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priority over all other competing claims for said revenues, except for the liens of the <br /> BORROWER'S existing loans as listed in Section 5 (Schedule of Existing Debt), of the <br /> PROJECT SUMMARY (APPENDIX 1), which sets forth the position of the lien created by <br /> this CONTRACT in relation to any existing lien(s). <br /> c. Assessment Covenant. Pursuant to its statutory authority and as permitted by <br /> law, the BORROWER shall take all necessary actions consistent therewith during the <br /> term of this CONTRACT to establish, levy and collect rates, charges and fees as <br /> described in APPENDICES 4a and 4b, 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 to <br /> maintain adequate debt service reserves, including obtaining voter approval, if <br /> necessary, of increases in the BORROWER'S rate schedule or taxes, if applicable. <br /> d. 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 to <br /> one-tenth of an annual payment into its debt service reserve account or fund on the <br /> due date of its first annual loan payment and annually thereafter for the first ten years <br /> of repayment of this loan. In the event that the BORROWER applies funds from this <br /> account to repayment of the loan, the BORROWER shall replenish the account within <br /> ninety(90)days of withdrawal of the funds. The debt service reserve account or <br /> fund requirement is in effect until the loan is paid in full. <br /> e. Additional Debts or Bonds. The BORROWER shall not issue any indebtedness <br /> payable from the PLEDGED REVENUES and having a lien thereon which is superior to <br /> the lien of this loan. The BORROWER may issue parity debt only with the prior <br /> written approval of the CWCB, provided that: <br /> f. The BORROWER is currently and at the time of the issuance of the parity debt in <br /> substantial compliance with all of the obligations of this CONTRACT, including, but <br /> not limited to, being current on the annual payments due under this CONTRACT and <br /> in the accumulation of all amounts then required to be accumulated in the <br /> BORROWER'S debt service reserve fund; <br /> g. The BORROWER provides to the CWCB a Parity Certificate from an independent <br /> certified public accountant certifying that, based on an analysis of the BORROWER'S <br /> revenues, for 12 consecutive months out of the 18 months immediately preceding <br /> the date of issuance of such parity debt, the BORROWER'S revenues are sufficient to <br /> pay its annual operating and maintenance expenses, annual debt service on all <br /> outstanding indebtedness having a lien on the pledged revenues, including this <br /> loan, the 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. The analysis <br /> of revenues shall be based on the BORROWER'S current rate structure or the rate <br /> structure most recently adopted. No more than 10% of total revenues may <br /> originate from tap and/or connection fees. <br /> The BORROWER acknowledges and understands that any request for approval of <br /> the issuance of additional debt must be reviewed and approved by the CWCB prior <br /> to the issuance of any additional debt. <br /> Page 4 of 13 <br />