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8.A. - Page 41 Reserve Fund The Fisc11 Agent Agreement establishes a debt service reserve fund (the "Iteserve 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 u1 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 lggregate principal amount of the Bonds. The Reserve Requirement as of the date of issuailce of the Bonds will be $634,000��. Except as otherwise provided u1 the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund (i) for the plyment of any rebate liability due to the federal government, (ii) for transfers in connection with Prepaymeilts of Special Taxes, and (iu) 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Requirement to pay the scheduled debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fui1d of the amount then required for payment of the pri�zcipal 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, includi�lg 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 u1 the Reserve Fund will be transferred to the City to be used for any 1lwful 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 maki�zg rebate payments to the federal government in accordance with the Fiscal Agent Agreement following payment of the Bonds, and (ii) payment of any fees and expenses due to the Fiscal Agent See Appendix C- "Summary of Fiscal Agent Agreement." Whenever Bonds are to be redeemed with proceeds of Prepayments of Special Taxes pursuant to the provisions of the Fiscal Agent Agreement, a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the Business Day prior to the date on which such Bonds are to be redeemed, be transferred by the Fiscal Agent from the Reserve Fund to the Series 2012 Prepayment Account and shall be applied to the redemption of said Bonds; provided, however, thlt such amount shlll be so transferred only to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement (excluding from the calculation thereof said Bonds to be redeemed). Such proportionate share shall be equal to the largest integral multiple of $5,000 that is not larger than the amount equal to the product of (a) the lmount on deposit in the Reserve Fund on the date five (5) Business Days prior to the date notice of redemption of such Bonds is required to be given pursuant to the provisions hereof, times (b) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstlnding on the day prior to the date on which such Bonds are to be so redeemed. �� Preliminary, subject to change. -17-