Agmt08 South Bayside System Authority AKA Silicon Valley Clean Water

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Section 2. Issuance of Bonds; Deposit of Bond Proceeds. Upon the issuance of any series of Bonds, the Authority shall determine whether and to what extent the Members will benefit from the respective projects to be financed from the proceeds of such series of Bonds. The Authority shall establish separate funds for each Member and shall deposit therein such portion of the proceeds of the Bonds as the Authority determines will be expended for projects which are of benefit to such Member; provided, however, that any Bond proceeds which the Authority determines will be expended to finance projects which are of proportionate benefit to all of the Members shall be deposited into a separate fund to be expended only for such projects. The Authority hereby agrees that it will not issue any series of Bonds unless the issuance of such series of Bonds has been duly approved by resolution of the Commission of the Authority at an open public meeting which is conducted in accordance with the Joint Powers Agreement and all applicable provisions of law. Section 3. Debt Service Payments. With respect to any series of Bonds, the City shall be solely responsible for payment of its Allocable Share of the Bond Interest and Redemption Expenses relating to such series of Bonds. Payment of SBSA Bond Payments by the City shall be made as follows: (a) Structure of City's Obligations. At least 30 days prior to the sale of any series of Bonds, the City shall inform the Authority of its preferred period for amortizing the SBSA Bond Payments and whether and for what period it prefers to capitalize the interest portion of the SBSA Bond Payments, and the Authority shall make its best efforts to structure the Bond issue to accommodate such preferences. (b) Payment Dates and Amounts. The City shall pay the SBSA Bond Payments in semiannual installments in the amounts and at the times set forth in the Payment Schedule for such series of Bonds. (c) Payment Schedule. Upon the sale of any series of Bonds, the Authority shall determine the SBSA Bond Payments for such senes of Bonds. Prior to the issuance of such series of Bonds the Authority shall file with the City a Payment Schedule showing the amount and date of each SBSA Bond Payment and setting forth the provisions relating to prepayment of such SBSA Bond Payments. (d) Credit for Reserve Fund and Debt Service Fund Earnings. In determining the amount of the SBSA Bond Payment which the City is required to pay on any semiannual payment date or prepayment date, the City shall be credited for an Allocable Share of any earnings which have been received from the investment of any reserve funds or debt service funds which are established for the Bonds. (e) Payments to Bond Trustee. At the written direction of the Authority, the City shall pay the SBSA Bond Payments to the Bond Trustee or other assignee of the Authority. In the absence of such written direction, the City shall pay the SBSA Bond Payments to the Authority. -2-