including the Export - Import Bank; Farmers Home
Administration; General Services Administration; U.S. Maritime Administration; Small Business
Administration; Government National Mortgage Association (GNMA); U.S. Department of Housing
& Urban Development (PHA's); and Federal Housing Administration; (2)bonds, notes or other
evidences of indebtedness rated "AAA" and "Aaa" by the applicable Rating Agency issued by the
Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with
remaining maturities not exceeding three years; (3) U.S. dollar denominated deposit accounts,
certificates of deposit, federal funds and banker's acceptances with domestic commercial banks
(including the Trustee and its affiliates) which are either insured by the Federal Deposit Insurance
Corporation or have a rating on their short term certificates of deposit on the date of purchase of
"A-1" or"A-1+" by S&P and "P-1" by Moody's and maturing no more than 360 days after the date
of purchase (ratings on holding companies are not considered as the rating of the bank); (4)
commercial paper which is rated at the time of purchase in the single highest classification, "A-1+"
by S&P and"P-1"by Moody's and which matures not more than 270 days after the date of purchase;
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TRUST AGREEMENT
THIS TRUST AGREEMENT, made and entered into as of November 1, 2004 (the
"Agreement"), by and among BNY WESTERN TRUST COMPANY, as trustee (the "Trustee"), a
banking corporation duly organized and existing under the laws of the State of California, and
TRUCKEE DONNER PUBLIC UTILITY DISTRICT FINANCING CORPORATION, as seller, a
nonprofit public benefit corporation duly organized and existing under the laws of the State of
California (the "Corporation"), and TRUCKEE DONNER PUBLIC UTILITY DISTRICT, as
purchaser, a public utility district duly organized and existing under the laws of the State of
California(the"District");
WI TNESSE TH.-
In consideration of the mutual covenants herein contained and for other valuable
consideration, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION; CONTENTS OF
CERTIFICATES AND OPINIONS; RECITALS
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this
section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any
report or other document mentioned herein or therein have the meanings defined herein, the
following definitions to be equally applicable to both the singular and plural forms of any of the
terms defined herein. All capitalized terms used herein and not defined herein shall have the
meanings ascribed thereto in the Installment Purchase Agreement:
Agreement. The term "Agreement"means this Trust Agreement, as originally executed or as
it may from time to time be amended or supplemented as provided for herein.
Assignment Agreement. The term "Assignment Agreement" means that certain Assignment
Agreement, by and between the Corporation and the Trustee, dated as of November 1, 2004 as
originally executed or as it may from time to time be amended or supplemented in accordance with
its terms.
Certificate Payment Fund. The term "Certificate Payment Fund means the fund by that
name established in Section 5.2 hereof.
Certificates. The term "Certificates" means the certificates of participation executed and
delivered by the Trustee pursuant to this Agreement.
Code. The term "Code" means the Internal Revenue Code of 1986, as amended, and the
United States Treasury Regulations in effect with respect thereto.
Delivery Cost Fund. The term "Delivery Cost Fund" means the fund by that name
established in Section 3.4 hereof.
Delivery Costs. The term "Delivery Costs" means all items of expense directly or indirectly
payable by or reimbursable to the District and related to the authorization, execution, sale and
DOCSSF/43383v5/22925-0011
#205169v1
REVENUE,CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Series 2004
PURCHASE CONTRACT
September_,2004
Board of Directors
Truckee Donner Public Utility District
Truckee, California
Ladies and Gentlemen:
The undersigned, (the "Purchaser"), hereby offers to enter into this
Purchase Contract (the "Purchase Contract") with you, the Truckee Donner Public Utility
District (the "District"), which upon the District's acceptance of this offer, will be binding upon
the District and the Purchaser. This offer is made subject to acceptance by you prior to 11:59
P.M., California time, on the date hereof. If this offer is not so accepted, this offer will be
subject to withdrawal by the Purchaser upon notice delivered to you at any time prior to
acceptance. Upon acceptance, this Purchase Contract shall be in full force and effect in'
accordance with its terms and shall be binding upon the District and the Purchaser.' All
capitalized terms used herein and not otherwise defined shall have the respective meanings
ascribed thereto in the Placement Memorandum (as hereinafter defined).
1. Purchase, Sale and Delivery of the 2004 Certificates.
(a) Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, the Purchaser hereby agrees
to purchase and the District agrees to cause the Trustee (as defined below) to execute and
deliver to the Purchaser all (but not less than all) of $ aggregate principal
amount of Truckee Donner Public Utility District Revenue Certificates of Participation,
Series 2004 (the "2004 Certificates"). The 2004 Certificates are being delivered to
provide funds (i) to pay the cost of the construction of a "Fiber-to-the-Home"broadband
telecommunications network within the territory of the District to be used for government
and community connectivity for education and other government services, along with the
provision of other broadband communication services to business and residential
customers such as cable television service, Internet access and telephone services (the
"Project"), (ii) to pay capitalized interest on the Certificates during the construction of
Project, (iii) to fund any reserve requirement for the Certificates, and (iv) to pay costs of
issuance, as further described in the Private Placement Memorandum, dated
2004, related to the Certificates (the "Placement Memorandum").
The District hereby ratifies, confirms and approves of the use and distribution by the
Purchaser, prior to the date hereof, of the Preliminary Placement Memorandum dated _,
2004 relating to the 2004 Certificates (which, including the cover page and all appendices
thereto, is referred to herein as the "Preliminary Placement Memorandum"). The District has
deemed final the Preliminary Placement Memorandum as of its date for purposes of Rule 15c2-
12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12"), except for
information permitted to be omitted therefrom by Rule 15c2-12. The District hereby agrees to
cause to be delivered to the Purchaser, within seven (7) business days of the date hereof, copies
of the final Placement Memorandum, dated the date hereof. The District hereby agrees to deliver
or cause to be delivered to the Purchaser copies of the Placement Memorandum in sufficient
quantity to enable the Purchaser to comply with applicable rules of the Municipal Securities
Rulemaking Board ("MSRB"). The Purchaser hereby agrees to deliver a copy of the Placement
Memorandum to a national repository as soon as practicable after the date hereof and to each
investor that purchases any of the 2004 Certificates. The Purchaser shall advise the District of
the date and repository of such filing.
3. Representations, Warranties and Agreements of the District.
The District hereby represents and agrees with the Purchaser as follows:
(a) The District is, and will be on the Closing Date, a public utility district of
the State of California organized and operating pursuant to the laws of the State of
California with the full power and authority to execute and deliver the Placement
Memorandum and to enter into the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and this Purchase Contract
(collectively, the "Legal Documents");
(b) By all necessary official action of the District prior to or concurrently with
the acceptance hereof, the District has duly approved, ratified and confirmed the
execution, delivery and distribution of the Placement Memorandum, and has duly
authorized and approved the execution and delivery of, and the performance by the
District of the obligations on its part contained in, the Legal Documents;
(c) The District is not in any material respect in breach of or default under any
applicable constitutional provision, law or administrative regulation to which it is subject
or any applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the District is a party or to which the
District or any of its property or assets is otherwise subject, and no event has occurred
and is continuing which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default in any material respect under any such
instrument; and the execution and delivery of the Legal Documents, and compliance with
the provisions on the District's part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the District is a parry or is otherwise subject, nor
will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any material
3
circumstances under which they were made,not misleading;
(h) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the 2004 Certificates, the Placement Memorandum did not and
will not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(i) If between the date thereof and the date which is 25 days following the
End of the Underwriting Period for the 2004 Certificates, an event occurs which might or
would cause the information contained in the Placement Memorandum, as then
supplemented or amended, to contain an untrue statement of a material fact or to omit to
state a material fact required to be stated therein or necessary to make such information
therein, in the light of the circumstances under which it was presented, not misleading,
the District will notify the Purchaser, and, if in the opinion of the District, the Purchaser
or their respective counsel, such event requires the preparation and publication of a
supplement or amendment to the Placement Memorandum, the District will forthwith
prepare and furnish to the Purchaser (at the expense of the District) a reasonable number
of copies of an amendment of or supplement to the Placement Memorandum(in form and
substance reasonably satisfactory to the Purchaser). For the purposes of this subsection,
_ between the date of the Placement Memorandum and the date which is 25 days following
the End of the Underwriting Period, the District will furnish such information- with
respect to itself as the Purchaser may from time to time reasonably request;
(j) If the information contained in the Placement Memorandum is amended or
supplemented pursuant to paragraph (i) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days following the End of the Underwriting Period, the portions of the Placement
Memorandum so supplemented or amended will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make such information therein, in the light of the circumstances under which it was
presented, not misleading;
(k) After the Closing, the District will not participate in the issuance of any
amendment of or supplement to the Placement Memorandum to which, after being
furnished with a copy, the Purchaser shall reasonably object in writing or which should
be disapproved by counsel for the Purchaser;
(1) Between the date of this Purchase Contract and the Closing Date, except
as disclosed in the Placement Memorandum, the District will not, without the prior
written consent of the Purchaser, offer or issue any bonds, notes, Certificates or other
obligations for borrowed money, or incur any material liabilities direct or contingent,
payable from Revenues of the Project, other than in the ordinary course of its business or
as otherwise permitted under the Installment Purchase Agreement;
5
(d) Between the date hereof and the Closing Date, the market price or
marketability of the 2004 Certificates shall been materially adversely affected, in the
reasonable judgment of the Purchaser (evidenced by a written notice to the District
terminating the obligation of the Purchaser to accept delivery of and make any payment
for the 2004 Certificates),by reason of any of the following:
(1) an amendment to the Constitution of the United States or the State
of California shall have been passed or legislation shall have been introduced in
or enacted by the Congress of the United States or the legislature of the State of
California or legislation pending in the Congress of the United States shall have
been amended or legislation shall have been recommended to the Congress of the
United States or otherwise endorsed for passage (by press release, other form of
notice or otherwise) by the President of the United States, the Treasury
Department of the United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the United States
Senate or the Committee on Ways and Means of the United States House of
Representatives, or legislation shall have been proposed for consideration by
either such Committee by any member thereof or presented as an option for
consideration by either such Committee by the staff of such Committee or by the
staff of the Joint Committee on Taxation of the Congress of the United States, or
legislation shall have been favorably reported for passage to either House of the
Congress of the United States by a Committee of such House to which such
legislation has been referred for consideration, or a decision shall have been
rendered by a court of the United States or of the State of California or the Tax
Court of the United States, or a ruling shall have been made or a regulation or
temporary regulation shall have been proposed or made or any other release or
announcement shall have been made by the Treasury Department of the United
States, the Internal Revenue Service or other federal or State of California
authority, with respect to federal or State of California taxation upon Revenues of
the-District's Project or other income of the general character to be derived by the
District or upon interest received with respect to obligations of the general
character of the 2004 Certificates which, in the reasonable judgment of the
Purchaser, may have the purpose or effect, directly or indirectly, of affecting the
tax status of the District, its property or income, its securities (including the 2004
Certificates) or the interest thereon, or any tax exemption granted or authorized by
State of California legislation or, in the reasonable judgment of the Purchaser,
materially and adversely affecting the market for the 2004 Certificates or the
market price generally of obligations of the general character of the 2004
Certificates;
(2) legislation enacted, introduced in the Congress or recommended
for passage by the President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States or by the Tax
Court of the United States, or an order, ruling, regulation (final, temporary or
proposed) or Placement Memorandum issued or made by or on behalf of the
Securities and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter shall have been made or issued to the effect that
7
were made, not misleading;
(e) Prior to or simultaneous with the execution of this Purchase Contract, the
Purchaser shall have received from the District a letter, dated the date of the Preliminary
Placement Memorandum, addressed to the Purchaser, consenting to the posting of the
Preliminary Placement Memorandum on the website, substantially
in the form attached hereto as Exhibit D;
(f) At or prior to the Closing Date, the Purchaser shall have received the
following documents, in each case satisfactory in form and substance to the Purchaser:
(1) The Placement Memorandum and each supplement or amendment,
if any thereto, executed on behalf of the District;
(2) Copies of the Legal Documents, duly executed and delivered by
the respective parties thereto;
(3) The approving opinion of Special Counsel, dated the Closing Date
and addressed to the District, in substantially the form attached to the Placement
Memorandum as Appendix B thereto;
(4) The supplemental opinion of Special Counsel, dated the Closing
Date and addressed to the Purchaser in substantially the form attached hereto as
Exhibit B;
(5) The opinion of General Counsel of the District, dated the Closing
Date and addressed to the Purchaser, in substantially the form attached hereto as
Exhibit C;
(b) The opinion of counsel to the Corporation, dated the Closing Date
and addressed to the District and the Purchaser, to the effect that (i) the
Corporation is a California corporation duly organized and validly existing
pursuant to the laws of the State of California; (ii) the Trust Agreement and the
Installment Purchase Agreement have been duly authorized, executed and
delivered by the Corporation and, assuming due authorization, execution and
delivery by the other parties thereto, constitute legal, valid and binding
agreements of the Corporation enforceable in accordance with their respective
terms, subject to laws relating to bankruptcy, insolvency or other laws affecting
the enforcement of creditors' rights generally and the application of equitable
principles if equitable remedies are sought; and (iii) assuming due execution and
delivery thereof by the Trustee and the District, the execution and delivery of the
Trust Agreement by the Corporation is effective and sufficient to transfer all right,
9
any way contesting the existence or powers of the District, nor to the best
knowledge,,of such official after reasonable investigation, is there any basis for
any such action, suit,proceeding, inquiry or investigation, wherein an unfavorable
decision, ruling or finding would make invalid or materially adversely affect the
authorization, execution, delivery or performance by the District of the foregoing;
and (iii) no event affecting the District has occurred since the date of the
Placement Memorandum which either makes untrue or incorrect in any material
respect as of the Closing Date any statement or information contained in the
Placement Memorandum relating to the District or is not reflected in the
Placement Memorandum but should be reflected therein in order to make the
statements and information therein relating to the District not misleading in any
material respect; and (iv) except as referred to in or as contemplated by the
Placement Memorandum, with respect to its Project, the District has not incurred
any financial liabilities, direct or contingent, or entered into any transactions and
there has not been any adverse change in the condition, financial or physical, of
the Project, in any case that would materially and adversely affect the ability of
the District to meet its obligations under the Installment Purchase Agreement;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Corporation satisfactory to the Purchaser, in form
and substance satisfactory to the Purchaser, to the effect that (i) the corporation is,
and was at all relevant times, a California corporation duly organized and validly
existing under the laws of the State of California; (ii) the Installment Purchase
Agreement and the Trust Agreement were duly executed and delivered in the
name and on behalf of the Corporation by officers of the Corporation duly
authorized to execute, attest and deliver such agreements on behalf of the
Corporation, and constitute the legal, valid and binding obligations of the .
Corporation enforceable against the Corporation in accordance with their terms,
except as limited by applicable reorganization, insolvency, liquidity, readjustment
of debt or other laws affecting the enforcement of the rights of creditors of the
Corporation and by general principles of equity; (iii) the Corporation has
complied with all the terms of the Trust Agreement and the Installment Purchase
Agreement to be complied with by the Corporation prior to or concurrently with
the Closing and such documents are in full force and effect as to the Corporation;
and (iv) the information in the Placement Memorandum under the caption "THE
CORPORATION"is true and correct;
(11) A certificate, dated the Closing Date, signed by a duly authorized
officer of the Trustee, satisfactory in form and substance to the Purchaser, to the
effect that (i) the Trustee is a banking corporation duly organized and existing
under and by virtue of the laws of the State of California, having the full power
and being qualified to enter into and perform its duties under the Trust Agreement
and the Continuing Disclosure Agreement; (ii) to the best of such officer's
knowledge, the execution and delivery of the Trust Agreement and the Continuing
Disclosure Agreement and compliance with the provisions on the Trustee's part
contained therein, will not conflict with or constitute a breach of or default under
any law, administrative regulation, judgment, decree, loan agreement, indenture,
11
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All expenses and costs incident to the authorization, execution, delivery and sale of the
2004 Certificates to the Purchaser, including the costs of preparing and printing of the 2004
Certificates, the Preliminary Placement Memorandum and the Placement Memorandum, any
bond insurance premiums, the fees of accountants, financial advisors and consultants, the initial
fees of the Trustee and its counsel, the initial fees and expenses of the District and the
Corporation, the fees and expenses of counsel to the District and counsel to the Corporation, any
California Debt Advisory Fee, the fees and expenses of Special Counsel, and the fees and
expenses of Purchaser's Counsel, in each case incurred in connection with the sale and delivery
of the 2004 Certificates, shall be paid from the proceeds of the 2004 Certificates. In the event
that the 2004 Certificates for any reason are not executed and delivered, or to the extent proceeds
of the 2004 Certificates are insufficient or unavailable therefor, any such fees, costs and expenses
owed by the District, which otherwise would have been paid from the proceeds of the 2004
Certificates, shall be paid by the District.
6. Notices.
Any notice or other communication to be given under this Purchase Contract may be
given by delivering the same in writing to the respective parties at the following address:
Purchaser:
District: Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, California 96160
Attention: General Manager
7. Survival of Representations and Warranties.
The representations and warranties of the District set forth in or made pursuant to this
Purchase Contract shall not be deemed to have been discharged, satisfied or otherwise rendered
void by reason of the Closing or termination of this Purchase Contract regardless of any
investigations or statements as to the results thereof made by or on behalf of the Purchaser and
regardless of delivery of and payment for the 2004 Certificates.
8. Effectiveness and Counterpart Signatures.
This Purchase Contract shall become effective and binding upon the respective parties
hereto upon the execution hereof by a duly authorized officer of the District and shall be valid
and enforceable as of the time of such execution. This Purchase Contract may be executed by the
parties hereto in separate counterparts, each of which when so executed and delivered shall be an
original,but all such counterparts shall together constitute but one and the same instrument.
9. Parties in Interest.
This Purchase Contract is made solely for the benefit of the District and the Purchaser
(including the successors or assigns of the Purchaser) and no other person shall acquire or have
any right hereunder or by virtue hereof. No assignment of this Purchase Contract shall be made
13
EXHIBIT A
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES,AND PRICES OR YIELDS
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
A-1
4. The statements contained in the Placement Memorandum under the captions
r "THE 2004 CERTIFICATES," "SECURITY AND SOURCES OF PAYMENT FOR THE
2004 CERTIFICATES," "TAX MATTERS," "APPENDIX A DEFINITIONS AND
SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT PURCHASE
AGREEMENT AND THE TRUST AGREEMENT," and "APPENDIX D PROPOSED FORM
OF CONTINUING DISCLOSURE AGREEMENT" and "APPENDIX B PROPOSED FORM
OF OPINION OF SPECIAL COUNSEL," insofar as such statements expressly summarize
certain provisions of the Trust Agreement, the Installment Purchase Agreement and the
Continuing Disclosure Agreement, and our opinion concerning certain federal tax matters
relating to the Certificates, are accurate in all material respects.
This letter is furnished by us as Special Counsel. No attorney-client relationship has
existed or exists between our firm and you in connection with the 2004 Certificates or by virtue
of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as
Purchaser of the 2004 Certificates, is solely for your benefit as such Purchaser and is not to be
used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any
other person. This letter is not intended to, and may not, be relied upon by owners of the 2004
Certificates or by any other party to whom it is not specifically addressed.
Very truly yours,
B-2
accomplished) or, to my current actual knowledge after reasonable investigation, threatened
against or affecting the District to restrain or enjoin the Installment Payments under the
g g j Ym
Installment Purchase Agreement, in any way contesting or affecting the validity of the 2004.
Certificates, the Trust Agreement, the Installment Purchase Agreement, the Continuing
Disclosure Agreement or the Purchase Contract.
4. The adoption of the District Resolutions and the execution and delivery by the
District of the Trust Agreement, the Installment Purchase Agreement, the Continuing
Disclosure Agreement, the Purchase Contract and the Placement Memorandum, and
compliance by the District with the provisions of the foregoing, as appropriate, under the
circumstances contemplated thereby, does not and will not in any material respect conflict with
or constitute on the part of the District a breach or default under any agreement or other
instrument to which the District is a party (and of which I have current actual knowledge after
reasonable investigation) or by which it is bound (and of which I have current actual knowledge
after reasonable investigation) or any existing law, regulation, court order or consent decree to
which the District is subject.
5. The Placement Memorandum, the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement and the Purchase Contract have been duly
authorized, executed and delivered by the District and, assuming due authorization, execution
and delivery by other parties thereto, the Trust Agreement, the Installment Purchase Agreement,
the Continuing Disclosure Agreement and the Purchase Contract constitute legal, valid and
binding agreements of the District, enforceable in accordance with their respective terms,
subject in each case to laws relating to bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and the application of equitable principles if equitable
remedies are sought. The enforceability of the foregoing agreements may be subject or limited
by the unenforceability under certain circumstances of provisions imposing penalties,
forfeitures or late payment charges upon delinquency in payment or occurrence of a default, and
no opinion is expressed as to any indemnification provisions contained therein.
6. Except as described in the Placement Memorandum, no authorization, approval,
consent, or other order of the State of California or any other governmental authority or agency
within the State of California having jurisdiction over the District is required for the adoption of
the District Resolutions and for the valid authorization, execution, delivery and performance by
the District of the Placement Memorandum, the Trust Agreement, the Installment Purchase
Agreement, the Continuing Disclosure Agreement or the Purchase Contract which has not been
obtained, provided that no opinion is expressed with respect to qualification under Blue Sky or
other state securities laws.
7. Without having undertaken to determine independently the accuracy,
completeness or fairness of the statements contained in the Placement Memorandum and based
upon the information made available to me in the course of my participation in the preparation
of the Placement Memorandum as General Counsel for the District, nothing has come to my
attention which would cause me to believe that the Placement Memorandum (excluding
therefrom the information concerning DTC and the book-entry system and the financial
statements and the statistical data included in the Placement Memorandum, as to which no
opinion is expressed), as of the date thereof and the Closing Date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
C-2
a
EXHIBIT D
FORM OF LETTER TO PURCHASER
2004
[Purchaser]
Ladies and Gentlemen:
With respect to the proposed sale to you of its Revenue Certificates of Participation,
Series 2004 (the "2004 Certificates") evidencing interests of the Owners thereof in Installment
Payments to be made by the Truckee Donner Public Utility District (the "District"), the District
has delivered to you a Preliminary Placement Memorandum, dated _, 2004, relating to
the 2004 Certificates (the "Preliminary Placement Memorandum"). The District, for purposes of
compliance with Rule 15c2-12 of the Securities and Exchange Commission, deems the
Preliminary Placement Memorandum to be final as of its date, except for the omission of no
more than the following information: the offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, dates of mandatory sinking fund
payments, delivery date, ratings, and any other terms of the 2004 Certificates relating to such
matters.
The District hereby approves the use and the distribution by the Purchaser of the
Preliminary Placement Memorandum and the posting and distribution of the Preliminary
Placement Memorandum through the website.
Sincerely,
TRUCKEE DONNER PUBLIC UTILITY
DISTRICT
By:
Name:
Title:
D-1
8. Under the laws of the State of California, the District has the authority to fix and
collect rates and charges for electric service and is not presently subject to the regulatory
jurisdiction of any state, regional or local governmental regulatory authority in connection with
fixing and collecting such charges, and, to my current actual knowledge after reasonable
investigation, no legislation is proposed or pending to restrict or limit such rates and charges
except as set forth in the Placement Memorandum.
9. The Revenues of the Project (as described in the Placement Memorandum) are
free and clear of and from any and all liens and encumbrances other than as set forth in the
Placement Memorandum.
This letter is furnished by me as General Counsel to the District. No attorney-client
relationship has existed or exists between me and yourselves in connection with the delivery of
the 2004 Certificates or by virtue of this letter. This letter is delivered to you as Purchaser of the
2004 Certificates and is solely for your benefit as such Purchaser and is not to be used,
circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other
person.
Respectfully submitted,
C-3
EXHIBIT C
FORM OF OPINION OF DISTRICT COUNSEL
BNY Western Trust Company [Purchaser].
Los Angeles, California
Re: REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Ladies and Gentlemen:
I am General Counsel to the Truckee Donner Public Utility District (the "District"), a
public utility district organized and existing pursuant to Division 7 of the Public Utilities Code
of the State of California, as amended. This opinion is rendered in connection with the
execution, sale and delivery of $ principal amount of Revenue Certificates of
Participation, Series 2004 (the "2004 Certificates") evidencing interests of the Owners thereof
in Installment Payments to be made by the District. Capitalized terms used herein not otherwise
defined shall have the meanings ascribed thereto in the hereinafter referenced Trust Agreement.
In rendering this opinion, I have examined the following documents: (i) the Trust -.
Agreement dated as of _, 2004 (the "Trust Agreement"), by and among the District, the
Truckee Donner Public Utility District Financing Corporation (the "Corporation") and BNY
Western Trust Company, as trustee (the "Trustee"); (ii) the Installment Purchase Agreement
dated as of _, 2004 (the "Installment Purchase Agreement"), by and between the
District and the Corporation; (iii) the Purchase Contract dated _, 2004 (the "Purchase
Contract"), by and between the District and you, the Purchaser; (iv) the Continuing Disclosure
Agreement dated as of 2004 (the "Continuing Disclosure Agreement"), by and
between the District and the Trustee; and (v) the Placement Memorandum dated _,
2004 (the "Placement Memorandum"), relating to the 2004 Certificates. In addition, I have
examined such other documents and instruments, including certificates of public officials, and
have made such investigations of law and of fact as I have deemed necessary or appropriate for
the purpose of rendering the opinions set forth herein.
Based on the foregoing, I am of the opinion that:
1. The District is, and was at all relevant times, a public utility district duly
organized and validly existing under the laws of the State of California.
2. The resolution or resolutions of the District approving and authorizing the
execution and delivery of the Trust Agreement, the Installment Purchase Agreement, the
Purchase Contract and the Continuing Disclosure Agreement by the District (the "District
Resolutions") were duly adopted at meetings of the Board of Directors of the District, which
were called and held pursuant to law and with all public notice required by law and at which a
quorum was present and acting throughout.
3. There is no action, suit, proceeding or investigation at law or in equity before or
by any court, public board or body, pending (with service of process having been
C-1
EXHIBIT B
FORM OF OPINION OF
STRADLING YOCCA CARLSON&RAUTH
BNY Western Trust Company [Purchaser]
Los Angeles, California New York,New York
Re: REVENUE CERTIFICATES OF PARTICIPATION, SERIES 2004
Evidencing the Interests of the Owners Thereof
in Installment Payments to be Made by the
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
This letter is addressed to you as the Purchaser (the "Purchaser") pursuant to Section
4(f)(4) of the Purchase Contract dated _, 2004 (the "Purchase Contract"), between you
and the Truckee Donner Public Utility District (the "District") providing for the purchase of
$ principal amount of Revenue Certificates of Participation, Series 2004 (the "2004
Certificates") evidencing interests of the Owners thereof in Installment Payments to be made by
the District). The 2004 Certificates are being executed and delivered pursuant to a Trust
Agreement (the "Trust Agreement") dated as of _, 2004, by and among the District,
the Truckee Donner Public Utility District Financing Corporation (the "Corporation") and BNY
Western Trust Company, as trustee. Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Trust Agreement or, if not defined in the Trust Agreement, --�.
in the Purchase Contract.
In addition to the opinions set forth in our final legal opinion concerning the validity of
the 2004 Certificates and certain other matters, dated the date hereof and addressed to, the
Corporation (but which may be relied upon by yourselves to the same extent as if such opinion
were addressed to you), as of the date hereof, we are of the following opinions or conclusions:
1. The 2004 Certificates are not subject to the registration requirements of the
Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification
pursuant to the Trust Indenture Act of 1939, as amended.
2. The Placement Memorandum dated _, 2004, with respect to the 2004
Certificates (the "Placement Memorandum") and the execution and delivery thereof have been
duly approved by the District.
3. The Purchase Contract and the Continuing Disclosure Agreement have been
duly authorized, executed and delivered by the District and (assuming due authorization,
execution and delivery by and validity against the other parties thereto) are valid and binding
agreements of the District. We call attention to the fact that the rights and obligations under the
Purchase Contract and the Continuing Disclosure Agreement and their enforceability may be
subject to bankruptcy, insolvency, reorganization, assignment, fraudulent conveyance,
moratorium and other laws relating to or affecting creditors' rights, to the application of
equitable principles, to the exercise of judicial discretion in appropriate cases and to the
limitations or legal remedies against public entities in the State of California. We express no
opinion with respect to any indemnification, contribution, choice of law, choice of forum or
waiver provisions contained in the Purchase Contract or the Continuing Disclosure Agreement.
B-1
by the Purchaser without the consent of the District.
10. Heading.
The headings of the sections of this Purchase Contract are inserted for convenience only
and shall not be deemed to be a part hereof.
11. Governing Law.
This Purchase Contract shall be construed in accordance with the laws of the State of
California.
Very truly yours,
as Purchaser
By:
Title:
ACCEPTED:
TRUCKEE DONNER PUBLIC UTILITY
DISTRICT
By:
Title:
14
bond, note, resolution, agreement or other instrument to which the Trustee is a
party or is otherwise subject; (iii) to the best of such officer's knowledge, the
Trustee has not been served with any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, governmental agency,
public board or body, nor is any such action threatened against the Trustee, as
such but not in its individual capacity, affecting the existence of the Trustee, or
the titles of its officers to their respective offices, or contesting or affecting the
validity or enforceability of the Trust Agreement and the Continuing Disclosure
Agreement against the' Trustee, or contesting the powers of the Trustee or its
authority to enter into, adopt or perform its obligations under the foregoing,
wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity or enforceability of the Trust Agreement and the Continuing
Disclosure Agreement against the Trustee;
(12) Certified copies of the resolutions of the District authorizing the
execution and delivery of the Legal Documents and the Placement Memorandum;
(13) Certified copies of the resolutions of the Corporation authorizing
the execution and delivery of the Trust Agreement, the Assignment Agreement
and the Installment Purchase Agreement;
(14) A copy of any Preliminary Blue Sky Survey with respect to the
2004 Certificates,prepared by Purchaser's Counsel; `
. (1 S) A copy of the financial projections of the District included as
Appendix A in the Placement Memorandum describing the Project;
(16) Arbitrage certifications by the District with respect to the 2004
Certificates in form satisfactory to Special Counsel and Purchaser's.Counsel; and
(17) Such additional legal opinions, certificates, proceedings,
instruments, insurance policies or evidences thereof and other documents as the
Purchaser, Purchaser's Counsel or Special Counsel may reasonably request to
evidence the truth and accuracy, as of the date hereof and as of the Closing Date,
of the representations of the District herein and of the statements and information
contained in the Placement Memorandum, and the due performance or
satisfaction by the District at or prior to the Closing of all agreements then to be
performed and all conditions then to be satisfied by the District in connection with
the transactions contemplated hereby and by the Legal Documents and the
Placement Memorandum.
If the District shall be unable to satisfy the conditions to the Purchaser's obligations
contained in this Purchase Contract or if the Purchaser's obligations shall be terminated for any
reason permitted herein, all obligations of the Purchaser hereunder may be terminated by the
Purchaser at, or at any time prior to, the Closing Date by written notice to the District and neither .�,.
the Purchaser nor the District shall have any further obligations hereunder.
