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<br />BORROWER and/or the DISTRICT shall immediately ~otify the STATE in writing if the circumstances which <br />formulate the basis of this warranty change. <br /> <br />e. The DISTRICT and the BORROWER warrant that the security identified in the Pledge of Revenues and <br />Collateral Provisions of this contract is not encumbered by any liens of any party other than the STATE <br />or in any other manner. <br /> <br />11. Pledge of revenues. The DISTRICT and the BORROWER agree that the specific revenues to be pledged <br />to repay the STATE shall include rates, fees and charges levied and collected by the BORROWER from the DISTRICT <br />for services associated with the Mutual Mesa Lateral pursuant to an agreement between the DISTRICT and the <br />BORROWER dated October~j'. 1996. which is incorporated herein by reference, and any other funds legally <br />available to BORROWER to repay the STATE. <br /> <br />a. Revenues for this loan are to be kept separate. The BORROWER hereby irrevocably pledges such <br />revenues to repay the STATE loan, agrees that these revenues shall be set aside and kept in an account <br />separate from other BORROWER revenues, and warrants that these revenues shall not be used for any <br />other purpose. <br /> <br />.' <br /> <br />b. Establish security interest in the revenues. TM DISTRICT and the BORROWER agree that, in order to <br />provide a security interest to the STATE in the pledged revenues so that the STATE shall have priority <br />over all other competing claims for said revenueS, they shall provide a properly executed Security <br />Agreement, which is attached as APPENDIX Il and incorporated herein. The DISTRICT and the <br />BORROWER acknowledge that the STATE shall file a UCC.1 Financing Statement with the Colorado <br />Secretary of State to perfect its security interest in the pledged revenues. <br /> <br />c. Levy charges and fees for repayment of the loan. The BORROWER shall, pursuant to its statutory <br />authority and as authorized by its resolutions, charge the DISTRICT sufficient fees for its services and <br />for the use of BORROWER'S water conveyance facilities and take all other necessary actions consistent <br />therewith to generate sufficient revenues to pay this contract loan in a timely manner and as required <br />by the terms and conditions of this contract. In addition, in the event the fees charged by the <br />BORROWER become insufficient to assure repayment to the STATE as required by this contract, then the <br />BORROWER shall immediately take all necessary action consistent with its statutory authority and its <br />resolutions, including, but not limited to, charging additional fees to raise sufficient revenue to assure <br />repayment of the loan to the STATE. <br /> <br />d. Assessments for operations, maintenance and reserves. The BORROWER shall, pursuant to its <br />statutory authority and its resolutions, levy charges from time to time as necessary to provide <br />sufficient funds for adequate operation and maiMenance, emergency repair services, obsolescence <br />reserves and debt reserves. BORROWER shall deposit an amount equal to one-tenth of an annual <br />payment into its reserve debt service fund on an annual basis for the first ten years of this loan. <br /> <br />12. Collateral. Part of the security provided for this loan, as evidenced by the executed Assignment <br />of Certificate of Deposit attached as APPENDIX C and incorporated herein, shall be an undivided one hundred <br />percent interest in a certificate of deposit account established by the BORROWER in the amount of one annual <br />loan payment ($50,370.02). hereinafter referred to as CD ACCOUNT. The STATE shall use the funds contained <br />in the CD ACCOUNT for the purpose of paying principal and interest due under this contract not otherwise paid <br />by the BORROWER. Any amount withdrawn by the STATE for this purpose shall be replenished by the BORROWER <br />within sixty days after such withdrawal. The STATE shall not disburse any loan funds under this contract until <br />the BORROWER has established the CD ACCOUNT. / <br /> <br />13. Collateral during repayment. The DISTRICT and the BORROWER shall not sell, convey, assign, grant, <br />transfer, mortgage, pledge, encumber, or otherwise dispose of any collateral for this loan, including the <br />PROJECT, so long as any of the principal and any accrued interest required by the Promissory Note Provisions <br />of the contract remain unpaid, without the prior written concurrence of the STATE. <br /> <br />Orchard Mesa Irrigation District & <br />Mutual Mesa Lateral Enterprise <br /> <br />Page 6 of 12 <br /> <br />Loan Contract <br />