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e e d. the contract will be valid and binding against the BORROWER if entered into by the CWCB. 6. Pledge of revenues. The BORROWER hereby irrevocably pledges to the CWCB, for purposes of repayment of this loan, water system revenues levied for that purpose as authorized by its resolutions, and any other funds legally available to the BORROWER, in an amount sufficient to pay the annual payment due under this contract ("pledged revenues"). Further, the BORROWER agrees to: a. Keep pledged revenues separate. The BORROWER shall set aside and keep the pledged revenues in an account separate from other BORROWER revenues, and warrants that these revenues will not be used for any other purpose. b. Security interest in pledged revenues. To provide a security interest to the eWCB in the pledged revenues so that the CWCB shall have priority over all other competing claims for said revenues, the BORROWER has duly executed a Security Agreement, attached hereto as Appendix 4 and incorporated herein. c. Rate Covenant. Pursuant to its statutory authority and as permitted by law, the BORROWER shall take all necessary actions consistent therewith during the term of this contract to establish, levy and collect water rates, charges and fees in amounts sufficient to pay this loan as required by 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 water user fees. d. Debt Service Reserve Account. To establish and maintain the debt service reserve account, the BORROWER shall deposit an amount equal to one-tenth of an annual payment into its debt service reserve fund on the due date of its first annual loan , payment and annually thereafter for the first ten years of this loan. In the event that the BORROWER applies funds from this account to repayment of the loan, the BORROWER shall replenish the account within ninety (90) days of withdrawal of the funds. e. Additional Debts Oi Bonds. The BORROWER shall not issue any indebtedness payable from the pledged revenues and having a lien thereon which is superior to the lien of this loan. The BORROWER may issue parity debt only with the prior written approval of the CWCB, provided that: i. The BORROWER is currently and at the time of the issuance of the parity debt in substantial compliance with all of the obligations of this contract, including, but not limited to, being current on the annual payments due under this contract and in the accumulation of all amounts then required to be accumulated in the BORROWER'S debt service reserve fund; ii. The BORROWER provides to the CWCB a Parity Certificate from an independent certified public accountant certifying that, based on an analysis of the BORROWER'S revenues, for 12 consecutive months out of the 18 months immediately preceding the date of issuance of such parity debt, the BORROWER'S Page 3 of 13 Loan Contract