5. Expenses.
12
title and interest of the Corporation in the Installment Purchase Agreement as are
purported to be transferred thereby (including the Installment Payments) to the
Trustee;
(7) The opinion of counsel to the Trustee, dated the Closing Date and
addressed to the District and the Purchaser, to the effect that (i) the Trustee is a
banking corporation duly organized, validly existing and in good standing under
the laws of the State of California and has full power and authority to execute and
deliver the Trust Agreement and the Continuing Disclosure Agreement and to
perform its obligations thereunder; (ii) the Trust Agreement and the Continuing
Disclosure Agreement have been duly authorized, executed and delivered by the
Trustee and constitute the valid and binding obligations of the Trustee enforceable
against the Trustee in accordance with their terms, except insofar as the validity,
binding nature and enforceability of the Trustee's obligations thereunder may be
limited by the effect of(a) insolvency, reorganization, arrangement, moratorium,
fraudulent transfer and other similar laws, (b) the discretion of any court of
competent jurisdiction in awarding equitable remedies, including, without
limitation, specific performance or.injunctive relief and (c) the effect of general
principles of equity;
(8) The opinion of Greenberg Traurig, LLP, Washington, DC,
Purchaser's Counsel, dated the Closing Date and addressed to the Purchaser, to
the effect that (i) the 2004 Certificates are exempt from registration under the
Securities Act of 1933, as amended, and the Trust Agreement is exempt from
qualification under the Trust Indenture Act of 1939, as amended; and (ii) based
upon their participation in the preparation of the Placement Memorandum as
Purchaser's Counsel and without having undertaken to determine independently
the accuracy, completeness or fairness of the statements contained in the
Placement Memorandum, nothing has come to their attention which would cause
them to believe that the Placement Memorandum (excluding therefrom the
information relating to the Project, DTC and the book-entry system and the
financial statements and the statistical data included in the Placement
Memorandum and the appendices thereto, as to which no opinion need be
expressed), as of the date thereof and the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made,not misleading;
(9) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the District satisfactory to the Purchaser, in form and
substance satisfactory to the Purchaser, to the effect that (i) the representations of
the District contained in this Purchase Contract are true and correct in all material
respects on and as of the Closing Date with the same effect as if made on the
Closing Date; (ii) there is no action, suit, proceeding, inquiry or investigation, to
the best knowledge of such official, pending or threatened (a) to restrain or enjoir
the execution or delivery of the 2004 Certificates, (b) in any way contesting or
affecting the validity of the 2004 Certificates or the Legal Documents or (c) in
10
obligations of the general character of the 2004 Certificates, or the 2004
Certificates are not exempt from registration under the Securities Act of 1933, as
amended, or that the Trust Agreement is not exempt from qualification under the
Trust Indenture Act of 1939, as amended;
(3) the declaration of war or engagement in major military hostilities
by the United States or the occurrence of any other national emergency or
calamity relating to the effective operation of the government of, or the financial
community in, the United States;
(4) the declaration of a general banking moratorium by federal, New
York or California authorities, or the general suspension of trading on any
national securities exchange;
(5) the imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions
not now in force with respect to the 2004 Certificates or obligations of the general
character of the 2004 Certificates or securities generally, or the material increase
of any such restrictions now in force, including those relating to the extension of
credit by, or the charge to the net capital requirements of, the Purchaser;
(6) an order, decree or injunction of any court of competent
jurisdiction, or order, ruling, regulation or Placement Memorandum by the �.
Securities and Exchange Commission, or any other governmental agency having
jurisdiction of the subject matter, issued or made to the effect that the issuance,
offering or sale of obligations of the general character of the 2004 Certificates, or
the issuance, offering or sale of- the 2004 Certificates, including any or all
underlying obligations, as contemplated hereby or by the Placement
Memorandum, is or would be in violation of the federal securities laws as
amended and then in effect;
(7) an action, suit, proceeding, inquiry or investigation is pending or
threatened (a) to restrain or enjoin the execution or delivery of the 2004
Certificates, (b) which contests or affecting the validity of the 2004 Certificates or
the Legal Documents or (c) in any way contests the existence or powers of the
District to own and operate.the Project and provide the Project-related services
described in the Placement Memorandum; or
(8) the withdrawal or downgrading of any rating of the 2004
Certificates by any rating agency then rating the 2004 Certificates; or
(9) any event occurring, or information becoming known which in the
reasonable judgment of the Purchaser, makes untrue in any material respect any
statement or information contained in the Placement Memorandum, or has the
effect that the Placement Memorandum contains any untrue statement of material—
fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
8
(m) As used herein and for the purposes of the foregoing, the term "End of the
Underwriting Period" for the 2004 Certificates shall mean the earlier of(i) the Closing
Date unless the District shall have been notified in writing to the contrary by the
Purchaser on or prior to the Closing Date, or (ii) the date on which the End of the
Underwriting Period for the 2004 Certificates has occurred under Rule 15c2-12;
provided, however, that the District may treat as the End of the Underwriting Period for
the 2004 Certificates the date specified as such in a notice from the Purchaser stating the
date which is the End of the Underwriting Period;
(n) Any certificate signed by any authorized official of the District and
delivered to the Purchaser in connection with the execution and delivery of the 2004
Certificates, shall be deemed a representation and warranty by the District to the
Purchaser as to the statements made therein.
4. Conditions to the Obligations of the Purchaser.
The Purchaser hereby enters into this Purchase Contract in reliance upon the
representations and warranties of the District contained herein and the representations to be
contained in the documents and instruments to be delivered at the Closing and upon the
performance by the District of its obligations both on and as of the date hereof and as of the
Closing Date. Accordingly, the Purchaser's obligations under this Purchase Contract to
purchase, to accept delivery of and to pay for the 2004 Certificates shall be subject, at the option
of the Purchaser, to the accuracy in all material respects of the representations of the District
contained herein as of the date hereof and as of the Closing Date, to the accuracy in all material.
respects of the statements of the officers and other officials of the District made in any certificate
or other document furnished pursuant to the provisions hereof, to the performance by the District
of its obligations to be performed hereunder and under such documents and instruments at or
prior to the Closing Date, and also shall be subject to the following additional conditions:
(a) The Purchaser shall receive, within seven (7) business days of the date
hereof, copies of the Placement Memorandum and any amendments or supplements as
have been approved by the Purchaser, in such reasonable quantity as the Purchaser shall
have requested;
(b) The representations and warranties of the District contained herein shall be
true and correct in all material respects on the date hereof and on the Closing Date, as if
made on and at the Closing Date;
(c) At the Closing Date, the Legal Documents shall have been duly
authorized, executed and delivered by the respective parties thereto, and the Placement
Memorandum shall have been duly authorized, executed and delivered by the District, as
applicable, all in substantially the forms heretofore submitted to the Purchaser, with only
such changes as shall have been agreed to in writing by the Purchaser, and shall be in full
force and effect; and there shall be in full force and effect such resolution or resolutions
of the board of directors of the District as, in the opinion of Stradling Yocca Carlson &
Rauth, A Professional Corporation, San Francisco, California ("Special Counsel"), shall
be necessary or appropriate in connection with the transactions contemplated hereby;
6
nature whatsoever upon any of the properties or assets of the District under the terms of
any such law, administrative regulation, judgment, decree, loan agreement, indenture,
bond, note, resolution, agreement or other instrument, except as provided in the Trust
Agreement or the Installment Purchase Agreement;
(d) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, to the best
knowledge of the District, after reasonable investigation, pending or threatened against
the District in any material respect affecting the existence of the District or the titles of its
officers to their respective offices or contesting or affecting, as to the District,the validity
or enforceability of the Legal Documents or contesting the powers of the District or its
authority to enter into, adopt or perform its obligations under any of the foregoing, or to
own or operate the Project or offer the services as described in the Placement
Memorandum, or in any way the completeness or accuracy of the Placement
Memorandum, or any amendment or supplement thereto, wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or enforceability
of the Legal Documents;
(e) All authorizations, approvals, licenses,permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matter which are required for the due authorization by, or which would
constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by, the District of its obligations in connection with the
execution and delivery of the 2004 Certificates have been duly obtained, except for such
approvals, consents and orders as may be required under the Blue Sky or securities laws
of any state in connection with the offering and sale of the 2004 Certificates, and, except
as described in or contemplated by the Placement Memorandum, all authorizations,
approvals, licenses, permits, consents and orders of any governmental authority, board,
agency or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by, the District of its
obligations under the Legal Documents have been duly obtained;
(f) The District will furnish such information, execute such instruments and
take such other action in cooperation with the Purchaser as the Purchaser may reasonably
request in order (i) to qualify the 2004 Certificates for offer and sale under the Blue Sky
or other securities laws and regulations of such states and other jurisdictions of the United
States as the Purchaser may designate and (ii) to determine the eligibility of the 2004
Certificates for investment under the laws of such states and other jurisdictions, and will
use its best efforts to continue such qualification in effect so long as required for
distribution of the 2004 Certificates;provided, however, that in no event shall the District
be required to take any action which would subject it to service of process in any
jurisdiction in which it is not now so subject;
(g) As of the date thereof, the Preliminary Placement Memorandum did not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
4
r
J
Pursuant to an Installment Purchase Agreement, dated as of 1, 2004 (the
"Installment Purchase Agreement"), by and between the District and the Truckee Donner
Public Utility District Financing Corporation (the "Corporation"), in consideration for the
Corporation's assistance in financing the Project, the District sells to the Corporation and
the Corporation purchases from the District certain assets and facilities comprising a
portion of the Project (the "Property") to be purchased back by the District from the
Corporation pursuant to the Installment Purchase Agreement. The 2004 Certificates
evidence the interests of the owners thereof in the installment payments (the "Installment
Payments") to be made by the District pursuant to the Installment Purchase Contract.
The 2004 Certificates shall be delivered pursuant to a Trust Agreement, dated as
of 1, 2004 (the "Trust Agreement"), by and among the District, the Corporation
and BNY Western Trust Company, as trustee (the "Trustee"). The Corporation will
assign certain of its interests in the Installment Purchase Agreement to the Trustee
pursuant to the Assignment Agreement dated , 2004, from the Corporation to the
Trustee (the "Assignment Agreement"). The 2004 Certificates shall be dated the date of
delivery thereof. The 2004 Certificates shall mature in the amounts and on the dates and
will accrue interest at the rates set forth in Exhibit A hereto. The 2004 Certificates shall
be substantially in the form described in, and shall be issued and secured under, the
provisions of the Trust Agreement.
(b) The purchase price for the 2004 Certificates shall be $
(representing the $ aggregate principal amount of the 2004 Certificates less
$ of Purchaser's discount and less $ original issue discount).
(c) At 8:00 o'clock A.M., California time, on _, 2004, or at such other
time or on such other date as the District and the Purchaser mutually agree upon (the
"Closing Date"), the Trustee will, subject to the terms and conditions hereof, deliver or
cause to be delivered to the Purchaser, at a location or locations to be designated by the
Purchaser in New York, New York, the 2004 Certificates (delivered through the book-
entry system of The Depository Trust Company), duly executed, and the parties will
deliver or cause to be delivered, at the offices of Stradling Yocca Carlson & Rauth, A
Professional Corporation, 44 Montgomery Street, Suite 4200, San Francisco, California
94104, or at such other place as shall have been mutually agreed upon by the District and
the Purchaser, the other documents mentioned herein. The Purchaser will accept such
delivery and pay the purchase price of the 2004 Certificates as set forth in subparagraph
(b) above in immediately available funds (such delivery and payment being herein
referred to as the "Closing") to the order of the Trustee in an amount equal to the
purchase price.
(d) The District will undertake pursuant to a Continuing Disclosure
Agreement, to provide certain annual financial information and operating data and
notices of the occurrence of certain events, if material. A description of this undertaking
is set forth in Preliminary Placement Memorandum (as hereinafter defined) and will also.
be set forth in the final Placement Memorandum.
2. Use and Preparation of Preliminary Placement Memorandum.
2
A
R
y ##204807v6
� DRAFT
NEW ISSUE-BOOK-ENTRY ONLY NOT RATED
PRELIMINARY PRIVATE PLACEMENT MEMORANDUM DATED SEPTEMBER_,2004
In the opinion of Stradling,Yocca Carlson &Rauth, a Professional Corporation, Newport Beach, California, Special Counsel, under existing
statutes,regulations,rulings and judicial decisions,and assuming certain representations and compliance with certain covenants and requirements described
herein, the portion of each Installment Payment constituting interest is excluded from gross income for federal income tax purposes and is not an item of tax
preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Special Counsel,
the portion of each Installment Payment constituting interest is exempt from State of California personal income tax. In addition,the difference between the
issue price of a Certificate(the first price at which a substantial amount of the Certificates of a maturity is to be sold to the public)and the stated redemption
price at maturity with respect to a Certificate constitutes original issue discount, and the amount of original issue discount that accrues to the owner of the
Certificate is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. See the caption "TAX
EXEMPTION"herein with respect to tax consequences with respect to the Certificates.
$2490009000*
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION,SERIES 2004
Dated: Date of Delivery Due:November 1,2016
The Truckee Donner Public Utility District(the"District")intends to issue its Revenue Certificates of Participation,Series 2004(the"Certificates')
in the original aggregate principal amount of$24,000,000*,as described herein. The Certificates are being executed and delivered in fully registered form and,
when executed and delivered,will be registered in the name of Cede&Co.,as nominee of The Depository Trust Company,New York,New York. Individual
purchases will be made in denominations of$100,000 plus integral multiple of$5,000 in excess thereof and will be in book-entry form only. Purchasers of the
Certificates will not receive certificates representing their beneficial ownership in the Certificates but will receive credit balances on the books of their
respective nominees. Interest evidenced by the Certificates is payable semiannually on May 1 and November 1 of each year,commencing May 1,2005. The
Certificates will mature on November 1,2016,subject to mandatory sinking fund prepayment as described herein. Payment of the principal and interest with
respect to the Certificates is to be made to Cede&Co.,which is to disburse said payments to the beneficial owners of the Certificates through their nominees.
The Certificates are subject to optional prepayment,mandatory sinking fund prepayment and extraordinary prepayment,all as more fully
described herein. See"THE CERTIFICATES—Prepayment of Certificates"herein.
The Certificates are being delivered to provide funds(i)to pay the cost of developing,acquiring,installing,and constructing a"Fiber-to-the-Home"
- broadband telecommunications network(the`Broadband System')within the territory of the District to be used for government and community connectivity
for education and other government services,along with the provision of other broadband communication services to business and residential customers such as
cable television service,Internet access and telephone services,(ii)to pay interest on the Certificates during the construction of the Broadband System(iii)to
fund the Reserve Requirement(herein defined)for the Certificates,and(iv)to pay costs of issuance of the Certificates.
The Certificates are being delivered pursuant to the Trust Agreement(the"Trust Agreement's dated as of November 1,2004,by and among the
Truckee Donner Public Utility District, the Truckee Donner Public Utility District Financing Corporation (the "Corporation') and BNY Western Trust
Company, as trustee (the "Trustee'). The Certificates are.payable solely from Installment Payments (defined herein) to be made by the District to the
Corporation pursuant to the Installment Purchase Agreement,dated as of November 1,2004,by and between the District and the Corporation(the"Installment
Contract'. INSTALLMENT PAYMENTS WILL BE PAYABLE BY THE DISTRICT SOLELY FROM REVENUES OF THE BROADBAND SYSTEM,
AFTER PAYMENT OF OPERATIONS AND MAINTENANCE COSTS. REVENUES OF THE DISTRICT'S ELECTRIC AND WATER UTILITIES ARE
NOT AVAILABLE TO MAKE INSTALLMENT PAYMENTS. PURSUANT TO SECTION 16467 OF THE PUBLIC UTILITIES CODE OF THE STATE
OF CALIFORNIA,THE DISTRICT IS NOT AUTHORIZED TO USE REVENUES DERIVED FROM ELECTRIC OR WATER OPERATIONS OF THE
DISTRICT TO MAKE INSTALLMENT PAYMENTS. The District may incur additional obligations payable on a parity with or subordinate to the Installment
Payments,subject to the terms and conditions of the Installment Purchase Agreement,as more fully described herein.
PURCHASE OF THE CERTIFICATES INVOLVES A SIGNIFICANT DEGREE OF RISK. SEE"CERTIFICATE HOLDERS'RISKS"
HEREIN.
THE OBLIGATION OF THE DISTRICT TO MAKE INSTALLMENT PAYMENTS PURSUANT TO THE INSTALLMENT PURCHASE
AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE ANY
FORM OF TAXATION OR FOR WHICH THE DISTRICT HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF
THE DISTRICT TO MAKE THE INSTALLMENT PAYMENTS IS A SPECIAL OBLIGATION OF THE DISTRICT PAYABLE SOLELY FROM
REVENUES DERIVED BY THE DISTRICT FROM THE OPERATION OF THE BROADBAND SYSTEM AFTER PAYING OPERATION AND
MAINTENANCE COSTS(AS DEFINED HEREIN)AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT,THE CORPORATION,THE
STATE OF CALIFORNIA OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR
STATUTORY DEBT LIMITATION OR RESTRICTION.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE.
INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN
INFORMED INVESTMENT DECISION.
The Certificates are offered when,as and if issued by the District and accepted by the Placement Agent,subject to prior sale,withdrawal or
modification of the offer without notice,subject to the approval as to the valid and binding nature of the Installment Purchase Agreement by Stradling
Yocca Carlson&Rauth,a Professional Corporation,Special Counsel,and certain other conditions. Certain legal matters will be passed upon for the
- Placement Agent by Greenberg Traurig,LLP,for the District by Porter Simon,Professional Corporation, Truckee, California,for the Corporation by
Stradling Yocca Carlson&Rauth,a Professional Corporation,and for the Trustee by its counsel. The Certificates are being offered on behalf of the
District by the Placement Agent on a best efforts, all or none basis, to eligible purchasers. It is anticipated that the Certificates will be available for
delivery to The Depository Trust Company or its agent on or about November ,2004.
RiviereJenison Securities, Ltd.
Placement Agent
Dated:September_,2004
THE SECURITIES ARE BEING OFFERED PRIVATELY. TRANSFERS OF THE
SECURITIES OFFERED HEREBY MAY BE MADE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT. ANY SUCH SALES MUST ALSO COMPLY WITH ANY
APPLICABLE STATE SECURITIES REQUIREMENTS.
THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN PREPARED ONLY
FOR THE BENEFIT OF PERSONS INTERESTED IN THE PROPOSED PRIVATE
PLACEMENT OF THE CERTIFICATES OFFERED HEREBY, AND ANY REPRODUCTION
OR DISTRIBUTION, INCLUDING, WITHOUT LIMITATION, ELECTRONIC MAILING,
OF THIS PRIVATE PLACEMENT MEMORANDUM, IN WHOLE OR PART, OR THE
DIVULGENCE OF ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE PLACEMENT AGENT AND THE DISTRICT IS PROHIBITED
NOTWITHSTANDING THE FOREGOING, BY ACCEPTING DELIVERY OF THIS
PRIVATE PLACEMENT MEMORANDUM, EACH PROSPECTIVE PURCHASER IS
AUTHORIZED TO DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION
OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE
CERTIFICATES AND THE TRANSACTIONS DESCRIBED HEREIN AND ALL
MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES)
THAT ARE PROVIDED TO ANY OFFEREE RELATING TO SUCH TAX TREATMENT
AND TAX STRUCTURE. NONE OF THE PLACEMENT AGENT, THE DISTRICT OR ANY
OF THEIR AFFILIATES ASSERTS ANY CLAIM OF PROPRIETARY OWNERSHIP OR
EXCLUSIVE RIGHT WITH RESPECT TO THE TAX TREATMENT OR TAX STRUCTURE
OF THE CERTIFICATES OR THE PAYMENT FACILITY OR THE TRANSACTIONS
DESCRIBED HEREIN.
THE OFFERING CONTEMPLATED BY THIS PRIVATE PLACEMENT
MEMORANDUM WILL BE MADE IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT FOR MUNICIPAL
SECURITIES.
IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES, THE
PLACEMENT AGENT MAY OVERALLOT OR EFFECT TRANSACTIONS THAT
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE
PLACEMENT AGENT MAY OFFER AND SELL THE CERTIFICATES TO CERTAIN
DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES
LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE
HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO
TIME BY THE PLACEMENT AGENT.
ii
TABLE OF CONTENTS
Page
INTRODUCTION.......................................................................................................................:................................ 1
General................................................................................................................................................................... 1
Purposeof Issue..................................................................................................................................................... 1
Planof Finance...................................................................................................................................................... 1
EligibleInvestors...................................................................................................................................................2
Restrictionon Transfers.........................................................................................................................................2
ForwardLooking Statements.................................................................................................................................2
THECERTIFICATES..................................................................................................................................................2
GeneralProvisions.................................................................................................................................................2
Book-Entry Only System.......................................................................................................................................3
Transfers and Exchanges Upon Termination of Book-Entry Only System...........................................................3
Prepaymentof Certificates.....................................................................................................................................3
Noticeof Prepayment............................................................................................................................................5
Effectof Prepayment.............................................................................................................................................5
DEBTSERVICE SCHEDULE.....................................................................................................................................6
SECURITYFOR THE CERTIFICATES.....................................................................................................................6
Limited Obligations Payable From Net Revenues and Reserve Fund Amounts....................................................6
RateCovenant........................................................................................................................................................7
ReserveFund.........................................................................................................................................................7
AdditionalContracts and Bonds............................................................................................................................8
ESTIMATEDUSES OF PROCEEDS..........................................................................................................................8
THEDISTRICT. ...........:..............................................................................................................................................9
General...................................................................................................................................................................9
TheTown of Truckee,California...................................................................................................:......................9
Landand Land Use................................................................................................................................................9
Governanceand Management................................................................................................................................9
DistrictPowers..................................................................................................................................................... 10
BudgetProcess..................................................................................................................................................... 10
THE CORPORAT
ION............................................................................................................................................... 10
THEBROADBAND SYSTEM.................................................................................................................................. 10
GeneralDescription............................................................................................................................................. 10
Broadband System Rates and Charges................................................................................................................. 12
Projected Broadband System Connections and Sales Revenues.......................................................................... 12
Discussion of Projected Broadband System Connections from Potential Customers.......................................... 12
Projected Operating Results and Debt Service Coverage.................................................................................... 14
THE CONSTRUCTION CONTRACT AND GENERAL CONTRACTOR.............................................................. 16
General................................................................................................................................................................. 16
CompletionDate.................................................................................................................................................. 16
LiquidatedDamages............................................................................................................................................ 16
ContractPrice...................................................................................................................................................... 16
APPROVAL FROM THE NEVADA COUNTY LOCAL AGENCY FORMATION COMMISSION..................... 16
CERTIFICATEHOLDERS' RISKS.......................................................................................................................... 17
Prepayment of Certificates Prior to Maturity....................................................................................................... 17
LimitedObligation............................................................................................................................................... 17
ConstructionRisks............................................................................................................................................... 17
FinanceRisks....................................................................................................................................................... 18
iv
PRIVATE PLACEMENT MEMORANDUM
FOR
$2490009000-
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
REVENUE CERTIFICATES OF PARTICIPATION,SERIES 2004
INTRODUCTION
General
This Private Placement Memorandum, including the cover page and all appendices hereto,provides certain
information concerning the sale and delivery of Truckee Donner Public Utility District Revenue Certificates of
Participation, Series 2004 in the original aggregate principal amount of $24,000,000* (the "Certificates').
Descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or
definitive, and reference is made to each document for complete details of all terms and conditions. All statements
herein are qualified in their entirety by reference to each document. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in Appendix A attached hereto.
The Certificates represent the interests of the registered owners thereof (the "Certificate Owners" or
"Owners") in Installment Payments (the "Installment Payments") payable by the Truckee Donner Public Utility
District (the "District") under an Installment Purchase Agreement dated as of November 1, 2004 (the "Installment
Purchase Agreement"), by and between the District and the Truckee Donner Public Utility District Financing
Corporation, a nonprofit public benefit corporation (the "Corporation"). The Certificates are being executed and
delivered pursuant to (i) the Public Utility District Act of the State of California, being Division 7 of the Public
Utilities Code of California (the "Act"), (ii) a Trust Agreement dated as of November 1, 2004 (the "Trust
Agreement"), by and among the District, the Corporation and BNY Western Trust Company, Los Angeles,
California, as trustee (the "Trustee"), and (iii) a resolution of the District adopted on September 1, 2004 (the
"Resolution"). Pursuant to an Assignment Agreement dated as November 1, 2004 (the "Assignment Agreement'),
by and between the Corporation and the Trustee, the Corporation has assigned to the Trustee, for the benefit of the
Owners of the Certificates, substantially all its rights under the Installment Purchase Agreement, including the
Corporation's right to receive Installment Payments payable under the Installment Purchase Agreement and
Corporation's rights to enforce payment by the District of such Installment Payments when due.
Purpose of Issue
The Certificates are being delivered to provide funds(i)to pay the costs of acquiring,installing,developing
and constructing (including the reimbursement of certain costs previously incurred by the District) a "Fiber-to-the
Home" broadband telecommunications network within the territory of the District to be used for government and
community connectivity for education and other government services, along with the provision of other board and
communication services to business and residential customers such as cable television service, Internet access and
telephone services (the "Broadband System"), (ii) to pay capitalized interest on the Certificates during the
construction of the Broadband System, (iii) to fund the Reserve Requirement for the Certificates, and (iv) to pay
costs of issuing the Certificates.
Plan of Finance
Pursuant to the Installment Purchase Agreement,the District will purchase the Broadband System from the
Corporation. In consideration for such purchase,the District will make the Installment Payments to the Corporation,
which will be assigned to the Trustee. Under the Trust Agreement, the Certificates will be delivered to the
investors. The Certificates represent individual interest in the Installment Payments; thus each payment on the
Certificate will represent the interest and principal paid on the underling Installment Payment. It is expected that the
portion of each Installment Payment constituting interest (and original issue discount) will be excluded from gross
'Preliminary,subject to change.
1
The Certificates will be delivered only in fully registered form and, when executed and delivered,will be
registered in the name of Cede& Co., as nominee of The Depository Trust Company, New York, New York
("DTC"). DTC will act as securities depository for the Certificates. Ownership interests in the Certificates may be
purchased in book-entry form only in denominations of$100,000 and integral multiples of$5,000 in excess thereof.
See the caption"Book-Entry Only System"below and Appendix D attached hereto.
In the event the book-entry only system described below is discontinued, the principal evidenced by any
Certificate will be payable by check or draft of the Trustee upon presentation and surrender thereof at maturity or
upon prior prepayment at the office of the Trustee in Los Angeles, California (the "Office of the Trustee'). Such
principal and interest shall be payable in lawful money of the United States of America.
Book-Entry Only System
One fully-registered Certificate will be executed and delivered for each maturity of the Certificates in the
principal amount of the Certificates of such maturity. It will be registered in the name of Cede& Co. and will be
deposited with DTC. As long as the ownership of the Certificates is registered in the name of Cede&Co.,the term
"Owner"as used in this Private Placement Memorandum shall refer to Cede& Co. and not to the actual purchasers
of the Certificates(the"Beneficial Owners').
The District may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event,the Certificates will be printed and delivered and will be governed by
the provisions of the Trust Agreement with respect to payment of principal and interest and rights of exchange and
transfer.
The District cannot and does not give any assurances that DTC participants or others will distribute
payments with respect to the Certificates received by DTC or its nominee as the registered Owner, or any
prepayment or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will
service and act in the manner described in this Private Placement Memorandum. See Appendix D. hereto for
additional information concerning DTC.
Transfers and Exchanges Upon Termination of Book-Entry Only System
In the event the book-entry system described above is discontinued, the Certificates will be printed and
delivered as provided in the Trust Agreement. Thereafter, any Certificate may, in accordance with its terms, be
transferred on the Registration Books by the person in whose name it is registered, in person or by such person's
duly authorized attorney,upon surrender of such Certificate at the Office of the Trustee accompanied by delivery of
a duly executed instrument of transfer in a form approved by the Trustee. Upon the surrender of a Certificate for
transfer, the Trustee is to execute and deliver a new Certificate or Certificates of the same maturity in the same
principal amount. The Trustee may require the Certificate Owner requesting any such transfer to pay any tax or
other governmental charge required to be paid in connection therewith.
Certificates may be exchanged at the Office of the Trustee for a like aggregate principal amount of
Certificates of other authorized denominations of the same maturity. The Trustee may require the Certificate Owner
requesting any such exchange to pay any tax or other governmental charge required to be paid in connection
therewith.
The Trustee shall not be required to register the transfer of or to exchange any Certificate during the period
in which the Trustee is selecting Certificates for prepayment or of any Certificate that has been selected for
prepayment.
Prepayment of Certificates
Optional Prepayment. The Certificates are subject to prepayment at the option of the District and as
directed by the District in whole or in part on any date, upon notice as provided herein, on or after November 1,
2014, at a prepayment price equal to the percentage of the outstanding principal amount thereof together with a
3
r
or operation of the Broadband System, in each case at a Prepayment Price equal to 100% of the principal amount
thereof(together with interest accrued to such dated fixed for prepayment),without premium.
Prepayment upon Determination of Taxability. The Certificates are subject to prepayment in whole upon
the occurrence of a Determination of Taxability on the first date possible subsequent to such a Determination of
Taxability after the giving of notice as provided in the Trust Agreement,at a Prepayment Price equal to 100%of the
principal amount thereof(together with interest accrued to such dated fixed for prepayment),without premium.
Partial Prepayment of Certificates. Upon surrender of any Certificate prepaid in part only,the Trustee will
execute and deliver to the Owner thereof, at the expense of the District, a new Certificate or Certificates of
authorized denominations equal in aggregate principal amount to the unprepaid portion of the Certificates
surrendered and of the same maturity.
Notice of Prepayment
Notice of prepayment shall be mailed, first class postage prepaid, to the respective Owners of any
Certificates designated for prepayment at their addresses appearing on the Certificate registration books and to the
Information Services and by registered or certified or overnight mail to the Securities Depositories at least 30 days
but not more than 60 days prior to the prepayment date.
Each notice of prepayment shall state the date of notice, the prepayment date, the place or places of
prepayment and the Prepayment Price, shall designate the maturities, CUSIP numbers, if any, and, if less than all
Certificates of any such maturity are to be prepaid, the serial numbers of the Certificates of such maturity to be
prepaid by giving the individual number of each Certificate or by stating that all Certificates between two stated
numbers, both inclusive, have been called for prepayment and,in the case of Certificates to be prepaid in part only,
the portion to be prepaid. Each such notice shall also state that on said date there will become due and payable on
each of said Certificates the Prepayment Price thereof or of said specified portion of the principal represented
thereby in the case of a Certificate to be prepaid in part only, and that (provided that moneys for prepayment have
been deposited with the Trustee) from and after such prepayment date interest with respect thereto shall cease to
accrue, and shall require that such Certificates be then surrendered to the Trustee. Any defect in the notice or the
mailing thereof will not affect the validity of the prepayment of any Certificate.
Notice of prepayment of Certificates shall be given by the Trustee on behalf of and at the expense of the
District.
Effect of Prepayment
When notice of prepayment has been duly given and moneys for payment of the Prepayment Price of,
together with interest accrued to the prepayment date with respect to, the Certificates(or portions thereof) so called
for prepayment are held by the Trustee, the Certificates (or portions thereof) so called for prepayment will, on the
prepayment date designated in such notice,become due and payable at the Prepayment Price specified in such notice
and interest accrued thereon to the prepayment date; and from and after the prepayment date interest represented by
the Certificates so called for prepayment will cease to accrue, said Certificates(or portions thereof)will cease to be
entitled to any benefit or security under the Trust Agreement,and the Owners of said Certificates will have no rights
in respect thereof except to receive payment of said Prepayment Price and accrued interest.
5
Notwithstanding anything contained in the Installment Purchase Agreement, the District shall not be
required to advance any moneys derived from any source of income other than the Revenues in the Revenue Fund
for the payment of amounts due under the Installment Purchase Agreement or for the performance of any
agreements or covenants required to be performed by it contained in the Installment Purchase Agreement. The
District may, however, advance moneys for any such purpose so long as such moneys are derived from a source
legally available for such purpose and may be legally used by the District for such purpose. INSTALLMENT
PAYMENTS WILL BE PAYABLE BY THE DISTRICT SOLELY FROM REVENUES OF THE BROADBAND
SYSTEM, AFTER PAYMENT OF OPERATIONS AND MAINTENANCE COSTS, AND FROM AMOUNTS IN
THE RESERVE FUND. REVENUES OF THE DISTRICT'S ELECTRIC AND WATER UTILITIES ARE NOT
AVAILABLE TO MAKE INSTALLMENT PAYMENTS. PURSUANT TO SECTION 16467 OF THE PUBLIC
UTILITIES CODE OF THE STATE OF CALIFORNIA, THE DISTRICT IS NOT AUTHORIZED TO USE
REVENUES DERIVED FROM ELECTRIC OR WATER OPERATIONS OF THE DISTRICT TO MAKE
INSTALLMENT PAYMENTS.
THE TRUSTEE, ON BEHALF OF THE OWNERS, SHALL HAVE NO SECURITY INTEREST IN OR
MORTGAGE ON THE BROADBAND SYSTEM OR OTHER ASSETS OF THE DISTRICT, AND NO
DEFAULT UNDER THE TRUST AGREEMENT OR INSTALLMENT PURCHASE AGREEMENT SHALL
RESULT IN THE LOSS BY THE DISTRICT OF THE BROADBAND SYSTEM OR THE LOSS OF OTHER
ASSETS OF THE DISTRICT.
