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Section 3. Pledge and Lien for Payment of Amounts Payable Pursuant to Loan Contract Amendment. Pursuant to the Loan Contract, the District grants an irrevocable lien on the Net Revenue of that part of the System comprising the Project, second in priority only to the Lease of Power Privilege between the United States of America and the District for the Development of Hydroelectric Power on the Ridgway Dam dated as of February 6, 2012, and an irrevocable first lien on the Net Revenue of the System other than the Project, but not an exclusive such lien, for the payment of the Note, and such Net Revenue is hereby pledged to the payment of the Note. The Parity Lien Bonds have a lien on the Net Revenue which is on a parity with the lien granted pursuant to the Loan Contract. Notwithstanding the foregoing or anything else contained herein, the Note shall have no pledge of or lien or claim on any debt service reserve account created for any Parity Lien Bonds. The CWCB may not look to any general or other fund of the District for the payment of the principal of and interest on the Note or any other such amounts payable under the Loan Contract or the Note, except the Water Enterprise Fund and the Reserve Account, and neither the Note nor the Loan Contract shall constitute a debt or an indebtedness of the District within the meaning of any constitutional or statutory provision or limitation; nor shall they be considered or held to be general obligations of the District. Section 4. Water Enterprise Fund. There is hereby reaffirmed the Water Enterprise Fund, which shall be maintained by the District in accordance with the provisions of this Resolution. The District shall apply amounts on deposit in the Water Enterprise Fund as provided in the Loan Contract. Section 5. Maintenance of Water Activity Enterprise. The District hereby further irrevocably covenants and agrees with the CWCB that so long as the Note remains outstanding, the District has maintained and covenants to continue to maintain the System as an "enterprise" within the meaning of Article X, Section 20 of the Colorado Constitution, and as a "water activity enterprise" within the meaning of Title 37, Article 45. 1, Colorado Revised Statutes, as amended; provided, however, after calendar year 2013 the District may disqualify the System as an "enterprise" in any year in which said disqualification does not materially, adversely affect the enforceability of the covenants made by the District in the Loan Contract. In the event that the System is disqualified as an enterprise and the enforceability of the covenants made by the District in the Loan Contract is materially, adversely affected, the District covenants to immediately take all actions necessary to (i) qualify the System as an enterprise within the meaning of Article X, Section 20 of the Colorado Constitution and (ii) permit the enforcement of the covenants made in the Loan Contract. Section 6. Authorization to Execute Documents. The President, First Vice President, the Secretary and all other appropriate officers of the District, shall, and they are hereby authorized and directed to, take all actions necessary or desirable to effectuate the provisions of this Resolution, including, but not limited to, the execution of any such certificates and other documents as may be reasonably required by the CWCB or as are necessary and appropriate to effectuate the transactions described in this Resolution. The execution by the President, First Vice President, the Secretary or any other appropriate officers of the District of the District of any document authorized herein shall be conclusive proof of the approval by the District of the terms thereof. 5 4818 -5195- 9572.1