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Reso 1246-06/2005 RESOLUTION NO. 1246 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE VALLECITOS WATER DISTRICT APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF CERTIFICATES OF PARTICIPATION IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $67,000,000, THE DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION THEREWITH, AND THE EXECUTION OF DOCUMENTS AND ACTIONS RELATED THERETO (Water and Wastewater Enterprise Certificates of Participation Series 2005A (ARCs)) WHEREAS, this Board desires to refinance certain improvements to the District's water system and to acquire and construct certain additions, betterments, extensions and improvements to its water system and its wastewater system (collectively, the "2005 Project"); WHEREAS, in order to finance the 2005 Project, the District desires to purchase the 2005 Project from the Vallecitos Water District Financing Corporation (the "Corporation"), and the Corporation desires to sell the 2005 Project to the District, pursuant to a Master Installment Purchase Contract (the "Master Installment Purchase Contract") and a First Supplemental Installment Purchase Contract (the "First Supplemental Installment Purchase Contract", and, collectively with the Master Installment Purchase Contract, the "2005 Contract"); WHEREAS, the Corporation proposes to assign without recourse certain of its rights under and pursuant to the First Supplemental Installment Purchase Contract to Union Bank of California, NA, as trustee (the "Trustee") pursuant to a Trust Agreement among the Trustee, the Corporation and the District (the "Trust Agreement"); WHEREAS, in consideration of such assignment and the entering into of the Trust Agreement by the District and the Corporation, the Trustee has agreed to execute and deliver Vallecitos Water District Water and Wastewater Enterprise Certificates of Participation, Series 2005 (ARCs) (the "2005 Certificates"), in an aggregate principal amount equal to the aggregate principal amount of the installment payments payable under the First Supplemental Installment Purchase Agreement (the "2005 Installment Payments"), each such Certificate evidencing and representing a proportionate, undivided interest in the 2005 Installment Payments; WHEREAS, the District has determined to sell the 2005 Certificates as auction rate certificates; WHEREAS, the Trustee, Deutsche Bank Trust Company Americas (the "Auction Agent"), and the District will enter into an Auction Agency Agreement (the "Auction Agency Agreement") relating to the performance of the Auction Agent's duties; WHEREAS, the Auction Agent and UBS Financial Services Inc., as broker-dealer (the "Broker-Dealer") will enter into a Broker-Dealer Agreement (the "Broker-Dealer Agreement"), acknowledged by the District, relating to the performance of certain duties with respect to the Broker-Dealer and the Auction Agent; Resolution No. 1246 Page 2 WHEREAS, the District and the Corporation will enter into a purchase agreement (the "Certificate Purchase Agreement") with UBS Financial Services Inc. (the "Underwriter") pursuant to which the Underwriter will purchase the 2005 Certificates and the District and the Corporation will cause the execution and delivery of the 2005 Certificates to the Underwriter upon certain conditions; WHEREAS, the Underwriter will distribute a preliminary official statement (the "Preliminary Official Statement") relating to the 2005 Certificates to prospective purchasers thereof and a final official statement (the "Final Official Statement") to the actual purchasers thereof; WHEREAS, the Districtwill execute and deliver a continuing disclosure agreement (the "Continuing Disclosure Agreement") for the benefit of the Owners, as defined in the Trust Agreement, of the 2005 Certificates and in order to assist the Underwriter in complying with SEC. Rule 15c2-12(b)(5); WHEREAS, in furtherance ofthe execution and delivery of the 2005 Certificates, there has been submitted to this Board, for its consideration and approval, a form of the following: A. the Master Installment Purchase Contract; B. the First Supplemental Installment Purchase Contract; C. the Trust Agreement; D. the Auction Agency Agreement; E. the Broker-Dealer Agreement; F. the Certificate Purchase Agreement; G. the Preliminary Official Statement; and H. the Continuing Disclosure Agreement. 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 consummation of the financing authorized hereby 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 forthe purposes, in the manner and upon the terms herein provided; 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; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Vallecitos Water District, as follows: Section 1. The above recitals are true and correct and this Board so finds. Section 2. The form and substance of the Master Installment Purchase Contract and Resolution No. 1246 Page 3 the First Supplemental Installment Purchase Contract are approved. The President or 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 deliver the Master Installment Purchase Contract and the First Supplemental Installment Purchase Contract in the forms submitted 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; however, such changes, insertions and omissions shall not authorize an aggregate principal amount of 2005 Installment Payments in excess of $67,000,000, shall not result in the term of the 2005 Contract exceeding 35 years, and shall provide that the 2005 Certificates be initially issued as auction rate certificates (ARCs); Section 3. The form and substance of the Trust Agreement is approved. Any Authorized Officer is authorized and directed, for and in the name of the District, to execute and deliver the 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. Section 4. The execution and delivery of 2005 Certificates, evidencing