THE OBLIGATION OF THE DISTRICT TO MAKE INSTALLMENT PAYMENTS PURSUANT TO
THE INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH
THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE
DISTRICT HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE
DISTRICT TO MAKE THE INSTALLMENT PAYMENTS IS A SPECIAL OBLIGATION OF THE DISTRICT
PAYABLE SOLELY FROM THE NET REVENUES DERIVED BY THE DISTRICT FROM THE OPERATION
OF ITS BROADBAND SYSTEM AFTER PAYING OPERATION AND MAINTENANCE COSTS AND FROM
AMOUNTS IN THE RESERVE FUND AND DOES NOT CONSTITUTE A DEBT OF THE DISTRICT, THE
CORPORATION, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IN
CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
Rate Covenant
The Installment Purchase Agreement requires the District, to the fullest extent permitted by law, to fix,
prescribe and collect rates and charges for the Broadband Services which will be at least sufficient to yield, during
each Fiscal Year, Net Revenues equal to one hundred twenty-five percent (125%) of Debt Service for such Fiscal
year. This District may make adjustments from time to time in such rates and charges and may make such
classification thereof as it deems necessary, but shall not reduce the rates and charges then in effect unless the Net
Revenues from such reduced rates and charges will at all times be sufficient to meet the requirements described
above.
Reserve Fund
The Trust Agreement and the Installment Purchase Agreement require the establishment of a Reserve Fund
in an amount equal to $ , the maximum annual debt service due on the Certificates, which Reserve
Fund shall be initially funded from the proceeds of the Certificates. If one business day prior to any Payment Date
on the Certificates, the moneys in the Certificate Payment Fund are insufficient to make the payments required by
the Trust Agreement with respect to Certificates on such payment date, the Trustee shall transfer from the Reserve
Fund to the Certificate Payment Fund the amount of such insufficiency. In the event that the Trustee has transferred
moneys from the Reserve Fund to the Certificate Payment Fund in accordance with the Trust Agreement, upon
receipt of the moneys from the District to increase the balance in the Reserve Fund to the Reserve Requirement,the
Trustee shall deposit such moneys in the Reserve Fund.
7
THE DISTRICT
General
The District was incorporated on and has operated continuously since March 7, 1927, and operates under
the Public Utility District Act, Division 12 of the State of California Public Utility Code (the "Act"), for the
purposes of furnishing utilities within the District.
The District is a public utility district providing utility services in eastern California north of Lake Tahoe
(www.idpud.org) in and around the Town of Truckee, California ("Truckee") and within Nevada and Placer
Counties. The District is governed by a locally elected board of directors, comprised of local business people. The
District is already servicing nearly all resident, businesses and government offices in the area with water and
electricity (approximately 12,083 subscribers) and has an excellent reputation for integrity, customer service and
reliability.
The Town of Truckee,California
The Town of Truckee,California is a resort town,located 13 miles north of Lake Tahoe on Interstate 80,35
minutes from Reno, and 90 minutes from Sacramento. Truckee has experienced a very significant increase in the
number of vacation and second homes from residents of the San Francisco Bay area and other urban areas within a
three-hour drive of Truckee. Its proximity to Lake Tahoe, and a dozen ski resorts around Lake Tahoe, make it an
excellent year round destination for enjoying the Sierra Nevada Mountains.
In 2003/2004 the Town of Truckee approved over 1,100 new residential units and over 230 lodging units.
The second home owner/vacationing population of over three times the normal 12,000 residents, and like the year
round residents are sophisticated and accustomed to high-end video and broadband services.
Land and Land Use
The District encompasses an area of approximately 44 square miles in eastern Nevada County and
approximately 1.5 square miles in adjacent Placer County. The District's customer base of 12,083 is made up of
88.5%residential, 11%as commercial, and 5%as public authority/other. The District expects that the undeveloped
land within its boundaries,both Greenfield and in-fill,will continue to be developed and that the District's estimated
population at build out,or the year 2015,will be approximately 25,000.
Governance and Management
The District is governed by a 5-member Board of Directors (the "Board"), the members of which are
elected by the registered voters of the District to staggered four-year terms. The current directors,their occupations
and the expiration dates of their terms are set forth below.
Board Member Expiration of Term Occupation
James Maass December 2004 School District Technology Manager
Nelson Van Gundy December 2004 Real Estate Broker
Ron Hemig December 2006 Real Estate Broker
Joseph Aguera December 2004 Retired Mortician
Patricia Sutton December 2006 Private Business Owner
Day-to-day management of the District is delegated to the General Manager and Secretary (the "General
Manager"),Peter L. Holzmeister. Mr. Holzmeister has served the District as its General Manager since April, 1984.
Prior to accepting the General Manager position, Mr. Holzmeister held the position of City Manager in upper
Connecticut.
9
Uses of Broadband System. The Broadband System will be used by the District to enhance its delivery of
existing utility services, as well as to provide multichannel video programming service, including cable television
service, high speed Internet access, certain telecommunications services, as well as services offered using Voice
over the Internet Protocol (Vol?). The District will also provide security monitoring services using the Broadband
System.
All homes within the District's service territory will be required to utilize electronic meter reading services
in connection with their electric and water services provided by the District. In addition, the District's Electric and
Water Divisions will be required to use the Broadband System to enhance the existing SCADA systems. It is
estimated that SCADA will reduce the District's electric costs by approximately 75 percent,or$122,000 per year.
Cable Television. The District will use the Broadband System to provide a full suite of multi-channel
video programming services to residential consumers and to businesses located within the service area, as well as
high speed Internet access services.
To facilitate the provision of these services by the District over the Broadband System, the District has
entered into a Service Agreement dated March 4, 2004 with Eagle Broadband, Inc. ("Eagle"), a Texas-based
company experienced in planning, operating and maintaining broadband networks and in providing video, voice,
data, security and other services over those networks. Pursuant to that agreement, Eagle will construct and operate
the headend located in Reno,Nevada. The headend facility will be used to receive video programming and deliver
that programming over the Broadband System to the District's customers. Eagle will also acquire from
programming sources the programming content which will be delivered over the Broadband System. In addition,
the District will obtain billing services and certain customer support and maintenance services from Eagle.
The video services offered will include basic cable service (consisting of approximately 70 channels of
Programming), expanded cable service (approximately 43 additional programming channels), music channels, and
premium channels (such as HBO, Showtime, STARZ, Encore, and others). In addition,the District will offer pay-
per-view programming as well as video-on-demand programming. Enhancements to the District's cable service will
include the availability of Personal Video Recorders which will enable customers to record and save multiple
programs on a hard drive without the use of videotapes.These services will be provided by the District through the
use of customer-premises-based set top terminals which will be acquired by Eagle and made available to the
District's customers.
Pursuant to the terms of a Cable System Franchise Agreement dated April 17, 2003,the Town of Truckee
granted the District a franchise to construct and operate a cable system. Under the Agreement, the District is
required to pay the Town of Truckee a franchise fee equal to 5% of gross annual cable service revenues. The term
of the Agreement expires on April 17,2013.
Pursuant to the terms of a Cable System Franchise Agreement dated January 13, 2004, the County of
Nevada, California granted the District a franchise to construct and operate a cable system. Under the Agreement,
the District is required to pay the County of Nevada a franchise fee equal to 5% of gross annual cable service
revenues. The term of the Agreement expires on January 13,2005.
The terms of a Cable System Franchise Agreement between the District and Placer County, California are
currently being negotiated and the Agreement is expected to be in effect before the date of closing of the
Certificates.
High Speed Internet Access. Also, the District will offer to business and residential customers high speed
Internet access using cable modem technology. Internet service will be provided through use of cable modems
located at customer premises provided to customers by the District. Internet traffic will be sent to routers operated
and maintained by Eagle at the headend location in Reno,Nevada where it will be sent in the Internet protocol to IP
backbone networks. This service will enable customers to access and use the Internet at significantly higher speeds
than those available using traditional "dial up" Internet services. Residential Internet service will be available at
speeds of up to 1.5 mbps (megabits per second); higher speed commercial Internet services will be available at
speeds of 3.0 mbps, 6.0 mbps, and 10.0 mbps. High speed Internet access will enable customers to download and
11
service. The survey also found a high level of satisfaction by residents with services currently provided by the
District, including electric and water service. In addition to the residential customer survey,the District identified
several key business users drawn from government, education, and private industry and commerce. Many of those
indicated that they would be interested in the services which would be provided over the Broadband System. Some
of those users also expressed dissatisfaction with current providers of these services. While these survey results
indicate that there may be a strong demand for services to be provided over the Broadband System, there can no
assurance that any of these potential customers will,in fact,subscribe to one or more of the broadband services to be
provided on the Broadband System.
[The Remainder of this Page Intentionally Left Blank]
13
o ,
Revenue per Subscriber
Revenue per Subscriber per MONTH
Expense per Subscriber
Expense per Home passed
Capital per Subscriber
Net Income per Subscriber
Source: District.
G
4
k
f
F^
f
3
15
of Compliance from LAFCO indicating compliance with those conditions. Pursuant to that Resolution, LAFCO
would issue to the District a Certificate of Compliance upon completion of those conditions. Further,the Resolution
provided that if the Certificate"of Compliance was not issued by LAFCO within two years of the Resolution(i.e.,by
January 27, 2003),the approval would expire. The Resolution further provided that if the District had not begun to
provide one or more of the service functions specified in the Resolution by January 1, 2005,LAFCO's approval of
the unprovided service functions would automatically expire. On October 22, 2002, at a public meeting,LAFCO
issued another resolution (Resolution 02-17) which extended the date for compliance with the conditions of
Resolution 01-01 until January 27,2005. On August 11,2004, at another public meeting,LAFCO found that those
conditions had been mostly met and voted to issue a Certificate of Compliance to the District. By this action,
LAFCO has concluded that the District has complied with the conditions of the Resolution 01-01. In addition, on
August 11,LAFCO voted to extend the District's deadline for commencement of one or more service functions until
January 1,2008.
CERTIFICATE HOLDERS'RISKS
In making investment decisions, investors must rely on their own investigations and evaluation of the
merits of a particular investment. Each investment, including the Certificates,has particular risk factors an investor
should review and evaluate. The following is a summary,which does not purport to be comprehensive or definitive,
of some of the risk factors an investor should consider before purchasing the Certificates.
Prepayment of Certificates Prior to Maturity
Purchasers of Certificates, especially those who purchase Certificates at a price in excess of their principal
amount or who hold Certificates trading at a price in excess of par, should consider the fact that the Certificates are
subject to prepayment prior to maturity. Extraordinary redemption of the Certificates described under THE
CERTIFICATES—Prepayment of Certificates-Extraordinary Prepayment" herein can occur at a redemption price
equal to the principal amount plus accrued interest, without premium, and potential investors may not be able to
reinvest their funds with an equal or better rate of return.
Limited Obligation
The Certificates are payable from Installment Payments payable by the District pursuant to the Installment
Purchase Agreement and amounts on deposit in certain funds and accounts established by the Trust Agreement.
INSTALLMENT PAYMENTS WILL BE PAYABLE BY THE DISTRICT SOLELY FROM REVENUES OF THE
BROADBAND SYSTEM, AFTER PAYMENT OF OPERATIONS AND MAINTENANCE COSTS. REVENUES
OF THE DISTRICT'S ELECTRIC AND WATER UTILITIES ARE NOT AVAILABLE TO MAKE
INSTALLMENT PAYMENTS. PURSUANT TO SECTION 16467 OF THE PUBLIC UTILITIES CODE OF THE
STATE OF CALIFORNIA, THE DISTRICT IS NOT AUTHORIZED TO USE REVENUES DERIVED FROM
ELECTRIC OR WATER OPERATIONS OF THE DISTRICT TO MAKE INSTALLMENT PAYMENTS. No
assurance can be provided that the revenues of the Broadband System will be sufficient to pay all operation and
maintenance costs plus all payments of principal of and interest on the Certificates when due.
The Trustee, on behalf of the Owners, shall have no security interest in or mortgage on the Broadband
System or other assets of the District, and no default under the Trust Agreement or Installment Purchase Agreement
shall result in the loss by the District of the Broadband System or the loss of other assets of the District. See also
"SECURITY FOR THE CERTIFICATES"herein.
Construction Risks
There are many diverse risks attendant to any construction project,including,but not limited to,(i)the non-
performance by or disputes with one or more private contractors or subcontractors on various aspects of the
Broadband System, (ii) disputes with labor unions or similar labor disputes that could disrupt the Broadband
System, including increases in labor costs, (iii) the unavailability of certain materials or products necessary for the
construction of the Broadband System, (iv)environmental risks and hazards,(v)natural disasters,(vi)acts of war or
terrorism,(vii) inclement weather, (viii) shortages of, and price increases in, energy, material and skilled labor; (ix)
17
Nonexclusivity of Cable Television Franchises; Video Programming Competition. Federal law prohibits
local governments from awarding exclusive franchises to provide cable service and there can be no assurance the
Town of Truckee will not award additional cable television franchises in the future.
Federal law also allows local telephone companies to provide services which compete with those offered by
cable systems, including multichannel video programming services, and some local telephone companies in the
United States have indicated that they plan to deploy their own broadband facilities to provide such services.
In addition, multi-channel video programming services may be obtained by residents of the District from
two providers of direct satellite-to-home service—DirecTV and the Dish Network. Like cable television systems,
those direct-to-home satellite services offer consumers a wide variety of programming channels. There are certain
premium program services which are available from the satellite services which are not available from cable
operators. Also, in many locations, local television broadcast stations are not available from satellite providers.
There are no assurances that multi-channel video programming services offered over the Broadband System will be
preferred by consumers to those available from these other providers or that such other providers will not offer their
services at prices below those which can be charged by the District for multi-channel video programming services
provided over the Broadband System based upon the District's cost of obtaining such services from its vendor.
Internet Access Competition. Currently,Cebridge also offers high speed Internet access service using cable
modem technology over 550 MHz fiber-to-the-node technology. In an August 9, 2004 news release, Cebridge
announced plans to increase the speed of its residential Internet service from 1.5 to 3.0 megabytes per second
(Mbps)and to reduce its prices for residential internet service to$29.95 per month including modem rental.
In addition, Internet access service is available today from a variety of other entities, generally called
Internet Service Providers ("ISPs"). Typically, these ISPs, such as America Online and Earthlink, enable their
subscribers to access the Internet by dialing a local or a toll-free telephone number and connecting to the Internet
over telephone lines. Such "dial-up" arrangements are sometimes referred to as "narrow band"Internet access and
offer relatively slow transmission speeds of 56 Kbps or less. The Broadband System will enable subscribers to
access the Internet at much higher speeds using a "broadband" connection. As noted in the preceding paragraph,
Cequel also offers broadband Internet access using its own cable plant and cable modem technology. In addition,
the local telephone company serving the Town of Truckee, SBC Communications, offers high speed Internet access
through use of Digital Subscriber Line technology ("DSL"). However, DSL service is only available to limited
portions of the area to be served by the Broadband System. It is possible that in the future, SBC will offer DSL
service to larger portions of the service area or that it will deploy its own fiber plant throughout portions of the
service area. There can be no assurances that the Internet access service provided over the Broadband System will
provide higher speed service or will be of higher quality than will other broadband Internet services available.
Another source of competition for high speed Internet access may be Wireless Fidelity(commonly referred
to as "WiFi") services using any type of 802.11 (such as 802.11 a, 802.11 b or 802.11 g) network. These services,
where available,enable consumers to access the Internet at high speeds using mobile wireless devices(including,for
example,laptop computers and personal digital assistants). Currently these networks are employed mostly as home
networks or in designated"hot spots"(such as in Starbucks coffee shops, airports,hotels and other public locations),
but it is possible that area-wide networks using this technology could be established and could become competitive
with the District's"wired"Broadband System.
In addition, a more advanced source of wireless broadband, commonly referred to as "WiMax" (Wireless
Interoperability for Microwave Access) using the 802.16 standard is under development and has been the subject of
favorable reports in a number of national publications. WiMax will be able to deliver fixed wireless broadband over
wider geographic areas-up to 30 miles, and will be capable of delivering high speed Internet access to areas not
served by DSL or cable modem services. There is a possibility that some consumers may find such services to be
competitive alternatives for high speed Internet service provided over the District's Broadband System.
Upon completion of the Broadband System, the District plans to make the network available to another
entity which will utilize the Broadband System for the purpose of providing telecommunications services, including
local exchange service and long distance service. That entity will be subject to Federal and state laws which govern
the provision of telecommunications services to the public. The District does not plan to be a provider of
19
State Prohibition of Local Government Providing Telecommunication Services
In March 2004,the United States Supreme Court, in Nixon v. Missouri Municipal League. et al, held that
Section 253 of the Communications Act, which forbids any state or local law or regulation from prohibiting "any
entity" to provide any telecommunications service does not apply to state laws which forbid political subdivisions
within the state from providing telecommunications service. Although the District has no reason to believe that such
a prohibition will be enacted in California, if such a provision were to be enacted and made applicable to the
Broadband System, based on the recent Supreme Court decision, such a law could prohibit the District from
providing telecommunications service over the Broadband System. The Communications Act section at issue in that
case is only applicable to state or local statutes,regulations or other legal requirements prohibiting local government
entities from providing telecommunications service. It is not applicable to the District's provision of cable service
or information service,including high speed Internet access.
Litigation Risks
There are litigation risks relating to the District's ownership, construction and/or operation of the
Broadband System, including, but not limited to, disputes with contractors and suppliers, and challenges to the
District's legal authority to own, finance and operate the Broadband System and offer the services described herein.
Such challenges may be brought by existing or potential competitors of the District,or others. Cebridge has advised
the District that it may challenge the LAFCO's grant to the District of a Certificate of Compliance in an appropriate
forum.
Certain Matters Relating to the Enforceability of the Trust Agreement,Installment Purchase Agreement;
Enforceability of Remedies
The enforceability of the obligations of the District and the Corporation under the Trust Agreement and
Installment Purchase Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium,fraudulent
conveyance or other similar laws or by equitable principles affecting the enforcement of creditors' rights generally.
The realization of any rights upon a default by the District or the Corporation, respectively, will depend upon the
exercise of various remedies specified in the Trust Agreement and the Installment Purchase Agreement,
respectively. Certain remedies may require judicial action which is often subject to discretion and delay. Under
existing law, certain of the remedies, specified in the Trust Agreement or the Installment Purchase Agreement,
respectively, may not be readily available or may be limited. For example a court may decide not to order the
specific performance of the covenants contained in the Trust Agreement. Accordingly, the Trustee's ability to
exercise its remedies under the Trust Agreement upon a default by the District could be impaired by the need for
judicial approval.
Credit Rating
No rating has been obtained on the Certificates from any securities rating agency. As a result, the
Certificates are unrated and represent a high risk investment. The lack of a rating may adversely affect the presence
of a secondary market for the Certificates.
Secondary Market for the Certificates
There can be no assurance that there will be a secondary market for purchase or sale of the Certificates.
From time to time there may be no market for the Certificates depending upon prevailing market conditions,
including the financial condition or market position of firms who may make the secondary market,the evaluation of
the District and the financial condition and results of operations of the Broadband System.
Limited Transferability
An Owner may only transfer Certificates to "qualified institutional buyers" as defined in Rule 144A
promulgated under the Securities Act of 1934. There is no assurance that a potential transferee will be able to
satisfy such transfer limitations. Accordingly, purchasers of the Certificates may be required to bear the financial
21
California, for the Corporation by Stradling Yocca Carlson& Rauth, a Professional Corporation,for the Placement
Agent by Greenberg Traurig,LLP and for the Trustee by its counsel.
LITIGATION
There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,
regulatory agency,public board or body,pending or,to the knowledge of the District,threatened against the District
affecting the existence of the District or the titles of its board members or officers to their respective offices or
seeking to restrain or to enjoin the sale or delivery of the Certificates, the application of the proceeds thereof in
accordance with the Trust Agreement, or in any way contesting or affecting the validity or enforceability of the
Certificates, the Trust Agreement, the Installment Purchase Agreement, or any action of the District contemplated
by any of said documents, or contesting or affecting the collection of Revenues, or which would have a material
adverse effect on the BROADBAND System or the District's ability to pay the Installment Payments,or in any way
contesting the completeness or accuracy of this Private Placement Memorandum or any amendment or supplement
thereto, or contesting the powers of the District or its Corporation with respect to the Certificates or any action of the
District contemplated by any of said documents, nor to the knowledge of the District, is there any basis therefor.
See also"CERTIFICATE HOLDERS'RISKS—Litigation Regarding the District and the Broadband System".
TAX EXEMPTION
In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California, Special Counsel, under existing statutes, regulations, rulings and judicial decisions, the portion of each
Installment Payment constituting interest is excluded from gross income for federal income tax purposes, and is not
an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and
corporations. In the further opinion of Special Counsel, the portion of each Installment Payment constituting
interest is exempt from State of California personal income tax. Special Counsel notes that, with respect to
corporations, the portion of each Installment Payment constituting interest may be included as an adjustment in the
calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such
corporations. In addition,the difference between the issue price of a Certificate(the first price at which a substantial
amount of the Certificates of a maturity is to be sold to the public) and the stated redemption price at maturity with
respect to a Certificate constitutes original issue discount, and the amount of original issue discount that accrues to
the owner of the Certificate is excluded from the gross income of such owner for federal income tax purposes,is not
an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations,and is exempt from State of California personal income tax.
Special Counsel's opinion as to the exclusion from gross income of the portion of each Installment Payment
constituting interest (and original issue discount) is based upon certain representations of fact and certifications
made by the District and others and is subject to the condition that the District complies with all requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the execution and
delivery of the Certificates to assure that the portion of each Installment Payment constituting interest(and original
issue discount)will not become includable in gross income for federal income tax purposes. Failure to comply with
such requirements of the Code might cause the portion of each Installment Payment constituting interest (and
original issue discount) to be included in gross income for federal income tax purposes retroactive to the date of
execution and delivery of the Certificates. The District has covenanted to comply with all such requirements.
Special Counsel's opinions may be affected by actions taken (or not taken) or events occurring (or not
occurring)after the date hereof. Special Counsel has not undertaken to determine,or to inform any person,whether
any such actions or events are taken or do occur. The Indenture and the Tax Certificate permit certain actions to be
taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto. Special Counsel
expresses no opinion as to the exclusion from gross income of interest (and original issue discount) for federal
income tax purposes with respect to any Certificate if any such action is taken or omitted based upon the advice of
... counsel other than Stradling Yocca Carlson & Rauth. Although Special Counsel has rendered an opinion that the
portion of the Installment Payments constituting interest(and original issue discount)is excluded from gross income
for federal income tax purposes provided that the District continues to comply with certain requirements of the
Code, the ownership of the Certificates and the accrual or receipt of interest (and original issue discount) with
respect to the Certificates may otherwise affect the tax liability of certain persons. Special Counsel expresses no
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The Certificates are being offered on behalf of the District by the Placement Agent on a best effort, all or
none basis, to eligible purchasers. In consideration for its services as the Placement Agent, the Placement Agent
will receive a fee equal to$
THE SUITABILITY STANDARDS DISCUSSED ABOVE REPRESENT MINIMUM SUITABILITY
STANDARDS FOR PROSPECTIVE INVESTORS. EACH PROSPECTIVE INVESTOR,TOGETHER WITH ITS
INVESTMENT, TAX, LEGAL, ACCOUNTING AND OTHER ADVISORS, SHOULD DETERMINE
WHETHER THIS INVESTMENT IS APPROPRIATE FOR SUCH INVESTOR.
The Certificates will not be registered under the Securities Act of 1933 or any other laws of applicable
jurisdictions and may not be transferred unless registered under all applicable laws or unless an exemption from
such laws is available. Neither the District nor any other person has any plans,or is under any obligation,to register
the Certificates under the Securities Act of 1933 or any other applicable laws. No market currently exists for the
Certificates and none is expected to develop. The Certificates may not be sold or transferred by a purchaser thereof
in principal amounts of less than$100,000.
MISCELLANEOUS
Insofar as any statements made in this Private Placement Memorandum involve matters of opinion or of
estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No
representation is made that any of such statements made will be realized. Neither this Private Placement
Memorandum nor any statement which may have been made verbally or in writing is to be construed as a contract
with the Owners of the Certificates.
The execution and delivery of this Private Placement Memorandum have been duly authorized by the
District.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By:
President
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Debt Service means, as this only related to the Certificates or Bonds and Contracts payable from Net
Revenues of the Broadband System for any Fiscal Year, the sum of: (1)the interest on all outstanding Bonds,
payable during such Fiscal Year (except to the extent that such interest is capitalized); (2)that portion of the
principal amounts of all outstanding serial Bonds maturing in such Fiscal Year; (3)that portion of the principal
amounts of all outstanding term Bonds required to be prepaid or paid in such Fiscal Year; and(4)that portion of the
Parity Installment Payments required to be made during such Fiscal Year(except to the extent the interest evidenced
and represented thereby is capitalized);provided that, as to any such Bonds or Parity Installment Payments bearing
or comprising interest at other than a fixed rate, the rate of interest used to calculate Debt Service will, for all
purposes, be assumed to bear interest at a fixed rate equal to the higher of (i)the actual rate on the date of
calculation,or if the Bonds or Parity Installment Payments are not yet outstanding,the initial rate(if established and
binding), (ii)if the Bonds or Parity Installment Payments have been outstanding for at least twelve months, the
average rate over the twelve months immediately preceding the date of calculation, and (iii).(1)if interest on the
Bonds or Parity Installment Payments is excludable from gross income under the applicable provisions of the Code,
the most recently published Bond Buyer 25 Bond Revenue Index (or comparable index if no longer published)plus
fifty (50) basis points, or (2)if interest is not so excludable, the interest rate on direct United States Treasury
obligations with comparable maturities plus fifty(50)basis points;
and provided further that if any series or issue of such Bonds or Parity Installment Payments have
twenty-five percent (25%) or more of the aggregate principal amount of such series or issue due in any one year,
Debt Service will be determined for the Fiscal Year of determination as if the principal of and interest on such series
or issue of such Bonds or Parity Installment Payments were being paid from the date of incurrence thereof in
substantially equal annual amounts over a period of thirty(30)years from the date of calculation;
and provided further that, as to any such Bonds or Parity Installment Payments or portions.thereof bearing
no interest but which are sold at a discount and which discount accretes with respect to such Bonds or Parity
Installment Payments or portions thereof, such accreted discount will be treated as interest in the calculation of Debt
Service;
and provided further that the amount on deposit in a debt service reserve fund on any date of calculation of
Debt Service will be deducted from the amount of principal due at the final maturity of the Bonds and Contracts for
which such debt service reserve fund was established and in each preceding year until such amount is exhausted;
and provided further that Debt Service will be reduced by an amount equal to earnings on any reserve fund
(including the Reserve Fund)transferred to the corresponding debt service fund(including the Interest Fund created
under the Trust Agreement).
District means Truckee Donner Public Utility District, a public utility district, duly organized and existing
under and by virtue of the laws of the State of California,including the Law.
Event of Default means an event described in the Installment Purchase Agreement.
Fiscal Year means the period beginning on January 1 of each year and ending on the last day of December
of the next succeeding year, or any other twelve-month period selected and designated as the official Fiscal Year of
the District.
Independent Certified Public Accountant means any firm of certified public accountants appointed by the
District, each of whom is independent of the District and the Corporation pursuant to the Statement on Auditing
Standards No. I of the American Institute of Certified Public Accountants.
Independent Financial Consultant means a financial consultant or firm of such consultants appointed by the
District,and who,or each of whom: (1)is in fact independent and not under domination of the District;(2)does not
have any substantial interest, direct or indirect, with the District; and (3)is not connected with the District as an
officer or employee thereof,but who may be regularly retained to make reports thereto.
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Revenues means all income, rents, rates, fees, charges and other moneys derived from the ownership or
operation or sale of the Broadband System, including, without limiting the generality of the foregoing, (1)all
income, rents, rates, fees, charges or other moneys derived from providing broadband services (including, but not
limited to data, voice, video and security services), and commodities sold, furnished or supplied through the
facilities of the Broadband System allocable to the Broadband System,plus(2)except as set forth in(z)below,taxes
or assessments,if any,the imposition of which is permitted by law,and(3)the earnings on and income derived from
the investment of the amounts described in clauses (1) and (2) above and the general unrestricted funds of the
District, but excluding in all cases(y)customers' deposits or any other deposits subject to refund until such deposits
have become the property of the District, and (z)reserves, surcharges, taxes or assessments specifically pledged to
the payment of debt service with respect to notes,bonds or other obligations of the District and which reserves,taxes
or assessment are not available for any other purpose of the District.
Trust Agreement means the Trust Agreement, dated as of November 1, 2004, by and between the District,
the Corporation and the Trustee, relating to the Certificates, as originally executed and as it may from time to time
be amended or supplemented in accordance with its terms.
Trustee means BNY Western Trust Company, acting in its capacity as Trustee under-and pursuant to the
Trust Agreement,and its successors and assigns.
Written Consent of the Corporation or District, Written Order of the Corporation or District. Written
Request of the Corporation or District, and Written Requisition of the Corporation or District mean,respectively, a
written consent, order, request or requisition signed by or on behalf of(i)the Corporation by its President or Vice
President Representative or(ii)the District by the President of its Board of Directors or its General Manager or by
the Secretary of its Board of Directors or by any two persons (whether or not officers of the Board of Directors of
the District) who are specifically authorized by resolution of the District to sign or execute such a document on its
behalf.
SALE AND PURCHASE OF THE PROJECT
Purchase and Sale. of the Project. In consideration for the Installment Payments as set forth in the
Installment Purchase Agreement, the Corporation will sell to the District, and the District will purchase from the
Corporation,the Project at the purchase price specified in the Installment Purchase Agreement and otherwise in the
manner and in accordance with the provisions of the Installment Purchase Agreement.
Title. All right, title and interest in each component of the Project will vest in the District immediately
upon execution and delivery of the Installment Purchase Agreement.
Acquisition and Construction of the Project. The Corporation will cause the Project, and any additions or
modifications thereto to be constructed, acquired or installed by the District as its agent, and the District will enter
into contracts and provide for, as agent of the Corporation,the complete construction, acquisition and installation of
the Project. The District will cause the construction, acquisition and installation of the Project to be diligently
performed after the deposit of funds with the Trustee pursuant to the Trust Agreement,upon satisfactory completion
of design work and compliance with CEQA and approval by the Board of Directors of the District, unforeseeable
delays beyond the reasonable control of the District only excepted. It is expressly understood and agreed that the
Corporation will be under no liability of any kind or character whatsoever for the payment of any cost of the Project
and that all such costs and expenses will be paid by the District's Broadband System, regardless of whether the
funds deposited in the Acquisition Fund are sufficient to cover all such costs and expenses.
Changes to the Project. The District may substitute other improvements for those listed as components of
the Project in the Installment Purchase Agreement, but only if the District first files with the Corporation and the
Trustee a statement of the District: (a)identifying the improvements to be deleted and the improvements to replace
such deleted improvements; and (b)stating that the estimated costs of construction, acquisition and installation of
the substituted improvements are not less than such costs for the improvements previously planned.
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DISTRICT WILL PAY INSTALLMENT PAYMENTS SOLELY FROM REVENUES AND IS PROHIBITED
FROM PAYING INSTALLMENT PAYMENTS FROM ANY OTHER DISTRICT FUNDS OR MONEYS.
THE CERTIFICATES ARE NOT SECURED BY ANY LIENS ON PROJECT ASSETS.
Allocation of Revenues. In order to carry out and effectuate the pledge and lien contained in the
Installment Purchase Agreement, the District has agreed and covenanted that all Revenues will be received by the
District in trust under the Installment Purchase Agreement and will be deposited when and as received in a special
fund designated as the "Revenue Fund,"which fund includes the accounts described in the definition thereof and
which fund the District has agreed and covenanted to maintain and to hold separate and apart from other funds so
long as any Contracts or Bonds remain unpaid. Moneys in the Revenue Fund will be used and applied by the
District as provided in the Installment Purchase Agreement.
The District will, from the moneys in the Revenue Fund, pay all Operation and Maintenance Costs
(including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance
Costs, the payment of which is not then immediately required) as such Operation and Maintenance Costs become
due and payable. All remaining moneys in the Revenue Fund thereafter will be set aside by the District at the
following times for the transfer to the following respective special funds in the following order of priority; and all
moneys in each of such funds will be held in trust and will be applied,used and withdrawn only for the purposes set
forth in the Installment Purchase Agreement.
(a) Installment Payments. Not later than each Installment Payment Date, the District will, from the
moneys in the Revenue Fund, transfer to the Trustee the Installment Payment due and payable on that Installment
Payment Date. The District will also, from the moneys in the Revenue Fund, transfer to the applicable trustee for
deposit in the respective payment fund, without preference or priority, and in the event of any insufficiency of such
moneys ratably without any discrimination or preference, any other Debt Service in accordance with the provisions
of any Bond or Contract.
