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from the lien securing Borrower's obligation to repay the LOAN AMOUNT and <br /> may be used as determined by Borrower for any lawful purpose. <br /> b. Establish Security Interest. The BORROWER has duly executed a SECURITY <br /> AGREEMENT, attached hereto as APPENDIX 4 and incorporated herein, to <br /> provide a security interest to the CWCB in the PLEDGED REVENUES. The CWCB <br /> shall have priority over all other competing claims to such Pledged REVENUES. <br /> c. Debt Service Reserve Account or Fund. To establish and maintain the debt <br /> service reserve account or fund, the BORROWER shall deposit an amount equal <br /> to one-tenth of an annual payment into its debt service reserve account or fund <br /> on the due date of its first annual loan payment and annually thereafter for the <br /> first ten years of repayment of this loan. In the event that the BORROWER <br /> applies funds from this account to repayment of the loan, the BORROWER shall <br /> replenish the account with first available PLEDGED REVENUES. The debt service <br /> reserve account or fund requirement is in effect until the loan is paid in full. <br /> d. Additional Debts or Bonds. The BORROWER shall not issue any <br /> indebtedness payable from the PLEDGED REVENUES and having a lien thereon <br /> which is superior to the lien of this LOAN. The BORROWER may issue parity <br /> debt only with the prior written approval of the CWCB, provided that: <br /> i. The BORROWER is currently and at the time of the issuance of the parity debt <br /> in substantial compliance with all of the obligations of this CONTRACT, <br /> including, but not limited to, being current on the annual payments due under <br /> this CONTRACT and in the accumulation of all amounts then required to be <br /> accumulated in the BORROWER'S debt service reserve fund; <br /> ii. The BORROWER provides to the CWCB a Parity Certificate from an <br /> independent certified public accountant certifying that, based on an analysis <br /> of the BORROWER'S REVENUES, for 12 consecutive months out of the 18 <br /> months immediately preceding the date of issuance of such parity debt, <br /> taking into account all rate adjustments scheduled to be made within the <br /> following 24 calendar months, the BORROWER'S PLEDGED REVENUES are <br /> projected to be sufficient to pay its annual debt service on all outstanding <br /> indebtedness having a lien on PLEDGED REVENUES, including this LOAN, the <br /> annual debt service on the proposed indebtedness to be issued, and all <br /> required deposits to any reserve funds required by this CONTRACT or by the <br /> lender(s) of any indebtedness having a lien on THE PLEDGED REVENUES. <br /> The BORROWER acknowledges and understands that any request for approval <br /> of the issuance of additional debt must be reviewed and approved by the <br /> CWCB prior to the issuance of any additional debt. <br /> e. Annual Statement of Debt Coverage. Each year during the term of this <br /> CONTRACT, the BORROWER shall submit to the CWCB an annual audit report <br /> and a certificate of debt service coverage from a Certified Public Accountant. <br /> In addition, and at the same time as Borrower delivers to CWCB each such <br /> certificate of debt service coverage, Borrower shall deliver to CWCB a <br /> Page 4 of 13 <br />