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d. the contract will be valid and binding against the BoRROweR if entered into by the <br />CWCB; and <br />8. Pledge of revenues. The BoRROweR irrevocably pledges to the CWCB, for purposes <br />of repayment of this loan, seves�ues 4ev'sed for that purpose as authorized in Appendix 3 <br />and any other funds legally available to the BoRROweR, in an amount sufficient to pay <br />the annual payment due under this contract ("Pledged Revenues"). FuRher, the <br />BoRROweR agrees to: <br />a. Segregation of Pledged Revenues. The BoRROweR shall set aside and keep the <br />Pledged Revenues in an account separate from other BoRROw�R revenues, and <br />warrants that these revenues will not be used for any other purpose. <br />b. Establish Security Interest. The BORROWER has duly executed a Security <br />Agreement, attached hereto as Appendix 4 and incorporated herein, to provide a <br />security interest to the CWCB in the Pledged Revenues. The CWCB shall have <br />ps over all other competing claims for said revenues, except for the liens of <br />th@ BORROWER existing loans as listed in Section 5(Schedule of Existing Debt), of <br />the Project Summary, which sets forth the position of the lien created by this <br />contract in relation to any pre-existing lien(s). <br />c. Rate 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 <br />this contract to establish, levy and collec4 rates, charges and fees as described in <br />Appendix 3, in amounts sufficient to pay this loan as required by the terms of this <br />contract and the Promissory Note, to cover all expenditures for operation and <br />maintenance and emergency repair services, and to maintain adequate debt <br />service reserves, including obtaining voter approval, if necessary, of increases in <br />th2 BORROWER rate schedule or taxes, if applicable. <br />d. Debt Service Reserve Account. To establish and maintain the debt service <br />reserve account, the BoRROwER shail deposit an amount equal to one-tenth of an <br />annual payment into its debt service reserve fund on the due date of its first annual <br />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 <br />repayment of the loan, the BoRROweR shall replenish the account within ninety <br />(90) days of withdrawal of the funds. <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 />i. The BoRROweR is currently and at the time of the issuance of the parity debt <br />in substantial compliance with all of the obligations of this contract, including, <br />but not limited to, being current on the annual payments due under this <br />contract and in the accumulation of all amounts then required to be <br />accumulated in the BORROWER debt service reserve fund; <br />ii. The BORROWER provides to the CWCB a Parity Certificate from an <br />independent certified public accountant certifying that, based on an analysis of <br />th6 BORROWER revenues, for 12 consecutive months out of the 18 months <br />Page 3 of 10 <br />