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incurred in accordance with Section 14.E., hereof, and together with the Existing Parity Debt, <br /> shall be the Borrower's "Parity Indebtedness." <br /> A. Segregation of Pledged Revenues. The Pledged Revenues shall be accounted for and <br /> maintained in an account separate from other Borrower revenues at all times. The Pledged <br /> Revenues shall be used first to pay debt service on the Total Loan Amount and all other <br /> Parity Indebtedness on an equal basis and thereafter may be used for any and all other <br /> expenses. <br /> B. Establish Security Interest. The Borrower has duly executed a Security Agreement, <br /> (attached as Appendix 5) and incorporated herein, to provide a security interest to the <br /> CWCB in the Pledged Revenues. The lien of this Contract on the Pledged Revenues shall <br /> have priority over all other competing claims with respect to the Pledged Revenues, except <br /> for the parity lien on the Pledged Revenues of any Parity Indebtedness. <br /> C. Assessment Covenant. Pursuant to its statutory authority and as permitted by law, the <br /> Borrower shall take all necessary actions consistent therewith during the term of this <br /> Contract to establish, levy and collect rates, charges and fees as described in Appendix 5, in <br /> amounts 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 emergency <br /> repair services, and to maintain adequate debt service reserves. <br /> D. Debt Service Reserve Account or Fund. To establish and maintain the debt service <br /> reserve account or fund, the Borrower shall deposit an amount equal to one-tenth of an <br /> annual payment into its debt service reserve account or fund on the due date of its first <br /> annual loan payment and annually thereafter for the first ten years of repayment of this <br /> loan. In the event that the Borrower applies funds from this account to repayment of the <br /> loan, the Borrower shall replenish the account within ninety(90) days of withdrawal of the <br /> funds. The debt service reserve account or fund requirement is in effect until the loan is <br /> paid in full. <br /> E. Additional Debts or Bonds. The Borrower shall not issue any indebtedness payable from <br /> the Pledged Revenues and having a lien thereon which is superior to the lien of this loan. <br /> The Borrower may issue parity debt only with the prior written approval of the CWCB, <br /> provided that: <br /> i. 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 not <br /> limited to, being current on the annual payments due under this Contract and in the <br /> accumulation of all amounts then required to be accumulated in the Borrower's debt <br /> service reserve fund; <br /> ii. 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 the <br /> date of issuance of such parity debt, the Borrower's revenues are sufficient to pay its <br /> annual operating and maintenance expenses, annual debt service on all outstanding <br /> indebtedness having a lien on the pledged revenues, including this loan, the annual <br /> debt service on the proposed indebtedness to be issued, and all required deposits to <br /> any reserve funds required by this Contract or by the lender(s) of any indebtedness <br /> having a lien on the pledged revenues. The analysis of revenues shall be based on the <br /> Borrower's current rate structure or the rate structure most recently adopted. No more <br /> than 10% of total revenues may originate from tap and/or connection fees; <br /> Page 7 of 18 <br /> Contract Number:CT2019-2848 <br />