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B. APPLICATION OF BOND PROCEEDS. All proceeds to be derived from the sale of the Bonds shall be paid over to the Trustee and deposited by the Trustee to the credit of the Notes Payment Account, created and established by the Enabling Instrument, and applied by the Trustee only in the manner pro- vided in the Agreement. C. APPLICATION OF PRIOR COVENANTS. The co,renants and pledges contained in the Enabling Instrument for the benefit of the holders of the Bonds, to the extent that the same are not inconsistent with the provisions of this resolution and the Agreement, shall be deemed to be for the benefit, protection and security for the payment of the Notes and for the holders thereof in like manner as applicable to the Bonds for the benefit of the holders thereof. The Sinking Fund and Reserve Account, created and established pursuant to the Enabling Instrument, to the extent necessary, shall be maintained for the benefit of the Notes and the holders thereof. D. LOAN TO COVER SHORTFALL. In the event that there shall be insufficient funds available under the Agreement for the payment of all of the Notes and the interest thereon when the same shall become due upon maturity or prior redemption, whichever is applicable, the Issuer will make every reasonable and lawful effort to obtain a loan payable from funds of the Issuer derived from sources other than ad valorem taxation and legally available for such purpose (the "Non Ad Valorem Funds"), in order to provide for the payment in full of the Notes and the interest due thereon upon maturity or prior redemption, whichever is applicable. Nothing herein or in any loan agreement or pro- missory note obtained for such purpose shall be construed or be drafted in a manner to create a lien upon or pledge of any of such Non Ad Valorem Funds or prevent the Issuer from hereafter pledging any portion of such Non Ad Valorem Funds. , E. SALE OF BONDS. The Issuer shall in good faith endeavor to make timely sale and delivery of the Bonds in order to have funds available to pay the Notes and the interest thereon as the same become due, whether by maturity or prior redemption. F. ARBITRAGE. The Issuer covenants that it will not make or cause the Trustee to make any investments or acquiesce in the making of any investments of the proceeds of the Notes or the Pledged Funds which, if reasonably expected on the date of issuance of the Notes, would cause the Notes to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, and the applicable regulations issued thereunder. -10- r 40 00