(b) Reserve Funds. On or before each Installment Payment Date the District will,from the remaining
moneys in the Revenue Fund, thereafter,without preference or priority and in the event of any insufficiency of such
moneys ratably without any discrimination or preference,transfer to the Trustee for deposit in the Reserve Fund and
to the applicable trustee for such other reserve funds and/or accounts, if any, as may have been established in
connection with Bonds or Contracts other than the Installment Purchase Agreement, that sum, if any, necessary to
restore the Reserve Fund to an amount equal to the Reserve Requirement;provided, however,that the District may
provide for the Reserve Fund by means other than cash and Permitted Investments pursuant to the.Trust Agreement.
(c) Surplus. Moneys on deposit in the Revenue Fund on each Installment Payment Date not
necessary to make any of the payments required above may be expended by the District at any time for any purpose
permitted by law.
Investments. All moneys held by the District in the Revenue Fund and the Acquisition Fund will be
invested in Permitted Investments and the investment earnings thereon will remain on deposit in such fund, except
as otherwise provided in the Installment Purchase Agreement.
Additional Contracts and Bonds. The District may at any time execute any Contract or issue any Bonds,as
the case may be,in accordance with the Installment Purchase Agreement;provided:
(a) The Net Revenues for the most recent audited Fiscal Year preceding the date of adoption by the
Board of Directors of the District of the resolution authorizing the issuance of such Bonds or the date of the
execution of such Contract, as the case may be, as evidenced by both a calculation prepared by the District and a
special report prepared by an Independent Certified Public Accountant or an Independent Financial Consultant on
- such calculation on file with the District,will have produced a sum equal to at least one hundred twenty-five percent
(125%)of the Debt Service for such Fiscal Year;and
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The District will faithfully observe and perform all the agreements, conditions, covenants and terms
required to be observed and performed by it pursuant to all outstanding Contracts and Bonds as such may from time
to time be executed or issued,as the case may be.
Against Encumbrances. The District will not make any pledge of or place any lien on Revenues or the
moneys in the Revenue Fund except as permitted by the Installment Purchase Agreement. The District may at any
time, or from time to time, issue Contracts and Bonds as permitted in the Installment Purchase Agreement, or may
issue or incur evidences of indebtedness or incur other obligations, provided that such pledge and lien will be
subordinate in all respects to the pledge of and lien thereon provided in the Installment Purchase Agreement.
Against Sale or Other Disposition of Property. The District will not enter into any agreement or lease
which impairs the operation of the Broadband System or any part thereof necessary to secure adequate Net
Revenues for the payment of the Installment Payments, or which would otherwise impair the rights of the
Corporation under the Installment Purchase Agreement or the operation of the Broadband System. Any real or
personal property which has become nonoperative or which is not needed for the efficient and proper operation of
the Broadband System, or any material or equipment which has become worn out,may be sold if such sale will not
impair the ability of the District to pay the Installment Payments and if the proceeds of such sale are deposited in the
Revenue Fund.
Nothing in the Installment Purchase Agreement restricts the ability of the District to sell any portion of the
Broadband System if such portion is immediately repurchased by the District and if such arrangement cannot by its
terms result in the purchaser of such portion of the Broadband System exercising any remedy which would deprive
the District of or otherwise interfere with its right to own and operate such portion of the Broadband System.
Against Competitive Facilities . To the extent permitted by existing law, the District will not acquire,
construct, maintain or operate within the boundaries of the District any broadband system competitive with the
Broadband System.
Tax Covenants. Notwithstanding any other provision of the Installment Purchase Agreement, absent an
opinion of Special Counsel that the exclusion from gross income of interest with respect to the Certificates will not
be adversely affected for federal income tax purposes, the District and the Corporation will comply with all
applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically
covenants,without limiting the generality of the foregoing,as follows:
(a) Private Activity. The District and the Corporation will not take or omit to take any action or make
any use of the proceeds of the Certificates or of any other moneys or property which would cause the Certificates to
be"private activity bonds"within the meaning of Section 141 of the Code.
(b) Arbitrage. The District and the Corporation will make no use of the proceeds of the Certificates or
of any other amounts or property,regardless of the source, or take or omit to take any action which would cause the
Certificates to be"arbitrage bonds"within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The District and the Corporation will make no use of the proceeds of the
Certificates or take or omit to take any action that would cause the Certificates to be "federally guaranteed"within
the meaning of Section 149(b)of the Code.
(d) Information Reporting. The District and the Corporation will take or cause to be taken all
necessary action to comply with the informational reporting requirements of Section 149(e)of the Code.
(e) Miscellaneous. The District and the Corporation will take no action inconsistent with the
expectations stated in any Tax Certificate executed with respect to the Certificates and will comply with the
covenants and requirements stated therein and incorporated by reference in the Installment Purchase Agreement.
A-8
protection in such amounts and against such risks as are usually covered in connection with broadband systems
similar to the Broadband System.
(c) Any insurance maintained pursuant to paragraph (a) or (b) above may be maintained under a
self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained
in connection with broadband systems similar to the Broadband System and is, in the opinion of an accredited
actuary,actuarially sound.
All policies of insurance required to be maintained in the Installment Purchase Agreement will provide that
the Corporation and the Trustee will be given thirty (30) days written notice of any intended cancellation thereof or
reduction of coverage provided thereby.
Accounting Records,• Financial Statements and Other Reports. The District will keep appropriate
accounting records in which complete and correct entries will be made of all transactions relating to the Broadband
System, which records will be available for inspection by the Corporation and the Trustee at reasonable hours and
under reasonable conditions.
Protection of Security and Rights of the Corporation. The District will preserve and protect the security of
the Installment Purchase Agreement and the rights of the Corporation to the Installment Payments under the
Installment Purchase Agreement and will warrant and defend such rights against all claims and demands of all
persons. OTHER THAN REVENUES,NO OTHER DISTRICT MONEYS ARE PLEDGED TO THE PAYMENT
OF THE INSTALLMENT PAYMENTS. THE DISTRICT SHALL PAY INSTALLMENT PAYMENTS AND
OTHER AMOUNTS DUE HEREUNDER SOLELY FROM REVENUES AND IS HEREBY PROHIBITED
FROM PAYING INSTALLMENT PAYMENTS FROM ANY OTHER DISTRICT FUNDS OR MONEYS OR
USING SUCH FUNDS OR MONEYS FOR THE PERFORMANCE OF ANY AGREEMENTS OR COVENANTS
" REQUIRED TO BE PERFORMED BY IT CONTAINED HEREIN.
Payment of Taxes and Compliance with Governmental Regulations. The District will pay and discharge all
taxes, assessments and other governmental charges which may be lawfully imposed upon the Broadband System,or
any part thereof or upon the Revenues when the same will become due. The District will duly observe and conform
with all valid regulations and requirements of any governmental authority relative to the operation of the Broadband
System or any part thereof, but the District will not be required to comply with any regulations or requirements so
long as the validity or application thereof will be contested in good faith.
Amount of Rates and Charges. To the fullest extent permitted by law, the District will fix, prescribe and
collect rates and charges for the Broadband Service which will be at least sufficient to yield during each Fiscal Year
Net Revenues equal to one hundred twenty five percent(125%) of Debt Service for such Fiscal Year. The District
may make adjustments from time to'time in such rates and charges and may make such classification thereof as it
deems necessary,but will not reduce the rates and charges then in effect unless the Net Revenues from such reduced
rates and charges will at all times be sufficient to meet the requirements of the Installment Purchase Agreement.
Collection of Rates and Charges. The District will have in effect at all times by-laws,rules and regulations
requiring each customer to pay the rates and charges applicable to the Broadband Service and providing for the
billing thereof and for a due date and a delinquency date for each bill.
Eminent Domain Proceeds. If all or any part of the Broadband System is taken by eminent domain
proceedings,the Net Proceeds thereof will be applied as follows:
(a) If(1)the District files with the Corporation and the Trustee a certificate showing(i)the estimated
loss of annual Net Revenues, if any, suffered or to be suffered by the District by reason of such eminent domain
proceedings, (ii) a general description of the additions, betterments, extensions or improvements to the Broadband
System proposed to be acquired and constructed by the District from such Net Proceeds, and(iii)an estimate of the
additional annual Net Revenues to be derived from such additions,betterments,extensions or improvements,and(2)
the District,on the basis of such certificate filed with the Corporation and the Trustee, determines that the estimated
additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from
A-10
reason of such declaration) will have been made good or cured to the satisfaction of the Corporation or provision
deemed by the Corporation to be adequate will have been made therefor, then and in every such case the
Corporation, by written notice to the District, may rescind and annul such declaration and its consequences;but no
such rescission and annulment will extend to or will affect any subsequent default or will impair or exhaust any right
or power consequent thereon.
Application of Funds Upon Acceleration. Upon the date of the declaration of acceleration as provided in
the Installment Purchase Agreement,all Revenues thereafter received will be applied in the following order-
First,to the payment,without preference or priority,and in the event of any insufficiency of such Revenues
ratably without any discrimination or preference, of the fees, costs and expenses of the
Corporation and Trustee, if any, including reasonable compensation to .its accountants and
counsel;
Second,to the payment of the Operation and Maintenance Costs;and
Third, to the payment of the entire principal amount of the unpaid Installment Payments and the unpaid
principal amount of all Bonds and Contracts and the accrued interest thereon, with interest on the
overdue installments at the rate or rates of interest applicable to the Installment Payments and such
Bonds and Contracts if paid in accordance with their respective terms.
Other Remedies of the Corporation. The Corporation will have the right :(a)by mandamus or other action
or proceeding or suit at law or in equity to enforce its rights against the District or any director,officer or employee
thereof,and to compel the District or any such director,officer or employee to perform and carry out its or his duties
under the Law and the agreements and covenants required to be performed by it or him contained in the Installment
Purchase Agreement; (b)by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the
Corporation; or (c)by suit in equity upon the happening of an Event of Default to require the District and its
directors,officers and employees to account as the trustee of an express trust.
NOTWITHSTANDING ANYTHING CONTAINED IN THE INSTALLMENT PURCHASE
AGREEMENT,THE CORPORATION WILL HAVE NO SECURITY INTEREST IN OR MORTGAGE ON THE
PROJECT, THE BROADBAND SYSTEM OR OTHER ASSETS OF THE DISTRICT, AND NO DEFAULT
UNDER THE INSTALLMENT PURCHASE AGREEMENT WILL RESULT IN THE LOSS OF THE PROJECT,
THE BROADBAND SYSTEM OR OTHER ASSETS OF THE DISTRICT.
Non-Waiver. Nothing in the Installment Purchase Agreement will affect or impair the obligation of the
District, which is absolute and unconditional, to pay the Installment Payments to the Corporation at the respective
due dates or upon prepayment from the Net Revenues,the Certificate Payment Fund and the other funds pledged in
the Installment Purchase Agreement for such payment, or will affect or impair the right of the Corporation,which is
also absolute and unconditional,to institute suit to enforce such payment by virtue of the contract embodied therein.
A waiver of any default or breach of duty or contract by the Corporation will not affect any subsequent
default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of
duty or contract. No delay or omission by the Corporation to exercise any right or remedy accruing upon any
default or breach of duty or contract will impair any such right or remedy or will be construed to be a waiver of any
such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the
Corporation by the Law or by the Installment Purchase Agreement may be enforced and exercised from time to time
and as often as will be deemed expedient by the Corporation.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined
adversely to the Corporation, the District and the Corporation will be restored to their former positions, rights and
remedies as if such action,proceeding or suit had not been brought or taken.
4
Remedies Not Exclusive. No remedy in the Installment Purchase Agreement conferred upon or reserved to
the Corporation is intended to be exclusive of any other remedy, and each such remedy will be cumulative and will
be in addition to every other remedy given under the Installment Purchase Agreement existing in law or in equity or
A-12
Corporation [or its successor or assigns] any right, remedy or claim under or pursuant to the Installment Purchase
Agreement, and any agreement or covenant required in the Installment Purchase Agreement to be performed by or
on behalf of the District or the Corporation will be for the sole and exclusive benefit of the other party.
Successor Is Deemed Included in all References to Predecessor. Whenever either the District or the
Corporation is named or referred to in the Installment Purchase Agreement, such reference will be deemed to
include the successor to the powers, duties and functions that are presently vested in the District or the Corporation,
and all agreements and covenants required by the Installment Purchase Agreement to be performed by or on behalf
of the District or the Corporation will bind and inure to the benefit of the respective successors thereof whether so
expressed or not.
Waiver of Personal Liability. No director, officer or employee of the District will be individually or
personally liable for the payment of the Installment Payments, but nothing contained in the Installment Purchase
Agreement will relieve any director, officer or employee of the District from the performance of any official duty
provided by any applicable provisions of law or by the Installment Purchase Agreement.
Partial Invalidity. If any one or more of the agreements or covenants or portions of the Installment
Purchase Agreement required by the Installment Purchase Agreement to be performed by or on the part of the
District or the Corporation will be contrary to law,then such agreement or agreements, such covenant or covenants
or such portions thereof will be null and void and will be deemed separable from the remaining agreements and
covenants or portions thereof and will in no way affect the validity of the Installment Purchase Agreement. The
District and the Corporation have declared that they would have executed the Installment Purchase Agreement, and
each and every other article, section,paragraph, subdivision, sentence,clause and phrase of the Installment Purchase
Agreement irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences,
clauses or phrases of the Installment Purchase Agreement or the application thereof to any person or circumstance
may be held to be unconstitutional,unenforceable or invalid.
Assignment. The Installment Purchase Agreement and any rights under the Installment Purchase
Agreement may be assigned by the Corporation, as a whole or in part, without the necessity of obtaining the prior
consent of the District.
Net Contract. The Installment Purchase Agreement will be deemed and construed to be a net contract,and
the District will pay absolutely net during the term of the Installment Purchase Agreement,the Installment Payments
and all other payments required under the Installment Purchase Agreement, free of any deductions and without
abatement, diminution or set-off whatsoever.
California Law. THE INSTALLMENT PURCHASE AGREEMENT WILL BE CONSTRUED AND
GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
Indemnification of Corporation. The District will indemnify and hold harmless the Corporation if and to
the extent permitted by law, from and against all claims, advances, damages and losses, including legal fees and
expenses, arising out of or in connection with the acceptance or the performance of its duties under the Installment
Purchase Agreement and under the Trust Agreement; provided that no indemnification will be made for willful
misconduct, negligence or breach of an obligation under the Installment Purchase Agreement or under the Trust
Agreement by the Corporation.
Amendments Permitted. The Installment Purchase Agreement and the rights and obligations of the
Corporation,the District,the Owners of the Certificates and of the Trustee may be modified or amended at any time
by an amendment to the Installment Purchase Agreement which will become binding when the written consents of
the Owners of a majority in aggregate principal amount of the Certificates then Outstanding, exclusive of
Certificates disqualified as provided in the Trust Agreement, will have been filed with the Trustee. No such
modification or amendment will (1) extend the stated maturities of the Certificates, or reduce the rate of interest
represented thereby, or change the method of computing the rate of interest with respect thereto, or extend the time
of payment of interest,or reduce the amount of principal represented thereby,or reduce any premium payable on the
prepayment thereof, without the consent of the Owner of each Certificate so affected, or (2) reduce the aforesaid
percentage of Owners of Certificates whose consent is required for the execution of any amendment or modification
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APPENDIX B
DEFINITIONS AND SUMMARY OF CERTAIN
PROVISIONS OF THE TRUST AGREEMENT
The following is a summary of certain provisions of the Trust Agreement. This summary does not purport
to be comprehensive and reference should be made to the Trust Agreement for a full and complete statement of the
provisions thereof.
Definitions. Unless the context otherwise requires, capitalized terms used under the caption
"DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT"will have the
meanings defined below. Unless the contest otherwise requires, all capitalized terms used below and not defined
below will have the meanings ascribed thereto in the Installment Purchase Agreement and the Trust Agreement.
Agreement. The term "Agreement"means the Trust Agreement, as originally executed or as it may from
time to time be amended or supplemented as provided for therein.
Assignment Agreement. The term "Assignment Agreement" means that certain Assignment Agreement,
by and between the Corporation and the Trustee, dated as of November 1, 2004 as originally executed or as it may
from time to time be amended or supplemented in accordance with its terms.
Certificate Payment Fund. The term "Certificate Payment Fund"means the fund by that name established
in the Trust Agreement.
Certificates. The term "Certificates"means the certificates of participation executed and delivered by the
Trustee pursuant to the Trust Agreement.
Code. The term "Code" means the Internal Revenue Code of 1986, as amended, and the United States
Treasury Regulations in effect with respect thereto.
Delivery Cost Fund. The term "Delivery Cost Fund"means the fund by that name established in the Trust
Agreement.
Delivery Costs. The term "Delivery Costs"means all items of expense directly or indirectly payable by or
reimbursable to the District and related to the authorization, execution, sale and delivery of the Certificates,
including but not limited to costs of preparation and reproduction of documents, printing expenses, filing and
recording fees, initial fees and charges of the Trustee and counsel to the Trustee, legal fees and charges, fees and
disbursements of consultants and professionals,rating agency fees,title insurance premiums,letter of credit fees and
bond insurance premiums (if any), fees and charges for preparation, execution and safekeeping of the Certificates
and any other cost,charge or fee in connection with the original execution and delivery of the Certificates.
Depository or DTC. The term "Depository"or"DTC"means The Depository Trust Company,New York,
New York, a limited purpose trust company organized under the laws of the State of New York in its capacity as
securities depository for the Certificates.
Determination of Taxability. The term "Determination of Taxability"means the Trustee's obtaining actual
knowledge of a judgment or order of a court or an order, ruling, regulation or decision of the United States
Department of the Treasury or the International Revenue Service which is binding with respect to the Certificates
and which declares or determines, as applicable, that interest with respect to the certificates is includable in gross
income for federal income tax purposes (other than interest on any Certificate for any period during which such
Certificate is held by a "substantial user" or any facility financed with the proceeds of the certificates or a "related
person,"as such terms used in Section 147(a)of the Code).
Information Services. The term "Information Services" means national information services that
disseminate securities redemption notices in accordance with then current guidelines of the Securities and Exchange
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(GNMA); U.S. Department of Housing & Urban Development (PHA's); and Federal Housing Administration;
(2)bonds,notes or other evidences of indebtedness rated"AAA"and"Aaa"by the applicable Rating Agency issued
by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with remaining
maturities not exceeding three years; (3) U.S. dollar denominated deposit accounts, certificates of deposit, federal
funds and banker's acceptances with domestic commercial banks (including the Trustee and its affiliates)which are
either insured by the Federal Deposit Insurance Corporation or have a rating on their short term certificates of
deposit on the date of purchase of"A-1"or"A-1+"by S&P and"P-1"by Moody's and maturing no more than 360
days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (4)
commercial paper which is rated at the time of purchase in the single highest classification, "A-1+" by S&P and
"P-1"by Moody's and which matures not more than 270 days after the date of purchase;(5)investments in a money
market fund rated "AAAm" or "AAAm-G" or better by S&P, including such funds for which the Trustee or an
affiliate acts as investment advisor or provides other services; (6) pre-refunded municipal obligations defined as
follows: any bonds or other obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior
to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the
notice and which are rated, based on the escrow, in the highest rating category of S&P and Moody's or any
successor thereto;(7)any Investment Agreement;and(S)the Local Agency Investment Fund.
Prepayment Fund. The term "Prepayment Fund" means the fund by that name established in the Trust
Agreement.
Prepayment Price. The term "Prepayment Price" means the principal amount with respect to such
Certificate (or portion thereof) plus the applicable premium, if any, payable upon prepayment thereof pursuant to
the provisions of such Certificate and the Trust Agreement.
Principal Corporate Trust Office. The term "Principal Corporate Trust Office" means the principal
corporate trust office of the Trustee in Los Angeles, California,or such other office as the Trustee may from time to
time designate in writing to the District,the Corporation and the Owners.
Principal Fund. The term "Principal Fund" means the fund by that name established in the Trust
Agreement.
Project. The term "Project" means the facilities and equipment described in Exhibit B to the Installment
Purchase Agreement. The term "Parity Project" means any additions, betterments, extensions or improvements
designated by the Board of Directors of the District as a Parity Project, the acquisition and construction of which is
to be paid for with the proceeds of any Contracts or Bonds.
Rebate Fund. The term"Rebate Fund"means the fund by that name established in the Trust Agreement.
Record Date. The term "Record Date" means, with respect to any Payment Date for a Certificate, the
fifteenth day of the calendar month prior to such Payment Date.
Reserve Fund. The term"Reserve Fund"means the fund by that name established in the Trust Agreement.
Securities Depositories. The term "Securities Depositories"means: The Depository Trust Company, 711
Stewart Avenue, Garden City,New York 11530, Fax-(516)227-4039 or 4190; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other addresses as such depositories may specify
and/or such other securities depositories as the District may designate in a Written Request of the Corporation or a
Written Request of the District,as the case may be, delivered to the Trustee.
Special Counsel. The term "Special Counsel" means any attorney at law or firm of attorneys selected by
the District,of nationally-recognized standing in matters pertaining to the federal tax exemption of interest on bonds
issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of
the United States of America.
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Certificate Registration Books. The Trustee will keep or cause to be kept, at the office of the Trustee in
Los Angeles, California, sufficient books for the registration and transfer of the Certificates, which will upon
reasonable prior notice and at,all reasonable times be open to inspection by the Corporation or the District; and,
upon presentation for such purpose,the Trustee will,under such reasonable regulations as it may prescribe,register
or transfer or cause to be registered or transferred,on said books,Certificates as provided above.
The person in whose name any Certificate is registered will be deemed the Owner thereof for all purposes
of the Trust Agreement, and payment of or on account of the interest with respect to and principal of and
Prepayment Price represented by such Certificate will be made only to or upon the order in writing of such
registered Owner,which payments will be valid and effectual to satisfy and discharge liability upon such Certificate
to the extent of the sum or sums so paid.
Certificates Mutilated,Lost,Destroyed or Stolen. If any Certificate will become mutilated,the Trustee will
execute and deliver a new Certificate of like tenor, maturity and principal amount in exchange and substitution for
the Certificate so mutilated,but only upon surrender to the Trustee of the Certificate so mutilated.
Every mutilated Certificate so surrendered to the Trustee will be canceled by it and destroyed. If any
Certificate is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee,
and, if such evidence is satisfactory to the Trustee and indemnity satisfactory to the Trustee will be given
indemnifying the Trustee,the Corporation and the District,the Trustee,at the expense of the Certificate Owner,will
execute and deliver a new Certificate of like tenor and maturity, and numbered as the Trustee will determine,in lieu
of and in substitution for the Certificate so lost, destroyed or stolen.The Trustee may require payment of a sum not
exceeding the actual cost of preparing each new Certificate executed under the Trust Agreement and of the expenses
which may be.incurred by the Trustee under the Trust Agreement. Any Certificate executed under the provisions of
the Trust Agreement in lieu of any Certificate alleged to be lost, destroyed or stolen will be equally and
proportionately entitled to the benefits of the Trust Agreement with all other Certificates secured by the Trust
Agreement. The Trustee will not be required to treat both the original Certificate and any replacement Certificate as
being Outstanding for the purpose of determining the principal amount of Certificates which may be executed under
the Trust Agreement or for the purpose of determining any percentage of Certificates Outstanding under the Trust
Agreement, but both the original and replacement Certificate will be treated as one and the same. Notwithstanding
any other provision of the Trust Agreement, in lieu of delivering a new Certificate for a Certificate which has been
mutilated, lost, destroyed or stolen and which has matured or has been selected for prepayment, the Trustee may
make payment of such Certificate upon receipt of indemnity satisfactory to the Trustee.
Book-Entry System.
(a) Election of Book-Entry System. Prior to the execution and delivery of the Certificates,the District
may provide that such Certificates will be initially executed and delivered as book-entry Certificates. If the District
elects to deliver any Certificates in book-entry form, then the District will cause the delivery of a separate single
fully registered certificate (which may be typewritten) for each maturity date of such Certificates in an authorized
denomination corresponding to that total principal amount of the Certificates designated to mature on such date.
Upon initial execution and delivery, the ownership of each such Certificate will be registered in the Certificate
registration books in the name of the Nominee, as nominee of the Depository and ownership of the Certificates, or
any portion thereof may not thereafter be transferred except as provided in the Trust Agreement.
With respect to book-entry Certificates, the District and the Trustee will have no responsibility or
obligation to any Participant or to any person on behalf of which such a Participant holds an interest in such
book-entry Certificates. Without limiting the immediately preceding sentence,the District and the Trustee will have
no responsibility or obligation with respect to(i)the accuracy of the records of the Depository,the Nominee, or any
Participant with respect to any ownership interest in book-entry Certificates, (ii) the delivery to any Participant or
any other person, other than an Owner as shown in the Certificate registration books, of any notice with respect to
book-entry Certificates,including any notice of prepayment,(iii)the selection by the Depository and its Participants
of the beneficial interests in book-entry Certificates to be prepaid in the event the District prepays the Certificates in
part, or(iv) the payment by the Depository or any Participant or any other person, of any amount with respect to
principal,premium,if any, or interest with respect to book-entry Certificates. The District and the Trustee may treat
and consider the person in whose name each book-entry Certificate is registered in the Certificate registration books
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(2) to any Substitute Depository,upon(1)the resignation of DTC or its successor
(or any Substitute Depository or its successor)from its functions as depository,or(2)a determination by the District
that DTC(or its successor)is no longer able to carry out its functions as depository;provided that any such
Substitute Depository will be qualified under any applicable laws to provide the services proposed to be provided by
it;or
(3) to any person as provided below,upon(1)the resignation of DTC or its
successor(or any Substitute Depository or its successor)from its functions as depository,or(2)a determination by
the District that DTC or its successor(or Substitute Depository or its successor)is no longer able to carry out its
functions as depository.
(ii) In the case of any transfer pursuant to clause (1) or clause (2) of subparagraph(i) of this
paragraph,upon receipt of all Outstanding Certificates by the Trustee,together with a written request of the District
to the Trustee designating the Substitute Depository, a single new Certificate, which the District will prepare or
cause to be prepared,will be executed and delivered for each maturity of Certificates then Outstanding,registered in
the name of such successor or such Substitute Depository or their Nominees, as the case may be, all as specified in
such written request of the District. In the case of any transfer pursuant to clause (3) of subparagraph (i) of this
paragraph,upon receipt of all Outstanding Certificates by the Trustee, together with a written request of the District
to the Trustee, new Certificates, which the District will prepare or cause to be prepared, will be executed and
delivered in such denominations and registered in the names of such persons as are requested in such written request
of the District, subject to the limitations of the Trust Agreement, provided that the Trustee will not be required to
deliver such new Certificates within a period of less than sixty (60) days from the date of receipt of such written
request from the District.
(iii) In the case of a partial prepayment or an advance refunding of any Certificates
evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any Substitute
Depository or its successor) will make an appropriate notation on such Certificates indicating the date and amounts
of such reduction in principal, in form acceptable to the Trustee, all in accordance with the Letter of
Representations. The Trustee will not be liable for such Depository's failure to make such notations or errors in
making such notations.
(iv) The District and the Trustee will be entitled to treat the person in whose name any
Certificate is registered as the Owner thereof for all purposes of the Trust Agreement and any applicable laws,
notwithstanding any notice to the contrary received by the Trustee or the District; and the District and the Trustee
will not have responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with
any beneficial owners of the Certificates. Neither the District nor the Trustee will have any responsibility or
obligation, legal or otherwise, to any such beneficial owners or to any other party, including DTC or its successor
(or Substitute Depository or its successor), except to the Owner of any Certificates, and the Trustee may rely
conclusively on its records as to the identity of the Owners of the Certificates.
VALIDITY OF CERTIFICATES
Validity of Certificates. The validity of the execution and delivery of the Certificates is not dependent on
and will not be affected in any way by any proceedings taken by the District, the Corporation or the Trustee with
respect to or in connection with the Installment Purchase Agreement. The recital contained in the Certificates that
all acts, conditions and things required by the Constitution and statutes of the State of California and the Trust
Agreement to exist,to have happened and to have been performed precedent to and in the delivery thereof do exist,
have happened and have been performed in due time, form and manner as required by law will be conclusive
evidence of their validity and of compliance with the provisions of law in their delivery.
PREPAYMENT OF CERTIFICATES
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and when received in the Certificate Payment Fund. All moneys at any time deposited in the Certificate Payment
Fund will be held by the Trustee in trust for the benefit of the Owners from time to time of the Certificates,but will
nevertheless be disbursed,allocated and applied solely for the uses and purposes set forth in the Trust Agreement.
Certificate Payment Fund. There is established with the Trustee each of the Certificate Payment Fund and
the Reserve Fund each of which the Trustee covenants to maintain and hold in trust separate and apart from other
funds held by it so long as any Installment Payments remain unpaid. All moneys on deposit in the Certificate
Payment Fund(including income or profit from investments)will be retained therein except as expressly provided in
the Trust Agreement.
The Trustee will transfer from the Certificate Payment Fund the following amounts at the times and in the
manner provided in the Trust Agreement, and will deposit such amounts in one or more of the following respective
funds, each of which the Trustee will establish and maintain and hold in trust separate and apart from other funds
held by it, and each of which will be disbursed and applied only as authorized in the Trust Agreement. Such
amounts will be so transferred to and deposited in the following respective funds in the following order of priority,
the requirements of each such fund at the time of deposit to be satisfied before any transfer is made to any fund
subsequent in priority:
(a) Interest Fund. The Trustee, on the last business day before each Interest Payment Date
(commencing on the last business day of April, 2005), will deposit in the Interest Fund an amount representing the
portion of the Installment Payments designated as interest coming due on the next succeeding May 1 or November
1,as the case may be. No deposit need be made into the Interest Fund so long as there will be in such fund moneys
sufficient to pay the interest portion of Certificates then Outstanding due,if any, on the next May 1 or November 1,
as the case may be.
Except as provided in the Trust Agreement,moneys in the Interest Fund will be used and withdrawn by the
Trustee solely for the purpose of paying the interest with respect to the Certificates when due and payable(including
accrued interest on any Certificates prepaid prior to maturity pursuant to the Trust Agreement).
(b) Principal Fund. The Trustee, on the last business day before each November 1 (commencing on
the last business day of October, 2005),will deposit in the Principal Fund an amount equal to the principal coming
due with respect to the Certificates on the next succeeding November 1. No deposit need be made into the Principal
Fund so long as there will be in such fund moneys sufficient to pay the portion of all Certificates then Outstanding
designated as principal,and coming due on the next succeeding November 1.
Except as provided in the Trust Agreement, moneys in the Principal Fund will be used and withdrawn by
the Trustee solely for the purpose of paying the principal with respect to the Certificates when due and payable.
(c) Prepayment Fund. Moneys to be used for prepayment pursuant to the Trust Agreement and paid
by the District pursuant to the Installment Purchase Agreement will be transferred by the Trustee from the
Certificate Payment Fund and deposited in the Prepayment Fund on the prepayment date specified in the Written
Request of the District filed with the Trustee pursuant to the Installment Purchase Agreement. Said moneys will be
set aside in the Prepayment Fund solely for the purpose of prepaying the Certificates in advance of their respective
stated maturities and will be applied on or after the date specified for prepayment pursuant to the Trust Agreement to
the payment of the Prepayment Price with respect to the Certificates to be prepaid upon presentation and surrender
of such Certificates.
Investment of Moneys in Special Funds. Any moneys in the Delivery Cost Fund,the Certificate Payment
Fund, the Interest Fund, the Principal Fund, the Reserve Fund and the Prepayment Fund will be invested upon the
Written Request of the District, by the Trustee, in Permitted Investments which will mature on or before the dates
when such moneys are scheduled to be needed for payment from such fund. Securities acquired as an investment of
moneys in a fund will be credited to such fund.
In the absence of written investment direction from the District, the Trustee will invest moneys held by it
solely in Permitted Investments specified in clause(b)(5)of the definition thereof.
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Fund and the Reserve Fund for the benefit of the Owners of the Certificates in accordance with the terms of the
Trust Agreement and of the Installment Purchase Agreement.
COVENANTS
Corporation and District to Perform Under Installment Purchase Agreement. The Corporation and District
covenant and agree with the Owners of the Certificates to perform all obligations and duties imposed on them under
the Installment Purchase Agreement and,together with the Trustee,to enforce such Installment Purchase Agreement
against the other party thereto in accordance with its terms.
