Ord 2019-003/authorizing the issuance of the City of San Marcos Special Assessment Revenue Bonds, Series 2018 (Trace Public Improvement District); approving aand authorizing an Indenture of Trust, a Bond Purchase Agreement, an Offering Memorandum, a

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the Trust Estate solely for the benefit of the Owners of the Bonds. Amounts on deposit in the Funds, Accounts and Subaccounts shall be used solely for the purposes set forth herein. (d) Interest earnings and profit on each respective Fund and Account established by this Indenture shall be applied or withdrawn for the purposes of such Fund or Account as specified below. Section 6.2. Initial Deposits to Funds and Accounts. (a) The proceeds from the sale of the Bonds shall be paid to the Trustee and deposited or transferred by the Trustee as follows: (i) to the Capitalized Interest Account of the Bond Fund: $ (ii) to the Reserve Account of the Reserve Fund $ , which is equal to the initial Reserve Account Requirement; (ii) to the Costs of Issuance Account of the Project Fund: $ ; (iii) to the Improvement Account of the Project Fund: $ ; and (iv) to the Administrative Fund: $ (b) Funds received from the Developer on the Closing Date in the amount of $ (the "Initial Deposit", as defined by the Redemption Waiver Agreement) shall be deposited to the Developer Property Tax Reserve Fund. Section 6.3. Pledged Revenue Fund. (a) Immediately upon receipt thereof, the City shall transfer to the Trustee for deposit to the Pledged Revenue Fund the Pledged Revenues, as set forth in the Service and Assessment Plan. Specifically, the City shall direct the Trustee in writing to deposit or cause to be deposited the foregoing amounts as follows (each as set forth in a City Certificate specifying the funds or accounts into which the amounts are to be deposited): (i) first, to the Bond Pledged Revenue Account of the Pledged Revenue Fund in an amount sufficient to pay debt service on the Bonds next coming due, (ii) second, to the Reserve Account of the Reserve Fund in an amount to cause the amount in the Reserve Account to equal the Reserve Account Requirement, (iii) third to the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund the amounts the City determines is necessary to pay and reimburse the Developer for costs of Public Improvements (pursuant to the terms of the Reimbursement Agreement), (iv) fourth to pay other costs of the Public Improvements, and (v) fifth to pay other costs permitted by the PID Act. Notwithstanding the foregoing, the Additional Interest of the Annual Installments shall only be utilized for the purposes set forth in Section 6.7(a) hereof and, on each March 1, beginning March 1, 2019, and on any other day set forth in a City Certificate, the amount of Additional Interest of the Annual Installments confirmed by the City pursuant to a City Certificate, will be deposited into the Delinquency & Prepayment Reserve Account, and/or the Redemption Fund, as 38