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<br />cover all expenditures for operation and maintenance and emergency repair <br />services, and to maintain adequate debt service reserves. <br /> <br />d. Debt Service Reserve Account. BORROWER shall deposit an amount equal to one- <br />tenth of an annual payment into its debt service reserve account on an annual basis <br />for the first ten years of this loan. In the event that the Borrower applies funds from this <br />account to repayment of the loan, the Borrower shall replenish the account within ninety <br />(90) days of withdrawal of the funds. <br /> <br />e. Additional Debts or Bonds. The BORROWER shall not issue any obligations payable <br />from the pledged revenues and having a lien thereon which is superior to the lien of <br />this loan, The BORROWER may issue. parity bonds, other than this loan and the <br />BORROWER'S loans from CWRPDA and RD, to which the STATE has previously <br />consented, only with the prior written approval of the STATE, provided that: <br /> <br />i. The BORROWER is currently and at the time of the issuance of the parity debt in <br />substantial compliance with all of the obligations of this contract, including, but <br />not limited to, being current on the annual payments due under this contract and <br />in the accumulation of all amounts then required to be accumulated in the <br />BORROWER'S debt service reserve fund; <br /> <br />ii. The BoRROWER provides to the STATE a Parity Certificate from an independent <br />certified public accountant certifying that, based on an analysis of the <br />BORROWER'S revenues, excluding tap and/or connection fees, for 12 consecutive <br />months out of the 18 months immediately preceding the date of issuance of such <br />paritybonds, the BORROWER'S revenues are sufficient to pay at least the annual <br />operating and maintenance expenses, annual debt service on all outstanding <br />bonds having a lien on the pledged revenues, including this loan, the annual debt <br />service on the proposed bonds to be issued, and all required deposits to any <br />reserve funds required by this contract or by the lender(s) of any bonds having a <br />lien on the pledged revenues. The analysis of revenues shall be based on the <br />BORROWER'S current rate structure. <br /> <br />The BORROWER acknowledges and understands that any request for approval of the <br />issuance of parity bonds must be reviewed and approved by the CWCB Executive <br />Director prior to the issuance of any paritybonds. <br /> <br />12. Collateral. Part of the security provided for this loan shall be an undivided one hundred <br />percent (100%) interest in the following, hereinafter referred to as COLLATERAL: <br /> <br />a. Pledge of revenues from any sale or lease of the CrN's and/or BORROWER'S interest in <br />the Allotment Contracts, evidenced by the executed Security Agreement attached <br />hereto as APPENDIX C and incorporated herein. The CITY and the BORROWER <br />acknowledge that the STATE shall perfect its security interest in said revenues by filing a <br />UCC-1 Form with the Colorado Secretary of State. <br /> <br />b. Pledge of the CITl"S and the BORROWER'S Allotment Contract Rights, as more fully <br />described in the Remedies For Default provision of this contract and evidenced by the <br />executed Security Agreement attached hereto as APPENDIX C and incorporated <br />herein. The CITY and the BORROWER acknowledge that the STATE shall perfect its <br />security interest in the Allotment Contract Rights by filing a UCC-1 Form with the <br />Colorado Secretary of State. <br /> <br />City of Fort Morgan, Coiorado & <br />City of Fort Morgan, Colorado, Water Works and Distribution Enterprise <br /> <br />Page 7 0113 <br />