SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018 BONDS The Series 2018 Bonds are special fund revenue obligations of the University payable solely from and secured solely by Gross Revenue of the System on deposit in the Bond Fund, which is to be held by the University separate and apart from all other funds and accounts of the University. The “System” means (a) the existing housing and dining system of the University; (b) the services and activities system (including without limitation the student union building and recreation center); (c) the bookstore system of the University; and (d) the parking system of the University; all as the same is added to, improved and extended through the use of the proceeds of the sale of Parity Bonds and as such System may be added to, improved and extended, for as long as Parity Bonds are outstanding. The System also includes any other facilities financed pursuant to the Master Resolution. Pledge of Gross Revenue The Gross Revenue is to be deposited in the Revenue Fund as collected and is pledged to the payment of the Parity Bonds. The Bond Fund has been created in the office of the Treasurer of the University for the purpose of paying and securing the payment of the Parity Bonds. The Bond Fund is a trust fund for the registered owners of the Parity Bonds. The University has irrevocably obligated and bound itself to set aside and pay into the Bond Fund from Gross Revenue or other money in the Revenue Fund, on or prior to the respective dates the same become due, such amounts as are required to pay the principal of and interest on the Series 2018 Bonds. All amounts pledged to be paid with respect to the Series 2018 Bonds are an equal and prior lien and charge upon the Gross Revenue superior to all other charges of any kind or nature whatsoever, except that the Series 2018 Bonds have a lien and charge upon such Gross Revenue on a parity with the lien and charge of the Outstanding Parity Bonds and any Future Parity Bonds. “Gross Revenue” means all income and revenue derived from time to time by the University from any source whatsoever, from the ownership and operation of the System, including Direct Subsidy Receipts (if pledged to the System in a Series Resolution), grants, rentals, fees and any other charges that now are or hereafter may be charged to all or any segment of the student population, if pledged to the System, and including interest income, but not including the proceeds of any borrowing by the University and the earnings thereon (other than earnings on proceeds deposited in reserve funds); income and revenue which may not legally be pledged for revenue bond debt service; state or federal grants or substitutes therefor allocated to capital projects; payments made under Credit Facilities (if any) issued to pay or secure the payment of a particular series of Parity Bonds; proceeds of insurance or condemnation proceeds other than business interruption insurance; or income from investments irrevocably pledged to the payment of bonds issued or to be refunded under any refunding bond plan of the University. The “Revenue Fund” means collectively, the following special funds of the University: (a) the “Housing and Food Services Fund”; (b) the “Associated Student Fund”; (c) the “University Store Fund”; (d) the “Parking Fund”; and (e) any other special fund created in the office of the Treasurer for the receipt of Gross Revenue. Flow of Funds The Gross Revenue deposited in the Revenue Fund is to be used only for the following purposes and in the following order of priority: First, to make all payments, including sinking fund payments, required to be made into the debt service account(s) of the Bond Fund to pay the principal of and interest and premium, if any, on any Parity Bonds; Second, to make all payments required to be made into any debt service reserve fund(s), if any, that may be established to secure the payment of any Parity Bonds; Third, to pay Operating Expenses; Fourth, to make all payments required to be made into any other revenue bond redemption fund and debt service account or reserve account created therein to pay and secure the payment of the principal of and interest on any revenue bonds or other revenue obligations of the University having a lien upon the Gross Revenue and the money in the Revenue Fund junior and inferior to the lien thereon for the payment of the principal of and interest on any Parity Bonds, and to make all deposits of Rebate Amounts to the Rebate Fund; Fifth, to make all payments required to be made into any fund or account created by a Series Resolution; Sixth, to make necessary additions, betterments, improvements and repairs to or extensions and replacements of the System and make deposits to the Renewal and Replacement Fund as considered appropriate; and
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