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Reso 1285-06/2007 WHEREAS, the District has elected to adjust the interest rate on the Certificates to a Long-Term Interest Rate, and to cause the Certificates to be remarketed as authorized by the Original Trust Agreement; WHEREAS, in consideration of such assignment and the execution and entering into of the Original Trust Agreement, the Trustee executed and delivered certificates of participation (the "Certificates") in an aggregate principal amount equal to the aggregate principal amount of such 2005 Installment Payments, each evidencing and representing a proportionate, undivided interest in the 2005 Installment Payments; WHEREAS, the Certificates, in the aggregate principal amount of $66,700,000, were executed and delivered as Auction Rate Certificates ("ARCs"); WHEREAS, under the First Supplemental Contract, the District has agreed to make scheduled installment payments (the "2005 Installment Payments") to the Corporation for the purchase of the 2005 Project from the Corporation as provided therein; WHEREAS, pursuant to the Original Trust Agreement, the Corporation assigned to the Trustee, without recourse, certain of its rights under the 2005 Contract (including its right to receive the 2005 Installment Payments to be made by the District under the First Supplemental Contract); WHEREAS, this District and the Vallecitos Water District Financing Corporation (the "Corporation") have entered into a Master Installment Purchase Contract (the "Master Contract"), dated as of June 15, 2005, as supplemented by the First Supplemental Installment Purchase Contract, dated as of June 15, 2005, (the "First Supplemental Contract" and collectively, with the Master Contract, the "2005 Contract"), whereby the Corporation agreed to assist the District by refinancing certain improvements to the District's Water System and by acquiring and constructing certain additions, betterments, extensions and improvements to the District's Water System and Wastewater System (collectively, the "Enterprise") described therein (collectively, the "2005 Project") and by selling the 2005 Project to the District as provided therein; Water and Wastewater Enterprise Certificates of Participation Series 2005A RESOLUTION NO. 1285 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE V ALLECITOS WATER DISTRICT ELECTING TO ADJUST THE INTEREST RATE ON THE 2005 CERTIFICATES TO A LONG-TERM RATE, APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF A FIRST SUPPLEMENTAL TRUST AGREEMENT IN CONNECTION WITH THE REMARKETING OF THE 2005 CERTIFICATES, THE DISTRIBUTION OF A SECONDARY OFFERING MEMORANDUM IN CONNECTION THEREWITH, AND THE TAKING OF ACTIONS AND THE EXECUTION OF DOCUMENTS RELATED THERETO Section 2. The adjustment of the 2005 Certificates to a Long-Term Interest Rate and the remarketing thereof are hereby authorized and approved; provided, however, that the true interest cost of the remarketed 2005 Certificates shall not exceed 5.00% per annum. Section 3. The form and substance of the First Supplemental Trust Agreement is approved. The President and Secretary of this Board, the General Manager, the Assistant General Manager, and Director of Finance, and such other officers of the District as the General Manager may designate, are each referred to herein as an "Authorized Officer," and anyone of them is authorized and directed, for and in the name of the District, to execute and Section 1. The above recitals are true and correct and this Board so finds. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Vallecitos Water District, as follows: WHEREAS, it appears that each of the documents which is now before this Board is in appropriate form and is an appropriate document to be executed, or acknowledged, as the case may be, and delivered for the purpose intended; C. the Preliminary Secondary Offering Memorandum. WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the remarketing of the 2005 Certificates 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 remarketing in the manner and upon the terms herein provided; and B. the Contract to Remarket or Purchase Securities; and A. the First Supplemental Trust Agreement; WHEREAS, the Remarketing Agent will distribute a preliminary secondary offering memorandum (the "Preliminary Secondary Offering Memorandum"), relating to the remarketing of the 2005 Certificates to prospective purchasers thereof, and a final secondary offering memorandum (the "Final Secondary Offering Memorandum") to the actual purchasers thereof; WHEREAS, in furtherance of the remarketing of the 2005 Certificates, there has been submitted to this Board, for its consideration and approval, a form of the following: WHEREAS, the District and the Corporation will enter into a contract (the "Contract to Remarket or Purchase Securities") with UBS Securities, LLC (the "Remarketing Agent") pursuant to which the Remarketing Agent will remarket or purchase the 2005 Certificates upon certain conditions; WHEREAS, the District and the Corporation desire to amend the Original Trust Agreement in order to make certain changes regarding the Long-Term Interest Rate, remarketing, and redemption provisions with respect to the Certificates; Resolution No. 1285 Page 2 (c) Any Authorized Officer is authorized and directed to cause the Preliminary Secondary Offering Memorandum to be brought into the form of a final secondary offering memorandum (the "Secondary Offering Memorandum"), and, if required by the Remarketing Agent, to execute a statement that the facts contained in the final Secondary Offering Memorandum, and any supplement or amendment thereto (which shall be