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obligations have been duly authorized by all necessary actions of the BORROWER The <br /> BORROWER'S AUTHORIZING RESOLUTION(S) are attached as APPENDIX 3a, Resolutions <br /> of the Board of Directors (required) and Appendix 3b, Resolutions of the <br /> Shareholders (if required) and incorporated herein. <br /> 7. Attorney's Opinion Letter. Prior to the execution of this CONTRACT by the CWCB, <br /> the 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; and <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 /> shareholders; and <br /> c. there are no provisions in the BORROWER'S articles of incorporation or bylaws or <br /> any 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 <br /> the 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 assessment revenues in an account separate from other BORROWER <br /> revenues and 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 <br /> incorporation and bylaws, the BORROWER shall take all necessary actions <br /> consistent therewith during the term of this CONTRACT to levy assessments <br /> sufficient to pay this loan as required by the terms of this CONTRACT and the <br /> PROMISSORY NOTE, to cover all expenditures for operation and maintenance and <br /> emergency repair services, and to maintain adequate debt service reserves. In the <br /> event the assessments levied by the BORROWER become insufficient to assure <br /> such repayment to the CWCB, the BORROWER shall immediately take all necessary <br /> action consistent with its statutory authority, its articles of incorporation and bylaws <br /> including, but not limited to, levying additional assessments to raise sufficient <br /> Page 3 of 12 <br />