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<br />c, The BORROWER warrants that it has not employed or retained any company or person, other
<br />than a bona fide employee working solely for the BORROWER, to solicit or secure this contrad
<br />and has not paid or agreed to pay any person, company, corporation, individual, or firm, other
<br />than a bona fide employee, any fee, commission, percentage, gift, or other consideration
<br />contingent upon or resulting from the award or the making of this contract
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<br />d. The BORROWER warrants that the property identified in the Collateral Provisions of this contract
<br />is not encumbered by any liens of any party other than the STATE or in any other manner.
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<br />12. Collateral. Part of the security provided for this loan, as evidenced by the executed Assignment of
<br />Certificate of Deposit attached as Appendix 4 and incorporated herein, shall be an undivided one
<br />hundred percent (100%) interest in a certificate of deposit account established by the BORROWER in
<br />the amount of one annual loan payment ($7,196,21), hereinafter referred to as CD ACCOUNT. The
<br />STATE shall use the funds contained in the CD ACCOUNT for the purpose of paying principal and
<br />interest due under this contract not otherwise paid by the BORROWER, Any amount withdrawn by the
<br />STATE for this purpose shall be replenished by the BORROWER within sixty days after such
<br />withdrawal. The STATE shall not disburse any loan funds under this contract until the BORROWER has
<br />established the CD ACCOUNT,
<br />
<br />13. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes of
<br />repayment of this loan revenues from assessments levied for that purpose as authorized by the
<br />BORROWER'S resolution and all of the BORROWeR'S rights to receive said assessment revenues from
<br />its stockholders (hereinafter collectively referred to as the 'pledged property"), Furthermore,
<br />BORROWER agrees that
<br />
<br />a, Revenues For This Loan Are To Be Kept Separate. The BORROWER hereby agrees to set
<br />aside and keep the pledged revenues in an account separate from other BORROWER revenues,
<br />and warrants that it shall not use the pledged revenues for any other purpose.
<br />
<br />b. Establish Security Interest. The BORROWe:R agrees that, in order to provide a security interest
<br />for the STATE in the pledged property so that the STATE shall have priority over all other
<br />competing claims for said property, it shall execute a Security Agreement, attached hereto as
<br />Appendix 5 and incorporated herein, and an Assignment of Deposit Account as Security,
<br />attached as Appendix 6 and incorporated herein, prior to the disbursement of any loan funds.
<br />The BORROWER acknowledges that the STATE shall perfect its security interest in the
<br />BORROWER'S right to receive assessment revenues by filing a UCC-1 Form with the Colorado
<br />Secretary of State,
<br />
<br />c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, articles of
<br />incorporation and by-laws, and as authorited by its resolution, the BORROWER shall take all
<br />necessary actions consistent therewith to levy assessments sufficient to pay this loan as required
<br />by the terms of this contract and the promissory note, In the event the assessments levied by
<br />the BORROWER become insufficient to assure such repayment to the STATE, the BORROWER shall
<br />immediately take all necessary action consistent with its statutory authority, its articles of
<br />incorporation, bylaws and resolution, including, but not limited to, levying additional assessments
<br />to raise sufficient revenue to assure repayment of the loan to the STATE,
<br />
<br />d, Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory authority,
<br />articles of incorporation, by-laws, and resolutions, the BORROWER shall levy assessments from
<br />time to time as necessary to provide sufficient funds for adequate operation and maintenance,
<br />
<br />Western Mutual Ditch Company
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<br />Page 6 of 13
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<br />Loan Contract
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