The Corporation and the District will in all respects promptly and faithfully keep,perform and comply with
all the terms, provisions, covenants, conditions and agreements of the Installment Purchase Agreement to be kept,
performed and complied with by it.
The Corporation and the District agree not to do or permit anything to be done, or omit or refrain from
doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining
from action,would or might be a ground for cancellation or termination of the Installment Purchase Agreement.
Bum. On or prior to the fifteenth day of each Fiscal Year,the District will certify to the Trustee that the
amounts budgeted for payment of Installment Payments are fully adequate for the payment of all Installment
Payments due under the Installment Purchase Agreement for such Fiscal Year. If the amounts so budgeted are not
adequate for the payment of Installment Payments due under the Installment Purchase Agreement,the District will
take such action as may be necessary to cause such annual budget to be amended, corrected or augmented so as to
include therein the amounts required to be raised by the District in the then ensuing Fiscal Year for the payment of
Installment Payments due under the Installment Purchase Agreement and will notify the Trustee of the proceedings
then taken or proposed to be taken by the District.
Tax Covenants. Notwithstanding any other provision of the Trust Agreement,absent an opinion of Special
Counsel that the exclusion from gross income of interest with respect to the Certificates will not be adversely
affected for federal income tax purposes, the District will comply with all applicable requirements of the Code
necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality
of the foregoing,as follows:
(a) Private Activity. The District will not take or omit to take any action or make any use of the
proceeds of the Certificates or of any other moneys or property which would cause the Certificates to be "private
activity bonds"within the meaning of Section 141 of the Code.
(b) Arbitrage. The District will make no use of the proceeds of the Certificates or of any other
amounts or property, regardless of the source, or take or omit to take any action which would cause the Certificates
to be"arbitrage bonds"within the meaning of Section 148 of the Code.
(c) Federal Guarantee. The District will make no use of the proceeds of the Certificates or take or
omit to take any action that would cause the Certificates to be "federally guaranteed" within the meaning of
Section 149(b)of the Code.
(d) Information Reporting. The District will take or cause to be taken all necessary action to comply
with the informational reporting requirement of Section 149(e)of the Code.
(e) Miscellaneous. The District will take no action inconsistent with its expectations stated in any
Tax Certificate executed with respect to the Certificates and will comply with the covenants and requirements stated
therein and incorporated by reference in the Trust Agreement.
The Trust Agreement and the covenants set forth therein will not be applicable to, and nothing contained
therein will be deemed to prevent the District from causing the Trustee to execute and deliver, Certificates the
interest with respect to which has been determined by Special Counsel to be subject to federal income taxation.
B-11.
Notwithstanding anything to the contrary above, the Trustee will have no duty or liability whatsoever to
monitor or notify any party with respect to the timeliness,sufficiency or validity of any such recording,re-recording,
filing, filing of continuation statements and the like with respect to the Trust Agreement; it being expressly
understood and agreed that the Trustee's duties under the Trust Agreement will be exclusively limited to following
the express written filing or recording instructions of the District, from time to time with respect to the above
described actions so long as the District will supply said recording or filing instruments.
Eminent Domain. If all or any part of the Broadband System is taken by eminent domain proceedings(or
sold to a government threatening to exercise the power of eminent domain), the Net Proceeds therefrom will be
applied in the manner specified in the Installment Purchase Agreement.
Further Assurances. Whenever and so often as requested so to do by the Trustee or any Certificate Owner,
the Corporation and the District will promptly execute and deliver or cause to be executed and delivered all such
other and further instruments, documents or assurances, and promptly do or cause to be done all such other and
further things, as may be necessary or reasonably required in order to further and more fully vest in the Trustee and
the Certificate Owners all rights, interest, powers, benefits, privileges and advantages conferred or intended to be
conferred upon them by the Trust Agreement.
Continuing Disclosure. The District covenants and agrees that it will comply with and carry out all of its
obligations under the continuing disclosure certificate to be executed and delivered by the District in connection
with the delivery of the Certificates. Notwithstanding any other provision of the Trust Agreement, failure of the
District to comply with the continuing disclosure certificate will not be considered an Event of Default; however,
any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order,to cause the District to comply with its obligations under the Trust
Agreement. For purposes of this paragraph, "Beneficial Owner"means any person which has or shares the power,
directly or indirectly, to make investment decisions concerning ownership of any Certificates (including persons
holding Certificates through nominees,depositories or other intermediaries).
DEFAULT AND LIMITATION OF LIABILITY
Notice of Non-Payment. In the event of delinquency in the payment of any Installment Payments due by
the District pursuant to the Installment Purchase Agreement, the Trustee will, after one business day following the
date upon which such delinquent Installment Payment was due, as soon as practicable give written notice of the
delinquency and the amount of the delinquency to the District and the Corporation.
Action on Default or Termination. Upon the occurrence of an Event of Default (as that term is defined in
the Installment Purchase Agreement), which event will constitute a default under the Trust Agreement, and in each
and every such case during the continuance of such Event of Default, the Trustee or the Owners of not less than a
majority in aggregate principal amount of Certificates at the time Outstanding will be entitled,upon notice in writing
to the District,to exercise the remedies provided to the Corporation in the Installment Purchase Agreement.
Upon declaration of the entire principal amount of the unpaid Installment Payments and the accrued interest
thereon to be due and payable immediately and provided such declaration is not rescinded or annulled, all in
accordance with the Installment Purchase Agreement, the Trustee will apply all moneys received as Installment
Payments and all moneys held in any fund or account under the Trust Agreement in the following order:
First,to the payment,without preference or priority, and in the event of any insufficiency of such
revenues ratably without any discrimination or preference, of the fees, costs and expenses of the
Corporation and Trustee,if any, including reasonable compensation to its accounts and counsel;
Second,to the payment of the Operation and Maintenance Costs;and
Third, to the payment of the entire principal amount of the unpaid Installment Payments and the
unpaid principal amount of all Bonds and Contracts and the accrued interest thereon,with interest
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Limitation on Certificate-Owners'Right to Sue. No Owner of any Certificate executed and delivered under
the Trust Agreement will have the right to institute any suit,action or proceeding at law or in equity,for any remedy
under or upon the Trust Agreement, unless(a) such Owner will have previously given to the Trustee written notice
of the occurrence of an Event of Default thereunder; (b) the Owners of at least a majority in aggregate principal
amount of all the Certificates then Outstanding will have made written request upon the Trustee to exercise the
powers granted or to institute such action, suit or proceeding in its own name;(c)said Owners will have tendered to
the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such
request; and(d)the Trustee will have refused or omitted to comply with such request for a period of sixty(60)days
after such written request will have been received by, and said tender of indemnity will have been made to, the
Trustee.
Such notification, request, tender or indemnity and refusal or omission are declared, in every case, to be
conditions precedent to the exercise by any Owner of Certificates of any remedy under the Trust Agreement; it
being understood and intended that no one or more Owners of Certificates will have any right in any manner
whatever by his or their action to enforce any right under the Trust Agreement, except in the manner therein
provided, and that all proceedings at law or in equity to enforce any provision of the Trust Agreement will be
instituted, had and maintained in the manner therein provided and for the equal benefit of all owners of the
Outstanding Certificates.
The right of any Owner of any Certificate to receive payment of the principal of (and premium,if any)and
interest with respect to such Certificate, as provided in the Trust Agreement, on and after the respective due dates
expressed in such Certificate, or to institute suit for the enforcement of any such payment on or after such respective
dates, will not be impaired or affected without the consent of such Owner,notwithstanding the foregoing provisions
of this paragraph or any other provision of the Trust Agreement.
No Obligation with Respect to Performance by Trustee. Neither the District nor the Corporation will have
any obligation or liability to any of the other parties to the Trust Agreement or to the Owners of the Certificates with
respect to the performance by the Trustee of any duty imposed upon it under the Trust Agreement.
No Liability to Owners for Payment. The Corporation will not have any obligation or liability to the
Owners of the Certificates with respect to the payment of the Installment Payments by the District when due,or with
respect to the performance by the District of any other covenant made by it in the Installment Purchase Agreement
or in the Trust Agreement. Except as provided in the Trust Agreement, the Trustee will not have any obligation or
liability to the Owners of the Certificates with respect to the payment of the Installment Payments by the District
when due, or with respect to the performance by the District of any other covenant made by it in the Installment
Purchase Agreement or in the Trust Agreement.
No Responsibility for Sufficiency. The Trustee will not be responsible for the sufficiency of the Trust
Agreement, the Installment Purchase Agreement, or of the assignment made to it by the Assignment Agreement of
rights to receive Installment Payments pursuant to the Installment Purchase Agreement, or the value of or title to the
Project. The Trustee will not be responsible or liable for selection or liquidation of investments or any loss suffered
in connection with any investment of funds made by it under the terms of and in accordance with the Trust
Agreement.
indemnification of Trustee. The District will indemnify the Trustee(including all of its employees, officers
and directors)and hold it harmless against any loss, liability,expenses or advances, including but not limited to fees
and expenses of counsel and other experts, incurred or made without negligence or willful misconduct on the part of
the Trustee, (i)in the exercise and performance of any of the powers and duties under the Trust Agreement or under
the Installment Purchase Agreement by the Trustee, (ii) relating to or arising out of the Project, or the conditions,
occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design,
acquisition, installation or construction of the Project or any part thereof, or (iii)arising out of or relating to any
untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material
fact necessary to make the statements made, in light of the circumstances under which they were made, not
misleading in any official statement or other offering circular utilized in connection with the sale of the Certificates,
including the costs and expenses of defending itself against any claim of liability arising under the Trust Agreement.
B-15
trustee, or agent for any committee or body of Owners of Certificates or of obligations of the Corporation or the
District as freely as if it were not Trustee under the Trust Agreement.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers and perform the
duties required of it under the Trust Agreement by or through attorneys, agents, or receivers, and will be entitled to
advice of counsel concerning all matters of trust and its duties thereunder,and the Trustee will not be answerable for
the default or misconduct of any such attorney, agent or receiver selected by it with reasonable care. The Trustee
will not be answerable for the exercise of any discretion or power under the Trust Agreement or in the performance
of its duties thereunder or for anything whatever in connection with the funds and accounts established thereunder,
except only for its own willful misconduct or negligence.
The recitals, statements and representations by the District or the Corporation contained in the Trust
Agreement or in the Certificates will be taken and construed as made by and on the part of the District or
Corporation and not by the Trustee and the Trustee does not assume, and will not have, any responsibility or
obligations for the correctness of any thereof.
The Trustee undertakes to perform such duties, and only such duties as are specifically set forth in the Trust
Agreement and no implied duties or obligations will be read into the Trust Agreement against the Trustee.
No provision in the Trust Agreement will require the Trustee to risk or expend its own funds or otherwise
incur any financial liability in the performance of any of its duties thereunder if it will have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk or liability is not assured to it.
In accepting the trust created by the Trust Agreement,the Trustee acts solely as Trustee for the Owners and
not in its individual capacity and all persons, including without limitation the Owners and the District or the
Corporation having any claim against the Trustee arising from the Trust Agreement will look only to the funds and
accounts held by the Trustee thereunder for payment except as otherwise provided therein. Under no circumstances
will the Trustee be liable in its individual capacity for the obligations evidenced by the Certificates.
The Trustee makes no representation or warranty, express or implied as to the title, value, design,
compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or
fitness for any particular purpose or fitness for the use contemplated by the District or the Corporation of the Project.
In no event will the Trustee be liable for incidental, indirect, special or consequential damages in connection with or
arising from the Installment Purchase Agreement or the Trust Agreement for the existence, furnishing or use of the
Project.
The Trustee will not be deemed to have knowledge of any Event of Default under the Trust Agreement or
under the Installment Purchase Agreement unless and until it will have actual knowledge thereof or have received
notice thereof at its corporate trust office at the address set forth in the Trust Agreement. The Trustee will, during
the existence of any Event of Default (which has not been cured) use the same degree of care and skill in their
exercise,as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
The Trustee will not be accountable for the use or application by the District, or the Corporation or any
other party of any funds which the Trustee has released in accordance with the terms of the Trust Agreement.
The Trustee shall not be considered in breach of or in default in its obligations under the Trust Agreement
or progress in respect thereto in the event of enforced delay ("unavoidable delay") in the performance of such
obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not
limited to, acts of god or the public enemy or terrorists, acts of a government, acts of the other party, fires, floods,
epidemics,quarantine restrictions, strikes,freight embargoes, earthquakes, explosion,mob violence,riot,inability to
procure or general sabotage or rationing of labor, equipment,facilities, sources of energy,material or supplies in the
open market,litigation or arbitration involving a party or others relating to zoning or other governmental action or in
action pertaining to the project, malicious mischief, condemnation, and unusually severe weather or delays of
suppliers or subcontractors due to such causes or similar event and/occurrences beyond the control of the Trustee.
B-17
Trustee without cost to each Owner for Certificates then Outstanding upon surrender of such Outstanding
Certificates.
Amendment of Particular Certificates. The provisions of the Trust Agreement will not prevent any Owner
from accepting any amendments to the particular Certificates held by him or her,provided that due notation thereof
is made on such Certificates.
DEFEASANCE
Discharge of Trust Agreement. When the obligations of the District under the Installment Purchase
Agreement will cease pursuant to the Installment Purchase Agreement (except for the right of the Trustee and the
obligation of the District to have the money and Permitted Investments mentioned therein applied to the payment of
Installment Payments as therein set forth and the obligation to apply moneys on deposit in the Rebate Fund as
provided in the Trust Agreement), then and in that case the obligations created by the Trust Agreement will
thereupon cease, terminate and become void except for the obligation of the District to direct the Trustee to apply
money on deposit in the Rebate Fund as provided therein which will continue until such moneys are so applied and
the right of the Owners to have applied and the obligation of the Trustee to apply such moneys and Permitted
Investments to the payment of the Certificates as therein set forth,and subject to application of moneys on deposit in
the Rebate Fund as provided in the Trust Agreement, the Trustee will turn over to the District, after provision for
payment of amounts due the Trustee thereunder, as an overpayment of Installment Payments, any surplus in the
Certificate Payment Fund and all balances remaining in any other funds or accounts other than moneys and
Permitted Investments held for the payment of the Certificates at maturity or on prepayment, which moneys and
Permitted Investments will continue to be held by the Trustee in trust for the benefit of the Owners and will be
applied by the Trustee to the payment,when due, of the principal or interest and premium,if any,represented by the
Certificates,and after such payment,the Trust Agreement will become void.
If moneys or securities described in clause (i), (a) or (d) of the definition of Permitted Investments are
deposited with and held by the Trustee as provided in the Trust Agreement,the Trustee will within thirty(30) days
after such moneys or Permitted Investments will have been deposited with it, mail a notice, first class postage
prepaid, to the Owners at the addresses listed on the registration books kept by the Trustee pursuant to the Trust
Agreement, setting forth (a) the date fixed for prepayment of the Certificates, (b) a description of the moneys or
securities described in clause (i), (a) or(d) of the definition of Permitted Investments so held by it, and(c)that the
Trust Agreement has been released in accordance with the provisions of the Trust Agreement.
Deposit of Money or Securities with Trustee. Whenever in the Trust Agreement or the Installment
Purchase Agreement it is provided or permitted that there be deposited with or held in trust by the Trustee money or
securities in the necessary amount to pay or prepay any Certificates, the money or securities to be so deposited or
held may include money or securities'held by the Trustee in the funds and accounts established pursuant to the Trust
Agreement will be (a)lawful money of the United States of America in an amount equal to the principal amount
represented by such Certificates and all unpaid interest represented thereby to maturity, except that, in the case of
Certificates which are to be prepaid prior to maturity and in respect of which notice of such prepayment will have
been given as in the Trust Agreement provided or provision satisfactory to the Trustee will have been made for the
giving of such notice, the amount to be deposited or held will be the principal amount or Prepayment Price and all
unpaid interest to such date of prepayment if any, represented by such Certificates; or (b)non-callable securities
described in clause (i), (a) or(d) of the definition of Permitted Investments which will provide money sufficient to
pay the principal at maturity or upon prepayment plus all accrued interest to maturity or to the prepayment date, as
the case may be,represented by the Certificates to be paid or prepaid, as such amounts become due,plus premium,
if any,provided that, in the case of Certificates which are to be prepaid prior to the maturity thereof,notice of such
prepayment will have been given as in the Trust Agreement provided or provision satisfactory to the Trustee will
have been made for the giving of such notice; provided, in each case, that the Trustee will have been irrevocably
instructed(by the terms of the Trust Agreement and the Installment Purchase Agreement or by Written Request of
the District) to apply such money or securities to the payment of such principal or Prepayment Price and interest
represented by such Certificates.
Unclaimed Moneys. Anything contained in the Trust Agreement to the contrary notwithstanding, any
moneys held by the Trustee in trust for the payment and discharge of the interest, principal or Prepayment Price
B-19
employee of the District or Corporation from the performance of any official duty provided by any applicable
provisions of law or by the Installment Purchase Agreement or by the Trust Agreement.
Acquisition of Certificates by the District,• Destruction of Certificates. All Certificates acquired by the
District, whether by purchase.or gift or otherwise will be surrendered to the Trustee for cancellation. Whenever in
the Trust Agreement provision is made for the cancellation by the Trustee of any Certificates, the Trustee will
destroy such Certificates and upon written request deliver a certificate of such destruction to the District.
Funds and Accounts. Any fund required by the Trust Agreement to be established and maintained by the
Trustee may be established and maintained in the accounting records of the Trustee either as a fund or an account,
and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto,be
treated either as a fund or as an account; but all such records with respect to all such funds will at all times be
maintained in accordance with sound corporate trust industry practices and with due regard for the protection of the
security of the Certificates and the rights of every Owner thereof.
Partial jnyilidity. If any one or more of the agreements, conditions, covenants or terms required in the
Trust Agreement to be observed or performed by or on the part of the District,the Corporation or the Trustee will be
contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or
such term or terms will be null and void and will be deemed separable from the remaining agreements, conditions,
covenants and terms thereof and will in no way affect the validity thereof or of the Certificates,and the Owners will
retain all the benefit,protection and security afforded to them under any applicable provisions of law. The District,
the Corporation and the Trustee declare that they would have executed the Trust Agreement, and each and every
other article, section, paragraph, subdivision, sentence, clause and phrase thereof and would have authorized the
execution and delivery of the Certificates pursuant thereto irrespective of the fact that any one or more articles,
sections, paragraphs, subdivisions, sentences, clauses or phrases thereof or the application thereof to any person or
circumstances may be held to be unconstitutional,unenforceable or invalid.
California Law. THE TRUST AGREEMENT WILL BE CONSTRUED AND GOVERNED IN
ACCORDANCE WITH THE LAWS OF THE STATE.
Liability of District Limited to Revenues. Notwithstanding anything contained in the Trust Agreement,the
District shall not be required to advance any moneys derived from any source of income other than the Revenues for
the payment of amounts due hereunder and/or for the performance of any agreements or covenants required to be
performed by it contained in the Trust Agreement and is prohibited from using any other District moneys for any
such purpose.
[The Remainder of this Page Intentionally Left Blank]
B-21
constituting interest may be included as an adjustment in the calculation of alternative minimum taxable income,
which may affect the alternative minimum tax liability of corporations.
5. The portion of each Installment Payment constituting interest is exempt from State of California
personal income tax.
6. The difference between the issue price of a Certificate (the first price at which a substantial
amount of the Certificates of a maturity is to be sold to the public) and the stated redemption price at maturity with
respect to such Certificate constitutes original issue discount. Original issue discount accrues under a constant yield
method, and original issue discount will accrue to a Certificate Owner before receipt of cash attributable to such
excludable income. The amount of original issue discount deemed received by a Certificate Owner will increase the
Owner's basis in the applicable Certificate. Original issue discount that accrues to the Certificate Owner is excluded
from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes
of the federal alternative minimum tax imposed on individuals and corporations, and is,exempt from State of
California personal income tax.
The opinions expressed herein as to the exclusion from gross income of the portion of each Installment
Payment constituting interest (and original issue discount) are based upon certain representations of fact and
certifications made by the District and others and are subject to the condition that the District complies with all
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),that must be satisfied subsequent to
the execution and delivery of the Certificates to assure that such portion of each Installment Payment constituting
interest (and original issue discount) will not become includable in gross income for federal income tax purposes.
Failure to comply with such requirements of the Code might cause the portion of each Installment Payment
constituting interest (and original issue discount) to be included in gross income for federal income tax purposes
retroactive to the date of execution and delivery of the Certificates. The District has covenanted to comply with all
such requirements.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not
occurring) after the date hereof. We have not undertaken to determine, or to inform any person,whether any such
actions or events are taken or do occur. The Trust Agreement,the Agreement and the Tax Certificate permit certain
actions to be taken or to be omitted if a favorable opinion of Special Counsel is provided with respect thereto. No
opinion is expressed herein as to the exclusion from gross income of the portion of each Installment Payment
constituting interest (and original issue discount) for federal income tax purposes with respect to any Certificate if
any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than
expressly stated herein,we express no other opinion regarding tax consequences with respect to the Certificates.
The opinions expressed herein are based upon our analysis and interpretation of existing laws,regulations,
rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention
to the fact that the rights and obligations under the Trust Agreement,the Agreement, and the Certificates are subject
to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting
creditors'rights,to the application of equitable principles if equitable remedies are sought,to the exercise of judicial
discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.
Respectfully submitted,
C-2
will be governed by standing instructions and customary practices,as is the case with securities held for the accounts
of customers in bearer form or registered in"street name,"and will be the responsibility of such Participant and not
of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from
time to time. Payments to DTC are the responsibility of the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall
be the responsibility of Direct and Indirect Participants.
The District and the Trustee cannot and do not give any assurances that DTC Direct Participants or DTC
Indirect Participants will distribute to the Beneficial Owners(i)principal and interest with respect to the Certificates,
(ii)certificates representing an ownership interest in or other confirmation of ownership interests in the Certificates,
or(iii)prepayment or other notices sent to DTC or Cede& Co.,its nominee,as registered owner of the Certificates,
or that they will do so on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will
service and act in the manner described in the Private Placement Memorandum.
The District and the Trustee shall be entitled to treat the person in whose name any Certificate is registered
as the Certificate Owner thereof for all purposes of the Trust Agreement and any applicable laws, notwithstanding
any notice to the contrary received by the Trustee or the District; and the District and the Trustee shall have no
responsibility for transmitting payments to,communication with,notifying,or otherwise dealing with any Beneficial
Owners of the Certificates. Neither the District nor the Trustee will have any responsibility or obligations,legal or
otherwise,to the Beneficial Owners or to any other party including DTC or its successor(or substitute depository or
its successor),except for the registered owner of any Certificate.
DTC may discontinue providing its services as securities depository with respect to the Certificates at any
time by giving notice to the District or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, Certificates are required to be printed and delivered.
THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE
CERTIFICATES, WILL SEND ANY NOTICE OF PREPAYMENT OR OTHER NOTICES TO OWNERS ONLY
TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT,OR OF ANY DTC PARTICIPANT
TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT
AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE PREPAYMENT
OF THE CERTIFICATES CALLED FOR PREPAYMENT OR OF ANY OTHER ACTION PREMISED ON
SUCH NOTICE.
D-2
i
"State Repository" shall mean any public or private repository or entity designated by the State as a state
repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of
the date of this Disclosure Certificate,there is no State Repository.
3. Provision of Annual Reports.
(a) The District shall provide (or cause the Dissemination Agent to provide) not later than
270 days following the end of its Fiscal Year (commencing with the Fiscal Year ) to each Repository an
Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of
Section 4 of this Disclosure Certificate,which Annual Report may be submitted as a single document or as separate
documents comprising a package, and may cross-reference other information as provided in Section 4 of this
Disclosure Certificate.
(b) If the District is unable to provide to each Repository an Annual Report by the date
required in subsection (a), the District shall send to each Repository a notice in substantially the form attached
hereto as Exhibit B.
4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the
following:
(a) The audited financial statements of the District for the prior fiscal year, prepared in
accordance with generally accepted accounting principles as promulgated to apply to governmental entities from
time to time by the Governmental Accounting Standards Board. If the District's audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to Section 4(1), the Annual Report shall
contain unaudited financial statements in a format similar to the District Annual Audit, and the audited financial
statements shall be filed in the same manner as the Annual Report when they come available. [To be revised to
discuss Broadband System revenues.]
(b) Principal amount of the Certificates outstanding.
(c) Balance in the Reserve Fund and a statement of the reserve requirement with respect
thereto.
(d) An update of the information in the following tables or paragraphs under caption entitled
"THE PROJECT"in the Private Placement Memorandum:
1.
2.
3.
4.
5.
6
Any or all of the items listed above may be included by specific reference to other documents, including
official statements of debt issues of the District or related public entities, which have been submitted to each of the
Repositories; provided, that if any document included by reference is a final official statement,it must be available
from the Municipal Securities Rulemaking Board; and provided further, that the District shall clearly identify each
such document so included by reference.
5. Reporting of Significant Events.
E-2
10. Default. In the event of a failure of the District to comply with any provision of this Disclosure
Certificate, any Holder or Beneficial Owner of the Certificates may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order,to cause the District to comply with
its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an
Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of
any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance.
No Holder or Beneficial Owner of the Certificates may institute such action, suit or proceeding to compel
performance unless they shall have first delivered to the District satisfactory written evidence of their status as such,
and a written notice of and request to cure such failure, and the District shall have refused to comply therewith
within a reasonable time.
11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the
Participating Placement-Agent and Holders.and Beneficial Owners from time to time of the Certificates, and shall
create no rights in any other person or entity.-
Dated: November 1,2004 TRUCKEE DONNER PUBLIC
UTILITY DISTRICT
By:
Its: President
E-4
s
EXHIBIT B
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: TRUCKEE DONNER PUBLIC UTILITY DISTRICT
Name of Issue: REVENUE CERTIFICATES OF PARTICIPATION,SERIES 2004
Date of Issuance November,2004
NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the
above-named Certificates as required by the Continuing Disclosure Certificate approved pursuant to a Resolution
adopted by the Board of Directors of the District on The District anticipates that the
Annual Report will be filed by
Dated:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
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J
EXHIBIT A
Nationally Recognized Municipal. Securities Information Repositories approved by the Securities and
Exchange Commission as of September 1,2004:
Bloomberg Municipal Repositories
P.O.Box 840
Princeton,NJ 08542-0840
E-mail: Munis@Bloomberg.com
(609)279-3225
FAX(609)279-5962
DPC Data Inc.
One Executive Drive
Fort Lee,NJ 07024
E-mail: nrmsir@dpcdata.com
(201)346-0701
FAX(201)947-0107
Interactive Data
Attn:Repository
100 Williams Street
New York,NY 10038
Phone:(212)771-6899
Fax:(212)771-7390
E-Mail:NRMSIR@interactivedata.com
Website:http://www.InteractiveData.com
Standard &Poor's J.J.Kenny Repository
55 Public Utility Street,45th Floor
New York,NY 10041
(212)438-4595
FAX(212)438-3975
E-5
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Certificates,if material:
1. principal and interest payment delinquencies.
2. non-payment related defaults.
3. modifications to rights of Certificate holders.
4. optional,contingent or unscheduled Certificate calls.
5. defeasances.
6. rating changes.
7. adverse tax opinions or events affecting the tax-exempt status of the Certificates.
8. unscheduled draws on the debt service reserves reflecting financial difficulties.
9. unscheduled draws on the credit enhancements reflecting financial difficulties.
10. substitution of the credit or liquidity providers or their failure to perform.
11. release,substitution or sale of property securing repayment of the Certificates.
(b) Whenever the District obtains knowledge of the occurrence of a Listed Event,the District
shall as soon as possible determine if such event would be material under applicable federal securities laws.
(c) If the District determines that knowledge of the occurrence of a Listed Event would be
material under applicable federal securities laws,the District shall promptly file a notice of such occurrence with the
Repositories. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need
not be given under this subsection any earlier than the notice(if any) of the underlying event is given to Holders of
affected Certificates pursuant to the Trust Agreement.
6. Customarily Prepared and Public Information. Upon request, the District shall provide to any
person financial information and operating data regarding the District which is customarily prepared by the District
and is publicly available.
7. Termination of Obli ag tom. The District's obligations under this Disclosure Certificate shall
terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certificates. If such
termination occurs prior to the final maturity of the Certificates,the District shall give notice of such termination in
the same manner as for a Listed Event under Section 5(c).
8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the
District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,
provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the
Rule.
9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the
District from disseminating any other information, using the means of dissemination set forth in this Disclosure
Certificate or any other means of communication, or including any other information in any notice of occurrence of
a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include
any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by
this Disclosure Certificate, the District shall not thereby have any obligation under this Disclosure Certificate to
update such information or include it in any future notice of occurrence of a Listed Event.
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the
Truckee Donner Public Utility District(the"District")in connection with the execution and delivery of$24,000,000
Revenue Certificates of Participation, Series 2004 (the "Certificates"). The Certificates are being executed and
delivered pursuant to a Trust Agreement, dated as of November 1, 2004 (the"Trust Agreement"),by and among the
District, the Truckee Donner Public Utility District Financing Corporation (the "Corporation") and BNY Western
Trust Company as trustee(the"Trustee"). The District covenants and agrees as follows:
1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered
by the District for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the
Participating Placement Agent in complying with the Rule.
2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any
capitalized term used in this Disclosure Certificate unless otherwise defined in this Section,the following capitalized
terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the District pursuant to, and as described in,
Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Certificates (including persons holding Certificates
through nominees, depositories or other intermediaries), or(b) is treated as the owner of any Certificates for federalm.
income tax purposes.
"Dissemination Agent"shall mean any agent of the district(including the Trustee), acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the District and
which has filed with the District and the Trustee a written acceptance of such designation.
"Fiscal Year"shall mean the one-year period ending on the last day of December of each year.
"Holder"means a registered owner of the Certificates.
"Installment Purchase Agreement" shall mean that certain Installment Purchase Agreement executed and
entered into as of November 1,2004,by and between the District and the Corporation.
"Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository
for purposes of the Rule. The National Repositories currently approved by the Securities and Exchange Commission
are set forth in Exhibit A.
"Participating Placement Agent" shall mean any of the original Placement Agents of the Certificates
required to comply with the Rule in connection with offering of the Certificates.
"Repository"shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,as the same may be amended from time to time.
"State"shall mean the State of California.
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APPENDIX D
INFORMATION CONCERNING DTC
The information concerning DTC set forth herein has been supplied by DTC, and the District assumes no
responsibility for the accuracy thereof.
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities
certificates. "Direct Participants" include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc.,the American Stock Exchange, Inc., and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities
and Exchange Commission.
Purchases of the Certificates under the DTC system must be made by or though Direct Participants, which
will receive credit for the Certificates on DTC's records. The ownership interest of each actual purchaser of each
Certificate (a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Certificates, except in the event that use of the book-entry system for the Certificates is
discontinued.
To facilitate subsequent transfers, all Certificates deposited by Participants with DTC are registered in the
name of DTC's partnership nominee, Cede& Co. The deposit of Certificates with DTC and their registration in the
name of Cede& Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Certificates;DTC's records reflect only the identity of the Direct Participants to whose accounts such
Certificates are credited,which may or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Prepayment notices shall be sent to Cede& Co. If less than all of the Certificates within an issue are being
prepaid, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to
be redeemed.
Neither DTC nor Cede& Co. will consent or vote with respect to Certificates. Under its usual procedures,
DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns
Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited
on the record date(identified in a listing attached to the Omnibus Proxy).
Payments on the Certificates will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the payment date in accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on a payment date. Payments by Participants to Beneficial Owners
D-1
APPENDIX C
FORM OF OPINION OF SPECIAL COUNSEL
Upon execution and delivery of the Certificates, Stradling Yocca Carlson & Rauth, a Professional
Corporation, Special Counsel,proposes to render its final approving opinion in substantially the following form:
November_,2004
Truckee Donner Public Utility District
Truckee,CA
Members of the Board of Directors:
We have acted as Special Counsel to the Truckee Donner Public Utility District (the "District") in
connection with the execution and delivery of$24,000,000 aggregate principal amount of Revenue Certificates of
Participation, Series 2004, dated November_, 2004 (the "Certificates"), each evidencing and representing an
interest of the registered owner thereof in the right to receive Installment Payments (as that term is defined in the
Trust Agreement hereinafter mentioned) under and pursuant to that certain Installment Purchase Agreement (the
"Agreement"), dated as of November 1, 2004, by and between the District and the Truckee Donner Public Utility
District Financing Corporation (the "Corporation"), which right to receive such Installment Payments has been
assigned by the Corporation to BNY Western Trust Company,as trustee(the"Trustee"),pursuant to the Assignment
Agreement, dated as of November 1,2004,by and between the Trustee and the Corporation. The Certificates have
been executed by the Trustee pursuant to the terms of the Trust Agreement, dated as of November 1, 2004 (the
"Trust Agreement"),by and among the District,the Corporation and the Trustee.
