(b) no moneys forming a part of any such fund shall be invested in any investments other than such as are expressly authorized herein.

Transcription

1 at any time held in the Debt Servie Fund may be invested only in Federal Obligations having stated maturities, or being redeemable at the option of the holder thereof at a stated prie and time, not later than the date upon whih suh moneys will be needed for the payment of prinipal of or interest on the Parity Seurities. The investments held in eah of the other Indennire Funds shall have suh maturities as shall result in the availability at all times of suffiient ash moneys for the various pmposes to be served by eah of suh funds. Subjet to the limitations imposed by the provisions of the first paragraph of this setion, the County hereby reserves the right to ontrol the investment of the moneys at any time on deposit in the Indenture Funds and hereby designates the County's Diretor of Finane as its representative for the purpose of ommuniating investment deisions to the Trustee. In partiular, and without limiting the generality of the foregoing, County's Diretor of Finane may from time to time speify to the Trustee the types and maturities of the Eligible Investments to be aquired with the moneys held in the Indenture Funds, the prie to be paid for suh investments and the seurities dealer or dealers from whih suh investments are to be aquired. So long as suh diretions from the County's Diretor of Finane are not inonsistent with the provisions of the first paragraph of this setion, the Trustee will aquire the speified investments from the speified dealer or dealers and at any speified prie, regardless of its opinion as to the prudene of suh investments or its ability to aquire suh investments upon more favorable terms from another soure; provided, however, that the County's Diretor of Finane shall have no right to require, and the Trustee shall be prohibited from making,any investment that would result in any of the Parity Seurities being onsidered "arbitrage bonds" within the meaning of Setion 148 of the Code and the appliable regulations thereunder. In the absene of general or speifi investment diretions from the County's Diretor of Finane, the Trustee shall invest the moneys held in the Indenture Funds in aordane with its general praties respeting the investment of publi moneys held in trust. The Trustee shall not be liable or responsible for any loss resulting from any investment made in aordane with the provisions of this paragraph. AIl Eligible Investments in whih any portion of the moneys in any Indenture Fund are invested, together with all inome therefrom, shall beome a part of the partiular Indenture Fund from whih moneys were used to make suh investment; provided that (a) so long as the balane in the Reserve Fund is equal to the Reserve Fund Requirement, any inome or profits derived from the investment of moneys held in the Reserve Fund shall be transferred to the Debt Servie Fund Primary Aount and (b) so long as the balane in the Rate Stabilization Fund is equal to the Rate Stabilization Fund Requirement, any inome or profits derived from the investment.of moneys held in the Rate Stabilization Fund shall be paid to the County. Setion 11.9 Commingling of Moneys in Separate Indenture Funds. Any provision hereof to the ontrary notwithstanding, moneys on deposit in any Indenture Fund may be ommingled and ombined with moneys in any of the other Indenture Funds for the purpose of making investments under the provisions of Setion 11.8 hereof, subjet to the following onditions: 64

2 (a) all interest, inome or profit realized from any suh ommingled investment shall be redited, and all losses resulting therefrom shall be harged, to eah suh fund in the same respetive proportions as the amount invested from eah suh fund bears to the total amount so invested (subjet, however, to the provisions of the said setion whih, under ertain irumstanes, provide for a different disposition of the earnings from the Reserve Fund or the Rate Stabilization Fu~d); and (b) no moneys forming a part of any suh fund shall be invested in any investments other than suh as are expressly authorized herein. C / Setion Valuation of Indenture Funds. Any investments onstituting a part of the Indenture Funds shall, for purposes of this Indenture, be valued at their fair market value (exlusive of arued interest), exept that any investments having a tenn of less than six months may be valued at par. The Trustee shall make a valuation of investments in the Reserve Fund on the first Business Day of eah alendar month and at suh other times as the County may request or as may be neessary to asertain ompliane with the provisions of the Indenture. If as a result of suh valuation the balane in suh fund is determined to be less than the balane required to be maintained therein under the tenns of this Indenture, then monthly transfers,to suh fund shall be resumed