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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 as provided in paragraph (i) of this Subsection, such amount shall <br /> be replenished from Pledged Revenues within the time period set forth in the <br /> Loan Contracts. Moneys credited to the Reserve Account may be invested or <br /> deposited in lawful securities or obligations and all interest income from the <br /> investment or reinvestment of moneys credited to the Reserve Account shall be <br /> credited to the Reserve Account until the amount therein is equal to the Required <br /> Reserve Amount, at which time the balance of the Reserve Account shall be <br /> maintained in the Required Reserve Amount and such interest income shall be <br /> credited to the Debt Service Fund and applied to payment of the Promissory <br /> Notes. <br /> Section 5. Security for Payment of the Promissory Notes. <br /> (a) Pledge of Pledged Revenue. Each Promissory Note shall constitute an <br /> irrevocable and first lien upon the Pledged Revenue, but not an exclusive first lien. The <br /> Pledged Revenue is hereby pledged to the payment of each Promissory Note on parity <br /> with the lien of the other Promissory Notes. The creation, perfection, enforcement and <br /> priority of the pledge of revenues to secure or pay the Promissory Note shall be governed <br /> by Section 11-57-208, C.R.S. and this Resolution. The Pledged Revenue shall <br /> immediately be subject to the lien of such pledge without any physical delivery, filing or <br /> further act. For purposes of the Loan Contracts and the Promissory Notes, the term <br /> "Pledged Revenues" used therein shall have the meaning ascribed to such term <br /> herein. <br /> (b) Promissory Note Does Not Constitute a Debt. Each Promissory Note, <br /> together with the interest thereon, shall be payable only out of: (i) the Pledged Revenue; <br /> or (ii) if necessary, the Reserve Account. The CWCB may not look to the funds, <br /> accounts or assets of the District for the payment of the principal of and interest on the <br /> Promissory Notes, and the Loan Contracts and the Promissory Notes shall not constitute a <br /> debt or an indebtedness of the District within the meaning of any constitutional or <br /> statutory provision or limitation; nor shall they be considered or held to be general <br /> obligations of the District. <br /> Section 6. Additional Covenants and Agreements. <br /> (a) Maintenance of Rates and Coverage. The District hereby covenants that <br /> it will establish, maintain, enforce and collect rates, fees and charges for water services <br /> furnished by the Water Activity Enterprise sufficient to pay all Operations and <br /> Maintenance Expenses, to repay the Loans, and any other financial obligations of the <br /> Water Activity Enterprise. In the event that the Pledged Revenue at any time is not <br /> sufficient to make the payments required by said provision, the District covenants to <br /> promptly increase Gross Revenue to an extent which will ensure compliance with this <br /> covenant(the "Rate Covenant"). <br /> {00465252.DOC/6}corrected 6 <br /> 4831-3765-6607.4 <br />