In connection with our representation we have examined a certified copy of the proceedings relating to the
Certificates. As to questions of fact material to our opinion,we have relied upon the certified proceedings and other
certifications of public officials furnished to us without undertaking to verify the same by independent
investigations.
Based upon the foregoing and after examination of such questions of law as we have deemed relevant in
the circumstances,but subject to the limitations set forth herein,we are of the opinion that:
1. The proceedings show lawful authority for the execution and delivery by the District of the
Agreement and the Trust Agreement under the laws of the State of California now in force, and the Agreement and
the Trust Agreement have been duly authorized, executed and delivered by the District, and, assuming due
authorization, execution and delivery by the Trustee and the Corporation, as appropriate, are valid and binding
obligations of the District enforceable against the District in accordance with their respective terms.
2. The Certificates, assuming due execution and delivery by the Trustee, are entitled to the benefits
of the Trust Agreement, and the proceeds of the Certificates may be used by the District as contemplated in the
transaction described in the Private Placement Memorandum related to the Certificates,dated September_,2004.
3. The obligation of the District to make the Installment Payments from Net Revenues(as defined in
the Agreement) is an enforceable obligation of the District and does not constitute a debt of the District, or of the
State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt
limit or restriction, and does not constitute an obligation for which the District is obligated to levy or pledge any
form of taxation or for which the District has levied or pledged any form of taxation.
4. Under existing statutes, regulations, rulings and judicial decisions,the portion of each Installment
Payment constituting interest is excluded from gross income for federal income tax purposes and is not an item o4,—'
tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals an4
corporations;however,it should be noted that,with respect to corporations,the portion of each Installment Payment
C-1
represented by any of the Certificates which remain unclaimed for two years after the date of deposit of such
moneys if deposited with the Trustee after the date when the interest, principal or Prepayment Price represented by
such Certificates have become payable, will at the Written Request of the District be repaid by the Trustee to the
District as its absolute property free from trust, and the Trustee will thereupon be released and discharged with
respect thereto and the Owners will look only to the District for the payment of the interest and principal or
Prepayment Price represented by much Certificates;provided,however,that before being required to make any such
payment to the District,the Trustee will, at the written request and expense of the District, first mail a notice to the
owners of the Certificates so payable that such moneys remain unclaimed and that after a date named in such notice,
which date will not be less than thirty (30) days after the date of the mailing of such notice, the balance of such
moneys then unclaimed will be returned to the District.
MISCELLANEOUS
Benefits of Trust Agreement Limited to Parties. Nothing contained in the Trust Agreement, expressed or
implied, is intended to give to any person other than the District, the Trustee, the Corporation and the Owners any
claim,remedy or right under or pursuant thereto, and any agreement,condition,covenant or tenor required therein to
be observed or performed by or on behalf of the District will be for the sole and exclusive benefit of the Trustee,the
Corporation and the Owners.
Successor Deemed Included in all References to Predecessor. Whenever either the District, the
Corporation or the Trustee or any officer thereof is named or referred to in the Trust Agreement,such reference will
be deemed to include the successor to the powers, duties and functions that are presently vested in the District, the
Corporation or the Trustee or such officer, and all agreements, conditions, covenants and terms required thereby to
be observed or performed by or on behalf of the District, the Corporation or the Trustee or any officer thereof will
bind.and inure to the benefit of the respective successors thereof whether so expressed or not.
Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or
required in the Trust Agreement to be executed by Owners may be in one or more instruments of similar tenor and
may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution
by any Owner or such Owner's attorney of any declaration,request or other instrument or of any writing appointing
such attorney may be proved by the certificate of any notary public or other officer authorized to take
acknowledgments of deeds to be recorded in the state or territory in which he or she purports to act that the person
signing such declaration,request or other instrument or writing acknowledged to him or her the execution thereof,or
by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such
other proof as the Trustee may accept which it may deem sufficient.
The ownership of any Certificates and the amount,payment date,number and date of owning the same may
be proved by the books required to be kept by the Trustee pursuant to the provisions of the Trust Agreement.
Any declaration,request or other instrument in writing of the Owner of any Certificate will bind all future
Owners of such Certificate with respect to anything done or suffered to be done by the District or the Trustee in
good faith and in accordance therewith.
Disqualified Certificates. Certificates owned or held by or for the account of the Corporation or the District
(but excluding Certificates held in any pension or retirement fund) will not be deemed Outstanding for the purpose
of any consent or other action or any calculation of Outstanding Certificates provided for in the Trust Agreement,
and will not be entitled to consent to or take any other action provided for in the Trust Agreement.
The Trustee may adopt appropriate regulations to require each Owner of Certificates, before his or her
consent provided for in the Trust Agreement will be deemed effective, to reveal if the Certificates as to which such
consent is given are disqualified as provided in the Trust Agreement.
Waiver of Personal Liability. No director, officer or employee of the District or the Corporation will by'—".
individually or personally liable for the payment of the interest, principal or the prepayment premiums, if any,
represented by the Certificates, but nothing contained in the Trust Agreement will relieve any director, officer or
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The Trustee agrees to accept and act upon facsimile transmission of written instructions and/or direction
pursuant to this Trust Agreement provided, however, that: (a) subsequent to such facsimile transmission of written
instructions and/or directions, (b) such originally executed instructions and/or directions shall designed by a person
as may be designated and authorized to sign for the party signing such instructions and/or direction, and (c) the
trustee shall have received a current incumbency certificate containing the specimen signature of such designated
person.
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 will be a
party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business
(provided such company is eligible under the Trust Agreement), will be the successor to the Trustee without the
execution or filing of any paper or further act,anything therein to the contrary notwithstanding.
AMENDMENT OF TRUST AGREEMENT
Amendments Permitted.
(a) The Trust Agreement and the rights and obligations of the District and of the Owners of the
Certificates and of the Trustee may be modified or amended at any time by an amendment thereto which will
become binding when the written consents of the Owners of a majority in aggregate principal amount of the
Certificates then Outstanding, exclusive of Certificates disqualified as provided in the Trust Agreement, will have
been filed, with the Trustee. No such modification or amendment will (1) extend the stated maturities of the
Certificates, or reduce the rate of interest or yields-to-maturity, as the case may be, represented thereby, or extend
the time of payment of interest, or reduce the amount of principal represented thereby, or reduce any premium
payable on the prepayment thereof, without the consent of the Owner of each Certificate so affected, or(2)reduce
the aforesaid percentage of Owners of Certificates whose consent is required for the execution of any amendment or
modification of the Trust Agreement,or(3)modify any of the rights or obligations of the Trustee or the Corporation
without its written consent thereto,or(4)modify the limitations on the liability of the District hereunder without the
consent of the Nevada County Local Agency Formation Commission.
(b) The Trust Agreement and the rights and obligations of the Corporation and the District and of the
Owners of the Certificates may also be modified or amended at any time by an amendment thereto which will
become binding upon adoption, without the consent of the Owners of any Certificates, but only to the extent
permitted by law and only for any one or more of the following purposes—
(i) to add to the covenants and agreements of the Corporation or the District contained in the
Trust Agreement other covenants and agreements thereafter to be observed or to surrender any right or power
therein reserved to or conferred upon the Corporation or the District, and which will not adversely affect the
interests of the Owners of the Certificates;
(ii) to cure, correct or supplement any ambiguous or defective provision contained in the
Trust Agreement or in regard to questions arising under the Trust Agreement, as the Corporation or the District may
deem necessary or desirable and which will not adversely affect the interests of the Owners of the Certificates;and
(iii) to make such other amendments or modifications as may be in the best interests of the
Owners of the Certificates.
Endorsement or Replacement of Certificates After Amendment or Supplement. After the effective date of
any action taken as provided in the Trust Agreement, the Trustee may determine that the Certificates may bear a
notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the
Trustee to the Owner of any Outstanding Certificate and presentation of such Owner's Certificate for such purpose
at the principal corporate trust office of the Trustee a suitable notation as to such action will be made on such
Certificate. If the Trustee will so determine, new Certificates so modified as in the opinion of the Trustee will be
necessary to conform to such action will be prepared, and in that case upon demand of the Trustee to the Owner of
any Outstanding Certificates such new Certificates will be exchanged at the principal corporate trust office of the
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Such indemnity will survive payment of the Certificates and discharge of the Trust Agreement or resignation or
removal of the Trustee.
THE TRUSTEE
Trustee: Duties,Removal and Resignation. By executing and delivering the Trust Agreement,the Trustee
accepts the duties and obligations of the Trustee provided in the Trust Agreement, but only upon the terms and
conditions set forth in the Trust Agreement.
The District may, by written request to the Trustee, remove the Trustee and appoint a successor Trustee;
provided, however, that if the District is in default under the Installment Purchase Agreement, the Owners of a
majority in aggregate principal amount of all Certificates Outstanding may, by written request to the Trustee,
remove the Trustee and appoint a successor Trustee. Any such successor will be a bank or trust company doing
business and having a corporate trust office in California,which has(or the parent holding company of which has)a
combined capital (exclusive of borrowed capital) and surplus of at least twenty million dollars ($20,000,000) and
subject to supervision or examination by federal or state authorities. If such bank or trust company publishes a
report of condition at least annually, pursuant to law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of the Trust Agreement,the combined capital and surplus of such
bank or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published.
The Trustee may at any time resign by giving written notice to the District and by giving to the Certificate
Owners notice of such resignation by mail at the addresses shown on the registration books maintained by the
Trustee. Upon receiving such notice of resignation, the District will promptly appoint a successor Trustee by an
instrument in writing; provided, however, that in the event that the District does not appoint a successor Trustee
within thirty (30) days following receipt of such notice of resignation, the'resigning Trustee may at the expense of
the District petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or "
removal of the Trustee and appointment of a successor Trustee will become effective upon written acceptance of
appointment by the successor Trustee.
Protection of the Trustee. The Trustee will be protected and will incur no liability whatsoever in acting or
refraining from acting or proceeding in good faith upon any resolution, notice, telegram, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it will in good faith
believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the
provisions of the Trust Agreement, and the Trustee will be under no duty to make any investigation or inquiry as to
any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as
conclusive evidence of the truth and accuracy of such statements. The Trustee will not be bound to recognize any
person as an Owner of any Certificate or to take any action at the request of any such person unless such Certificate
will be deposited with the Trustee or satisfactory evidence of the ownership of such Certificate will be furnished to
the Trustee. The Trustee may consult with counsel, who may be counsel to the Corporation or the District, with
regard to legal questions, and the opinion of such counsel will be full and complete authorization and protection in
respect of any action taken or suffered by it under the Trust Agreement in good faith in accordance therewith.
Whenever in the administration of its duties under the Trust Agreement,the Trustee will deem it necessary
or desirable that a matter be proved or established prior to taking or suffering any action thereunder, such matter
(unless other evidence in respect thereof be specifically prescribed) will be deemed to be conclusively proved and
established by a certificate of the Corporation or the District and such certificate will be full warranty to the Trustee
for any action taken or suffered under the provisions of the Trust Agreement upon the faith thereof, but in its
discretion the Trustee may (but will have no duty), in lieu thereof, accept other evidence of such matter or may
require such additional evidence as to it may seem reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Certificates provided pursuant to the Trust
Agreement, and may join in any action which any Owner may be entitled to take with like effect as if the Trustee—
were not a party to the Trust Agreement. The Trustee, either as principal or agent, may also engage in or bt
interested in any financial or other transaction with the District or the Corporation, and may act as depository,
B-16
on the overdue installments at the rate or rates of interest applicable to the Installment Payments
and such Bonds and Contracts if paid in accordance with their respective terms.
Other Remedies of the Trustee. The Trustee will have the right by mandamus or other action or proceeding
or suit at law or in equity to enforce its rights against the District or any board member, officer or employee thereof,
and to compel the District or any such board member, officer or employee to perform or carry out its or his duties
under law and the agreements and covenants required to be performed by it or him contained in the Trust
Agreement.
Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee will not affect any
subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or
breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any
default or breach of duty or contract will impair any such right or remedy or will be construed to be a waiver of any
such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the
Trustee by law or by the Trust Agreement may be enforced and exercised from time to time and as often as will be
deemed expedient by the Trustee.
If any action,proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined
adversely to the Trustee,the Trustee and the District will be restored to their former positions,rights and remedies as
if such action,proceeding or suit had not been brought or taken.
Remedies Not Exclusive. No remedy conferred upon or reserved to the Trustee is intended to be exclusive
of any other remedy, and each such remedy will be cumulative and will be in addition to every other remedy given
under the Trust Agreement existing in law or in equity or by statute or otherwise and may be exercised without
exhausting and without regard to any other remedy conferred by any law.
No Obligation by the District to Owners. Except for the payment of Installment Payments when due in
accordance with the Installment Purchase Agreement and the performance of the other covenants and agreements of
the District contained in said Installment Purchase Agreement and in the Trust Agreement, the District will have no
obligation or liability to the Owners of the Certificates with respect to the Trust Agreement or the execution,
delivery or transfer of the Certificates, or the disbursement of Installment Payments to the Owners by the Trustee;
provided however that nothing contained in this paragraph will affect the rights, duties or obligations of the Trustee
expressly set forth in the Trust Agreement.
Trustee Appointed Agent for Certificate-owners: Direction of Proceedings. The Trustee is appointed the
agent and attorney of the Owners of all Certificates outstanding under the Trust Agreement for the purpose of filing
any claims relating to the Certificates. The Owners of a majority in aggregate principal amount of the Certificates
Outstanding under the Trust Agreement will, upon tender to the Trustee of reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such direction, have the right to direct the method and
place of conducting all remedial proceedings by the Trustee,provided such direction will be in accordance with law
and the provisions of the Trust Agreement and that the Trustee will have the right to decline to follow any such
direction which in the opinion of the Trustee would be unjustly prejudicial to Certificate-owners not parties to such a
direction.
Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of
Default, will have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Trust
Agreement, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal
amount of the Certificates then outstanding pursuant to the Trust Agreement,it will have full power, in the exercise
of its discretion for the best interests of the Owners of the Certificates, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the
Trustee will not, unless there no longer continues an Event of Default under the Trust Agreement, discontinue,
withdraw, compromise or settle, or otherwise dispose of, any litigation pending at law or in equity, if at the time
there has been filed with it a written request signed by the Owners of at least a majority in principal amount of the .—
Certificates Outstanding under the Trust Agreement opposing such discontinuance, withdrawal, compromise,
settlement or other disposal of such litigation.
B-14
Accounting Records and Reports. The Trustee will keep or cause to be kept proper books of record and
account in which complete and correct entries will be made of all transactions made by it relating to the receipts,
disbursements, allocation and application of the Installment Payments, and such books will be available upon
reasonable prior notice for inspection by the District and by any Owner of Certificates, or his agent or
representative, at reasonable hours and under reasonable conditions. Each month, so long as the Certificates are
Outstanding, the Trustee will furnish to the District a statement covering receipts, disbursements, allocation and
application of amounts on deposit in the funds and accounts created under the Trust Agreement held by it.
Compliance with Trust Agreement. The Trustee will not execute,or permit to be executed,any Certificates
in any manner other than in accordance with the provisions of the Trust Agreement, and the District will not suffer
or permit any default by it to occur under the Trust Agreement, but will faithfully observe and perform all the
covenants,conditions and requirements thereof.
Observance of Laws and Regulations. To the extent necessary to assure their performance under the Trust
Agreement, the Corporation and the District will well and truly keep, observe and perform all valid and lawful
obligations or regulations imposed on them by contract,or prescribed by any law of the United States of America,or
of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued
enjoyment of any and every right, privilege or franchise owned or acquired by the Corporation or the District,
respectively,including its right to exist and carry on its business,to the end that such contracts,rights and franchises
will be maintained and preserved,and will not become abandoned,forfeited or in any manner impaired.
Compliance with Contracts. The District will comply with the terms, covenants and provisions,express or
implied,of all contracts for the use of the Project by the District, and all other contracts and agreements affecting or
involving the Project to the extent that the District is a party thereto.
Prosecution and Defense of Suits. The District will promptly, upon request of the Trustee or any
Certificate Owner,from time to time take such action as may be necessary or proper to remedy or cure any defect in
or cloud upon the title to the Broadband System or any part thereof, will prosecute all such suits, actions and other
proceedings as may be appropriate for such purpose and will indemnify and save the Trustee (including all of its
employees,officers and directors),the Corporation and every Certificate Owner harmless from all loss,cost,damage
and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud,
suit,action or proceeding.
The District will defend against every suit, action or proceeding at any time brought against the Trustee
(including all of its employees, officers and directors), the Corporation or any Certificate Owner upon any claim
arising out of the receipt, application or disbursement of any of the Installment Payments or involving the rights of
the Trustee, the Corporation or any Certificate Owner under the Trust Agreement; provided that the Trustee, the
Corporation or any Certificate Owner at such party's election may appear in and defend any such suit, action or
proceeding. The District will indemnify and hold harmless the Trustee,the Corporation and the Certificate Owners
against any and all liability claimed or asserted by any person, arising out of such receipt, application or
disbursement, and will indemnify and hold harmless the Certificate Owners against any attorneys' fees or other
expenses which any of them may incur in connection with any litigation(including pre-litigation activities)to which
any of them may become a party by reason of ownership of Certificates. The District will promptly reimburse the
Corporation or any Certificate Owner in the full amount of any attorneys' fees or other expenses which the
Corporation or such Owner may incur in litigation or otherwise in order to enforce such partying rights under the
Trust Agreement or the Certificates, provided that such litigation will be concluded favorably to such parry's
contentions therein.
Recordation and Filing. The Trustee, upon written direction of the District, will record, register, file,
renew,refile and re-record all such documents,including financing statements,as may be required by law in order to
maintain a security interest in the Trust Agreement and the Assignment Agreement, all in such manner, at such
times and in such places as may be required by, and to the extent permitted by,law in order fully to preserve,protect
and perfect the security of the Certificate Owners and the rights and security interests of the Trustee. The Trustee, ---
upon written direction of the District,will(subject to the Trust Agreement)do whatever else may be necessary or be
reasonably required in order to perfect and continue the lien of the Trust Agreement and the Assignment Agreement.
B-12
Any interest,profit or other income on such investments will be deposited when received by the Trustee in
the Reserve Fund to the extent the amount available and contained therein is less than the Reserve Requirement and
thereafter in the Certificate Payment Fund established under the Trust Agreement.
Subject to the further provisions of the Trust Agreement, the Trustee may sell or present for prepayment
any obligations so purchased at the direction of the District whenever it will be necessary in order to provide moneys
to meet any payment, and the Trustee will not be liable or responsible for any loss resulting from such investment.
The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of any investment and
should be entitled to its customary fee therefor. The Trustee may commingle any of the funds or accounts
established pursuant to the Trust Agreement into a separate fund or funds for investment purposes only; provided,
however,that all funds or accounts held by the Trustee under the Trust Agreement will be accounted for separately
notwithstanding such commingling.
Reserve Fund. The Trustee will deposit in the Reserve Fund the amounts required to be deposited therein
pursuant to the Installment Purchase Agreement and the Trust Agreement and apply moneys in the Reserve Fund in
accordance with the Trust Agreement.
If one business day prior to any Payment Date the moneys in the Certificate Payment Fund are insufficient
to make the payments required by the Trust Agreement with respect to Certificates on such Payment Date, the
Trustee will transfer from the Reserve Fund to the Certificate Payment Fund the amount of such insufficiency. In
the event that the Trustee has transferred moneys from the Reserve Fund to the Certificate Payment Fund in
accordance with the Trust Agreement, upon receipt of the moneys from the District to increase the balance in the
Reserve Fund to the Reserve Requirement,the Trustee will deposit such moneys in the Reserve Fund.
If the amount available and contained in the Reserve Fund exceeds an amount equal to the Reserve
Requirement and if the District is not then in default under the Installment Purchase Agreement, the Trustee will
semiannually on or before each Payment Date withdraw the amount of such excess from the Reserve Fund and will
deposit such amount in the Certificate Payment Fund, and for such determination the Trustee will make a valuation
of the Reserve Fund as often as it may deem appropriate, and in any event on or before each Payment Date in each
year. In addition, the Trustee will, on the date all or any portion of the Certificates are discharged in accordance
with the Trust Agreement, value the Reserve Fund in accordance with the Trust Agreement and withdraw the
excess, if any, on deposit in the Reserve Fund and transfer such amount to or in accordance with the written
direction of the District. Except for such withdrawals, all moneys in the Reserve Fund will be used and withdrawn
by the Trustee solely for the purpose of paying principal, Prepayment Price and interest with respect to the
Certificates in the event that no other moneys of the District are available therefor.
For the purpose of determining the amount in the Reserve Fund, all Permitted Investments credited to the
Reserve Fund will be valued at the lower of cost(inclusive of all interest accrued but not paid),or market value.
The District may substitute a municipal bond debt service reserve fund policy or a surety bond or a letter of
credit(a "Reserve Insurance Policy") or money for any Reserve Insurance Policy or money held by the Trustee in
the Reserve Fund; provided, that (i) in the case of a municipal bond debt service reserve fund policy or a surety
bond, bonds which are insured by the issuer thereof are rated in the highest rating category by Standard & Poor's
and Moody's Investors Service (collectively, the "Rating Agencies"), or, in the case of a letter of credit, the
unsecured debt obligations of the issuing bank thereof are rated in the highest short-term rating category by the
Rating Agencies; (ii) the sum of the money and face amount of any Reserve Insurance Policy in effect after such
substitution will be equal to the Reserve Requirement; and (iii) in the case of the substitution of a new Reserve
Insurance Policy for money or an existing Reserve Insurance Policy, the Trustee receives an opinion of Special
Counsel to the effect that such substitution will not adversely affect the exclusion from gross income for federal
income tax purposes of interest with respect to the Certificates.
Pledge of Moneys in Funds. All amounts on deposit in the Delivery Cost Fund, the Certificate Payment
Fund,the Interest Fund,the Principal Fund, the Prepayment Fund and the Reserve Fund are irrevocably pledged to---- -
the Owners of the Certificates as provided in the Trust Agreement. Such pledge will constitute a first and exclusive
lien on the Delivery Cost Fund,the Certificate Payment Fund,the Interest Fund,the Principal Fund,the Prepayment
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Selection of Certificates for Prepayment. Whenever less than all of the Certificates are called for
prepayment, the Trustee will select the Certificates or portions thereof to be prepaid from the Outstanding
Certificates in accordance with the Trust Agreement. The Trustee will promptly notify the District in writing of the
numbers of the Certificates or portions thereof so selected for prepayment.
Notice of Prepayment. Notice of prepayment will be mailed, first class postage prepaid,to the respective
Owners of any Certificates designated for prepayment at their addresses appearing on the Certificate registration
books and to the Information Services and by registered or certified or overnight mail to the Securities Depositories
at least 30 days but not more than 60 days prior to the prepayment date.
Each notice of prepayment will state the date of notice, the prepayment date, the place or places of
prepayment and the Prepayment Price, will designate the maturities, CUSIP numbers, if any, and, if less than all
Certificates of any such maturity are to be prepaid, the serial numbers of the Certificates of such maturity to be
prepaid by giving the individual number of each Certificate or by stating that all Certificates between two stated
numbers, both inclusive, have been called for prepayment and, in the case of Certificates to be prepaid in part only,
the portions thereof to be prepaid. Each such notice will also state that on said date there will become due and
payable on each of said Certificates the Prepayment Price thereof or of said specified portion of the principal
represented thereby in the case of a Certificate to be prepaid in part only,together with interest accrued with respect
thereto to the prepayment date, and that (provided that moneys for prepayment have been deposited with the
Trustee) from and after such prepayment date interest with respect thereto will cease to accrue,and will require that
such Certificates be then surrendered to the Trustee. Any defect in the notice or the mailing thereof will not affect
the validity of the prepayment of any Certificate.
Notice of prepayment of Certificates will be given by the Trustee on behalf of and at the expense of the
District.
Partial Prepayment of Certificate. Upon surrender of any Certificate prepaid in part only, the Trustee will
execute and deliver to the Owner thereof, at the expense of the District, a new Certificate or Certificates of
authorized denominations equal in aggregate principal amount to the unprepaid portion of the Certificate
surrendered and of the same maturity.
Effect of Prepayment. When notice of prepayment has been duly given as aforesaid, and moneys for
payment of the Prepayment Price of, together with interest accrued to the prepayment date with respect to, the
Certificates (or portions thereof) so called for prepayment are held by the Trustee, the Certificates (or portions
thereof) so called for prepayment will,on the prepayment date designated in such notice,become due and payable at
the Prepayment Price specified in such notice and interest accrued thereon to the prepayment date; and from and
after the prepayment date interest represented by the Certificates so called for prepayment will cease to accrue, said
Certificates(or portions thereof)will cease to be entitled to any benefit or security under the Trust Agreement, and
the Owners of said Certificates will have no rights in respect thereof except to receive payment of said Prepayment
Price and accrued interest.
All Certificates prepaid pursuant to the provisions of this paragraph will be canceled upon surrender thereof
and destroyed by the Trustee.
INSTALLMENT PAYMENTS
Pledge and Deposit of Installment Payments. The Installment Payments are irrevocably pledged to, and
will be used for, the punctual payment of the Certificates, and the Installment Payments will not be used for any
other purpose while any of the Certificates remain Outstanding. The pledge will constitute a first and exclusive lien
on the Installment Payments in accordance with the terms of the Trust Agreement.
All Installment Payments to which the Corporation may at any time be entitled(including income or profit
from investments pursuant to the.Trust Agreement) will be paid directly to the Trustee pursuant to the terms of the
Assignment Agreement,and if received by the Corporation at any time will be deposited by the Corporation with the
Trustee within one business day after the receipt thereof, and the Trustee will deposit all Installment Payments as
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as the absolute Owner of such book-entry Certificate for the purpose of payment of principal,premium,if any, and
interest with respect to such Certificate, for the purpose of giving notices of prepayment and other matters with
respect to such Certificate, for the purpose of registering transfers with respect to such Certificate, and for all other
purposes whatsoever. The Trustee will pay all principal, premium, if any, and interest with respect to the
Certificates only to or upon the order of the respective Owner, as shown in the Certificate register, or his respective
attorney duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge
the District's obligations with respect to payment of principal of, premium, if any, and interest evidenced and
represented by the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown
in the Certificate registration books, will receive a Certificate evidencing the obligation to make payments of
principal, premium, if any, and interest evidenced and represented by the Certificates. Upon delivery by the
Depository to the Owner and the Trustee, of written notice to the effect that the Depository has determined to
substitute a new nominee in place of the Nominee,and subject to the provisions in the Trust Agreement with respect
to Record Dates,the word Nominee in the Trust Agreement will refer to such nominee of the Depository.
(b) Delivery of Letter of Representations. In order to qualify the book-entry Certificates for the
Depository's book-entry system, the District and the Trustee will execute and deliver to the Depository a Letter of
Representations. The execution and delivery of a Letter of Representations will not in any way impose upon the
District or the Trustee any obligation whatsoever with respect to persons having interests in such book-entry
Certificates other than the Owners, as shown on the Certificate registration books. By executing a Letter of
Representations, the Trustee will agree to take all action necessary at all times so that the District will be in
compliance with all representations of the District in such Letter of Representations. In addition to the execution
and delivery of a Letter of Representations,the District and the Trustee will take such other actions,not inconsistent
with the Trust Agreement, as are reasonably necessary to qualify Book-Entry Certificates for the Depository's
book-entry program.
(c) Selection of Depository. In the event (i) the Depository determines not to continue to act as
securities depository for book-entry Certificates, or (ii) the District determines that continuation of the book-entry
system is not in the best interest of the beneficial owners of the Certificates or the District, then the District will
discontinue the book-entry system with the Depository. If the District determines to replace the Depository with
another qualified securities depository, the District will prepare or direct the preparation of a new single, separate,
fully registered Certificate for each of the maturity dates of such book-entry Certificates, registered in the name of
such successor or substitute qualified securities depository or its Nominee as provided in the Trust Agreement. If
the District fails to identify another qualified securities depository to replace the Depository, then the Certificates
will no longer be restricted to being registered in such Certificate register in the name of the Nominee, but will be
registered in whatever name or names the Owners transferring or exchanging such Certificates will designate, in
accordance with the provisions of the Trust Agreement.
(d) Payments To Depository. Notwithstanding any other provision of the Trust Agreement to the
contrary, so long as all Outstanding Certificates are held in book-entry form and registered in the name of the
Nominee, all payments with respect to principal, prepayment premium, if any, and interest with respect to such
Certificate and all notices with respect to such Certificate will be made and given, respectively to the Nominee, as
provided in the Letter of Representations or as otherwise instructed by the Depository and agreed to by the Trustee
notwithstanding any inconsistent provisions in the Trust Agreement.
(e) Transfer of Certificates to Substitute Depository.
(i) The Certificates will be initially executed and delivered as provided in the Trust
Agreement. Registered ownership of such Certificates, or any portions thereof, may not thereafter be transferred
except:
(1) to any successor of DTC or its nominee,or of any substitute depository
designated pursuant to the Trust Agreement("Substitute Depository");provided that any successor of DTC or
Substitute Depository will be qualified under any applicable laws to provide the service proposed to be provided by
it;
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man_
State. The term"State"means the State of California.
Statement of the Corporation or District. The term "Statement of the Corporation or District" means a
statement signed by or on behalf of(i)the Corporation by its President or a Vice President or(ii)the District by the
President and by the Secretary or by any two persons (whether or not members of the Board of Directors)who are
specifically authorized by resolution of the District to sign or execute such a document on its behalf. If and to the
extent required by the provisions of the Trust Agreement, each Statement of the Corporation or District will include
the statements provided for in the Trust Agreement.
Tax Certificate. The Term "Tax Certificate" means the Tax Certificate dated the date of closing of the
Certificates, concerning certain matters pertaining to the use and investment of proceeds of the Certificates executed
by and delivered to the District on the date of execution and delivery of the Certificates,including any and all
exhibits attached thereto.
Trustee. The term "Trustee"means BNY Western Trust Company, a banking corporation duly organized
and existing under and by virtue of the laws of the State of California having a principal corporate trust office in Los
Angeles, California, or such other office as the Trustee may from time to time designate in writing to the District,
the Corporation and the Owners,or its successor as Trustee under the Trust Agreement.
Written Consent of the Corporation or District Written Order of the Corporation or District. Written
Request of the Corporation or District, Written Requisition of the Corporation or District. The terms "Written
Consent of the Corporation or District," "Written Order of the Corporation or District," "Written Request of the
Corporation or District," and "Written Requisition of the Corporation or District" mean, respectively, a written
consent, order, request or requisition signed by or on behalf of (i) the Corporation by its President or a Vice
President or(ii)the District by the President or General Manager or its Treasurer or by the Secretary or by any two
persons (whether or not members of the Board of Directors) who are specifically authorized by resolution of the
District to sign or execute such a document on its behalf.
CERTIFICATES; TERMS AND PROVISIONS
Transfer of Certificates. Any Certificate may, in accordance with its terms,be transferred,upon the books
required to be kept pursuant to the provisions of the Trust Agreement, by the person in whose name it is registered,
in person or by such person's duly authorized attorney, upon surrender of such Certificate for cancellation at the
Principal Corporate Trust Office of the Trustee, accompanied by delivery of a duly executed written instrument of
transfer in a form approved by the Trustee.
Whenever any Certificate or Certificates will be surrendered for transfer, the Trustee will execute and
deliver a new Certificate or Certificates of the same maturity, for a like aggregate principal amount and of
authorized denomination or denominations. The Trustee may charge a sum for each new Certificate executed and
delivered upon any transfer. The Trustee may require the payment by any Certificate Owner requesting any such
transfer of any tax or other governmental charge required to be paid with respect to such transfer. Following any
transfer of Certificates the Trustee will cancel and destroy the Certificates it has received.
Exchange of Certificates. Certificates may be exchanged at the Principal Corporate Trust Office of the
Trustee, for a like aggregate principal amount of Certificates of other authorized denominations of the same
maturity. The Trustee may charge a sum for each new Certificate executed and delivered upon any exchange except
in the case of any exchange of temporary Certificates for definitive Certificates. The Trustee may require the
payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with
respect to such exchange. Following any exchange of Certificates the Trustee will cancel and destroy the
Certificates it has received.