and ontinued as required by Setion 11.3 hereof. Setion Reserve Fund Surety Requirements. The County may satisfy all or a portion of the Reserve Fund Requirement by the deposit with the Trustee of a surety bond, insurane poliy or letter of redit that satisfies the sueeding requirements of this Setion , A surety bond or insurane poliy issued to the Trustee by a ompany liensed to issue insurane poliies guaranteeing the timely payment of debt servie on muniipal bonds (a "muniipal bond insurer") may be deposited in the Reserve Fund to meet the Reserve Fund Requirement if the laims paying ability of the issuer thereof is rated "MA" or "Aaa" by S&P or Moody's, respetively. A surety bond or insurane poliy issued to the Trustee by an entity other than a muniipal bond insurer may be deposited in the Reserve Fund to meet the Reserve Fund Requirement if the form and substane of suh instrunient and the issuer thereof are approved by the Bond Insurer. An unonditional irrevoable letter of redit issued to the Trustee bya bank may be deposited in the Reserve Fund to meet the Reserve Fund Requirement if the issuer thereof is rated at least "AA" by S&P or "Aa" by Moody's. Any suh letter of redit shall be payable in one or more draws upon presentation by the Trustee of a sight draft aompanied by its ertifiate that it then holds insuffiient funds to make a required payment of prinipal of or interest on the Parity Seurities. Any suh draw shall be payable within two days of presentation of the related sight draft. Any suh letter of redit shall be for a tenn of not less 65

3 than three years. The issuer of any suh letter of redit shall be required to notify the County and the Trustee, not later than 30 months prior to the stated expiration date of suh letter of redit, as to whether suh expiration date will be extended, and if so, shall indiate the new expiration date. If any suh notie indiates that the expiration date will not be extended, the County shall deposit in the Reserve Fund an amount suffiient to ause the ash or Eligible Investments on deposit in the Reserve Fund, together with any other qualifying redit instruments, to equal the Reserve Fund Requirement on all outstanding Parity. Seurities, suh deposit to be paid in equal installments on at least a semi-annual basis over the remaining term of the letter of redit, unless the letter of redit in question is replaed by another Reserve Fund redit instrument. Any letter of redit in the Reserve Fund shall permit a draw in full not less than two weeks prior to the expiration or termination of suh letter of redit if the letter of redit has not been replaed or renewed. The Trustee shall, in tum, draw upon the letter of redit prior to its expiration or termination unless an aeptable replaement is in plae or ihe Reserve Fund is fully funded in its required amount. The use of any Reserve Fund redit instrument pursuant to this setion shall be subjet to reeipt of an opinion of ounsel aeptable to the Bond Insurer aud in form and substane satisfatory to the Bond Insurer as to the due authorization, exeution, delivery and enforeability of suh instrument in aordane with its terms, subjet to appliable laws affeting reditors' rights generally, and, in the event the issuer of suh redit instrument is not a domesti entity, an opinion of foreign ounsel in form and substane satisfatory to the Bond Issuer. In addition, the use of an irrevoable letter of redit to satisfy ali or a portion of the Reserve Fund Requirement shall be subjet to reeipt of an opinion of ounsel aeptable to the Bond Insurer and in form and substane satisfatory to the Bond Insurer to the effet that payments under suh letter of redit would not onstitute avoidable preferenes under Setion 547 of the United States Bankrupty Code or similar state laws with avoidable preferene provisions in the event of the filing of a petition for relief under the United States Bankrupty Code or similar state laws by or against the County. The obligation to reimburse the issuer of a Reserve Fund redit instrument for any fees, expenses, laims or draws upon suh Reserve Fund redit instrument shall be subordinate to the payment of debt servie on the Parity Seurities. The right of the issuer of a Reserve Fund redit instrument to payment or reimbursement of its fees and expenses shall be subordinated to ash replenishment of the Reserve Fund, and, subjet to the seond 'sueeding sentene, its right to reimbursement for laims or draws shall be on a parity with the ash replenishment of the Reserve Fund. Any Reserve Fund redit instrument shall provide for a revolving feature under whih the amount available thereunder will be reinstated to the extent of any reimbursement of draws or laims paid. If the revolving feature is suspended or terminated for any reason, the right of the issuer of the Reserve Fund redit instrument to reimbursement will be further subordinated to ash replenishment of the Reserve Fund to an amount equal to the differene between the full original amount available under the Reserve Fund redit instrument and the amount then available for further draws or laims. If (a) the issuer of a Reserve Fund redit instrument beomes insolvent or (b) the issuer of a Reserve Fund redit instrument defaults in its payment obligations thereunder or () the laims-paying ability of the issuer of a Reserve Fund insurane poliy or surety bond falls below an S&P "AAA" or a Moody's "Aaa" or (d) the rating of the issuer of a Reserve Fund letter of redit falls below an S&P "AA", the 66

