PROJ01923 ‎(2)‎

• Contract/PO #: C150126
• Contractor Name: Kremmling, Town of
• Contract Type: Loan
• Water District: 50
• County: Grand
• Loan Projects - Doc Type: Contract Documents

(c) Promissory Note Does Not Constitute a Debt The Promissory Note,
together with the interest thereon, shall be payable only out of: (i) the Note Account; or
(ii) if necessary, the Reserve Account. The CWCB may not look to the general fund of
the Town for the payment ofthe principal of and interest on the Promissory Note, and the
Loan Contract arid the Promissory Note shall not constitute a debt or an indebtedn.ess of
the Town within the meaning of any constitutional or statutory provision or limiltation;
nor shall they be considered or held to be genen:tl obligations of the Town.

Section 7. Note Account. Moneys in the Note Account shall be used solely for the
purpose of paying the principal of and Interest on the Promissory Note. Upon the determination
by CWCB that the Project is substantially' complete the Town shall, or before the last day of each
month, credit to the Note Account from the Net Revenue an amount equal to the Pro Rata
Portion ofthe principal and interest to come due on the Promissory Note on the next sl,lcc;eeding
Payment Date. Moneys iri the Project Account also may be used to pay the interest accruing
under provision A(4) of the Loan Contract prior to,the completion of the Project. To the: extent
that moneys are not used from the final disbursement of loan funds pursuant to provision A(4)
for such purpose, Net Revenues and other legally available moneys shall be credited to the Not~
Acqount prior to substantial completion of the Proj ect in order to make said payment when due.

Section 8.

Reserve Account.

(a) Use of Moneys in the Reserve Account. Moneys in the Reserve Account
shall be used, if necessary, only to prevent a default in the payment of the principal of or
interest on the Promissory Note ,on any Payment Date and the Reserve Account is hereby
pledged to the payment of the Promissory Note. In the event the amounts credited to the
, '
Note Account are insufficient to pay the principal of or' interest on Promissory Note when
,due, the Town' shall transfer from the Reserve Account to the Note Account an amount
which, when combined with moneys in the Note Account win be sufficient to make such
payments when due.

(b) Funding and Maintenance of Required Reserve Amount Commencing
with the frrstPayment Date, the Town shall annually credit an amount equal to one-tenth
of the Required Reserve Amount on or before each Payment Date uhtil such time as the
amount. credited thereto is'equal to the Required Reserve Amount (i.e., the Reserve'
Account is to be fully funded. within ten years from substantial completion of the
Project). In the event that moneys from the Reserve Account are transferred to the Note
Account as provided in paragraph (a) of this Section, such amount shall be repllenished
within 90 days from the date of such transfer. Moneys credited to the Reserve Account
may be invested ot deposited in lawful securities or obligations and all interest income
from the investment or reinvestment of moneys credited to the Reserve Account shall be
credited to the Reserve Account until the amount therein is equal to the Required Reserve
Amount, at which time as the balance of the Reserve Account shall be maintained in the
Required Reserve Amount and such interest income shall be credited to the Note
Account.

Section 9. Maintenance of Rates and Coverage, The Town hereby covenants that
it will establish, maintain, enforce and collect rates, fee&, plant investment fees, availability fees,

02-178969.2

6