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12/03/2012 respect to property tax collection and disbursement procedures. These sections provide an alternative method of apportioning secured taxes whereby agencies levying taxes through the County roll may receive from the County 100% of their taxes at the time they are levied. The County treasury's cash position (from taxes) is insured by a special tax loss reserve fund accumulated from delinquent penalties. The Board of Supervisors of the County may discontinue the procedures under the Teeter Plan altogether, or with respect to any tax or assessment levying agency in the County, if the rate of secured tax and assessment delinquency in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured rolls for that agency. The Special Taxes have been and are expected to continue to be collected pursuant to the procedures described above. Thus, so long as the County maintains its policy of collecting taxes pursuant to said procedures and the City meets the Teeter Plan requirements, the City will receive 100% of the annual Special Taxes Ievied without regard to actual collections; however, there is no assurance that the County Board of Supervisors will maintain its policy of apportioning taxes pursuant to the aforementioned procedures. Reserve Fund The Fiscal Agent Agreement establishes a debt service reserve fund (the "reserve Fund") as a separate fund to be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, as a reserve for the payment of principal of, and interest and any premium on, the Bonds and moneys in the Reserve Fund are subject to a lien in favor of the Owners of the Bonds. The Reserve Fund is required by the Fiscal Agent Agreement to be funded in an amount equal to the "Reserve Requirement" which amount is, as of any date of calculation equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Bonds, (ii) one hundred twenty-five percent (125%) of average Annual Debt Service for any Bond Year, or (iii) ten percent (10%) of the original aggregate principal amount of the Bonds. The Reserve Requirement as of the date of issuance of the Bonds will be $-- Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund (i) for the payment of any rebate liability due to the federal government, (ii) for transfers in connection with Prepayments of Special Taxes, and (iii) the use of moneys in the Reserve Fund in excess of the Reserve Requirement to pay the scheduled debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund. in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds. See Appendix C - "Summary of the Fiscal Agent Agreement." Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund. to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City to be used for any lawful purpose of the City. Notwithstanding the foregoing, no amounts will be transferred from the Reserve Fund as described in the preceding sentence until after (i) amounts in the Reserve Fund are withdrawn for purposes of making rebate payments to the federal government in accordance with the Fiscal Agent Agreement following payment of the -17- 25 RESO. # 15237 MUFF # 505