4 obligation to reimburse the issuer Of suh Reserve Fund redit instrument shall be subordinate to the ash replenishment of the Reserve Fund. If (a) the revolving reinstatement feature of a Reserve Fund redit instrument desribed in the preeding paragraph is suspended or terminated or (b) the rating of the laims paying ability of the issuer of a Reserve Fund surety bond or insurane poliy falls below an S&P "AAA" or a Moody's "Aaa" or () the rating of the issuer of a Reserve Fund letter of redit falls below an S&P "AA", the County shall either (i) deposit into the Reserve Fund an amount suffiient to ause the ash or Eligible Investments on deposit in the Reserve Fund to equal the Reserve Fund Requirement on all outstanding Parity Seurities, suh amount to be paid over the ensuing five years in equal installments dep'osited at least semi-aunually or (ii) replae suh instrument with a surety bond, insurane poliy or letter of redit meeting the requirements of this setion within six months of suh ourrene. In the event (a) the rating of the laimspaying ability of the issuer of a Reserve Fund surety bond or insurane poliy falls below "A" or (b) the rating of the issuer of a Reserve Fund letter of redit falls below "A" or () the issuer of a Reserve Fund redit instrument defaults in its payment obligations or (d) the issuer of a Reserve Fund redit instrument beomes insolvent, the County shall either (i) deposit into the Reserve Fund an amount suffiient to ause the ash or Eligible Investments on deposit in the Reserve Fund to equal the Reserve Fund Requirement on all outstanding Parity Seurities, suh amount to be paid over the ensuing year in equal installments on at least a monthly basis or (ii) replae suh instrument with a surety bond, insurane poliy or letter of redit meeting the requirements of this setion within six months of suh ourrene. Where appliable, the amoilnt available for draws or laims under a Reserve Fund redit instrument may be redued by the amount of ash or Eligible Investments deposited in the Reserve Fund pursuant to the preeding provisions of this paragraph. If the County hooses any of the permitted alternatives to a fully ash-funded Reserve Fund desribed in the preeding provisions of this Setion 11.11, any amounts owed by the County to the issuer of any suh redit instrument as a result of a draw thereon or a laim thereunder, as appropriate, shall be inluded in any alulation of debt servie requirements required to be made pursuant to the Indenture for any purpose. The Trustee shall asertain the neessity for a laim or draw upon any Reserve Fund redit instrument and provide notie to the issuer of the Reserve Fund redit instrument in aordane with its terms not later than three days (or suh longer period as may be neessary depending on the permitted time period for honoring a draw under the Reserve Fund redit instrument) prior to eah Interest Payment Date. Cash on deposit in the Reserve Fund shall be used (or investments purhased with suh ash shall be liquidated and the proeeds applied as required) prior to any drawing on any Reserve Fund redit instrument. If and to the extent that more than one Reserve Fund redit instrument is deposited in the Reserve Fund, drawings thereunder and repayments of osts assoiated therewith shall be made on a pro rata basis, alulated by referene to the maximum amounts available thereunder. 67

5 . Setion Issuime Cost Aount. There is hereby reated a speial aount the full name of whih shall be the "Series 1997 Warrants Issuane Cost Aount." The Issuane Cost Aount shall be maintained as a separate aount until the moneys in said aount shall have been fully expended as hereinafter provided.. The Trustee shall be the depository and disbursing agent for the Issuane Cost Aount. The County will apply the moneys in the Issuane Cost Aount solely for payment of the Issuane Costs, as and when suh osts beome due and payable. The President of the Governing Body or any Authorized County Representative is hereby authorized and direted to ause the said osts to be paid, as promptly as may be feasible following the issuane of the Series 1997 Warrants and Series 1997-C Warrants, by submitting to the Trustee requisitions signed by anyone of said offiers direting the payment of the osts speified in said requisition. In the event the moneys deposited in or transferred to the Issuane Cost Aount are not