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(c) Reserve Account. <br /> (i) Use of Moneys in the Reserve Account. Moneys in the Reserve <br /> Account shall be used, if necessary, only to prevent a default in the payment of <br /> the principal of or interest on the Promissory Notes on any Payment Date and the <br /> Reserve Account is hereby pledged to the payment of the Promissory Notes. The <br /> Authority shall transfer moneys from the Reserve Account to pay principal of and <br /> interest on the Promissory Notes in the event that Net Revenues are not sufficient <br /> to make such payments when due. <br /> (ii) Funding and Maintenance of Required Reserve Amount. <br /> Commencing with the first Payment Date for each Loan Contract, the Authority <br /> shall annually credit an amount equal to one-tenth of the Required Reserve <br /> Amount for such Loan Contracts on or before each Payment Date until such time <br /> as the amount credited thereto is equal to the Required Reserve Amount (i.e., the <br /> Reserve Account is to be fully funded within ten years from substantial <br /> completion of the Project). In the event that moneys from the Reserve Account <br /> are transferred to provided in paragraph (i) of this Subsection, such amount shall <br /> be replenished from Net Revenues within the time period set forth in the Loan <br /> Contracts. Moneys credited to the Reserve Account may be invested or deposited <br /> in lawful securities or obligations and all interest income from the investment or <br /> reinvestment of moneys credited to the Reserve Account shall be credited to the <br /> Reserve Account until the amount therein is equal to the Required Reserve <br /> Amount, at which time the balance of the Reserve Account shall be maintained in <br /> the Required Reserve Amount and such interest income shall be credited to the <br /> Debt Service Fund and applied to payment of the Promissory Notes. <br /> (d) Audits. At least once a year in the time and manner provided by law, the <br /> Authority will cause an audit to be performed of the records relating to its revenues and <br /> expenditures. In addition, at least once a year in the time and manner provided by law, <br /> the Authority will cause a budget to be prepared and adopted. Copies of the budget and <br /> the audit will be filed and recorded in the places, time and manner provided by law. The <br /> Authority covenants to submit a copy of the annual audit and certificate of debt service <br /> coverage to the CWCB as provided in provision A(8)(f) of the Loan Contracts. <br /> Section 5. Security for Payment of the Promissory Notes. <br /> (a) Pledge of Net Revenues. Each Promissory Note shall constitute an <br /> irrevocable and first lien upon the Net Revenue, but not an exclusive first lien. The Net <br /> Revenue is hereby pledged to the payment of each Promissory Note on a parity with the <br /> lien of the other Promissory Notes. The creation, perfection, enforcement and priority of <br /> the pledge of revenues to secure or pay the Promissory Note shall be governed by Section <br /> 11-57-208, C.R.S. and this Resolution. The Net Revenue shall immediately be subject to <br /> the lien of such pledge without any physical delivery, filing or further act. For purposes <br /> of the Loan Contracts and the Promissory Notes,the term "Pledged Revenues" used <br /> therein shall mean the Net Revenue, as defined herein. <br /> 7 <br /> 4831-0427-7019.3 <br />