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<br />said assessment revenues, hereinafter collectively referred to as the "Pledged Property."
<br />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 Iien(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 BOR,ROWER 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, grant, transfer, mortgage, pledge,
<br />encumber, orotherwise dispose of the Collateral or the Pledged Property, so long as
<br />any of the principal, accrued interest, and late charges, if any, on this loan remain
<br />unpaid, without the prior written concurrence of the CWCB. In the event of any such
<br />sale, transfer or encumbrance without the CWCB's written concurrence, the CWCB
<br />may at any time thereafter declare all outstanding principal, interest, 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
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