Okaloosa County BOCC — April 1, 2014 — Bond Trust Indenture.2BL — reading text

held by the Bond Trustee in trust and shall be applied to the payment of the costs of issuing the Bonds, including necessary incidental expenses and reimbursement to the Borrower for such costs and expenses paid by the Borrower in connection with issuing the Bonds and, pending such application, shall be subject to a lien and charge in favor of the holders of the Bonds for their security until paid out. After completion of payment of all costs of issuance of the Series 2014 Bonds, as certified by a Written Request of the Borrower to the Bond Trustee, and in any event no later than April 1, 2015, any surplus money in the Expense Fund shall be transferred to the Project Fund. Payments from the Expense Fund shall be made in accordance with the provisions of this paragraph. Before any such payment shall be made, there shall be filed with the Bond Trustee a Written Request of the Borrower substantially in the form attached hereto as EXHIBIT B, stating (i) the name of the person, firm or corporation to whom each such payment is due, (ii) the amount of each payment, and (iii) the purpose by general classification for which each obligation to be paid was incurred. Such Written Request shall be accompanied by written invoices for the matters referenced therein and if the purpose of the Written Request is to reimburse the Borrower for prior expenditures, proof of prior payment by the Borrower of such invoices. Upon receipt of each requisition the Bond Trustee shall pay the obligation set forth in such requisition out of money in the Expense Fund, and each such obligation shall be paid by wire transfer or by check signed by one or more officers or employees of the Bond Trustee designated for such purpose by the Bond Trustee. In making such payments the Bond Trustee may rely upon such Written Requests. SECTION 3.2. PROJECT FUND. A special fund is hereby established with the Bond Trustee and designated the "Project Fund – Auburn Water System, Inc. Project" (hereinafter called the "Project Fund"), to the credit of which such deposits shall be made as are required by the provisions of Section 3.3 of this Bond Indenture. Monies in the Project Fund shall be held by the Bond Trustee in trust and shall be applied to the payment of, and reimbursement to the Borrower for, costs and expenses in connection with the Project, and, pending such application, shall be subject to a lien and charge in favor of the holders of the Bonds for their security until paid out. After completion of the Project, as certified in a Written Request of the Borrower to the Bond Trustee, surplus money in the Project Fund shall be applied as directed in such Written Request as follows (and in the following order): (a) to pay the costs of new improvements or 21 equipment for the Borrower, but only upon receipt by the Bond Trustee of an Opinion of Bond Counsel that such payment will not adversely affect the validity of, or the exclusion from, gross income for federal income tax purposes of interest on the Series 2014A Bonds, (b) to the Bond Sinking Fund to pay interest coming due on the Bonds on the next two Interest Payment Dates, (c) upon receipt of an Opinion of Bond Counsel that such payment will not adversely affect the validity or exclusion from gross income for federal tax purposes of the interest on the Series 2014A Bonds, to the Bond Sinking Fund to pay the principal coming due on the Bonds on the next Principal Payment Date, and (d) to the Redemption Fund and held as a segregated subaccount therein to be used to purchase and retire Bonds at the Written Request of the Borrower or to redeem Bonds on their first optional redemption date, and such surplus money shall not be invested at a yield exceeding the yield on the Bonds. Payments from the Project Fund shall be made in accordance with the following provisions: before any such payment shall be made, there shall be filed with the Bond Trustee a Written Request of the Borrower substantially in the form attached hereto as EXHIBIT B, stating: (a) The name of the person, firm or corporation to whom each such payment is due; (b) The respective amounts to be paid; (c) The purpose by general classification for which each obligation to be paid was incurred; and (d) That obligations in the stated amounts have been incurred by the Borrower and are presently due and payable and that each item thereof is a necessary cost of the Project and is a proper charge against the Project Fund and has not been paid previously from the Project Fund. Such Written Request shall be accompanied by a summary of such invoices for the matters referenced therein and if the purpose of the Written Request is to reimburse the Borrower for prior expenditures, evidence of prior payment by the Borrower of such amounts. Upon receipt of each Written Request, the Bond Trustee shall pay the obligations set forth in such Written Request out of moneys in the Project Fund, and each such obligation shall be paid by check signed by the Bond Trustee or by wire transfer in accordance with the instructions provided by the Borrower. In making such payments, the Bond Trustee may conclusively rely upon such Written Request. SECTION 3.3. DEPOSIT OF BOND PROCEEDS. The Issuer, for and on behalf of the Borrower, shall deposit or cause to be deposited with the Bond Trustee all of the proceeds (net of discount, if any) loaned to the Borrower from the sale of the Series 2014 Bonds and the Bond Trustee shall deposit such proceeds as follows: (a) deposit $__________ of the Series 2014A Bond proceeds and $__________ of the Series 2014B Bond proceeds to the credit of the Bond Sinking Fund established pursuant to Section 4.2 hereof; and 22  (b) deposit $_________ of the Series 2014A Bond proceeds and $_________ of the Series 2014B Bond proceeds to the credit of the Expense Fund established pursuant to Section 3.1 hereof. (c) deposit the remainder of the Series 2014A Bond proceeds ($_________) to the credit of the Project Fund established pursuant to Section 3.2 hereof. (d) utilize the remainder of the Series 2014B Bond proceeds to retire the Refunded Indebtedness on the date hereof. 