principal in an aggregate amount of not to exceed $67,000,000, payable in the years and in the amounts, and evidencing principal and interest components of the 2005 Installment Payments as specified in the Trust Agreement, as finally executed, are hereby authorized and approved. Section 5. The form and substance of the Auction Agency Agreement is approved. Any Authorized Officer is authorized and directed, for and in the name of the District, to execute and deliver the Auction Agency 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. Section 6. The form and substance of the Broker-Dealer Agreement, is approved. Any Authorized Officer is authorized and directed, for and in the name of the District, to acknowledge and deliver the Broker-Dealer Agreement in the form presented to this Board, with such changes, insertions and omissions as the Authorized Officer acknowledging the same may require or approve, such requirement or approval to be conclusively evidenced by the acknowledgment thereof by such Authorized Officer. Section 7. This Board approves the sale of the 2005 Certificates to the Underwriter. The form and substance of the Certificate Purchase Agreement is approved. Any Authorized Officer is authorized and directed, for and in the name of the District, to execute and deliver the Certificate Purchase 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 Resolution No. 1246 Page 4 by such Authorized Officer; however, the underwriter's discount for the sale of the 2005 Certificates shall not exceed 1 % of the aggregate principal amount thereof. Section 8. (a) The form and substance of the Preliminary Official Statement related to the sale of the 2005 Certificates is approved. Any Authorized Officer is authorized to approve corrections and additions to the Preliminary Official Statement by supplement or amendment thereto, by appropriate insertions, or otherwise as appropriate, 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 2005 Certificates or to the proceedings of this Board related thereto, or that such corrections or additions are in form rather than in substance. (b) This Board finds and determines that the Preliminary Official Statement 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. (c) Any Authorized Officer is authorized and directed to cause the Preliminary Official Statement to be brought into the form of a final official statement (the "Official Statement"), and, if required by the Underwriter, to execute a statement that the facts contained in the final Official Statement, 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 sale of the 2005 Certificates, true and correct in all material respects and that the final Official Statement did not, on the date of sale of the 2005 Certificates, and does not, as ofthe date of delivery of the 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 Official Statement, which shall include such changes and additions thereto deemed advisable by an Authorized Officer and such information permitted to be excluded from the Preliminary Official Statement pursuant to the Rule, shall be conclusive evidence of the approval of the final Official Statement by the District. (d) The Official Statement shall be executed by either the President of this Board or the Director of Finance, either of whom is authorized and directed to execute the Official Statement on behalf of the District. (e) The Underwriter is authorized to distribute the Preliminary Official Statement and the final Official Statement to be derived therefrom in connection with sale and distribution of the 2005 Certificates. Section 9. The form and substance of the Continuing Disclosure Agreement is approved. Any Authorized Officer is authorized and directed, for and in the name and on behalf of the District, to execute and deliver the Continuing Disclosure Agreement in substantially such form, together with such changes therein as an Authorized Officer may require or approve, such approval to be conclusively evidenced by the execution and delivery Resolution No. 1246 Page 5 thereof. Section 10. 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 execution and delivery of the 2005 Certificates, the transactions contemplated by this Resolution, and the documents herein approved, including the execution and delivery of an escrow agreement or prepayment certificate and notice related thereto, in form acceptable to the Trustee, related to the prepayment of the District's outstanding Water Revenue Certificates of Participation (Twin Oaks Reservoir Project) as a part of the financing herein contemplated; the funding of the Reserve Fund with a letter of credit, surety bond or insurance policy pursuant to the terms of the Trust Agreement if, upon the advice of the Underwriter, the funding of the Reserve Fund with a letter of credit, surety bond or insurance policy will be economically beneficial to the District; the insuring of all or any portion of the 2005 Certificates through one or more municipal bond insurance companies, if, upon the advice of the Underwriter, such insurance will result in a lower true interest cost to the District; and, the investment of the proceeds of the 2005 Certificates in one or more Investment Securities. Section 11. All actions heretofore taken by the officers and employees of the District with respect to the execution, delivery and sale of the 2005 Certificates, or in connection with or related to any ofthe agreements or documents referenced herein, are approved, confirmed and ratified. PASSED, APPROVED AND ADOPTED by the Board of Directors of the Vallecitos Water District at a meeting held on this 15th day of June, 2005 by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: DAVY, SHELL, FERGUSON GENTRY, HANNAN Margaret E. Ferguson, P Board f Directors Vallecitos Water District ATTEST: \ }.J)'-M l /ÜY William W. Rucker, Secretary Board of Directors Vallecitos Water District