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<br />said assessment revenues, hereinafter collectively referred to as the "Pledged Property." <br /> <br />a. Segregation of Pledged Revenues. The BORROWER shall set aside and keep the <br />pledged revenues in an account separate from other BORROWER revenues, and warrants <br />that these revenues will not be used for any other purpose. <br /> <br />b. Establish Security Interest. The BORROWER has duly executed a Security Agreement, <br />attached hereto as Appendix 4 and incorporated herein, to provide a security interest to <br />the CWCB in the Pledged Property. The CWCB shall have priority over all other <br />competing claims for said Pledged Property, except for the liens of the BORROWER'S <br />existing loans as listed in Section 5 (Schedule of Existing Debt) of the Project <br />Summary, which sets forth the position of the lien created by this contract in relation to <br />any pre-existing Iien(s). <br /> <br />c. Revenue Assessments. Pursuant to its statutory authority, articles of incorporation and <br />bylaws, the BORROWER shall take all necessary actions consistent therewith during the <br />term of this contract to levy assessments sufficient to pay this loan as required by the <br />terms of this contract and the Promissory Note, to cover all expenditures for operation <br />and maintenance and emergency repair services, and to maintain adequate debt <br />service reserves. In the event the assessments levied by the BORROWER become <br />insufficient to assure such repayment to the CWCB, the BORROWER shall immediately <br />take all necessary action consistent with its statutory authority, its articles of <br />incorporation and bylaws including, but not limited to, levying additional assessments to <br />raise sufficient revenue to assure repayment of this loan. <br /> <br />d. Debt Service Reserve Account. To establish and maintain the debt service reserve <br />account, the BORROWER shall deposit an amount equal toone-tenth of an annual <br />payment into its debt service reserve fund on the due date of its first annual loan <br />payment and annually thereafter for the first ten years of repayment of this loan. In the <br />event that the BORROWER applies funds from this account to repayment of the loan, <br />the BORROWER shall replenish the account within ninety (90) days of withdrawal of the <br />funds. <br /> <br />9. Release After Loan Is Repaid. Upon complete repayment to the CWCB of the entire <br />principal, all accrued interest, and late charges, if any, as specified in the Promissory Note, <br />the CWCB agrees to release and terminate any and all of the CWCB's right, title, and <br />interest in and to the collateral and the property pledged to repay this loan. <br /> <br />10. Collateral. The collateral for this loan is described in Section 6 (Collateral) of the <br />Project Summary, and secured by the instrument(s) attached hereto as Appendix 5 <br />and incorporated herein. <br /> <br />11. Collateral During Loan Repayment. The BORROWER shall not sell, convey, assign, <br />grant, transfer, mortgage, pledge, encumber, or otherwise dispose of the collateral for <br />this loan, including the Pledged Property, so long as any of the principal, accrued <br />interest, and late charges, if any, on this loan remain unpaid, without the prior written <br />concurrence of the CWCB. In the event of any such sale, transfer or encumbrance <br />without the CWCB's written concurrence, the CWCB may at any time thereafter <br />declare all outstanding principal, interest, and late charges, if any, on this loan <br />immediately due and payable. <br /> <br />12. Warranties. <br /> <br />Page 3 of 9 <br />