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d. Assessment Covenant. Pursuant to its statutory authority and as permitted by
<br /> law, the BORROWER shall take all necessary actions consistent therewith during
<br /> the term of this CONTRACT to establish, levy and collect assessments, charges and
<br /> fees as described in APPENDIX 3a and 3b, in amounts 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
<br /> to maintain adequate debt service reserves, of increases in the BORROWER'S
<br /> assessment schedule.
<br /> e. Debt Service Reserve Account or Fund. To establish and maintain the debt
<br /> service reserve account, the BORROWER shall deposit an amount equal to one-tenth
<br /> of an annual payment into its debt service reserve fund on the due date of its first
<br /> annual loan payment and annually thereafter for the first ten years of repayment of
<br /> this 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. The debt service reserve account or fund
<br /> requirement will remain in effect until the loan is paid in full.
<br /> 9. Collateral The BORROWER irrevocably pledges to the CWCB, for purposes of
<br /> repayment of this loan, the real property ("COLLATERAL") as further described in Section
<br /> 6 (COLLATERAL) of the PROJECT SUMMARY, authorized by the BORROWER'S AUTHORIZING
<br /> RESOLUTIONS and secured by the DEED OF TRUST(APPENDIX 5).
<br /> 10. Collateral during Loan Repayment. The BORROWER shall not sell, convey, assign,
<br /> grant, transfer, mortgage, pledge, encumber, or otherwise dispose of the COLLATERAL
<br /> or the PLEDGED PROPERTY so long as any of the principal, accrued interest, and late
<br /> charges, if any, on this loan remain unpaid, without the prior written concurrence of
<br /> the CWCB. In the event of any such sale, transfer or encumbrance without the
<br /> CWCB's written concurrence, the CWCB may at any time thereafter declare all
<br /> outstanding principal, interest, and late charges, if any, on this loan immediately due
<br /> and payable.
<br /> 11. 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
<br /> NOTE, the CWCB agrees to release and terminate any and all of the CWCB's right, title,
<br /> and interest in and to the COLLATERAL and the PLEDGED PROPERTY.
<br /> 12. Warranties.
<br /> a. The BORROWER warrants that, by acceptance of the loan under this CONTRACT and
<br /> by its representations herein, the BORROWER shall be estopped from asserting for
<br /> any reason that it is not authorized or obligated to repay the loan to the CWCB as
<br /> required by this CONTRACT.
<br /> b. The BORROWER warrants that it has not employed or retained any company or
<br /> person, other than a bona fide employee working solely for the BORROWER, to
<br /> solicit or secure this CONTRACT and has not paid or agreed to pay any person,
<br /> company, corporation, individual, or firm, other than a bona fide employee, any fee,
<br /> commission, percentage, gift, or other consideration contingent upon or resulting
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