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ARTICLE IV APPLICATION OF PROCEEDS OF BONDS; ESTABLISHMENT OF FUNDS Section 4.01. Application of Proceeds of Sale of Bonds. Upon receipt of the proceeds of sale of the Bonds on any Closing Date, the proceeds thereof shall be forthwith set aside, paid over and deposited by the Treasurer, as set forth in the Bond Purchase Contract and Certificate(s) of the City. Section 4.02. Improvement Fund. There is hereby created a separate fund to be known as the "Seaport Centre Assessment District-1990 Improvement Fund" (the "Improvement Fund"), which shall be held in trust by the Treasurer. The Treasurer shall disburse moneys in the Improvement Fund for the purpose of paying or reimbursing the costs of acquiring and constructing the Project, including but not limited to all costs incidental to or connected with such acquisition and construction: Disbursements from the Improvement Fund shall be subject to the provisions of Sections 5.09 and 5.10 hereof. Any surplus remaining after payment of all said costs and expenses shall be used as set forth in the proceedings pursuant to the Resolution of Intention and applicable provisions of the Act and the Improvement Fund shall be closed. Section 4.03. Reserve Fund. There is hereby created a special fund known as the "Seaport Centre Assessment District-1990 Reserve Fund" (the "Reserve Fund"). The Reserve Fund should be initially established in the amount set forth in the Bond Purchase Contract thereafter the amount of the Reserve Fund shall not exceed the Reserve Requirement. The moneys in the Reserve Fund shall constitute a trust fund for the benefit of the Registered Owners of the Bonds and shall be administered by the City in accordance with and pursuant to the provisions of Part 16 of the Bond Law; provided that proceeds from redemption or sale of the properties with respect to which payment of delinquent assessments and interest thereon was paid from the Reserve Fund, shall be credited to the Reserve Fund; and provided further that for the purposes of maintaining the Reserve Requirement and providing for any required reduction of the amount of money in the Reserve Fund during the term of the Bonds pursuant to Section 8887 of the Act, and applicable provisions of the Tax Code, all proceeds from investment of moneys in the Reserve Fund in excess of the Reserve Requirement shall be credited upon the assessments, except as otherwise provided in Section 5.07 hereof. Section 4.04. Redemption Fund. There is hereby created a special fund known as the "Seaport Centre Assessment District-1990 Limited Obligation Improvement Bonds, Redemption Fund" (the "Redemption Fund"). The Treasurer shall place in the Redemption Fund any amounts of accrued interest upon the Bonds from the Bond Date to the Closing Date and premium (if any) received upon the sale of the Bonds, together with any capitalized interest funded as a part of the purchase price of the Bonds and all sums received from the collection of unpaid assessments provided in Section 5.01 hereof, and of the interest and penalties thereon. From the Redemption Fund disbursements shall be made to pay the principal or advance redemption price of the Bonds and the interest due thereon. -14- 11305