Okaloosa County BOCC — April 1, 2014 — Loan Agreement.2BL — reading text

the market value of the gross plant of the System, an Officer's Certificate of the Borrower shall determine that one or more of the conditions for sale, lease or disposition of property provided for in the second paragraph of this Section 5.19 have been met; or (2) if the amount to be received from such sale, lease or other disposition of said property shall be in excess of five percent (5%) of the market value of the gross plant of the System, (a) the Borrower and the Consulting Engineers shall each first make a finding in writing determining that one or more of the conditions for sale, lease or other disposition of property provided for in the second paragraph of this Section 5.19 have been met, (b) the Governing Body shall, by resolution, duly adopt, approve and concur in the finding of the Officer's Certificate and the Consulting Engineers, and (c) the Borrower shall obtain an opinion of Bond Counsel to the effect that such sale, lease or other disposition is not in violation of the Act and will not adversely affect the federal tax exempt status of interest on the Bonds (other than the Series 2014B Bonds) or shall not otherwise affect the status of any Outstanding Bonds. Notwithstanding the foregoing provisions of this Section 5.19, the Borrower shall have the authority to sell for fair and reasonable consideration any land comprising a part of the System which is no longer necessary or useful in the operation of the System. The Borrower may make contracts or grant licenses for the operation of, or grant easements or other rights with respect to, any part of the System if such contract, license, easement or right does not, in the opinion of the Consulting Engineers, as evidenced by a certificate to that effect filed with the Borrower, impede or restrict the operation by the Borrower of the System, but any payments to the Borrower under or in connection with any such contract, license, easement or right in respect of the System or any part thereof shall constitute Gross Revenues. SECTION 5.20. INSURANCE. The Borrower will carry such insurance as is ordinarily carried by private or public entities owning and operating utilities similar to the System with a reputable insurance carrier or carriers, in such amounts as the Borrower shall determine to be sufficient, and such other insurance against loss or damage by fire, explosion, hurricane, tornado or other hazards and risks, and said property loss or damage insurance shall at all times be in an amount or amounts equal to the fair appraisal value of the buildings, properties, furniture, fixtures and equipment of the System, or such other amount or amounts as the Consulting Engineers or an insurance consultant who has a favorable reputation and experience and is qualified to survey risks and to recommend insurance coverage for Persons engaged in operations similar to the System, shall recommend or approve as sufficient. The Borrower may establish certain levels of insurance for which the Borrower may self- insure. Such levels of insurance shall be in amounts as recommended in writing by an insurance 16 consultant who has a favorable reputation and experience and is qualified to survey risks and to recommend insurance coverage for Persons engaged in operations similar to the System. The proceeds from property loss and casualty insurance shall, together with other available funds of the Borrower, be used to repair or replace the damaged portion of the System; provided, however, if the Issuer makes a determination in accordance with Section 5.19 hereof that such portion of the System is no longer necessary or useful in the operation of the System, such proceeds shall (1) if such proceeds equal or exceed $500,000, (a) be applied to the redemption or purchase of Bonds or (b) be deposited in irrevocable trust for the payment of Bonds in the manner set forth in the Bond Indenture, provided the Borrower has received an opinion of Bond Counsel to the effect that such deposit shall not adversely affect the exclusion, if any, from gross income of interest on the Outstanding Bonds for purposes of federal income taxation (other than the Series 2014B Bonds) and will not otherwise affect the status of any Outstanding Bonds, or (2) if such proceeds are less than $500,000, be used for lawful purposes of the System. SECTION 5.21. NO FREE SERVICE. The Borrower will not render or cause to be rendered any free services of any nature by its System, nor will any preferential rates be established for users of the same class; provided, however, the foregoing clause shall not be construed to prevent the Borrower from establishing various classes of users based on any factors deemed necessary or desirable by the Borrower. Different rates may be established for different classes. SECTION 5.22. NO IMPAIRMENT OF RIGHTS. The Borrower will not enter into any contract or contracts, nor take any action, the results of which might impair the rights of the Holders of the Bonds. SECTION 5.23. ENFORCEMENT OF CHARGES. The Borrower shall compel the prompt payment of rates, fees and charges imposed in connection with the System, and to that end will vigorously enforce all of the provisions of any requirement of the Borrower having to do with System connections and charges, and all of the rights and remedies permitted the Borrower under law, including