suffiient to pay all Issuane Costs, the President of the Governing Body is hereby authorized and direted to pay, out of any other funds of the County available therefor, the remainder of suh osts. If any moneys remain in the Issuane Cost Aount after the payment of all osts of issuing the Series 1997 Warrants and Series 1997-C Warrants, the Trustee shall transfer suh moneys to the County upon r!!eipt of a ertifiate signed by the President of the Governing Body or any Authorized County Representative stating that all expenses of issuing the Series 1997 Warrants and Series 1997-C Warrants; to the extent known to or antiipated by the County, have been paid in full. ARTICLE XII PARTICULAR COVENANTS AND AGREEMENTS OF THE COUNTY; RELEASE OF PORTION OF THE SYSTEM Setion 12.1 Budget for the System. No later than the first Tuesday in the month of Otober at the beginning of eah Fisal Year, beginning with the Fisal Year that begins on Otober 1, 1997, the County shall ause to be prepared and approved by the Governing Body an annual budget and monthly budgets for the System. Eah suh budget shall inlude the following:. (a) the estimated gross revenues and inome to be derived from the System during suh Fisal Year and in eah month thereof; (b) an estimated sum suffiient to. provide for the payment of all Operating Expenses during suh Fisal Year and in eah month thereof; 68

6 ( () the sum required by this Indenture to be paid into the Debt Servie Fund during suh Fisal Year and in eah month thereof; (d) the sum (if any) required by this Indenture to be paid into the Reserve Fund during suh Fisal Year and in eah month thereof; and (e) the sum (if any) expeted to be transferred from thirate Stabilization Fund into the Revenue Aount during suh Fisal Year and in eah month thereof. The budget in effet for any Fi~al Year may be amended or revised by the County in aordane with hanged irumstanes' and onditions at any time during suh Fisal Year. The County shall submit. a opy of eah suh budget as initially approved to the Trustee. C ' / Setion 12.2 Maintenane of Books and Reords; Annual Audits. The County will maintain omplete and separate books and reords pertaining to the System and all reeipts and disbursements with respet thereto. Within ninety (90) days following the lose of eah Fisal Year, the County will provide the Trustee with unaudited [maniai statements respeting the System prepared by the County's finanial offiers. The County will ause an audit of the books and reords for the System to be ompleted as soon as pratiable after the lose of eah Fisal Year. Eah suh audit shall be made by an Independent Aountant and shall inlude: (a) a statement in reasonable detail of the revenues derived from the System and of Operating Expenses during suh Fisal Year; (b) a statement of hanges in fund balanes for suh Fisal Year; () a balane sheet respeting the System as of the end of suh Fisal Year; (d) a statement of the amounts on deposit in the Indenture Funds at the end of suh Fisal Year; (e) the Independent Aountant's omments regarding the manner in whih the County has arried out the requirements of the Indenture; (f) the Independent Aountant's reommendations for any hanges or improvements in the fmanial operation of the System; (g) a list of the insurane poliies and fidelity bonds in fore with respet to the System at the'end of suh Fisal Year, setting out with respet to eah suh poliy' the amount thereof, the risk overed, the name of the insurer and the expiration date of the poliy; and (h) the number of ustomers onneted to and served by the System at the end of suh Fisal Year, as dislosed by the reords of the County and without any requirement of verifiation thereof by the Independent Aountant. Within one hundred and eighty (180) days following the lose of eah Fisal Year, the County will furnish a opy of suh audit to the Trustee and to eah Rating Ageny whih has a rating outstanding respeting any series of the Parity Seurities, and eah of them is granted the right to disuss'the ontents of the audit with the Independent Aountant making the same and to seure from the Independent Aountant suh additional information respeting the matters therein set out as may be reasonably required. Setion 12.3 Restritions as to Free Servie. The County will not furnish or permit to be furnished any free servie from the System to the State of Alabama, any ounty or inor- 69

