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• ARTICLE III PAYMENT OF INITIAL PAYMENTS AND USER PAYMENTS; RESERVE AND REPLACEMENT FUND • Section 3.01. Payment of the Initial Payment and User Payments. New Users who enter into this Operating Agreement and existing Users who have paid an Initial Payment of $200 per radio who wish to increase the number of radios in their existing service, shall pay an Initial Payment to the Authority, or its successors or assigns, from any source of legally available money, of Two Hundred Dollars ($200) per radio. The Initial Payments shall be deposited in the Reserve and Replacement Fund. In addition, each New User, or User increasing the number of radios in service, shall pay an Operating Payment equal to the fee per radio paid by all then existing Users, and a Service Payment per radio equal to that paid by each existing User then paying a Service Payment, unless such New User selects prepayment of its Service Payment. In the event that a New User chooses to prepay its Service Payment at the time of its execution of the Operating Agreement, the Authority will calculate the appropriate contribution of the New User based on the total cost of the Project, and will deposit such Service Payment in the Reserve and Replacement Fund. • In addition to any required Initial Payment, on each Due Date, beginning in 2013, unless required earlier pursuant to a supplemental agreement, each User shall each pay to the Authority, or its successors or assigns, from any source of legally available money, its Service Payment, and its Operating Payment. The Operating Payment owed by each User shall be in the • amount annually determined by the Authority for such Operating Period. The payment in any Operating Period by a User of its User Payment shall be for use of the Project by such User during such Operating Period. Service Payments for New Users entering into an Operating Agreement after August 2013 shall be deposited in the Reserve and Replacement Fund. Each Initial Payment and User Payment shall be payable by the Users in accordance with the terms hereof and at the times required herein in lawful money of the United States of America. In the event a User should fail to make any of the payments required in this Section 3.01, the payment in default shall continue as an obligation of such User until the amount in default shall have been fully paid, and the Users agree to pay the same with interest thereon, to the extent permitted under applicable law, from the date of default to the date of payment at the highest rate of interest represented by any Outstanding Bond plus one percent (1 %). Overdue Service Payments, if received, shall be deposited in the Reserve and Replacement Fund to the extent that the amount on deposit therein is less than the Reserve and Replacement Fund •Requirement, and then to the Revenue Fund. Overdue Operating Payments shall be used by the Authority to pay Operating Costs. The User Payment coming due and payable during each Operating Period shall constitute the total payment for service to such User provided by the Project for such Operating Period, and shall be paid by each User in each Operating Period for and in consideration of the right of the { use and service provided by the Project during each Operating Period. The parties hereto have -7 Project Operating Agreement 082710 •