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<br />these revenues will not be used for any other purpose except for repayment of the <br />BORROWER'S 1996 loan from the Colorado Water Resources and Power Authority, hereinafter <br />called AUTHORITY. <br /> <br />b. Establish parity status for this loan. The STATE, the TOWN and the BORROWER recognize <br />that the BORROWER has also pledged such water system revenues to repay the BORROWER'S <br />199610an from the AUTHORITY. The STATE, the TOWN and the BORROWER agree that the TOWN <br />and the BORROWER shall meet the requirements of Exhibit F of the loan contract between the <br />AUTHORITY and the TOWN to establish parity status of this loan with the AUTHORITY'S loan for <br />such revenues. The TOWN and the BORROWER shall provide the STATE with a copy of the <br />parity certificate from an independent certified public accountant that the TOWN and the <br />BORROWER have submitted to the AUTHORITY in compliance with said Exhibit F. Said parity <br />certificate is attached hereto as Appendix 4 and incorporated herein. <br /> <br />c. Establish security interest in the revenues. The BORROWER and the TOWN agree that, in <br />order to provide a security interest to the STATE in the pledged revenues so that the STATE <br />shall have priority over all other competing claims for said revenues, except the BORROWER'S <br />pledge of said revenues for repayment of its 1996 loan from the AUTHORITY, with which this <br />loan shall have parity status, the BORROWER and the TOWN shall provide a completed and <br />properly executed Uniform Commercial Code Security Agreement and Financing Statement, <br />hereinafter referred to as UCC DOCUMENT, attached hereto as Appendix 5 and incorporated <br />herein. <br /> <br />d. Levy charges and fees for repayment of the loan. The TOWN and the BORROWER shall, <br />pursuant to statutory authority and as authorized by their ordinances, take all necessary <br />actions consistent therewith to provide sufficient funds for adequate operation and <br />maintenance, emergency repair services, obsolescence reserves, debt reserves, and to <br />establish revenues from water charges and fees sufficient to pay this contract loan in a timely <br />manner as required by the terms and conditions herein to assure repayment of the loan to the <br />STATE. In the event these revenues are or become insufficient to assure repayment to the <br />STATE as required by the terms and conditions herein, then the BORROWER shall immediately <br />take all necessary action consistent with its statutory authority, including but not limited to <br />adjusting water charges and fees, to raise sufficient revenue to assure repayment of the loan <br />to the STATE. BORROWER shall deposit an amount equal to one-tenth of an annual payment <br />into its reserve debt service fund on an annual basis for the first ten years of this loan. <br /> <br />12. Collateral. Part of the security provided for this loan, evidenced by the executed assignment <br />of certificate of deposit attached hereto as Appendix 6 and incorporated herein, shall be shall be an <br />undivided one hundred percent (100%) interest in a certificate of deposit account in the amount of <br />one annual loan payment ($147,033.03), hereinafter referred to as CD ACCOUNT. The STATE shall <br />use the funds contained in the CD ACCOUNT for the purpose of paying principal and interest due under <br />this contract not otherwise paid by the BORROWER. Any amount withdrawn by the STATE for this <br />purpose shall be replenished by the BORROWER sixty (60) days after such withdrawal. Any unused <br />funds contained in the CD ACCOUNT shall be applied first to the final payment due under this contract, <br />and any funds remaining shall be reimbursed to the BORROWER. <br /> <br />13. Collateral during repayment. The TOWN and the BORROWER shall not sell, convey, assign, <br />grant, transfer, mortgage, pledge, encumber, or otherwise dispose of any collateral for this loan, <br />including the water system revenues pledged to repay the loan herein, so long as any of the principal <br />and any accrued interest required by the Promissory Note Provisions of the contract remain unpaid, <br />without the prior written concurrence of the STATE. <br /> <br />Town of Johnstown Water Activity Enterprise <br />& Town of Johnstown Page 7 of 14 <br /> <br />Loan Contract <br />