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<br />d. The BORROWER warrants that the property identified in the Collateral Provisions of this <br />contract is not encumbered by any other deeds of trust to or liens of any party other <br />than the STATE or in any other manner. <br /> <br />11. Collateral. Part of the security provided for this loan, as evidenced by the executed <br />Assignment of Certificate of Deposit attached as Appendix 4 and incorporated herein, <br />shall be an undivided one hundred percent (100%) interest in a certificate of deposit <br />account established by the BORROWER in the amount of one annual loan payment <br />($17,868,56), hereinafter referred to as CD ACCOUNT. The STATE shall use the funds <br />contained in the CD ACCOUNT for the purpose of paying principal and interest due under <br />this contract not otherwise paid by the BORROWER. Any amount withdrawn by the STATE for <br />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 <br />BORROWER has established the CD ACCOUNT, <br /> <br />12. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for <br />purposes of repayment of this loan revenues from assessments levied for that purpose as <br />authorized by the BORROWER'S resolution and all of the BORROWER'S rights to receive said <br />assessment revenues from its members (hereinafter collectively referred to as the <br />"pledged property"). Furthermore, BORROWER agrees that: <br /> <br />a. Revenues For This Loan Are To Be Kept Separate. The BORROWER hereby agrees <br />to set aside and keep the pledged revenues in an account separate from other <br />BORROWER revenues, and warrants that it shall not use the pledged revenues for any <br />other purpose. <br /> <br />b. Establish Security Interest. The BORROWER agrees that, in order to provide a security <br />interest for the STATE in the pledged property so that the STATE shall have priority over <br />all other competing claims for said property, it shall execute a Security Agreement, <br />attached hereto as Appendix 5 incorporated herein, and an Assignment of Deposit <br />Account as Security, attached as Appendix 6 and incorporated herein. The <br />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 <br />Colorado Secretary of State. <br /> <br />c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, <br />articles of incorporation and by-laws, and as authorized by its resolution, the <br />BORROWER shall take all necessary actions consistent therewith to levy assessments <br />sufficient to pay this loan as required by the terms of this contract and the promissory <br />note, In the event the assessments levied by the BORROWER become insufficient to <br />assure such repayment to the STATE, the BORROWER shall immediately take all <br />necessary action consistent with its statutory authority, its articles of incorporation, <br />bylaws and resolution, including, but not limited to, levying additional assessments to <br />raise sufficient revenue to assure repayment of the loan to the STATE. <br /> <br />13. Assessments For Operations, Maintenance And Reserves. Pursuant to its <br />statutory authority, articles of incorporation, by-laws, and resolutions, the BORROWER shall <br />levy assessments from time to time as necessary to provide sufficient funds for adequate <br />operation and maintenance, emergency repair services, obsolescence reserves and debt <br /> <br />Sterling Irrigation Company <br /> <br />Page 6 of 1 3 <br /> <br />Loan Contract <br />