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"Revenues" consist of Installment Payments paid by the City to the Authority pursuant to the Installment
<br />Purchase Agreement and deposits in the funds and accounts held under the Indenture (excluding the Rebate Fund
<br />and the Cost of Issuance Fund). The Authority shall pay to the Trustee all Revenues, which the Trustee shall
<br />deposit in the Bond Fund to be used: first, for payment of debt service (including mandatory sinking fund
<br />redemptions), and second, for replenishment of the Reserve Account in the event its balance is less than the
<br />Reserve Requirement, as and to the extent required by the Indenture, see "APPENDIX B." The Authority,
<br />pursuant to the Indenture, has assigned to the Trustee its right to receive all Installment Payments from the City
<br />under the Installment Purchase Agreement and, effective immediately on default by the City under the Installment
<br />Purchase Agreement and without any further act on the part of the Authority, any and all of the other rights of the
<br />Authority under the Installment Purchase Agreement as may be necessary to enforce payment of such Installment
<br />Payments when due or otherwise to protect the interests of the Owners of the Bonds.
<br />All Net System Revenues (defined below) are irrevocably pledged by the City to the payment of the
<br />Installment Payments and debt service on Parity Obligations as provided in the Installment Purchase Agreement,
<br />and the Net System Revenues shall not be used for any other purpose while any of the Installment Payments
<br />remain unpaid; provided, however, that out of the Net System Revenues there may be apportioned such sums for
<br />such purposes as are expressly permitted by the Installment Purchase Agreement, including payment of debt
<br />service on any Parity Obligations. This pledge shall constitute a first lien on the Net System Revenues for the
<br />payment of the Installment Payments and debt service on any Parity Obligations in accordance with the Installment
<br />Purchase Agreement. The Bonds are not secured by a direct lien on the assets of the Water System or any
<br />other property of the City.
<br />In the Installment Purchase Agreement, the City covenants that, so long as any Bonds are outstanding,
<br />the City will not issue or incur any obligations payable from Net System Revenues superior to the payment of the
<br />Installment Payments. The City is authorized to issue additional Parity Obligations secured by Net System
<br />Revenues with a lien on a parity basis with the lien of Installment Payments, provided it complies with certain
<br />provisions in the Installment Purchase Agreement. See "THE BONDS --Issuance of Parity Obligations." The
<br />City is also authorized to issue subordinate debt secured by Net System Revenues.
<br />Net System Revenues
<br />Net System Revenues are System Revenues less Maintenance and Operation Costs of the Water System.
<br />"System Revenues" are defined in the Installment Purchase Agreement to mean all income, rents, rates, fees,
<br />charges and other moneys derived from the ownership or operation of the Water System, including, without
<br />limiting the generality of the foregoing, (i) all income, rents, rates, fees, charges (including standby and capacity
<br />charges), insurance proceeds or other moneys derived by the City from the water services, facilities, and
<br />commodities or byproducts sold, furnished or supplied through the facilities of or in the conduct or operation of
<br />the business of the Water System, (ii) investment earnings on, and income derived from, the amounts referred to
<br />in the preceding clause (i), including investment earnings on the operating reserves, to the extent that the use of
<br />such earnings is limited to the Water System by or pursuant to law, and earnings on any Reserve Fund for
<br />Obligations but only to the extent that such earnings may be utilized under the Issuing Instrument for the payment
<br />of debt service for such Obligations; (iii) the proceeds derived by the City directly or indirectly from the sale or
<br />lease of a part of the Water System; and (iv) any amount received from the levy or collection of taxes which are
<br />solely available and are earmarked for the support of the operation of the Water System; provided, however, that
<br />System Revenues shall not include: (a) customers' deposits or any other deposits or advances subject to refund
<br />until such deposits or advances have become the property of the City; and (b) the proceeds of borrowings.
<br />Notwithstanding the foregoing, there shall be deducted from System Revenues any amounts transferred into a
<br />Rate Stabilization Fund as contemplated by Section 6.08(b), and there shall be added to System Revenues any
<br />amounts transferred out of such Rate Stabilization Fund to pay Maintenance and Operation Costs. System
<br />Revenues shall include reimbursements from the United States of America pursuant to Section 54AA of the Code
<br />(Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-
<br />5, 23 Stat. 115 (2009), enacted February 17, 2009), or any future similar program); provided, however, for
<br />purposes of complying with the rate setting covenants contained in the Installment Purchase Agreement and
<br />satisfying the debt service coverage requirements in connection with the issuance or incurring of Parity
<br />Obligations, System Revenues shall not include such reimbursements from the United States of America.
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