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7. BORROWER'S Authority to Contract. The BORROWER warrants that it has full power and <br /> authority to enter into this CONTRACT. The execution and delivery of this CONTRACT and the <br /> performance and observation of its terms, conditions and obligations have been duly <br /> authorized by all necessary actions of the BORROWER. The BORROWER'S AUTHORIZING <br /> RESOLUTION(S) or ORDINANCE(S) are attached as APPENDIX 4 and incorporated herein. <br /> 8. Bond Counsel's Opinion Letter. Prior to the execution of this CONTRACT by the CWCB,the <br /> BORROWER shall submit to the CWCB a letter from its bond counsel stating that it is the bond <br /> counsel's opinion that: <br /> a. the CONTRACT has been duly executed by officers of the BORROWER who are duly <br /> elected or appointed and are authorized to execute the CONTRACT and to bind the <br /> BORROWER;and <br /> b. the resolutions or ordinances of the BORROWER authorizing the execution and delivery <br /> of the CONTRACT were duly adopted by the governing bodies of the BORROWER;and <br /> c. there are no provisions in the Colorado Constitution or any other state or applicable <br /> and binding local law that prevent this CONTRACT from binding the BORROWER;and <br /> d. the CONTRACT will be valid and binding against the BORROWER if entered into by the <br /> CWCB subject to typical limitations related to bankruptcy, police power, and creditor's <br /> rights generally;and <br /> 9. Pledge of Revenues. The BORROWER irrevocably pledges, to the CWCB, for purposes of <br /> repayment of this loan the PLEDGED REVENUES as defined in the LOAN RESOLUTION or <br /> ORDINANCE set forth in APPENDIX 4 and any other funds legally available to the BORROWER in <br /> an amount sufficient to pay the annual payment due under this CONTRACT (collectively <br /> PLEDGED REVENUES). <br /> a. Segregation of Pledged Revenues. The BORROWER shall set aside and keep the PLEDGED <br /> REVENUES in an account separate from other BORROWER revenues and warrants that these <br /> revenues will not be used for any other purpose. <br /> b. Establish Security Interest. The BORROWER has duly executed a SECURITY AGREEMENT, <br /> attached hereto as APPENDIX 5 and incorporated herein, to provide a security interest to the <br /> CWCB in the PLEDGED REVENUES. The CWCB shall have priority over all other competing <br /> claims for said revenues, except for the liens of the BORROWER'S existing loans as listed in <br /> Section 5 (Schedule of Existing Debt), of the PROJECT SUMMARY (APPENDIX 1), which sets forth <br /> the position of the lien created by this CONTRACT in relation to any existing lien(s). <br /> c. Rate Covenant. Pursuant to its statutory authority and as permitted by law, the <br /> BORROWER shall take all necessary actions consistent therewith during the term of this <br /> CONTRACT to establish, levy and collect rates, charges and fees as described in APPENDIX 4, in <br /> amounts sufficient to pay this loan as required by the terms of this CONTRACT and the <br /> PROMISSORY NOTE, to cover all expenditures for operation and maintenance and emergency <br /> repair services, and to maintain adequate debt service reserves, including obtaining voter <br /> approval, if necessary, of increases in the BORROWER'S rate schedule or taxes, if applicable. <br /> Page 4 of i4 <br />