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a. the contract has been duly executed by officers of the BORROWER who are duly <br /> elected or appointed and are authorized to execute the contract and to bind the <br /> BORROWER; <br /> b. the resolutions of the BORROWER authorizing the execution and delivery of the <br /> contract were duly adopted by the BORROWER's board of directors and /or <br /> stockholders <br /> c. there are no provisions in the BORROWER's articles of incorporation or bylaws or any <br /> state or local law that prevent this contract from binding the BORROWER; and <br /> d. the contract will be valid and binding against the BORROWER if entered into by the <br /> CWCB. <br /> 8. Pledge Of Property. The BORROWER irrevocably pledges to the CWCB for purposes of <br /> repayment of this loan: (1) revenues from assessments levied for that purpose as <br /> authorized by the BORROWER's resolution(s) and (2) all of the BORROWER's rights to <br /> receive said assessment revenues, hereinafter collectively referred to as the "Pledged <br /> Property." <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 <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 Property. The CWCB shall have <br /> priority over all other competing claims for said Pledged Property, except for the <br /> liens of the BORROWER's existing loans as listed in Section 5 (Schedule of Existing <br /> Debt) of the Project Summary, which sets forth the position of the lien created by <br /> this contract in relation to any existing lien(s). <br /> c. Revenue Assessments. Pursuant to its statutory authority, articles of incorporation <br /> and bylaws, the BORROWER shall take all necessary actions consistent therewith <br /> during the term of this contract to levy assessments sufficient to pay this loan as <br /> required by the terms of this contract and the Promissory Note, to cover all <br /> expenditures for operation and maintenance and emergency repair services, and to <br /> maintain adequate debt service reserves. In the event the assessments levied by <br /> the BORROWER become insufficient to assure such repayment to the CWCB, the <br /> BORROWER shall immediately take all necessary action consistent with its statutory <br /> authority, its articles of incorporation and bylaws including, but not limited to, levying <br /> additional assessments to raise sufficient revenue to assure repayment of this loan. <br /> d. Debt Service Reserve Account. To establish and maintain the debt service <br /> reserve account, the BORROWER shall deposit an amount equal to one -tenth of an <br /> annual payment into its debt service reserve fund on the due date of its first annual <br /> loan payment and annually thereafter for the first ten years of repayment of this <br /> loan. In the event that the BORROWER applies funds from this account to <br /> repayment of the loan, the BORROWER shall replenish the account within ninety <br /> (90) days of withdrawal of the funds. <br /> Loan Contract C150307 <br /> Page 3 of 11 <br />