23  ARTICLE IV REVENUES AND FUNDS SECTION 4.1. SOURCE OF PAYMENT OF BONDS. The Bonds herein authorized and all payments to be made by the Issuer thereon and into the various Funds established under this Bond Indenture are not general obligations of the Issuer but are special limited obligations payable solely from amounts payable under the Loan Agreement pledged hereunder (it being understood that such pledged payments do not include the fees and expenses of the Issuer and amounts payable to the Issuer as indemnification under certain circumstances), and amounts on deposit in the Funds created hereunder (other than the Rebate Fund). SECTION 4.2. BOND SINKING FUND. The Issuer shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Bond Sinking Fund – Auburn Water System, Inc." (hereinafter called the "Bond Sinking Fund"). The Bond Sinking Fund shall be held by the Bond Trustee and shall be funded in accordance with Section 4.1 of the Loan Agreement. Except as provided in this paragraph, in Sections 7.6 or 8.2 hereof and as directed by the Borrower pursuant to the Tax Exemption Agreement, moneys in the Bond Sinking Fund shall be used solely for the payment of interest on and principal of the Bonds as the same shall become due and payable and to redeem the Bonds in accordance with the mandatory Bond Sinking Fund redemption schedule provided in Section 5.1 hereof. The Bond Trustee shall at all times maintain accurate records of deposits into the Bond Sinking Fund, and the sources and dates of such deposits. In lieu of such mandatory Bond Sinking Fund redemption the Bond Trustee may, at the written request of the Borrower, purchase an equal principal amount of Bonds with the same Maturity Date in the open market at prices not exceeding the principal amount of the Bonds being purchased plus accrued interest. In addition, the amount of Bonds to be redeemed on any date pursuant to the mandatory Bond Sinking Fund redemption schedule shall be reduced by the principal amount of Bonds with the same Maturity Date which are acquired by the Borrower and delivered to the Bond Trustee for cancellation. SECTION 4.3. REDEMPTION FUND. The Issuer shall establish with the Bond Trustee and maintain so long as any of the Bonds are outstanding a separate account to be known as the "Redemption Fund – Auburn Water System, Inc. Project" (the "Redemption Fund"). In the event of (i) prepayment by or on behalf of the Borrower under the Loan Agreement, (ii) receipt by the Bond Trustee of condemnation awards or insurance proceeds for purposes of redeeming Bonds, or (iii) deposit with the Bond Trustee by the Borrower or the Issuer of moneys from any other source for redeeming Bonds, except as otherwise provided in Section 4.2 of this Bond Indenture, such moneys shall be deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall be used first to make up any deficiencies existing in the Bond Sinking Fund, and second for the purchase or redemption of Bonds in accordance with the provisions of Article V hereof. SECTION 4.4. INVESTMENT OF FUNDS; INCOME. (a) Moneys in the Bond Sinking Fund, Expense Fund, Project Fund and Redemption Fund shall be invested in Qualified Investments upon a Written Request of the Borrower filed with the Bond Trustee; provided, however, that moneys held in the Redemption Fund shall only 24 be invested in United States Government Obligations with a term not exceeding the earlier of 30 days from the date of investment of such moneys or the date such moneys are anticipated to be required. Absent a written request regarding investment instructions, the Bond Trustee shall invest the subject moneys in any investment vehicle described in item D of the term "Qualified Investments." Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are anticipated to be required. The Bond Trustee, when authorized by the Borrower, may trade with itself in the purchase and sale of securities for such investments; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained herein. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. Any purchase or sale of securities may be accomplished through the Bond Trustee's bond department. (b) All income derived from the investment of moneys on deposit in the following funds shall be deposited as follows: (i) income derived from the investment of moneys on deposit in the Redemption Fund, Expense Fund and the Bond Sinking Fund shall be retained in such Funds; and (ii) income derived from the investment of moneys on deposit in the Project Fund (A) prior to the completion of the Project, shall be retained in the Project Fund, and (B) after completion of the Project, shall be applied in accordance with Section 3.2 hereof. SECTION 4.5. TRUST FUNDS. All moneys received by the Bond Trustee under the provisions of this Bond Indenture shall be trust funds under the terms hereof for