25-20 Sewage Works Refunding Bond Ordinance

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(iii) The City may, upon the issuance of the Refunding Bonds, establish within the Reserve Account a refunding subaccount for the Refunding Bonds (or separate subaccounts for each series of the Refunding Bonds with each containing the year and series designation of the corresponding Refunding Bonds) (as used herein, each a "Refunding Subaccount"). Each Refunding Subaccount shall constitute the margin for safety and as protection against default in the payment of principal of and interest on the corresponding series of Refunding Bonds, and the moneys in each such Refunding Subaccount shall be used to pay current principal and interest on the corresponding series of Refunding Bonds to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. (iv) No amounts in each of the Refunding Subaccounts shall be available to pay any principal of or interest or redemption premium, if any,on any Bonds, except the corresponding series of Refunding Bonds. (v) The balance to be maintained in each of the Refunding Subaccounts shall equal but not exceed an amount(the"Reserve Requirement") equal to the least of(i) the maximum annual debt service on the Refunding Bonds, (ii) one hundred twenty-five percent(125%)of average annual debt service on the Refunding Bonds, or(iii)ten percent (10%) of the proceeds of the Refunding Bonds. (vi) If a Refunding Subaccount is established,and the initial deposit into the Refunding Subaccount does not equal the Reserve Requirement, or if no deposit is made, the City shall deposit a sum of Net Revenues into each such Refunding Subaccount on the last day of each calendar month until the balance therein equals the Reserve Requirement. The monthly deposits shall be equal in amount and sufficient to accumulate the Reserve Requirement in each Refunding Subaccount within five (5) years of the date of delivery of the corresponding series of Refunding Bonds. (vii) Any deficiency in the balance maintained in each Refunding Subaccount shall be made up from the next available Net Revenues remaining after credits into the Bond and Interest Account. Any moneys in each Refunding Subaccount in excess of the Reserve Requirement shall either be transferred to the Sewage Works Improvement Fund(as described herein)or be used for the purchase of outstanding bonds or installments of principal of fully registered bonds of each corresponding series at a price not exceeding the par amount thereof and accrued interest. (viii) As an alternative to holding cash funds in each Refunding Subaccount, the City, with the advice of the Municipal Advisor and the City's bond counsel, may satisfy all or any part of its obligation to maintain any amount in each Refunding Subaccount by depositing a Credit Facility(as defined below)therein,provided that such deposit does not adversely affect any then existing rating on the corresponding series of Refunding Bonds. A "Credit Facility" is hereby defined as a letter of credit, liquidity facility,insurance policy or comparable instrument furnished by a bank,insurance company, financial institution or other entity pursuant to a reimbursement agreement or similar instrument between such entity and the City. As long as any such Credit Facility is in full force and effect, any valuation of each Refunding Subaccount shall treat the - 15 -