the requirement for the making of a reasonable deposit by each user and the requirement for lawful disconnection of services for all premises delinquent in the payment of any duly invoiced bill. SECTION 5.24. CONSULTING ENGINEERS. The Borrower shall employ Consulting Engineers, whose duties shall be to make any certificates and perform any other acts required or permitted of the Consulting Engineers under this Loan Agreement, and also to review the construction and operation of the System, to make an inspection of the System at least once every three years, and to submit to the Borrower a report with recommendations as to the proper maintenance, repair and operation of the System, including recommendations for expansion and additions to the System to meet anticipated service demands, and an estimate of the amount of money necessary for such purposes. Copies of such reports, recommendations and estimates made as hereinabove provided shall be filed with the Borrower for inspection by Bondholders, if such inspection is requested. 17  ARTICLE VI EVENTS OF DEFAULT AND REMEDIES THEREFOR SECTION 6.1. EVENTS OF DEFAULT AND REMEDIES. The occurrence and continuance of any of the following events shall constitute an "event of default" hereunder: (a) failure by the Borrower to make any payment required by Section 4.1 or 4.2 hereof for the payment of the Bonds when the same shall become due and payable, whether upon a scheduled Interest Payment Date, at maturity, upon any date fixed for prepayment or purchase, by acceleration or otherwise; or (b) failure of the Borrower to comply with or perform any of the covenants, conditions, or provisions hereof or of the Tax Exemption Agreement or Continuing Disclosure Agreement and, except in case of a failure under Section 6.1(a) hereof which shall immediately constitute an event of default, to remedy such default within sixty (60) days after written notice thereof from the Issuer or the Bond Trustee, to the Borrower, the Issuer and the Bond Trustee; provided that, if such default cannot with due diligence and dispatch be wholly cured within 60 days but can be wholly cured, the failure of the Borrower to remedy such default within such 60- day period shall not constitute a default hereunder if the Borrower shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or (c) if any representation or warranty made by the Borrower herein or in any statement or certificate furnished to the Issuer, the Bond Trustee or the purchaser of any Bonds in connection with the sale of the Bonds or furnished by the Borrower pursuant hereto proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within sixty (60) days after written notice thereof by the Issuer to the Borrower, or the Issuer, as the case may be; or (d) if the Borrower admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for the Borrower, or for the major part of its property; or (e) if a trustee, custodian or receiver is appointed for the Borrower or for the major part of its property and is not discharged within sixty (60) days after such appointment; or (f) if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors under federal or State law are instituted by or against the Borrower (other than bankruptcy proceedings instituted by the Borrower against third parties) and, if instituted against the Borrower, are not dismissed, stayed or otherwise nullified within 60 days after institution; or (g) if payment of any installment of interest or principal, or any premium, on any Bond shall not be made when the same shall become due and payable under the provisions of the Bond Indenture. 18  Upon the occurrence of an event of default, the Bond Trustee may, or upon receipt from the owners of at least 51% of the principal amount of the Bonds then Outstanding of a request to do so, shall, by written notice to the Borrower, declare all amounts due under this Loan Agreement to be immediately due and payable. Upon the occurrence of any event of default, the Bond Trustee as assignee of the Issuer, may take whatever action at law or in equity it deems necessary or desirable (i) to collect any amounts then due under this Loan Agreement, (ii) to enforce performance of any obligation, agreement or covenant of the Borrower under this Loan Agreement, or any other document to which the Borrower is a party associated with the issuance of the Bonds, or (iii) to otherwise enforce any of its rights. No waiver of any event of default extends to or affects any subsequent event of default or impairs any rights or remedies consequent thereon. The Borrower will give Immediate Notice to the Issuer and the Bond Trustee of any event of default. SECTION 6.2. APPLICATION OF PROCEEDS OF REMEDIES. The proceeds or avails resulting from the exercise of any such remedies, together with any other sums which then may be held by the Issuer (or the Bond Trustee, as assignee of the Issuer) under this Loan Agreement, whether under the provisions of this Article or otherwise, and which are available for such application shall be applied as follows: FIRST: To the payment of the costs and expenses of the exercise of such remedies, including reasonable compensation to the Issuer and the Bond Trustee, their agents, attorneys and counsel, and the expenses of any judicial proceedings wherein the same may be made, and of all fees, expenses, liabilities and advances made or incurred by any of them as