Autthorizing the acquistion, construction, and installation of certain improvements and extensions to sewage works, the issuance and sale of additional revenue bonds

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(b) Debt Service Reserve Account. On the first day of each calendar month, after making the credits to the Bond and Interest Account, there shall be credited from available net revenues to the Debt Service Reserve Account an amount not less than an amount which will produce, in equal monthly installments over atwenty-four (24) month period, an amount equal to the least of (i) maximum annual debt service on all bonds payable from the net revenues of the Sewage Works, (ii) 125% of the average annual principal and interest payable on all bonds payable from the net revenues of the Sewage Works, or (iii) ten percent (10%) of the proceeds of all bonds payable from the net revenues of the Sewage Works, plus a minor portion thereof as defined in the Internal Revenue Code of 1986, as amended (the "Code") (the "Debt Service Reserve Requirement"). Said credits to the Debt Service Reserve Account shall continue until the balance therein shall equal the Debt Service Reserve Requirement. The Debt Service Reserve Account shall constitute the margin for safety as a protection against default in the payment of principal of and interest on the bonds, and the moneys in the Debt Service Reserve Account shall be used to pay current principal and interest on the bonds to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. In the event moneys in the Debt Service Reserve Account are transferred to the Bond and Interest Account to pay principal and interest on bonds, then such depletion of the balance in the Debt Service Reserve Account shall be made up from the next available net revenues after the credits into the Bond and Interest Account hereinbefore provided for. Any moneys in the Debt Service Reserve Account in excess of the Debt Service Reserve Requirement shall be transferred to the Sewage Works Improvement Fund, and in no event shall such excess moneys be held in the Debt Service Reserve Account. Section 12. Sewage Works Improvement Fund. On the first day of each calendar month after the 1998 Bonds are issued, after meeting the requirements for operation, repair, and maintenance, and the Sewage Works Sinking Fund, all available net revenues shall be credited to the fund created under the 1993 Bond Ordinance and continued hereby, and designated as the "Sewage Works Improvement Fund". Said fund shall be used for improvements, replacements, additions and extensions of the Sewage Works. Moneys in the Sewage Works Improvement Fund shall be transferred to the Sewage Works Sinking Fund if necessary to prevent a default in the payment of principal and interest on the then outstanding bonds or if necessary to eliminate any -19- ::ODMA\PCDOCS\SBDOCS ri 14947\3