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herein. <br />7. Attorney's Opinion Letter. Prior to the execution of this CONTRACT by the CWCB, the <br />BORROWER shall submit to the CWCB a letter from its attorney stating that it is the <br />attorney's opinion that <br />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 <br />of 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 />Loan Contract C150344 <br />Page 3 of 11 <br />