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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 warrants <br /> that these revenues will not be used for any other purpose. <br /> b. Establish Security Interest. The BORROWER has duly executed a Security Agreement, <br /> attached hereto as Appendix 4 and incorporated herein, to provide a security interest to <br /> the CWCB in the Pledged Property. The CWCB shall have priority over all other <br /> competing claims for said Pledged Property, except for the liens of the BORROWER'S <br /> existing loans as listed in Section 5 (Schedule of Existing Debt) of the Project <br /> Summary, which sets forth the position of the lien created by this contract in relation to <br /> any existing lien(s). <br /> c. Revenue Assessments. Pursuant to its statutory authority, articles of incorporation and <br /> bylaws, the BORROWER shall take all necessary actions consistent therewith during the <br /> term of this contract to levy assessments sufficient to pay this loan as required by the <br /> terms of this contract and the Promissory Note, to cover all expenditures for operation <br /> and maintenance and emergency repair services, and to maintain adequate debt <br /> service reserves. In the event the assessments levied by the BORROWER become <br /> insufficient to assure such repayment to the CWCB, the BORROWER shall immediately <br /> take all necessary action consistent with its statutory authority, its articles of <br /> incorporation and bylaws including, but not limited to, levying additional assessments to <br /> raise sufficient revenue to assure repayment of this loan. <br /> d. Debt Service Reserve Account. To establish and maintain the debt service reserve <br /> account, the BORROWER shall deposit an amount equal to one-tenth of an annual <br /> payment into its debt service reserve fund on the due date of its first annual loan <br /> payment and annually thereafter for the first ten years of repayment of this loan. In the <br /> event that the BORROWER applies funds from this account to repayment of the loan, <br /> the BORROWER shall replenish the account within ninety (90) days of withdrawal of the <br /> funds. <br /> 9. Collateral. The collateral for this loan is described in Section 6 (Collateral) of the Project <br /> Summary, and secured by the instrument(s) attached hereto as Appendix 5 and <br /> incorporated herein. <br /> a. The BORROWER shall not sell, convey, assign, grah,jra,sf mortgage, pledge, <br /> encumber, or otherwise dispose of the Collateral or t Pje a Pip ` y, so long as <br /> any of the principal, accrued interest, and late charges, if , • s loan remain <br /> unpaid, without the prior written concurrence •i,t - W sB,. In the event of any such <br /> sale, transfer or encumbrance without the C ' ritt t ` c r c e CWCB <br /> may at any time thereafter declare all outstan•` g ic' al here , and late <br /> charges, if any, on this loan immediately due and payable. <br /> 10. 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 Note, <br /> the CWCB agrees to release and terminate any and all of the CWCB's right, title, and <br /> interest in and to the Collateral and the Pledged Property. <br /> 11. Warranties. <br /> a. The BORROWER warrants that, by acceptance of the loan under this contract and by its <br /> representations herein, the BORROWER shall be estopped from asserting for any reason <br /> that it is not authorized or obligated to repay the loan to the CWCB as required by this <br /> contract. <br /> Page 3 of 9 <br />