University of Virginia Library

ARTICLE V
REVENUES AND FUNDS

Section 5.1 Debt Service Fund.

(a) A special fund is hereby created in the office of the Issuing and Paying Agent and designated "The Rector and Visitors of the University of Virginia Commercial Paper General Revenue Pledge Notes Debt Service Fund" (the "Debt Service Fund"). On or before each date on which payments of interest, premium or principal shall be due and payable on the Notes (a "Payment Date"), the University shall transfer or cause to be transferred to the Issuing and Paying Agent for deposit in the Debt Service Fund an amount of money sufficient to cause the amount held in the Debt Service Fund to be equal to the interest, premium and principal due on the Notes on such Payment Date.

(b) The Issuing and Paying Agent shall further establish separate trust accounts within the Debt Service Fund to be known as the "Purchase Account" and the "Remarketing Proceeds Account" to be used as follows:

• (i) Remarketing Proceeds Account. Upon receipt of the proceeds of a remarketing or reissuance any Notes, the Issuing and Paying Agent shall deposit such proceeds in the applicable Remarketing Proceeds Account for application to the payment of maturing Notes.


• (ii) Purchase Account. Upon receipt from any Liquidity Facility Issuer of the immediately available funds transferred to the Issuing and Paying Agent, or receipt from the University of immediately available funds for the payment of the Notes, the Issuing and Paying Agent shall deposit such money in the Purchase Account for application to the payment of Notes to the extent that the moneys on deposit in the Remarketing Proceeds Account shall not be sufficient. Any amounts deposited in the Purchase Account and not needed for the payment of the Notes shall be immediately returned to the Liquidity Facility Issuer or the University, as the case may be.

Section 5.2 Payments to Noteholders.

The Issuing and Paying Agent shall at times appropriate to make payment on each Payment Date (as defined in Section 5.1), withdraw from the appropriate accounts of the Debt Service Fund the amounts needed on such date to pay the principal of and premium, if any, and interest on the Notes and shall pay or cause the same to be paid to the Noteholders as such principal, premium and interest become due and payable.

Section 5.3 Pledge of Funds and Accounts.

The moneys in the Debt Service Fund shall be held in trust and applied as herein provided and, pending such application, shall be pledged to, and subject to a lien and charge in favor, of the holders of the Notes issued and outstanding under this Resolution and for the further security of such holders until paid out or transferred as herein provided.

Section 5.4 Moneys Held in Trust.

All moneys from the funds of the University or from any other source and set aside, or deposited with the Issuing and Paying Agent, for the purpose of paying any of the Notes hereby secured, either at the maturity thereof or upon call for redemption, shall be held in trust for the respective holders of such Notes. Any moneys which shall be so set aside or deposited and which shall remain unclaimed by the holders of such Notes for the period of five (5) years after the date on which such Notes shall have become due and payable shall be disposed of by the University and the Issuing and Paying Agent in accordance with The Uniform Disposition of Unclaimed Property Act, Chapter 11.1, Title 55, Code of Virginia of 1950, as amended.

Section 5.5 Cancellation of the Notes Upon Payment.

All Notes paid, redeemed or purchased by the University, either at or before maturity, shall be canceled upon the payment, redemption or purchase of such Notes and shall be delivered to the University when such payment, redemption or purchase is made. All Notes canceled under any of the provisions of this Resolution may be cremated or otherwise destroyed by the University or its designee.

Section 5.6 Investment of Moneys.

Moneys in the Debt Service Fund established pursuant to this Resolution shall be invested by the University or by the Issuing and Paying Agent as shall be directed by the University, but only in Investment Obligations maturing or redeemable at the option of the holder in such amounts and on such dates as may be necessary to provide moneys to meet the payments from such funds and accounts.

Interest earned, profits realized and losses suffered by reason of any investment of the funds and accounts established hereunder shall be credited or charged, as the case may be, to the fund or account for which such investment shall have been made.

The University or the Issuing and Paying Agent may sell or redeem any obligations in which moneys shall have been invested as in this Section provided to the extent necessary to provide cash in the respective funds or accounts to make any payments required to be made therefrom or to facilitate the transfers of money between various funds and accounts as may be required or permitted from time to time pursuant to the provisions of this Article.

In computing the value of the assets of any fund or account established hereunder, investments and accrued interest thereon shall be deemed a part thereof. Such investments shall be valued at the current market value thereof.

Neither the University nor the Issuing and Paying Agent shall be liable for any depreciation in the value of any obligations or securities in which moneys of the funds or accounts created by this Resolution shall be invested as aforesaid, or for any loss arising from any investment permitted hereby. The investments authorized by this Section shall at all times be subject to the provisions of applicable law, as amended from time to time.

Section 5.7 No Risk to Issuing and Paying Agent Funds.

No provision herein shall require the Issuing and Paying Agent to expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Issuing and Paying Agent shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is reasonably insured to it.