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Section 8. Deposit and Use of Bond Proceeds. <br />(a) Construction Fund Deposit, Investment and Use of Proceeds. The proceeds of the <br />Bonds, less the amount necessary to satisfy the Reserve Requirement applicable to the Bonds (if any) <br />as set forth in subsection (b), shall be deposited in the Construction Fund and be used to pay the costs <br />of issuance and sale of the Bonds and the costs of carrying out the Projects. Until needed to pay such <br />costs, the City may invest those proceeds temporarily in any Permitted Investment, and the <br />investment earnings shall be retained in the Construction Fund and used for the purposes of that fiind, <br />except that earnings subject to a federal tax or rebate requirement may be withdrawn from the <br />Construction Fund and used for those tax or rebate purposes. <br />Implementation or completion of any specified Project shall not be required if the City <br />determines that, due to substantially changed circumstances, it has become advisable or impractical. <br />If the Projects are completed (or their completion duly provided for) by another source of funds, or if <br />their completion found to be impractical, the City may apply the Bond proceeds or any portion <br />thereof or to other improvements to the Water & Sewer System, as the City Council in its discretion <br />may direct. If the Bond proceeds, plus other legally available funds, are insufficient to accomplish all <br />of the Projects, the City may use the available funds for paying the cost of such portion of the <br />Projects deemed by the Council most necessary and in the best interest of the City. <br />(b) Resenve Requirement. On the Issue Date, if the Finance Director designates the Bonds <br />as Covered Bonds, proceeds of the Bonds in an amount (if any) necessary to satisfy the Reserve <br />Requirement in the manner and time as determined by the Finance Director and approved in the Sale <br />Terms, may be deposited into the Common Reserve Subaccount or, in the discretion of the Finance <br />Director, into a separate reserve subaccount created to secure the Bonds. In the Finance Director's <br />discretion, the Finance Director may create such additional reserve subaccounts within the Revenue <br />Bond Fund as may be required in respect of a series of Parity Bonds that are not Covered Bonds (if <br />any). <br />Section 9. Redemption Provisions and Purchase of Bonds. <br />(a) Optional Redemption. Each Series of the Bonds shall be subject to redemption at the <br />option of the City on terms acceptable to the Designated Representative, as set forth in the Bond <br />Purchase Agreement, consistent with the parameters set forth in Exhibit C. <br />(b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond <br />Purchase Agreement, except as set forth below, shall be called for redemption at a price equal to the <br />stated principal amount to be redeemed, plus accrued interest, on the dates and in the amounts as set <br />forth in the Bond Purchase Contract. If a Term Bond is redeemed under the optional redemption <br />provisions, defeased or purchased by the City and surrendered for cancellation, the principal amount <br />of the Term Bond so redeemed, defeased or purchased (irrespective of its actual redemption or <br />purchase price) shall be credited against one or more scheduled mandatory redemption installments <br />for that Term Bond. The City shall determine the manner in which the credit is to be allocated and <br />shall notify the Bond Registrar in writing of its allocation prior to the earliest mandatory redemption <br />date for that Term Bond for which notice of redemption has not already been given. <br />(c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the <br />A* Bonds within a Series are to be redeemed at the option of the City, the City shall select <br />the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a <br />Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the <br />Securities Depository to be redeemed in accordance with the Letter of Representations, and the Bond <br />Registrar shall select all other Bonds to be redeemed randomly in such manner as the Bond Registrar <br />14 <br />