7 porated muniipality or any ageny, instrumentality, person, firm or orporation whatsoever, other than to itself and its agenies. All servies furnished from the System shall be harged for at the rates at the time esiablished therefor (exept for those instanes in whih the County has entered into speifi agreements with partiular ustomers, whih speial agreements will not, in the aggregate, affet System Revenues by more than $100,000). Setion 12.4 Disontinuane of Servie on Non-Payment of Bills and Charges. If the aount of any user of utility servie supplied by the System shall remain unpaid for a period of thirty days after suh aount shall beome due (or suh longer period, if any, as may be required for ompliane with appliable federal and state law), the County thereupon will use its best efforts promptly to disontinue furnishing servie to suh user whose aount shall so remain unpaid, but upon subsequent payment of the aount, inluding any penalties whih may be provided for in the appliable shedule of rates of the County, the County may thereafter furnish servie to suh user until suh time as his aount shall again remain unpaid for a period of thirty days after suh aount shall beome due (or suh longer period, if any, as may be required for ompliane with appliable federal and state laws), whereupon the County will again use its best efforts to the end iliat the furnishing of servie shall again be disontinued. The shedule of rates for servie furnished by and from the System shall provide that all aounts for suh servie shah beome due not less often than one eah alendar quarter. Setion 12.5 Maintenane of Rates. (a) The County hereby ovenants and agrees to fix, revise and maintain suh rates for servies furnished by the System as shall be suffiient (i) to provide for the payment of the interest and premium (if any) on and the prinipal of the Parity Seurities, as and when the same beome due and payable, (ii) to provide for the payment of the Operating Expenses and (iii) to enable the County to perform and omply with all of its -ovenants ontained in the Indenture. (b) The County will make from time to time, to the extent permitted by law, suh inreases and other Changes in suh rates and harges as may be neessary to omply with the provisions of the preeding paragraph and to provide, in eah Fisal Year, Net Revenues Available for Debt Servie in an amount that shall result in ompliane with eah of the following two requirements (suh requirements being referred to herein olletively as the "Rate Covenant"); (i) the sum of (A) Net Revenues Available for Debt Servie for a given Fisal Year and (B) the Prior Years' Surplus as of the beginning of suh Fisal Year shall not be less than one hundred and ten perent (110 %) of the aggregate amount payable during suh Fisal Year as debt servie on all_ outstanding Parity Seurities; and (ii) the Net Revenues Available for Debt Servie for a given Fisal Year shall not be less than eighty perent (80%) [or, in the ase of any Fisal 70

8 Year beginning on or after Otober 1, 2007, one hundred perent (100%)] of the aggregate amount payable during suh Fisal Year as debt servie on all outstanding Parity Seurities. For purposes of the Rate Covenant, (a) debt servie on the Parity Seurities shall not inlude any interest (Le., arued interest or apitalized interest) paid with proeeds of Parity Seurities, (b) debt servie shall be redued by any amounts reeived by the County during the Fisal Year in question pursuant to Qualified Swaps, and () debt servie shall be inreased by any amounts paid by the County during suh Fisal Year pursuant to QUalified Swaps. " () The County's Diretor of Finane shall, within sixty (60) days after the end of eah"fisal Year, (i) determine whether or not the Net Revenues Available for Debt Servie and Prior Years' Surplus for the then most reently ompleted Fisal Year were suffiient to result in ompliane with the Rate Covenant for suh Fisal Year (the "Historial Evaluation"), (ii) determine whether or not the ombination of the Net Revenues Available for Debt"Servie for the then most reently ompleted Fisal Year (subjet to adjustment in the manner hereinafter desribed) and the Prior Years' Surplus as of the beginning of the then urrent Fisal Year would be suffiient to result in ompliane with the Rate Covenant for the then urrent Fisal Year (the "Immediate Prospetive Evaluation"), and (iii) determine whether or not the Net Revenues Available for Debt Servie for the then most reently ompleted Fisal Year (subjet to adjustment in the mauner hereinafter desribed) were equal to or greater than 100 % of Maximum Annual Debt Servie (the "Extended Prospetive Evaluation"). For purposes of the Immediate Prospetive Evaluation and the Extended Prospetive Evaluation, the Net Revenues Available for Debt Servie for the preeding Fisal Year may be adjusted to give effet to any inrease in the rates and harges for servies furnished by the System that was put into effet after the beginning of suh Fisal Year. If at the beginning of any Fisal Year the County's Diretor of Finane makes the aforesaid determinations and onludes that the County has failed to satisfy the Historial Evaluation, the Immediate Prospetive Evaluation or the Extended Prospetive Evaluation, then a written notie setting forth suh determinations and the onlusions reahed shall be delivered, no later than Deember 10 in suh Fisal Year, to the Trustee and to eah member of the Governing " Body. The County hereby ovenants, in the event of the delivery of