The Trustee will not be required to register the exchange, or transfer pursuant to the Trust Agreement, of
any Certificate(i)within 15 days preceding selection of Certificates for prepayment or(ii)selected for prepayment.
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Commission, such other services providing information with respect to called bonds as the District may specify in a
Written Request to the District and the Trustee as the Trustee may select.
Installment Pates. The term "Installment Payments" means the installment payments payable by the
District pursuant to the Installment Purchase Agreement and in the amounts and at the times set forth in the
Installment Purchase Agreement.
Installment Payment Date. The term "Installment Payment Date" means each date on which Installment
Payments are scheduled to be paid by the District pursuant to the Installment Purchase Agreement.
Installment Purchase Agreement. The term "Installment Purchase Agreement" means the Installment
Purchase Agreement, dated as of November 1, 2004, by and between the District and the Corporation, as originally
executed or as it may from time to time be amended or supplemented in accordance with its terms.
Interest Fund. The term"Interest Fund"means the fund by that name established in the Trust Agreement.
Letter of Representations. The term "Letter of Representations" means the letter of the District and the
Trustee delivered to and accepted by the Depository on or prior to delivery of the Certificates as book-entry
certificates setting forth the basis on which the Depository serves as depository for such book-entry certificates, as
originally executed or as it may be supplemented or revised or replaced by a letter from the District and the Trustee
delivered to and accepted by the Depository.
Nominee. The term "Nominee" means the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to the Trust Agreement.
Outstandinia. The term "Outstanding," when used as of any particular time with reference to Certificates, ....
means (subject to the provisions of the Trust Agreement) all Certificates except: (1) certificates canceled by the
Trustee or delivered to the Trustee for cancellation; (2)Certificates paid or deemed to have been paid within the
meaning of the Trust Agreement; and (3)Certificates in lieu of or in substitution for which other Certificates will
have been executed and delivered by the Trustee pursuant to the Trust Agreement.
Owner. The term "Owner" or "Certificate Owner" or "Owner of Certificates" or any similar term, when
used with respect to the Certificates, means any person who will be the registered owner of any Outstanding
Certificate.
Participants. The term "Participants" means those broker-dealers, banks and other financial institutions
from time to time for which the Depository holds book-entry certificates as securities depository.
Payment Dates: Payment Date. The term "Payment Dates" means each May 1 and November 1 in each
year commencing May 1, 2005 and any date on which the unpaid Installment Payments are declared to be due and
payable immediately and provided such declaration is not rescinded or annulled, all in accordance with the
Installment Purchase Agreement.
Permitted Investments. The term"Permitted Investments"means any of the following which at the time of
investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) for all purposes, including but not limited to defeasance investments in refunding escrow
accounts: (1) cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized
with obligations described in paragraph(2)below), or(2) direct obligations of(including obligations issued or held
in book entry form on the books of)the Department of the Treasury of the United States of America;and
(b) for all purposes other than defeasance investments in refunding escrow accounts: (1)obligations
of any of the following federal agencies which obligations represent full faith and credit of the United States of
America, including the Export - Import Bank; Farmers Home Administration; General Services Administration;
U.S. Maritime Administration; Small Business Administration; Government National Mortgage Association
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of the Installment Purchase Agreement without the consent of the Owners of all Certificates then Outstanding,or(3)
modify any of the rights or obligations of the Trustee, the Corporation or the Bond Insurer without its respective
written consent thereto, or (4) modify the limitations on the liability of the District under the Trust Agreement or
amend the "No Additional Advances" subsection below without the consent of the Nevada County Local Agency
Formation Commission.
The Installment Purchase Agreement and the rights and obligations of the Corporation, the District and of
the Owners of the Certificates may also be modified or amended at any time by an amendment to the Installment
Purchase Agreement which will become binding upon adoption, without the consent of the Owners of any
Certificates, but only to the extent permitted by law and only for any one or more of the following purposes- (a)to
add to the covenants and agreements of the Corporation or the District contained in the Installment Purchase
Agreement other covenants and agreements thereafter to be observed or to surrender any right or power in the
Installment Purchase Agreement reserved to or conferred upon the Corporation or the District, and which will not
adversely affect the interests of the Owners of the Certificates; (b)to cure, correct or supplement any ambiguous or
defective provision contained in the Installment Purchase Agreement or in regard to questions arising under the
Installment Purchase Agreement, as the Corporation or the District may deem necessary or desirable and which will
not adversely affect the interests of the Owners of the Certificates; and (c)to make such other amendments or
modifications as may be in the best interests of the Owners of the Certificates.
No amendment without consent of the Owners may modify any of the rights or obligations of the Trustee
without its written consent thereto.
No Additional Advances. The District shall not make any additional advances or interfund loans for the
purpose of funding the capital or operating costs of the Broadband Service.
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by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred
by the Law or any other law.
If any remedial action is discontinued or abandoned,the Trustee and Certificate Owners will be restored to
their former positions.
DISCHARGE OF OBLIGATIONS
Discharue of Obligations. (a)When all or any portion of the Installment Payments will have become due
and payable in accordance with the Installment Purchase Agreement or a written notice of the District to prepay all
or any portion of the Installment Payments will have been filed with the Trustee; and (b)there will have been
deposited with the Trustee at or prior to the Installment Payment Dates or date(or dates) specified for prepayment,
in trust for the benefit of the Corporation or its assigns and irrevocably appropriated and set aside to the payment of
all or any portion of the Installment Payments, sufficient moneys and non-callable Permitted Investments, issued by
the United States of America and described in clause (A) of the definition thereof, the principal of and interest on
which when due will provide money sufficient to pay all principal,prepayment premium,if any,and interest of such
Installment Payments to their respective Installment Payment Dates or prepayment date or dates as the case may be;
and (c)provision will have been made for paying all fees and expenses of the Trustee, then and in that event, the
right,title and interest of the Corporation in the Installment Purchase Agreement and the obligations of the District
thereunder will, with respect to all or such portion of the Installment Payments as have been so provided for,
thereupon cease, terminate, become void and be completely discharged and satisfied (except for the right of the
Trustee and the obligation of the District to have such moneys and such Permitted Investments applied to the
payment of such Installment Payments).
In such event, upon request of the District the Trustee will cause an accounting for such period or periods
as may be requested by the District to be prepared and filed with the District and will execute and deliver to the
District all such instruments as may be necessary or desirable to evidence such total or partial discharge and
satisfaction, as the case may be, and, in the event of a total discharge and satisfaction, the Trustee will pay over to
the District, after payment of all amounts due the Trustee pursuant to the Trust Agreement, as an overpayment of
Installment Payments,all such moneys or such Permitted Investments held by it pursuant to the Installment Purchase
Agreement other than such moneys and such Permitted Investments as are required for the payment or prepayment
of the Installment Payments, which moneys and Permitted Investments will continue to be held by the Trustee in
trust for the payment of the Installment Payments and will be applied by the Trustee to the payment of the
Installment Payments of the District.
MISCELLANEOUS
Liability of District Limited to Revenues. Notwithstanding anything contained in the Installment Purchase
Agreement, the District will not be required to advance any moneys derived from any source of income other than
the Revenues and the Revenue Fund for the payment of amounts due under the Installment Purchase Agreement or
for the performance of any agreements or covenants required to be performed by it contained in the Installment
Purchase Agreement. THE DISTRICT IS HEREBY PROHIBITED FROM USING ANY OTHER DISTRICT
FUNDS FOR ANY SUCH PURPOSE.
The obligation of the District to make the Installment Payments is a special obligation of the District
payable solely from the Net Revenues, and does not constitute a debt of the District or of the State of California or
of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.
OTHER THAN REVENUES, NO OTHER DISTRICT MONEYS ARE PLEDGED TO THE PAYMENT
OF THE INSTALLMENT PAYMENTS. THE DISTRICT SHALL PAY INSTALLMENT PAYMENTS SOLELY
FROM REVENUES AND IS PROHIBITED FROM PAYING INSTALLMENT PAYMENTS FROM ANY
OTHER DISTRICT FUNDS OR MONEYS.
Benefits of Installment Purchase Agreement Limited to Parties. Nothing contained in the Installment
Purchase Agreement, expressed or implied, is intended to give to any person other than the District or the
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such eminent domain proceedings so that the ability of the District to meet its obligations under the Installment
Purchase Agreement will not be substantially impaired(which determination will be final and conclusive),then the
District will promptly proceed with the acquisition and construction of such additions, betterments, extensions or
improvements substantially in''accordance with such certificate and such Net Proceeds will be applied for the
payment of the costs of such acquisition and construction, and any balance of such Net Proceeds not required by the
District for such purpose will be deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds will be applied by the District in
part to the prepayment of Installment Payments as provided in the Installment Purchase Agreement and in part to
such other fund or account as may be appropriate and used for the retirement of Bonds and Contracts in the same
proportion which the aggregate unpaid principal balance of Installment Payments then bears to the aggregate unpaid
principal amount of such Bonds and Contracts.
Further Assurances. The District will adopt, deliver, execute and make any and all further assurances,
instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the
performance of the Installment Purchase Agreement and for the better assuring and confirming unto the Corporation
of the rights and benefits provided to it therein.
EVENTS OF DEFAULT AND REMEDIES OF THE CORPORATION
Events of Default and Acceleration of Maturities. If one or more of the following Events of Default
happens,that is to say--
(a) if default is made by the District in the due and punctual payment of any Installment Payment or
any Contract or Bond when and as the same will become due and payable;
(b) if default will be made by the District in the performance of any of the other agreements or
covenants required in the Installment Purchase Agreement by it or in any Contract or Bond to be performed by it,
and such default continues for a period of sixty (60) days after the District has been given notice in writing of such
default by the Corporation;
(c) if the District files a petition or answer seeking arrangement or reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of
competent jurisdiction approves a petition filed with or without the consent of the District seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any
state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent
jurisdiction assumes custody or control of the District or of the whole or any substantial part of its property;or
(d) if payment of the principal of any Contract or Bond is accelerated in accordance with its terms;
then and in each and every such case during the continuance of such Event of Default specified in clauses
(c) and(d) above, the Corporation shall, and for any other such Event of Default the Corporation may, and in each
and every such case the Corporation, by notice in writing to the District,will declare the entire principal amount of
the unpaid Installment Payments and the accrued interest thereon to be due and payable immediately, and upon any
such declaration the same will become immediately due and payable,anything contained in the Installment Purchase
Agreement to the contrary notwithstanding. The Installment Purchase Agreement, however, is subject to the
condition that if at any time after the entire principal amount of the unpaid Installment Payments and the accrued
interest thereon will have been so declared due and payable and before any judgment or decree for the payment of
the moneys due will have been obtained or entered the District will deposit with the Corporation a sum sufficient to
pay the unpaid principal amount of the Installment Payments and/or the unpaid payment of any other Contract or
Bond referred to in clause (a) above due prior to such declaration and the accrued interest thereon,with interest on
such overdue installments, at the rate or rates applicable to the remaining unpaid principal balance of the Installment
Payments or such Contract or Bond if paid in accordance with their terms, and the reasonable expenses of the
Corporation, and any and all other defaults known to the Corporation (other than in the payment of the entire
principal amount of the unpaid Installment Payments and the accrued interest thereon due and payable solely by
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The covenants set forth in the Installment Purchase Agreement will not be applicable to, and nothing
contained therein will be deemed to prevent the District and the Corporation from issuing Certificates, the interest
with respect to which has been determined by Special Counsel to be subject to federal income taxation.
Maintenance and Operation of the Broadband System. The District will maintain and preserve the
Broadband System in good repair and working order at all times and will operate the Broadband System in an
efficient and economical manner and will pay all Operation and Maintenance Costs as they become due and
payable.
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 on the Revenues or the funds or accounts created under the
Installment Purchase Agreement or on any funds in the hands of the District or the Trustee pledged to pay the
Installment Payments or to the Owners prior or superior to the lien of the Installment Payments or which might
impair the security of the Installment Payments, but the District will not be required to pay such claims if the
validity thereof will be contested in good faith.
Compliance with Contracts. The District will neither take nor omit to take any action under any contract if
the effect of such act or failure to act would in any manner impair or adversely affect the ability of the District to pay
Installment Payments; and the District will comply with, keep, observe and perform all agreements, conditions,
covenants and terms, express or implied, required to be performed by it contained in all other contracts affecting or
involving the Broadband System, to the extent that the District is a party thereto, including but not limited to the
Agreement.
Insurance.
(a) The District will procure and maintain or cause to be procured and maintained insurance on the
Broadband System with responsible insurers in such amounts and against such risks (including damage to or
destruction of the Broadband System) as are usually covered in connection with facilities similar to the Broadband
System so long as such insurance is available from reputable insurance companies.
In the event of any damage to or destruction of the Broadband System caused by the perils covered by such
insurance, the Net Proceeds thereof will be applied to the reconstruction, repair or replacement of the damaged or
destroyed portion of the Broadband System. The District will begin such reconstruction, repair or replacement
promptly after such damage or destruction will occur, and will continue and properly complete such reconstruction,
repair or replacement as expeditiously as possible, and will pay out of such Net Proceeds all costs and expenses in
connection with such reconstruction, repair or replacement so that the same will be completed and the Broadband
System will be free and clear of all claims and liens.
If such Net Proceeds exceed the costs of such reconstruction, repair or replacement portion of the
Broadband System, and/or the cost of the construction of additions, betterments, extensions or improvements to the
Broadband System,then the excess Net Proceeds will be applied in part to the prepayment of Installment Payments
as provided in the Installment Purchase Agreement and in part to such other fund or account as may be appropriate
and used for the retirement of Bonds and Contracts in the same proportion which the aggregate unpaid principal
balance of Installment Payments then bears to the aggregate unpaid principal amount of such Bonds and Contracts.
If such Net Proceeds are sufficient to enable the District to retire the entire obligation evidenced by the Installment
Purchase Agreement prior to the final due date of the Installment Payments as well as the entire obligations
evidenced by Bonds and Contracts then remaining unpaid prior to their final respective due dates, the District may
elect not to reconstruct, repair or replace the damaged or destroyed portion of the Broadband System, and/or not to
construct other additions, betterments, extensions or improvements to the Broadband System; and thereupon such
Net Proceeds will be applied to the prepayment of Installment Payments as provided in the Installment Purchase
Agreement and to the retirement of such Bonds and Contracts.
(b) The District will procure and maintain liability and workers compensation coverage, if available
on commercially reasonable terms from reputable insurance companies, and such other insurance as it will deem
advisable or necessary to protect its interests and the interests of the Corporation, which insurance will afford
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(b) The Net Revenues for the most recent audited Fiscal Year preceding the date of the execution of
such Contract or the date of adoption by the Board of Directors of the District of the resolution authorizing the
issuance of such Bonds, as the case may be, including adjustments to give effect as of the first day of such Fiscal
Year to increases or decreases in rates and charges for the Broadband Service approved and in effect as of the date
of calculation, as evidenced by both a calculation prepared by the District and a special report prepared by an
Independent Certified Public Accountant or an Independent Financial Consultant on such calculation on file with the
District,will have produced a sum equal to at least one hundred twenty-five percent (125%)of the Debt Service for
such Fiscal Year plus the Debt Service which would have accrued on any Contracts executed or Bonds issued since
the end of such Fiscal Year assuming such Contracts had been executed or Bonds had been issued at the beginning
of such Fiscal Year plus the Debt Service which would have accrued had such Contract been executed or Bonds
been issued at the beginning of such Fiscal Year;and
(c) The estimated Net Revenues for the then current Fiscal Year and for each Fiscal Year thereafter to
and including the first complete Fiscal Year after the latest Date of Operation of any uncompleted Parity Project to
be financed from proceeds of such Contracts or Bonds, as evidenced by a certificate of the General Manager of the
District on file with the District, including (after giving effect to the completion of all such uncompleted Parity
Projects) an allowance for estimated Net Revenues for each of such Fiscal Years arising from.any increase in the
income,rents, fees,rates and charges estimated to be fixed,prescribed or received for Broadband Service and which
are economically feasible and reasonably considered necessary based on projected operations for such period, as
evidenced by a certificate of the Manager on file with the District, will produce a sum equal to at least one hundred
twenty-five percent (125%) of the estimated Debt Service for each of such Fiscal Years, after giving effect to the
execution of all Contracts and the issuance of all Bonds estimated to be required to be executed or issued to pay the
costs of completing all uncompleted Parity Projects within such Fiscal Years, assuming that all such Contracts and
Bonds have maturities, interest rates and proportionate principal repayment provisions similar to the Contract last
executed or then being executed or the Bonds last issued or then being issued for the purpose of acquiring and
constructing any of such uncompleted Parity Projects.
(d) The Installment Purchase Agreement notwithstanding, Bonds or Contracts may be issued or
incurred to refund outstanding Bonds or Contracts if, after giving effect to the application of the proceeds thereof,
total Debt Service will not be increased in any Fiscal Year in which Bonds or Contracts (outstanding on the date of
issuance or incurrence of such refunding Bonds or Contracts,but excluding such refunding Bonds or Contracts)not
being refunded are outstanding.
(e) Nothing in the Installment Purchase Agreement precludes the District from issuing any bonds or
installment purchase contracts the payments under which are subordinate to any Bonds or Contracts of the District.
COVENANTS OF THE DISTRICT
Compliance with Installment Purchase Agreement and Ancilla1y Agreements. The District will punctually
pay the Installment Payments in strict conformity with the terms of the Installment Purchase Agreement, and will
faithfully observe and perform all the agreements, conditions, covenants and terms contained therein required to be
observed and performed by it, and will not terminate the Installment Purchase Agreement for any cause including,
without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Broadband System, commercial frustration of purpose, any change in
the tax or other laws of the United States of America or of the State of California or any political subdivision of
either or any failure of the Corporation to observe or perform any agreement, condition, covenant or term contained
therein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation
arising out of or connected therewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the
Corporation or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil
disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation
facilities,fire,explosion,or acts or regulations of governmental authorities.
It has been expressly understood and agreed by and among the parties to the Installment Purchase
Agreement that, subject to the Installment Purchase Agreement, each of the agreements, conditions, covenants and
terms contained in the Installment Purchase Agreement is an essential and material term of the purchase of and
payment for the Project and by the District pursuant to,and in accordance with, and as authorized under the Law.
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Acquisition Fund. There is established with the District the Acquisition Fund. The moneys in the
Acquisition Fund will be held by the District in trust and will be applied to the payment of the costs of acquisition,
installation, development and construction of the Project (including reimbursement of related start-up costs
previously advanced by the District), and of expenses incidental thereto, including Delivery Costs. Before any
payment is made from the Acquisition Fund by the Treasurer of the District,the Manager will cause to be filed with
the Treasurer of the District a Written Requisition of the District in the form set forth in the Installment Purchase
Agreement.
Upon receipt of each such Written Requisition,the Treasurer of the District will pay the amount set forth in
such Written Requisition as directed by the terms thereof. The Treasurer of the District need not make any such
payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive
payment of, any of the moneys to be so paid, which has not been released or will not be released simultaneously
with such payment.
When the Project will have been constructed, installed, developed or acquired in accordance with the
Installment Purchase Agreement,a statement of the District stating the fact and date of such acquisition,installation,
development, construction and acceptance and stating that all of such costs of acquisition and incidental expenses
have been determined and paid(or that all of such costs and expenses have been paid less specified claims which are
subject to dispute and for which a retention in the Acquisition Fund is to be maintained in the full amount of such
claims until such dispute is resolved), will be delivered to the Treasurer of the District and the Trustee by the
District. Upon the receipt of such statement,the Treasurer of the District will transfer any remaining balance in the
Acquisition Fund not needed for Acquisition Fund purposes (but less the amount of any such retention which
amount will be certified to the Treasurer of the District by the District) to the Trustee which will transfer such
amounts first to the Reserve Fund until the amount therein equals the Reserve Requirement, and thereafter to the
Certificate Payment Fund for prepayment of Certificates in accordance with the Trust Agreement.
Installment Payments. The District will, subject to any rights of prepayment provided in the Installment
Purchase Agreement,pay the Corporation the Purchase Price in installment payments of interest and principal in the
amounts and on the Installment Payment Dates as set forth in the Installment Purchase Agreement.
Each Installment Payment will be paid to the Corporation in lawful money of the United States of America.
In the event the District fails to make any of the payments required to be made by it under the Installment Purchase
Agreement, such payment will continue as an obligation of the District until such amount will have been fully paid;
and the District will pay the same with interest accruing thereon at the rate or rates of interest then applicable to the
remaining unpaid principal balance of the Installment Payments if paid in accordance with their terms.
The obligation of the District to make the Installment Payments from Reserves is absolute and
unconditional, and until such time as the Purchase Price will have been paid in full (or provision for the payment
thereof will have been made pursuant to the Installment Purchase Agreement), the District will not discontinue or
suspend any Installment Payments required to be made by it under the Installment Purchase Agreement when due,
whether or not the Broadband System or any part thereof is operating or operable, or its use is suspended,interfered
with,reduced or curtailed or terminated in whole or in part, and whether or not the Project has been completed, and
such payments will not be subject to reduction whether by offset or otherwise and will not be conditional upon the
performance or nonperformance by any party of any agreement for any cause whatsoever.
SECURITY
Pledize of Revenues. All Revenues and all amounts on deposit in the Revenue Fund are irrevocably
pledged to the payment of the Installment Payments as provided in the Installment Purchase Agreement and the
Revenues will not be used for any other purpose while any of the Installment Payments remain unpaid;provided that
out of the Revenues there may be apportioned such sums for such purposes as are expressly permitted in the
Installment Purchase Agreement. The pledge, together with the pledge created by all other Contracts and Bonds,
will constitute a lien on Revenues and, subject to application of Revenues and all amounts on deposit therein as
permitted in the Installment Purchase Agreement, the Revenue Fund. OTHER THAN REVENUES, NO OTHER
DISTRICT MONEYS ARE PLEDGED TO THE PAYMENT OF THE INSTALLMENT PAYMENTS. THE
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Installment Payment Date means the fifth day prior to each Interest Payment Date, or if said date is not a
Business Day, then the preceding Business Day. The term "Parity Installment Payment Date"means each date on
which Parity Installment Payments are scheduled to be paid by the District under and pursuant to any Contract.
Installment Payments means the Installment Payments of interest and principal scheduled to be paid by the
District under and pursuant to the Installment Purchase Agreement. The term "Parity Installment Payments"means
the payments of interest and principal scheduled to be paid by the District under and pursuant to the Contracts.
Interest Payment Date means each May 1 and November 1 of each year,commencing March 1,2005.
Law means the Public Utility District Act of the State of California(being Division 7 of the Public Utilities
Code of the State of California,as amended)and all laws amendatory thereof or supplemental thereto.
Manager means the General Manager of the District, or any other person designated by the General
Manager to act on behalf of the General Manager.
Net Proceeds means, when used with respect to any casualty insurance or condemnation award, the
proceeds from such insurance or condemnation award remaining after payment of all expenses(including attorneys
fees)incurred in the collection of such proceeds.
Net Revenues means, for any Fiscal Year, the Revenues for such Fiscal Year less the Operation and
Maintenance Costs for such Fiscal Year.
Operation and Maintenance Costs means (1) costs spent or incurred for maintenance and operation of the
Broadband System calculated in accordance with generally accepted accounting principles, including(among other
things) the expenses of management and repair and other expenses necessary to maintain and preserve the
Broadband System in good repair and working order, and including administrative costs of the District, salaries and
wages of employees,payments to any public employees retirement plan, overhead, insurance,taxes(if any), fees of
auditors, accountants, attorneys or engineers and insurance premiums, (2) all other reasonable and necessary costs
of the District or charges (other than Debt Service) required to be paid by it to comply with the terms of the
Installment Purchase Agreement or any other Contract or of any resolution or indenture authorizing the issuance of
any Bonds or of such Bonds, and any franchise fees payable by the District with respect to the Broadband System
and(3)all costs paid by the District under the Service Agreement, dated ,2004,between the District and
Eagle Broadband, Inc., and in all cases relating to allocations and/or agreements between the District's broadband
utility and other utilities of the District to pay costs similar to the those described in this definition but excluding in
all cases(a)depreciation, replacement and obsolescence charges or reserves therefor, (b)amortization of intangibles
or other bookkeeping entries of a similar nature, (c)costs of capital additions,replacements,betterments,extensions
or improvements to the Broadband System which under generally accepted accounting principles are chargeable to a
capital account or to a reserve for depreciation,and(d)charges for the payment of Bonds or Contracts.
Project means the equipment and facilities of the Broadband System described in the Installment Purchase
Agreement. The term"Parity Project"means any additions,betterments, extensions or improvements designated by
the Board of Directors of the District as a Parity Project, the acquisition and construction of which is to be paid for
with the proceeds of any Contracts or Bonds.
Purchase Price means the principal amount plus interest thereon owed by the District to the Corporation
under the terms of the Installment Purchase Agreement.
Reserve Requirement means, initially $ and thereafter will be equal to the lesser of such
amount and maximum annual Installment Payments in the current or any future Fiscal Year.
Revenue Fund means all revenue accounts relating to the Broadband System maintained by the District as
of the date of the Installment Purchase Agreement, together with any revenue account created after the date of the
Installment Purchase Agreement and designated by the Treasurer of the District as a part of the Revenue Fund.
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APPENDIX A
DEFINl,TIONS AND SUMMARY OF CERTAIN PROVISIONS
OF THE INSTALLMENT PURCHASE AGREEMENT
The following is a summary of certain provisions of the Installment Purchase Agreement. This summary
does not purport to be comprehensive and reference should be made to the respective agreement for a full and
complete statement of the provisions thereof.
Definitions. Unless the context otherwise requires, capitalized terms used under this will have the
meanings defined below. Unless the context otherwise requires, all capitalized terms used below and not defined
below will have the meanings ascribed thereto in the Installment Purchase Agreement and the Trust Agreement.
Accountant's Report means a report signed by an Independent Certified Public Accountant.
Acquisition Fund means the fund by that name established pursuant to the Installment Purchase Agreement.
Agreement means the Installment Purchase Agreement, by and between the District and the Corporation,
dated as of October 1,2004, as originally executed and as it may from time to time be amended or supplemented in
accordance therewith.
Bonds means all bonds, notes or similar obligations (but not including Contracts) of the District, the
principal of and interest on which are payable from Net Revenues on a parity with the Installment Payments.
Broadband Service means the services made available or provided by the Broadband System.
Broadband System means all properties and assets, real and personal, tangible and intangible, of the
District's broadband utility now or hereafter existing, used or pertaining to providing broadband services(including
but not limited to data, voice, video and security services), including all additions, extensions, expansions,
improvements and betterments thereto;provided, however, that to the extent the District is not the sole owner of an
asset or property or to the extent that an asset or property is used in part for the above described purposes, only the
District's broadband utility ownership interest in such asset or property or only the part of the asset or property so
used for broadband purposes will be considered to be part of the Broadband System.
Business Day means a day other than: a Saturday or Sunday or a day on which(i)banks located in the city
in which the principal corporate trust office of the Trustee is located are not required or authorized to remain closed,
and(ii)on which The New York Stock Exchange is not closed.
Certificates means the Truckee Donner Public Utility District Revenue Certificates of Participation,
Series 2004, executed and delivered on behalf of the District and at any time Outstanding pursuant to the Trust
Agreement.
Contracts means the Installment Purchase Agreement and all contracts of the District the Parity Installment
Payments under which are payable from Net Revenues on a parity with the obligations of the District to make
payments under the Installment Purchase Agreement, excluding contracts entered into for operation and
maintenance of the Public Utility System.
Corporation means the Truckee Donner Public Utility District Financing Corporation, a nonprofit public
benefit corporation duly organized and existing under and by virtue of the laws of the State of California.
Date of Operation means, with respect to any uncompleted component Parity Project,the estimated date by
which such uncompleted component Parity Project will have been completed and,in the opinion of an engineer,will
be ready for operation by or on behalf of the District.
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opinion regarding any such tax consequences.- Accordingly,before purchasing any of the Certificates, all potential
purchasers should consult their tax advisors with respect to collateral tax consequences with respect to the
Certificates.
CONTINUING DISCLOSURE
The District has covenanted in a Continuing Disclosure Certificate for the benefit of the holders and
beneficial owners of the Certificates to provide certain financial information and operating data relating to the
Broadband System of the District by 270 days following the end of the District's Fiscal Year (currently its Fiscal
Year ends on December 31) (the "Annual Report"), commencing with the report for Fiscal Year ending December
31,2004, and to provide notices of the occurrence of certain enumerated events,if material. The Annual Report and
the notices of material events will be filed by the District (or a dissemination agent that has entered into a contract
with the District to file such information) with each Repository identified in the Continuing Disclosure Certificate.
The specific nature of the information to be contained in the Annual Report and the notice of material events is set
forth in Appendix E—"FORM OF CONTINUING DISCLOSURE CERTIFICATE"hereto. These covenants have
been made in order to assist the Placement Agent in complying with Rule 15c2-12(b)(5) promulgated under the
Securities Exchange Act of 1934. The District has not previously defaulted under any other continuing disclosure
undertaking.
FORWARD LOOKING STATEMENTS
The statements contained in this Placement Memorandum, and in any other information provided by the
District, that are not purely historical, are forward-looking statements, including statements regarding the District's
expectations, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-
looking statements. All forward looking statements included in this Placement Memorandum are based on
information available to the District on the date hereof; and the District assumes no obligation to update any such
forward-looking statements.It is important to note that the District's actual results could differ materially from those
in such forward-looking statements.
The forward-looking statements herein are necessarily based on various assumptions and estimates and are
inherently subject to numerous risks and uncertainties, including risks and uncertainties relating to the possible
invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic,
business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be
taken by third parties, including customers, suppliers, and competitors, and,legislative, judicial and other
governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to
among other things, future economic, competitive, and market conditions and future business decisions,all of which
are difficult or impossible to predict accurately and many of which are beyond the control of the District. Any of
such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements
included in this Placement Memorandum are accurate.
NO RATING
No application for a rating has been made to any rating agency, nor is there any reason to believe that the
District would have been successful in obtaining an investment grade rating for the Certificates had application been
made.
PLACEMENT AND RESTRICTION ON TRANSFER
The Bond Placement Agreement for the Certificates provides that RiviereJenison Securities, Ltd. (the
"Placement Agent")will act as placement agent to facilitate the sale of the Certificates to eligible purchasers. To be
eligible to purchase Certificates, a prospective purchaser must qualify as "qualified institutional buyers"as defined
in Rule 144A promulgated under the Securities Act. Each purchaser or transferee of the Certificates must represent
that such purchaser or transferee is a QIB at the time of acquisition of the Certificates.
24
risk of their investment for an indefinite period of time. The Certificates may not be resold or transferred in
principal amounts of less than$100,000. See"PLACEMENT AND RESTRICTIONS ON TRANSFER"herein.
Impact of Inflation
Dramatic increases in the rate of inflation could adversely affect the operations of the Broadband System if
the companies with whom the District contracts to provide broadband services are unable to increase the rates of
charges to their customers to match such increases.
Information Not Verified
Information with regard to the Broadband System has been obtained from the District and its consultants.
Some of that information involves predictions with regard to future events, such as the expected operating expenses
and revenues of the Broadband System; such information is, by its nature, not subject to verification. Neither the
Corporation nor the Placement Agent have independently verified the information provided by the District and its
consultants regarding the Broadband System. See"FORWARD LOOKING STATEMENTS"herein.
CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES
Article XIIIB
Article XIIIB of the California State Constitution limits the annual appropriations of the State and of any
district,county, school district,corporation or other political subdivision of the State to the level of appropriations of
the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and
population. The "base year"for establishing such appropriation limit is the 1978/79 fiscal year and the limit is to be
adjusted annually to reflect changes in population and consumer prices. Adjustments in the appropriations limit of
an entity may also be made if(i)the financial responsibility for a service is transferred to another public entity or to
a private entity, (ii)the financial source for the provision of services is transferred from taxes to other revenues, or
(iii)the voters of the entity approve a change in the limit for a period of time not to exceed four years.
Appropriations subject to Article XIIIB generally include the proceeds of taxes levied by the State or other
entity of local government, exclusive of certain State subventions and refunds of taxes. "Proceeds of taxes"include,
but are not limited to,all tax revenues and the proceeds to an entity of government from (i)regulatory licenses,user
charges, and user fees (but only to the extent such proceeds exceed the cost of providing the service or regulation),
and(ii)the investment of tax revenues. Article XIIIB includes a requirement that if an entity's revenues in any year
exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee
schedules over the subsequent two years.