deemed an original part thereof for the purpose of such statement) were, at the time of the remarketing of the 2005 Certificates, true and correct in all material respects and that the final Secondary Offering Memorandum did not, on the date of remarketing of the 2005 Certificates, and does not, as of the date of delivery of the remarketed 2005 Certificates, contain any untrue statement of a material fact with respect to the District or omit to state material facts with respect to the District required to be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. The execution and delivery by the District of the final Secondary Offering Memorandum, which shall include such changes and additions thereto deemed advisable by an Authorized Officer and such information permitted to be excluded from the Preliminary Secondary Offering Memorandum pursuant to the Rule, shall be conclusive evidence of the approval of the final Secondary Offering Memorandum by the District. (b) This Board finds and determines that the Preliminary Secondary Offering Memorandum in preliminary form is, and as of its date shall be deemed "final" for purpose of Rule 15c(2)-12 of the Securities and Exchange Commission (the "Rule"), and any Authorized Officer is authorized to execute a certificate to such effect in the customary form. Section 4. The form and substance of the Contract to Remarket or Purchase Securities is approved. Any Authorized Officer is authorized and directed, for and in the name of the District, to execute and deliver the Contract to Remarket or Purchase Securities in the form presented to this Board, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution thereof by such Authorized Officer; provided that the total remarketing fee shall not exceed 0.55% of the aggregate principal amount of the remarketed 2005 Certificates, and provided further that the Contract to Remarket or Purchase Securities is acceptable to the 2005 Insurer. Section 5. (a) The form and substance of the Preliminary Secondary Offering Memorandum is approved. Any Authorized Officer is authorized to approve corrections and additions to the Preliminary Secondary Offering Memorandum provided that such corrections or additions shall be regarded by such Authorized Officer as necessary to cause the information contained therein to conform to facts material to the remarketed 2005 Certificates or to the proceedings of this Board related thereto, or that such corrections or additions are in form rather than in substance. deliver the First Supplemental Trust Agreement in the form presented to this Board, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution thereof by such Authorized Officer. Resolution No. 1285 Page 3 William W. Rucker, Secretary Board of Directors Vallecitos Water District ATTEST: UuwL{ 6\~ Darrell Gentry, Preside"nt \ Board of Directors Vallecitos Water District FERGUSON,GENTRY,HANNAN,POLTL,SHELL AYES: NOES: ABSTAIN: ABSENT: PASSED, APPROVED AND ADOPTED by the Board of Directors of the Vallecitos Water District at a regular meeting held on this 6th day of June, 2007, by the following roll call vote: (d) The Secondary Offering Memorandum shall be executed by either the President of this Board, the General Manager, or the Director of Finance, anyone of whom is authorized and directed to execute the Secondary Offering Memorandum on behalf of the District. (e) The Remarketing Agent is authorized to distribute the Preliminary Secondary Offering Memorandum and the final Secondary Offering Memorandum to be derived there from in connection with the remarketing of the 2005 Certificates. Section 6. Any Authorized Officer is authorized and directed to execute and deliver any and all documents and to do and cause to be done any and all acts necessary or proper for carrying out the remarketing of the 2005 Certificates, the transactions contemplated by this Resolution, and the documents herein approved, including the execution and delivery of any written order or notice related thereto in form acceptable to the Trustee. Section 7. All actions heretofore taken by the officers and employees of the District with respect to the remarketing of the 2005 Certificates, or in connection with or related to any of the agreements or documents referenced herein, are approved, confirmed and ratified. Resolution No. 1285 Page 4 l~~ William W. Rucker, Secretary Board of Directors Vallecitos Water District Dated: June 6, 2007 An agenda of the meeting was posted at least 72 hours before the meeting at 201 Vallecitos de Ora, San Marcos, California, a location freely accessible to members of the public, and a brief general description of the Resolution appeared on the agenda. I further certify that I have carefully compared the same with the original minutes of the meeting on file and of record in my office; that the foregoing Resolution is a full, true and correct copy of the original Resolution adopted at the meeting and entered in the minutes; and that the Resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. AYES: FERGUSON, GENTRY, HANNAN, POLTL,SHELL NOES: ABSENT: ABSTAIN: I, William W. Rucker, Secretary of the Board of Directors of the Vallecitos Water District, hereby certify that the foregoing is a full, true and correct copy of Resolution No. 1285 duly adopted at a regular meeting of the Board of Directors duly and regularly held at the regular meeting place thereof on June 6, 2007, of which meeting all of the members of the Board of Directors had due notice and at which a majority thereof were present; and that at the meeting the Resolution was adopted by the following roll call vote: STATE OF CALIFORNIA ) ) ss COUNTY OF SAN DIEGO)