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Section 5. Accounts. <br /> (a) Establishment of Accounts. There is hereby established the Project <br /> Account, the Note Account and the Reserve Account. The foregoing accounts shall be <br /> maintained by the District in accordance with the provisions of this Resolution. <br /> (b) Project Account. All moneys received from CWCB under the Loan <br /> Contract shall be credited to the Project Account and shall be applied solely to the <br /> payment of the Project Costs. Upon the determination of the Board that all Project Costs <br /> have been paid or are determinable, any balance remaining in the Project Account (less <br /> any amounts necessary to pay Project Costs not then due and owing) shall be applied <br /> solely in accordance with the terms of the Loan Contract, including without limitation <br /> provision A(5)thereof. <br /> (c) Note Account. Moneys in the Note Account shall be used solely for the <br /> purpose of paying the interest on and principal of the Promissory Note. There shall be <br /> credited to the Note Account an amount of Pledged Revenues which, when combined <br /> with other legally available moneys in the Note Account, will be sufficient to pay the <br /> principal of and interest on the Notes when due. In the event of insufficient Pledged <br /> Revenues, moneys shall be applied as provided in the Loan Contract. Moneys in the <br /> Project Account also may be used to pay the interest accruing under provision A(4) of the <br /> Loan Contract prior to the completion of the Project. To the extent that moneys are not <br /> used from the final disbursement of loan funds pursuant to provision A(4) for such <br /> purpose, Pledged Revenues and other legally available moneys shall be credited to the <br /> Note Account prior to substantial completion of the Project in order to make said <br /> payment when due. <br /> (d) Reserve Account. <br /> (i) Use of Moneys in the Reserve Account. Moneys in the Reserve <br /> Account shall be used, if necessary, only to prevent a default in the payment of <br /> the principal of or interest on the Promissory Note on any Payment Dates and the <br /> Reserve Account is hereby pledged to the payment of the Promissory Note. In the <br /> event the amounts credited to the Note Account are insufficient to pay the <br /> principal of or interest on Promissory Note when due, the District shall transfer <br /> from the Reserve Accounts to the Note Account an amount which, when <br /> combined with moneys in the Note Account will be sufficient to make such <br /> payments when due. <br /> (ii) Funding and Maintenance of Required Reserve Amount. <br /> Commencing with the first Payment Date, the District shall annually credit an <br /> amount equal to one-tenth of the Required Reserve Amount on or before each <br /> Payment Date until such time as the amount credited thereto is equal to the <br /> Required Reserve Amount (i.e., the Reserve Account is to be fully funded within <br /> ten years from substantial completion of the Project). In the event that moneys <br /> from the Reserve Account are transferred to the Note Account as provided in <br /> paragraph (i) of this Subsection, such amount shall be replenished as provided in <br /> {00488776.DOC I 2} 5 <br /> 4833-8387-9213.1 <br />