The District is of the opinion that its charges for the Broadband System do not exceed the costs it
reasonably bears in providing such services and therefore are not subject to the limits of Article XIIIB. The District
has covenanted in the Installment Purchase Agreement that, to the fullest extent permitted by law, it will fix,
prescribe and collect rates and charges on the Broadband System sufficient to provide for payment of the Installment
Payments in each year. See the caption"SECURITY FOR THE CERTIFICATES—Rate Covenant."
Future Initiatives
Article XIIIB was adopted as a measure that qualified for the ballot pursuant to California's initiative
process. From time to time other initiatives could be proposed and adopted affecting the District's revenues or
ability to increase revenues.
APPROVAL OF LEGAL PROCEEDINGS
The legality and enforceability of the Installment Purchase Agreement and certain other legal matters are
subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, acting as Special Counsel.
Certain legal matters will be passed upon for the District .by Porter Simon, Professional Corporation, Truckee,
22
telecommunications services and will not be subject to those laws. However,it will derive revenues from the use of
the Broadband System by that other entity to provide telecommunications services. In addition, the Broadband
System may be used by that other entity for the purpose of offering customers the ability to send and receive
telephone calls using an Internet platform. Such services are referred to as Voice over Internet Protocol or"VOIP."
The regulatory status of VoIP is uncertain. Some contend that VoIP services are substitutes for traditional
telecommunications services and should be subject to the same regulatory requirements and the same government-
mandated costs. Others contend that VoIP is an information service which uses telecommunications but is not itself
a telecommunications service. Currently the FCC is conducting a proceeding wherein it is considering many issues
involving WIT, including whether and how to regulate such services. Several state regulatory agencies, including
the California Public Utilities Commission, have asserted that VoIP providers are telecommunications service
providers and that their intrastate services should be subject to state telecommunications regulation. It is possible
that VoIP will be subject to certain regulatory requirements which could impose additional costs on the provision of
VoIP services. However,as noted above, under California law,public utility districts,including the District,are not
subject to the jurisdiction of the California Public Utilities Commission.
Federal Regulation and Oversight
The Communications Act of 1934, as amended by the Telecommunications Act of 1996 (the
"Communications Act"), contains provisions which are applicable to the offering of telecommunications service,
cable television service and Internet access service.
The District's provision of multichannel video programming service will be subject to the provisions of the
Communications Act governing cable television service. These include requirements that local television stations
operating within the cable operator's community be carved on the cable system if they demand carriage(commonly
referred to as "must carry"). Alternatively, local television stations may demand compensation for allowing their
signals to be carried by cable systems (this alternative is referred to as "retransmission consent"). As a franchised
cable provider, the District would be required to comply with other requirements applicable to cable operators
including, for example, that they make available time for candidates for public office during election campaign
periods, and that they provide channels for public, educational and governmental use. Also, as a franchised cable
operator, the District will be required to pay a franchise fee to the Town of Truckee. The franchise fee has been
established at five percent (5%) of gross annual cable service revenues. The terms of the franchise are set forth in
the Cable System Franchise Agreement Between the Town of Truckee and the District executed April 17,2003,and
approved by the Board of Supervisors of Nevada County, California on January 13, 2004. The franchise agreement
has a duration of ten years and may be renewed.
"Open Access". In a 2002 decision, the FCC determined that high speed Internet service provided by
cable operators, commonly referred to as "cable modem" service is considered an interstate Information Service as
that term is defined in the Communications Act, and that such service is neither Telecommunications Service nor
Cable Service. Based on this decision,the FCC concluded that cable modem service, such as that which the District
plans to offer over the Broadband System, is not subject either to the telecommunications carrier provisions or the
cable provisions of the Communications Act. Rather, as an information service, cable modem service is essentially
unregulated. If the service is not regulated, there would be no basis for a governmentally-imposed requirement that
cable operators offering cable modem service over their cable plant allow competing Internet service providers
access to their high speed broadband networks. If, on the other hand, cable modem service were deemed to be
telecommunications service, it is possible that the FCC could require cable operators to allow access to cable
operators'broadband networks by competing Internet service providers.
In October 2003, a panel of the United States Court of Appeals for the Ninth Circuit in San Francisco
reversed and remanded portions of the FCC's decision, concluding that, based on a prior precedent of that court,
cable modem service is, in part, a telecommunications service. On April 1, 2004,the full court denied rehearing of
the October 2003 decision. It is not currently known whether the Supreme Court will be asked to review that
decision, whether it will agree to hear the case if asked, or whether it will affirm the court of appeals decision. It is
also not known what the FCC may do as a result of that decision. If the District were required to allow competing
Internet service providers to access its Broadband System for the purpose of offering their own high speed Internet
services, it could adversely affect the District's position as a provider of high speed Internet service and the
availability of Revenue to repay the Certificates.
20
delays in obtaining or inability to obtain necessary permits, including defective plans and specifications; and (xii)
geological, construction, excavation, regulatory and equipment problems. These risks may cause construction
delays for the Broadband System that increase the cost of construction beyond available funds. There can be no
assurance that the construction of the Broadband System can be accomplished according to schedule within the
construction budget for the Broadband System. See "THE CONSTRUCTION CONTRACT" AND "THE
GENERAL CONTRACTOR"herein.
Finance Risks
The ability of the District to generate revenues sufficient to allow the District to pay the operating and
maintenance expenses of the Broadband System and to make Installment Payments under the Installment Purchase
Agreement in amounts sufficient to provide for payment of the principal of, premium, if any, and interest on the
Certificates will be determined by the ability of the District and of certain parties to perform according to their
contractual responsibilities under various agreements. The revenues and expenses of the District are subject to,
among other things, the capabilities of the management of the District, the confidence of the various broadband
service providers in the demand for their broadband service through the Broadband System, the availability of
adequate broadband services on the Broadband System, demand and utilization of the Broadband System by the
customers of the District, changes in the population or the economic condition of the District's service area,
imposition of government price controls for particular broadband services on the Broadband System,the demand for
the broadband services of the Broadband System, competition, rates, government regulations and licensing
requirements, inflation and future economic and other conditions which are unpredictable and may not be
quantifiable or determinable at this time.
Technological Advances and Obsolescence
There can be no assurance that in the future technological advances in the supply of various communication
services will not render the Broadband System obsolete or at a competitive disadvantage with other types of
communication facilities.
Competition from other Service Providers
The District may be subject to significant competition from other providers of telecommunications services
and video programming services as well as providers of Internet and other information services. Competition
encountered in the provision of any of these services could adversely affect the ability of the District to collect
sufficient revenues from the Broadband System to pay Operating Costs of the Broadband System and to pay debt
service on the Certificates of Participation.
Existing Cable TV Competition. Currently, another cable service operator, Cequel III Communications I,
LLC d/b/a Cebridge Connections ("Cebridge"), holds a franchise from the Town of Truckee to provide cable TV
service in that community. Cebridge recently acquired the cable system from the prior operator, USA Media, on
August 19, 2004. Services offered by Cebridge include basic and extended cable, premium channels (e.g., HBO,
Showtime, etc.) and pay-per-view programming. That system was built some years ago and has been upgraded to
550 MHz fiber-to-the-node technology.
The Cebridge system currently offers 64 analog channels as well as digital service. By press release dated
August 9, 2004, Cebridge officials stated that new services including high definition television(HDTV) and video-
on-demand were expected to be available by the first quarter of 2005. The press release also stated that Cebridge is
planning to reduce its prices for its Expanded Basic cable service from $36.33 per month to$33.95 per month.
Further upgrading the Cebridge system would require significant capital investment, but there can be no
assurance that Cebridge (or any subsequent owner) will not further upgrade the system in the future. Neither can
there be assurances that Cebridge will not offer its services at prices below those which the District plans to charge
for its services.
18
THE CONSTRUCTION CONTRACT AND GENERAL CONTRACTOR
The Construction Contract (as hereinafter defined) for the Broadband System in the form described under
this heading has been executed by the General Contractor (as hereinafter defined) and the District. Certain
provisions of the Contraction Contract are described below. The following description is not a complete or
definitive summary of the Construction Contract and is qualified in its entirety by reference to the full terms of the
Construction Contract. All capitalized terms not defined in this section shall have the same meanings given such
terms in Construction Contact.
General
The District entered into the Construction Contract with (the "General
Contractor") on , 2004 (the "Construction Contract"), which provides for the construction of the
Broadband System,including,but not limited to, and utility requirements.
Completion Date
Pursuant to the Construction Contract, the General Contractor shall substantially complete the work stated
in the Construction Contract on or before , 2006. The work stated in the Construction Contract
shall be completed and ready for final payment in accordance with the provisions of the Construction Contract on or
before )2006.
Liquidated Damages
The General Contractor has agreed to pay liquidated damages of$ to the District for each day that
substantial completion of the Construction Contract is delayed until the work stated in the Construction Contract is .
substantially complete. After substantial completion,if the General Contractor neglects,refuses,or fails to complete
the remaining work on time,the General Contractor will pay to the District$ per day until the work stated
in the Construction Contract is completed and ready for final payment.
Contract Price
The District will pay to the General Contractor for completion of the work in accordance with the
Construction Contract
APPROVAL FROM THE NEVADA COUNTY LOCAL AGENCY FORMATION COMMISSION
In order to provide communication services, including cable television and Internet service, the District is
required to obtain the approval of the Local Agency Formation Commission of Nevada County, California
(LAFCO). LAFCO's rules and regulations provide that no special district (including the District) may provide or
engage in a new or different function or class of service in an area where such function or class of service already is
being provided, unless authorized to do so by LAFCO. Since the communications and other services which the
District seeks to provide using the Broadband System are being provided by several non-governmental entities,
LAFCO approval is required. The purposes for Local Agency Formation Commissions under California law include
avoidance of duplication of service which would result from indiscriminate formation of new local agencies or the
haphazard annexation of territory to existing local agencies. LAFCOs have authority to permit public utility
districts, such as the District,to provide services within their boundaries.
On January 18, 2001, following a public hearing on the District's application,LAFCO adopted a resolution
(Resolution 01-01) authorizing the District to provide communications services, including cable television service,
Internet access, data transfer and telephone service, subject to certain conditions. Those conditions included
requirements that the District submit to LAFCO a "Master Services Element" for the services it intends to provide; .
adopt a risk mitigation plan to ensure that the District's water and electricity rate payers not be required to subsidizf
the new services or support repayment of debt incurred to provide the new services, obtain franchise agreements
with the Town of Truckee and the Counties of Nevada and Placer to provide cable service, and obtain a Certificate
16
Projected Operating Results and Debt Service Coverage
The District's estimated projected operating results for its BROADBAND System for the current and next four fiscal years are set forth below,
reflecting certain significant assumptions concerning future events and circumstances. The financial forecast represents the District's estimate of projected
financial results based upon its judgment of the most probable occurrence of certain important future events. The assumptions set forth in the footnotes to the
chart below are material in the development of the District's financial projections,and variations in the assumptions may produce substantially different financial
results. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material.
Projected Operating Results
Fiscal Year Ending December 31
12 YEAR SUMMARY 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Construction&Installation Take Rate 39%
Subscribers—Cumulative
Business&Governmental.Subscribers—Cumulative
Total Subscribers
Take-Rate of Total Possible
Revenue(Sources)
Installation:Residential&Business
Pre-Committed Specific Users
Internet
Video,Voice and Internet Services
` Add-on Services
Advertising
Other Income
Total
Expenses(Uses)
Construction&Installation
Wave 7 Cost Quote of 9/23/03
Bandwidth,Installation,Wiring&Hoop-up Costs
Closing Costs
Internet
Eagle Programming,Overhead&Backotlice
Programming&Service Costs
OTHER CHARGES(pass throughs—all are 0%)
k Personnel
General&Administrative
Promotion and Advertising
Bad debt
Operating Expenses
Total Expenses
}
NET INCOME(EBITDA*)
Cash after Debt Payments(P&i)
14
transfer files of data in less time, send and receive a-mails at higher speeds than using dial up connections,and will
allow for use of full motion video.
Telecommunication Services. In addition, Eagle will provide to customers connected to the Broadband
System telecommunications services, including local exchange and long distance services. Initially, Eagle will
provide these services by reselling to customers services which it purchases from other telecommunications
companies. Upon completion of the Broadband System, Eagle will provide telecommunications services over the
Broadband System. Eagle will operate a switching facility at the Network Operations Center. Eagle expects to
include among its offerings an Internet protocol-based telephony service, commonly referred to as Voice over the
Internet Protocol or Vol?. Vol? differs from traditional telephone service. Traditional services use circuit switched
technology. Calls are routed from the point of origin to the point of termination along a single path and are directed
along that path to the destination through a series of switches which are operated by various telecommunications
providers. In contrast,with VoIP services data is segmented into packets which are individually addressed and then
transmitted over a series of networks. It will be the responsibility of Eagle, not the District, to obtain any required
certificates or authorizations to provide telecommunications service and to comply with applicable laws and
regulations governing the provision of telecommunications service. Although Eagle, not the District, will provide
consumers with telecommunications services, including Vol? services, pursuant to the agreement between the
District and Eagle,the District will derive revenues from Eagle for its use of the Broadband System to provide these
services.
Broadband System Rates and Charges
The District is not subject to the jurisdiction of, or regulation by, the California Public Utilities
Commission. The District annually determines the adequacy of the rate structure for the Broadband System after
full consideration of expected operations, maintenance and capital costs. As previously stated, the Installment
Purchase Contract requires the District to charge service rates for use of the Broadband System that will be at least
sufficient to yield during each Fiscal Year Net Revenues equal to one hundred twenty-five percent(125%) of Debt
Service for such Fiscal Year. See"SECURITY FOR THE CERTIFICATES—Rate Covenant"herein.
Projected Broadband System Connections and Sales Revenues
The following table shows the increase in the number of connections to the Broadband System projected by
the District for the current and next four fiscal years, together with the increase in the amount of its annual sales
revenues(exclusive of monthly service charges)projected by the District.
Projected Broadband System Connections and Sales Revenues
Connections Sales Revenues
Fiscal Year
EndingDecember 31 Business % Residential % Business % Residential %
2006
2007
2008
2009
Source: District.
Discussion of Projected Broadband System Connections from Potential Customers
In an effort to assess the demand for broadband services, including cable television, Internet access and
telephone service, in 2000, the District conducted surveys of residential and key business users. Of the residents
surveyed, 74%subscribed to cable service—a cable penetration rate above the national average. Nearly 75%of the
residential customers surveyed owned personal computers; most of those customers also purchased Internet access
12
1
The manager of the Broadband System is Mr. Alan Harry. Mr. Harry was hired in 1999 by the District to
plan, design and finance the Broadband System for the District. Alan's extensive local government experience in
the San Francisco Bay area, in addition to his experience with the local incumbent cable providers in Truckee since
the early 1990's, and his involvement in local service and community organizations,provides the District a manager
for this undertaking with substantial experience that may help the success of the Broadband System.
District Powers
The District is duly organized and existing under the California Public Utility District Act, see Public
Utilities Code Section 15501 et seq. Since its inception in 1927,the District,with the support of local residents,has
acquired and built numerous infrastructure to provide water and electricity to residents and businesses within its
service area. Section 16461 of the Public Utilities Code provides the District with specific powers. "A district may
acquire, construct, own, operate, control, or use,within or without or partly within or without the district,works for
supplying its inhabitants with light, water, power, heat, transportation, telephone service, or other means of
communication, or means for the disposition of garbage, sewage, or refuse matter, and may do all things necessary
or convenient to the full exercise of the powers granted in this article."
Budget Process
By November 15 of each year, the General Manager of the District submits to the Board of Directors a
proposed budget for the upcoming fiscal year. The District generally conducts public workshops to obtain
comments from residents and ratepayers. Subsequent to the workshops, the Board generally approves the budget
prior to January 1. The Board approved the 2004 budget on December 17,2003.
The District's budget is prepared on the accrual basis. For budgeting purposes, the District sets user
charges to cover operating expenses of the particular services.
THE CORPORATION
The Truckee Donner Public Utility District Financing Corporation is a nonprofit public benefit corporation,
formed on ,20 for the purpose of providing assistance to public agencies in financing,refinancing,
acquiring, constructing and rehabilitating of facilities, land and equipment, and in the sale or leasing of facilities,
land and equipment for the use, benefit and enjoyment of the public served by such agencies or any other purpose
incidental thereto. The members of the Board of Directors of the Corporation are the members of the Board of
Directors of the District.
THE BROADBAND SYSTEM
General Description
The Certificates will be executed and delivered to finance the acquisition, installation, development and
construction by the District of a "Fiber to the Home" broadband telecommunications network within the service
territory of the District. The Broadband System will be constructed within the service boundaries of the District
which include the territorial limits of the Town of Truckee, California and portions of Nevada County and Placer
County, California where the District provides electric and water utility services. The Broadband System will
consist of fiber optic cable plant mounted on electric utility poles and existing conduit throughout the District and
will include fiber connections to homes and businesses located within the District. In addition, the Broadband
System will include four strands of fiber which connect a headend facility located at 200. S.Virginia, Reno,Nevada
with the District's Network Operations Center located at 11570 Donner Pass Road,Truckee,California.
Construction of the Broadband System. The District anticipates that the construction of the Broadband
System will take eighteen (18) months to complete and will cost approximately $24 million. Broadband System
equipment will be provided by Wave 7 Optics, an experienced manufacturer of equipment for fiber optic networks
[needs specific information about capacity of system]
10
Additional Contracts and Bonds
Under the Installment Purchase Agreement,the District may at any time execute any Contract or issue any
Bonds,as the case may be,as described below:
(i) The Net Revenues for the most recent audited Fiscal Year preceding the date of adoption by the
Board of Directors of the District of the resolution authorizing the issuance of such Bonds or the date of the
execution of such Contract, as the case may be, as evidenced by both a calculation prepared by the District and a
special report prepared by an Independent Certified Public Accountant or an Independent Financial Consultant on
such calculation on file with the District, shall have produced a sum equal to at least one hundred twenty five
percent 025%) of the Debt Service for such Fiscal Year;and
(ii) The Net Revenues for the most recent audited Fiscal Year preceding the date of the execution of
such Contract or the date of adoption by the Board of Directors of the District of the resolution authorizing the
issuance of such Bonds, as the case may be, including adjustments to give effect as of the first day of such Fiscal
Year to increases or decreases in rates and charges for the Broadband Service approved and in effect as of the date
of calculation, as evidenced by both a calculation prepared by the District and a special report prepared by an
Independent Certified Public Accountant or an Independent Financial Consultant on such calculation on file with the
District, shall have produced a sum equal to at least one hundred twenty five percent(1250/o)of the Debt Service for
such Fiscal Year plus the Debt Service which would have accrued on any Contracts executed or Bonds issued since
the end of such Fiscal Year assuming such Contracts had been executed or Bonds had been issued at the beginning
of such Fiscal Year plus the Debt Service which would have accrued had such Contract been executed or Bonds
been issued at the beginning of such Fiscal Year;and
(iii) The estimated Net Revenues for the then current Fiscal Year and for each Fiscal Year thereafter to
and including the first complete Fiscal Year after the latest Date of Operation of any uncompleted project to be
financed from proceeds of such Contracts or Bonds,as evidenced by a certificate of the General Manager of the
District on file with the District, including (after giving effect to the completion of all such uncompleted Parity
Projects) an allowance for estimated Net Revenues for each of such Fiscal Years arising from any increase in the
income,rents, fees,rates and charges estimated to be fixed,prescribed or received for Broadband Service and which
are economically feasible and reasonably considered necessary based on projected operations for such period, as
evidenced by a certificate of the Manager on file with the District, shall produce a sum equal to at least one hundred
twenty five percent (125%) of the estimated Debt Service for each of such Fiscal Years, after giving effect to the
execution of all Contracts and the issuance of all Bonds estimated to be required to be executed or issued to pay the
costs of completing all uncompleted projects within such Fiscal Years, assuming that all such Contracts and Bonds
have maturities, interest rates and proportionate principal repayment provisions similar to the Contract last executed
or then being executed or the Bonds last issued or then being issued for the purpose of acquiring and constructing
any of such uncompleted Parity Projects.
Nothing in the Installment Purchase Agreement precludes the District from entering into obligations which
are Operation and Maintenance Costs and, therefore, payable from Revenues prior to the Installment Payments or
from issuing any bonds or executing contracts the payments under which are payable from Net Revenues
subordinate to Bonds or Contracts of the District.
ESTIMATED USES OF PROCEEDS
The following table sets forth the estimated uses of proceeds of the Certificates(exclusive of original issue
discount and accrued interest).
Acquisition Fund(Construction&Electronics)
Delivery Cost Fund')
Reserve Fund(Debt Service)
Truckee Donner PUD Reimbursement
Total
To be applied to the costs of issuing the Certificates.
8
-y
DEBT SERVICE SCHEDULE
Set forth below is a schedule of Series 2004 Installment Payments representing the interest and principal
payments on the Certificates for the periods as shown below.
Outstanding
Date Principal Interest Principal Total
May 1,2005 $-- $ $ $
November 1,2005
May 1,2006 November 1,1,2006
May 1,2007 November 1,1,2007
May 1,2008 November 1,1,2008
May 1,2009 November 1,1,2009
May 1,2010 November 1,1,2010
May 1,2011 November 1,1,2011
May 1,2012 November 1,1,2012
May 1,2013 November 1,1,2013
May 1,2014
November 1,2014
May 1;2015 November 1,1,2015
May 1,2016 November 1,1,2016
SECURITY FOR THE CERTIFICATES
Each Certificate represents a direct,undivided fractional interest in Installment Payments to be made by the
District under the Installment Purchase Agreement. The Corporation has assigned substantially all of its right,title
and interest in the Installment Purchase Agreement to the Trustee pursuant to the Trust Agreement,for the benefit of
the Owners of the Certificates, including its right to receive Installment Payments and its-rights as may be necessary
to enforce payment of the Installment Payments when due.
Limited Obligations Payable From Net Revenues and Reserve Fund Amounts
All Revenues under the Installment Purchase Agreement and the Reserve Fund have been irrevocably
pledged to the payment of the Installment Payments as provided in the Installment Purchase Agreement and the
Revenues and amounts in the Reserve Fund shall not be used for any other purpose while any of the Installment
Payments remain unpaid; provided that out of the Revenues there may be apportioned such sums for such purposes
as are expressly permitted in the Installment Purchase Agreement. This pledge,together with the pledge created by
all other Contracts and Bonds, shall constitute a first lien on the Revenues and amounts in the Reserve Fund, subject
to application of Revenues and amounts in the Reserve Fund as permitted in the Trust Agreement.
In order to carry out and effectuate such pledge and lien, the District has agreed and covenanted that all
Revenues shall be received by the District in trust and shall be deposited when and as received in a special fund-
designated as the "Revenue Fund," and which fund the District has agreed and covenanted to maintain and to holc,
separate and apart from other funds so long as any Contracts or Bonds remain unpaid. Moneys in the Revenue Fund
shall be used and applied by the District as provided in the Installment Purchase Agreement.
6
prepayment premium equal to the Redemption Price shown below (as a percentage of the outstanding principal
amount to be redeemed),together with interest accrued to such date fixed for prepayment:
Period During Which Prepaid' Redemption Price*
(both dates inclusive)
November 1,2014 through October 31,2015 102%
November 1,2015 through October 31,2016 101%
Mandatory Sinking Fund Prepayment. The Certificates are subject to mandatory prepayment prior to such
stated maturity in part(by lot) on each November 1 on and after November 1,2007* in integral multiples of$5,000,
solely from scheduled Installment Payments paid by the District under the Installment Purchase Agreement, at a
Prepayment Price equal to 100% of the principal amount thereof(together with interest accrued to such dated fixed
for prepayment),without premium,in accordance with the following schedule:
Prepayment Date*
(November 1) Principal Amount
2007 $
2008
2009
2010
2011
2012
2013
2014
2015
2016t
t Final Maturity
Prepayment from Insurance or Condemnation Proceeds. The Certificates are subject to prepayment prior to
maturity,in whole or in part on any date,by lot, in integral multiples of$5,000, from prepaid Installment Payments
made by the District from Net Proceeds, upon the terms and conditions of, and as provided for in, the Trust
Agreement (from proceeds of condemnation) and the Installment Purchase Agreement (from excess insurance
proceeds or proceeds from condemnation), at a Prepayment Price equal to 100% of the principal amount thereof
(together with interest accrued to such dated fixed for prepayment),without premium.
Prepayment from Unspent Moneys in Acquisition Fund. The Certificates are subject to prepayment prior
to maturity, in whole or in part on any date on and after 1, 200 , from unspent moneys in the Acquisition
Fund established under the Installment Purchase Agreement (for amounts not necessary for Installment Payments),
by lot,in integral multiples of$5,000,at a Prepayment Price equal to 100%of the principal amount thereof(together
with interest accrued to such dated fixed for prepayment),without premium.
Prepayment in the Event of Chan-Re in Law. The Certificates are subject to prepayment prior to maturity,in
whole or in part on any date, (i)as a result of changes in the constitutions or laws of the United States or the State of
California, any executive or administrative action by any federal, state or local entity, or any final decree or
judgment of any court after the contest thereof by the District, which materially adversely affect the ability of the
District to own or operate the Broadband Systems, (ii) the Installment Purchase Agreement becomes void or
unenforceable or impossible of performance in accordance with the intent and purpose of the parties as expressed
therein or(iii)unreasonable burdens or excessive liabilities are imposed upon the District by reason of its ownership ,
'Preliminary;subject to change.
4
income for federal income tax purposes and will not be an item of tax preference for purposes of calculating the
federal alternative minimum tax imposed on individuals and corporations.
The proceeds of the Certificates, after funding the amounts for capitalized interest during the construction
period,the funding of a reserve fund for the Certificates and the payment of the costs of issuance for the Certificates,
will be deposited in the Acquisition Fund. Amounts in the Acquisition Fund will be drawn down over a two-year
construction period (i) to pay costs of the construction and initial operation of the Broadband System and (ii) to
reimburse the District for preliminary development costs of the Broadband System.
Eligible Investors
The Certificates are being offered only to "qualified institutional buyers" ("QIBS") as defined by the Rule
144A promulgated under the Securities Act. The Certificates will be sold in minimum denominations of$100,000
to investors that will be required to represent that they are a QIB. See "PLACEMENT AND RESTRICTIONS ON
TRANSFER"herein.
Restriction on Transfers
This Certificates may not be transferred or resold except to a QIB and as permitted under the Securities Act
1933, as amended, pursuant to registration or exemption therefrom and may not be sold or transferred in principal
amounts of less than$100,000. Each transferee must represent that such purchaser or transferee is a QIB at the time
of acquisition of the Certificates. See"PLACEMENT AND RESTRICTIONS ON TRANSFER"herein.
Forward Looking Statements
Certain statements included or incorporated by reference in this Private Placement Memorandum constitute ,
"forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of
1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the
United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology
used such as "plan," "expect," "estimate," "project," "budget" or other similar words. Such forward-looking
statements include, but are not limited to, certain statements contained in the information under the caption "THE
BROADBAND SYSTEM"and"THE DISTRICT." See also"FORWARD LOOKING STATEMENTS HEREIN."
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS.
THE CERTIFICATES
General Provisions
The Certificates will be executed and delivered in the aggregate principal amount of$24,000,000*. The
Certificates will bear interest from and be dated the date of delivery. Interest evidenced by the Certificates will be
payable semiannually on May 1 and November I of each year, commencing May 1, 2005 (each,a"Payment Date").
Interest will be calculated at the rates set forth on the inside front cover page hereof and on the basis of a year of
360 days comprised of twelve 30 day months. The Certificates will mature on November 1, 2016, subject to
mandatory sinking fund prepayment as described under "THE CERTIFICATES — Prepayment of Certificates -
Mandatory Sinking Fund Prepayment"herein.
'Preliminary, subject to change.
2
Technological Advances and Obsolescence........................................................................................................ 18
Competition from other Service Providers........................................................................................................... 18
FederalRegulation and Oversight........................................................................................................................20
State Prohibition of Local Government Providing Telecommunication Services................................................21
LitigationRisks....................................................................................................................................................21
Certain Matters Relating to the Enforceability of the Trust Agreement,Installment Purchase Agreement;
Enforceabilityof Remedies..................................................................................................................................21
CreditRating........................................................................................................................................................21
Secondary Market for the Certificates.................................................................................................................21
LimitedTransferability........................................................................................................................................21
Impactof Inflation...............................................................................................................................................22
InformationNot Verified.....................................................................................................................................22
CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES.................................................22
ArticleXIIIB........................................................................................................................................................22
FutureInitiatives..................................................................................................................................................22
APPROVALOF LEGAL PROCEEDINGS...............................................................................................................22
LITIGATION..... ........................................................................................................................................................23
TAXEXEMPTION....................................................................................................................................................23
CONTINUINGDISCLOSURE..................................................................................................................................24
FORWARDLOOKING STATEMENTS...................................................................................................................24
NORATING...... ........................................................................................................................................................24
PLACEMENT AND RESTRICTION ON TRANSFER............................................................................................24
MISCELLANEOUS...................................................................................................................................................25
APPENDIX A DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT
PURCHASEAGREEMENT...............................................................................................................................A-1
APPENDIX B DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE
TRUSTAGREEMENT.......................................................................................................................................B-1
APPENDIX C FORM OF OPINION OF SPECIAL COUNSEL............................................................................C-1
APPENDIX D INFORMATION CONCERNING DTC.........................................................................................D-1
APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE...........................................................E-1
v
any.w.»........w..:�...v..p...wv:s�+++W-m..ww....,u..a�.......o-...µ.-.._...jr._...... ».a „`..�......�•.. ..
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
DISTRICT BOARD OF DIRECTORS
James Maass,President
Nelson Van Gundy,Vice President
Joseph Aguera, Director
Ron Hemig,Director
Patricia Sutton, Director
DISTRICT STAFF
Peter L. Holzmeister,General Manager
GENERAL COUNSEL
Porter Simon, Professional Corporation
Truckee, California
SPECIAL SERVICES
Special Counsel
Stradling Yocca Carlson &Rauth, a Professional Corporation
Newport Beach, California
Trustee
BNY Western Trust Company
Los Angeles, California
iii
i
No dealer, broker, salesperson or other person has been authorized by the District, the
Corporation or the Placement Agent to give any information or to make any representations,
other than those contained in this Private Placement Memorandum, and if given or made, such
information or representation must not be relied upon as having been authorized by any of the
foregoing. This Private Placement Memorandum does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the Certificates by any person in any
jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The
information and expressions of opinion herein are subject to change without notice, and neither
the delivery of this Private Placement Memorandum nor any sale of the Certificates shall under
any circumstances create any implication that there has been no change in the affairs of the
District, the Corporation or other matters described herein since the date hereof.
The Placement Agent has provided the following sentence for inclusion in this Private
Placement Memorandum:
The Placement Agent has reviewed the information in this Private Placement
Memorandum in accordance with, and as part of, its responsibilities to investors under the
federal securities laws as applied to the facts and circumstances of this transaction, but the
Placement Agent does not guarantee the accuracy or completeness of such information.
This Private Placement Memorandum and the information contained herein are subject to
completion or amendment without notice. These securities may not be sold nor may an offer to
buy be accepted prior to the time the Private Placement Memorandum is delivered in final form.
Under no circumstances shall this Private Placement Memorandum constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
THE CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 19339 AS AMENDED (THE "SECURITIES ACT"), AND THE TRUST
AGREEMENT HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF
19399 AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS CONTAINED IN SUCH
ACTS. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM.
WITH RESPECT TO THE VARIOUS STATES IN WHICH THE CERTIFICATES MAY BE
OFFERED, NO ATTORNEY GENERAL, STATE OFFICIAL, STATE AGENCY OR
BUREAU, OR OTHER STATE OR LOCAL GOVERNMENTAL AUTHORITY OR ENTITY
HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRIVATE
PLACEMENT MEMORANDUM OR PASSED UPON OR ENDORSED THE MERITS OF
THIS OFFERING OF THE CERTIFICATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS MEMORANDUM IS SUBMITTED ON A CONFIDENTIAL BASIS FOR USE
BY SOPHISTICATED INVESTORS THAT MEET THE DEFINITION OF "QUALIFIED
INSTITUTIONAL BUYER" UNDER RULE 144A PROMULGATED UNDER THE "
SECURITIES ACT.
i