any suh notie of failure to satisfy the Historial Evaluation or the Immediate Prospetive Evaluation (or both), to make an inrease in the rates and harges for servies furnished by the System, in an amount intended to result" in ompliane with the rate ovenant ontained in subsetion (b), with suh rate inrease to be effetive no later than January 1 in suh Fisal Year. Setion 12.6 Continued Operation of the System; Transfer of the System. The County will not hereafter sell, transfer, lease or otherwise dispose of or ease ontrol of the whole or any essential operating part of the System (exept pursuant to Setion or hereof) until all prinipal of and interest and premium (if any) on the Parity Seurities shall have been paid in full, or unless and until prqvision for suh payment shall have been made, as per- 71

9 mitted in Artile XVI hereof. So long as any of the Parity Seurities shall remain outstanding, the County will keep the System in good repair and effiient operating ondition, making from time to time all needed repairs and replaements thereto, and it will ontinuously operate the System in an eonomial and effiient manner. If the laws of Alabama at the time shall permit suh ation t6 be taken, nothing ontained in this setion shall prevent the transfer by the County of the entire System to a publi orporation whose property and inome are not subjet to taxation and whih has the power to own and operate the System; provided that (a) upon any suh transfer, the due and puntual payment of the prinipal of and interest on the Parity Seurities aording to their tenor and the due and puntual performane and observane of all the agreements and onditions provided in this Indenture to be kept and performed by the County shall be expressly assumed in writing by the orporation to whih the System shall be so transferred; (b) suh transfer shall not ause or result in any mortgage or other lien being affixed to or imposed on the System or the revenues therefrom that will be prior to or on a parity with the lien of the pledge herein made for the benefit of the Parity Seurities; and () the County shall deliver to the Trustee an opinion of Bond Counsel to the effet that suh transfer shall not result in the interest on the Parity Seurities beoming subjet to federal inome taxation. Nothing ontained iii this setion shall be onstrued to prevent the County from disposing of portions of the System that may beome obsolete or worn out or that may no longer be needed for the effiient operation of the System. Setion 12.7 Warranties and Representations Conerning Title to the System. The County warrants its title to the System as it presently exists to be free and lear of every lien, enumbrane or harge other than Permitted Enumbranes. The County further warrants and represents that no pledges of, or agreements respeting, the revenues from the System are now outstanding other than those made herein. Exept to the extent speifially permitted otherwise by the provisions of the third paragraph of this setion, the County will maintain its existene, will not dissolve, and will not onsolidate with or merge into another ounty or politial subdivision or permit one or more other ounties or politial subdivision to onsolidate with or merge into it. Further, the County will use its best efforts to maintain, preserve and renew all the rights and powers provided to. it by the onstitution or any appliable laws of the State of Alabama or of the United States of Ameria. If the onstitution and laws of the State of Alabama at the time shall permit suh ation to be taken, nothing ontained in this setion shall prevent the onsolidation of the County with, or the merger of the County into, any ounty or politial subdivision whih has authority to undertake and perform the obligations and agreements of the County under the Indenture; provided that upon any suh onsolidation or merger the following onditions shall be satisfied: (i) the due and puntual payment of the prinipal of and the interest and premium (if any) on the 72

10 Parity Seurities aording to their tenor and the due and puntual performane and observane of all the agreements and onditions ontained in the Indenture to be kept and performed by the County shall be expressly assumed in writing by the orporation resulting from suh onsolidation or surviving suh merger; (ii) suh onsolidation or merger shail not ause or result in any pledge or lien being imposed on the moneys pledged under the Indenture that will be prior to the pledge made in the Indenture for the benefit of the Parity Seurities; and (iii) the County shail deliver to the Trustee an opinion of Bond Counsel to the effet that suh onsolidation or merger shail not ause or result in the interest inome on any of the Parity Seurities beoming subjet to inome taxation by the United States of Ameria, the State of Alabama or any politial subdivision of either thereof. Setion 12.8 System to be Kept Free of Prior Liens. The County