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in this Instrument; and further provided, however, that the lien upon and pledge of the Gross Revenues in favor of the holders of the Bonds shall be junior, subordinate and inferior to the lien upon and pledge of the South County System Revenues in favor of the holders of the Notes, but the lien upon a pledge of the Gross Revenues, excluding the South County Water System Revenues, in favor of the holders of the Notes shall be junior, subordinate and inferior to the lien thereon in favor of the holders of the Bonds. 3.03 Application of Bond and Note Proceeds. The provi- C ions 1:: t�;e r-- � i- Y1 -...r bi. n ....7 a �_ '\- s--1.u�. ions aU -1 1. ming -1- DVl1Uj C1ilU tI1C Notes WLtll respect to the application of the proceeds of the sale of the Bonds and the Notes are hereby incorporated herein by reference, except that any surplus funds remaining on deposit in the various Construction Funds after completion of the applicable projects shall be deposited into the Sinking Fund, created and established by this resolution; subject, however, to the prior lien of the holders of the Notes on the proceeds of the sale of the Notes. 3.04 Covenants of the Issuer. So long as any of the principal of or interest on any of the Bonds or the Notes shall be outstanding and unpaid, or until there shall have been set apart in the Sinking Fund, including the Reserve Account therein, a sum sufficient to pay, when aue, the entire principal of the Bonds and the ;.totes remaining unpaid, together with interest accrued and to accrue thereon, the Issuer, covenants with the holders of any and all of the Bonds and the Notes as follows: (A) Annual Budget of Operating Expenses. The Issuer covenants and agrees that on or before the first day of each Fiscal Year during which any of the Bonds or Notes are outstanding, it will adopt an Annual Budget of Operating Expenses for the ensuing Fiscal Year, and will mail a copy of such Annual Budget or amendments thereto to any requesting holder of Bonds or Notes. The Issuer covenants that the Operating Expenses incurred in any year will not exceed the reasonable and necessary amounts required therefor, and that it will not expend any amount or incur any obligations for the operation, maintenance and repair of. the System in excess of the amount provided for Operating Expenses in the Annual Budget, except upon resolution of the Board that such expenses are necessary to operate and maintain the System. (B) Revenue Fund. The Issuer covenants and agrees that it will establish with a depository in the State of Florida, which is a member_ of the Federal Deposit Insurance Corporation and which is eligible under the laws of the State of Florida to receive county funds, and maintain so long as any of the Bonds and Notes are outstanding, a special fund to be known as the "Indian River. County Water and Sewer System Revenue Fund," into the Revenue Fund the Issuer shall. deposit promptly as receivea all MrAM