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$469,813.04, and to secure this loan with a pledge of revenues backed by a rate covenant and annual statement of debt coverage. NOW THEREFORE, it is hereby agreed that 1. Consideration for this Amendment to the ORIGINAL CONTRACT consists of the payments that shall be made pursuant to this Amendment and ORIGINAL CONTRACT and the promises and agreements herein set forth. 2. It is expressly agreed by the parties that this Amendment is supplemental to the ORIGINAL CONTRACT, and all tenns, conditions, and provisions thereof, unless specifically modified herein, are to apply to this Amendment as though they were expressly rewritten, incorporated, and included herein. 3. The BORROWER agrees that it shall execute the following documents, all of which shall set forth the revised loan amount, as of June 1, 1997, of $469,813.04: a. Promissory Note attached as Appendix 1 and incorporated herein, which shall replace and supersede the Promissory Note provisions (Paragraph A.9) in the ORIGINAL CONTRACT. b. Security Agreement Amendment No.1, attached hereto as Appendix 2 and incorporated herein, which shall supplement and operate in conjunction with the Security Agreement dated October 30, 1996, attached to the ORIGINAL CONTRACT as Appendix B. 4. The parties agree that the ORIGINAL CONTRACT, is and shall be modified, altered, and changed in the following respects only: a. Paragraph A.11, Pledge of revenues, is amended by the addition of the following two paragraphs to add the rate covenant and annual statement of debt coverage provisions: A.11.e. Rate Covenant. Pursuant to its statutory authority and as pennitted by law, the BORROWER shall take all necessary actions consistent therewith during the term of this contract to establish, levy and collect rates, charges and fees as described in Appendix 3, in amounts sufficient to pay this loan as required by the tenns of this contract and the Promissory Note, to cover all expenditures for operation and maintenance and emergency repair services, and to maintain adequate debt service reserves, including obtaining voter approval, if necessary, of increases in the BORROWER'S rate schedule or taxes, if applicable. A.11.f. Annual Statement of Debt Coverage. Each year during the term of this contract, the BORROWER shall submit to the CWCB an annual audit report and a certificate of debt service coverage from a Certified Public Accountant. b. Paragraph A.12, Collateral, is revised by the addition of the following paragraph A.12 a. In accordance with CWCB Policy No.5, the CWCB hereby agrees to collateral consisting of a pledge of revenues (established in the ORIGINAL CONTRACT under Paragraph A.11), and backed by rate covenant and annual statement of debt coverage. Page 2 of 5