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Pledged Revenues in an account separate from other BoRROwER revenues, and <br />warrants that these revenues will not be used for any other purpose. <br />b. Establish Security Interest. The BORROWER has duly executed a Security <br />Agreement, attached hereto as Appendix 4 and incorporated herein, to provide a <br />security interest to the CWCB in the Pledged Revenues. The CWCB shall have <br />priority over all other competing claims for said revenues, except for the liens of <br />the BORROWER's existing loans as listed in Section 5(Schedule of Existing Debt), of <br />the Project Summary, which sets forth the position of the lien created by this <br />contract in relation to any existing lien(s), and any other obligations issued in <br />accordance with Paragraph 7.e below. <br />c. Rate Covenant. Pursuant to its statutory authority and as permitted by law, the <br />BoRROwER shall take all necessary actions consistent therewith during the term of <br />this contract, including obtaining voter approval, if necessary, of increases in the <br />BORROWER's rate schedule, to establish, levy and collect rates, charges and fees <br />as described in Appendix 3, in amounts sufficient to pay this loan as required by. <br />the terms of this contract and the Promissory Note, to cover all expenditures for <br />operation and maintenance and emergency repair services, and to maintain <br />adequate debt service reserves. <br />d. Debt Service Reserve Account. The BoRROwER has previously established its <br />Water and Sewer Revenue Bond Reserve Fund (the "Reserve Fund") for the <br />payment of its Water and Sewer Revenue Refunding Bonds, Series 1998 and <br />Water and Sewer Revenue Refunding Bonds, Series 2001 (collectively, the "Prior <br />Bonds"). Prior to the effective date of this Contract, th2 BORROWER covenants to <br />cause the amount on deposit in the Reserve Fund to be increased (and <br />maintained thereafter) in an amount at least equal to the Reserve Fund <br />Requirement (as defined in the resolutions authorizing the issuance of the Prior <br />Bonds). The BoRROwER covenants to maintain and disburse amounts on deposit <br />in the Reserve Fund as provided in the resolutions authorizing the issuance of the <br />Prior Bonds. <br />e. Additional Debts or Bonds. The BoRROwER shall not issue any indebtedness <br />payable from the pledged revenues and having a lien thereon which is superior to <br />the lien of this loan. The BoRROwER may issue parity debt only with the prior <br />written approval of the CWCB, provided that: <br />i. The BoRROwER is currently and at the time of the issuance of the parity debt <br />in substantial compliance with all of the obligations of this contract, including, <br />but not limited to, being current on the annual payments due under this <br />contract and in the accumulation of all amounts then required to be <br />accumulated in the BoRROwER's debt service reserve fund; <br />ii. The BORROWER provides to the CWCB a Parity Certificate from an <br />independent certified public accountant certifying that, based on an analysis of <br />the BORROWER's revenues, for 12 consecutive months out of the 18 months <br />immediately preceding the date of issuance of such parity debt, the <br />BORROWER's revenues are sufficient to pay its annual operating and <br />maintenance expenses, annual debt service on all outstanding indebtedness <br />having a lien on the pledged revenues, including this loan, the annual debt <br />Page 3 of 10 <br />