will keep the System free and lear from all liens, enumbranes and harges other than Permitted Enumbranes, but it may defer payment of any laim against the System or the revenues therefrom pending the bona fide ontest of any suh laim unless by suh ation the title of the County to the System or any part thereof or the revenues therefrom shall be materially endangered or the System or any part thereof shall be subjet to -Joss or forfeiture, in whih event any suh payment then due shall not be deferred. Nothing herein ontained shall be onstrued to prevent the County from hereafter aquiring from other governmental entities properties that are to onstitute additions or improvements to the System, even though the properties to be aquired, or the revenues derived therefrom, have been subjeted, prior to the County's aquisition thereof, to a lien that is or may be prior to the lien of the Indenture. Setion 12.9 Priority of Pledge. The pledge of the Pledged Revenues herein made shall be prior and superior to any pledge thereof hereafter made for the benefit of any seurities hereafter issued by the County (other than Additional Parity Seurities), and the County agrees that in the event it should hereafter issue any seurities (other than Additional Parity Seurities) or make any ontrat payable out of the Pledged Revenues or for whih any part of the said revenues may be pledged, the County will, in the proeedings under whih any suh seurities or ontrat are authorized, reognize the priority of the pledge of the Pledged Revenues herein made. The County will not plae any mortgage, lien or other enumbrane on the System uuless suh mortgage, lien or other enumbrane is junior or subordinate in all respets to the pledge herein made and the lien herein reated. Setion Sale or Disposition of Personal Property. While J:4e County is not in default under this Indenture, it may, without the onsent of or any release froj;j1 the Trustee, seil or otherwise dispose of any mahinery, equipment or other personal property (inluding mains and pipes embedded in land but not inluding land itself or any building thereon) that shail have beome inadequate, obsolete, worn out, unsuitable for use or undesirable or unneessary for use as a part of the System. The proeeds of any suh sale or other disposition shail not be regarded 73

11 as revenues of the System whih are subjet to the lien of tliis Indenture or whih are required by the provisions hereof to be paid into the Revenue Aount. Setion Sale or Disposition of Portions of the System. While the County is not in default under this Indenture, the County may sell or otherwise dispose of any part of the System (inluding, without limitation, real property or improvements or buildings thereon or mahinery, equipment and other personal property not desribed in Setion hereof), and the Trustee shall onsent to suh sale or other disposition, upon deposit by the County with the Trustee of the following: (i) a resolution of the Goveruing Body desribing in reasonable detail the property to be released, stating the onsideration to be reeived by the County "for suh sale or disposition, stating that the County is not in default under any of the provisions of this Indenture, and requesting suh release; (ii) a ertifiate of a liensed engineer, who may be an employee of the County, stating that the property to be released is not and will not be needed by the County for the safe, effiient and eonomial operation of the remaining portions of the System and that the onsideration to be reeived by the County for suh sale or disposition is not less than the reasonable value of the property to be released; and (iii) the proeeds from suh sale or other disposition. Upon ompliane by the County with the foregoing onditions, the Trustee shall, at the expense of the County, exeute and deliver to the County any and all instruments that may be neessary to release suh property from the lien or enumbrane imposed by this Indenture. Subjet to the provisions of the next paragraph, the proeeds from any suh sale or other disposition of any part or parts of the System shall be deposited in the Revenue Aount, uuless the Governing Body shall provide the Trustee with written diretions to apply all or a portion of suh proeeds for the redemption of Parity Seurities prior to maturity in aordane with the terms of the Indenture and on the earliest pratiable date permitted thereby, in whih event the proeeds from suh sale or other disposition to be used for suh purpose shall be deposited in the Redemption Fund. Setion Insurane with Respet to the System. The County will take out and" ontinuously maintain in effet insurane with respet to those omponents of the System other than underground mains, laterals and olletion lines against suh risks as are ustomarily insured against by systems similar in size and harater to the System, paying as the same beome due all premiums with respet thereto, inluding but not limited to: 74