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<br />from asserting for any reason that it is not authorized or obligated to repay the loan money to _
<br />the STATE as required by this contract.
<br />
<br />b, The BORROWER warrants that it has full power and authority to enter into this contract. The
<br />execution and delivery of this contract and the performance and observation of its terms,
<br />conditions and obligations have been duly authorized by all necessary actions of the
<br />BORROWER,
<br />
<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 contract
<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.
<br />
<br />d. The BORROWER warrants that the property identified in the Collateral Provisions of this
<br />contract is not encumbered by any other liens or in any other manner.
<br />
<br />12, Collateral. In addition to the revenues pledged to repay this loan, the security provided to the
<br />STATE for this loan shall be an undivided one hundred percent interest in:
<br />
<br />a, A certificate of deposit account established by the BORROWER in the amount of one annual
<br />loan payment ($3,518.05), hereinafter referred to as CD ACCOUNT. The STATE shall use the
<br />funds 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this contract not otherwise paid by the BORROWER, Any amount withdrawn by the STATE for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 withdrawal.
<br />To convey a security interest in the CD ACCOUNT to the STATE, the BORROWER has executed
<br />an Assignment of Certificate of Deposit, which is attached as Appendix 4 and incorporated
<br />herein.
<br />
<br />b, The BORROWER'S new diversion structure located on Elkhead Creek approximately 200 feet
<br />downstream of the Smith Ditch head gate in the N1/2 of the NW1/4 of the NW1/4 of Section
<br />28, Township 7 North, Range 89 West of the 6th P,M, To convey a security interest in said
<br />diversion structure to the STATE, the BORROWER has executed a Deed of Trust, which is
<br />attached as Appendix 5 and incorporated herein,
<br />
<br />13. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer,
<br />mortgage, pledge, encumber, or otherwise dispose of any property provided as security for this
<br />loan, including the dues/assessment revenues pledged to repay the loan herein, so long as any of
<br />the principal and any accrued interest on this loan which remain unpaid, without the prior written
<br />concurrence of the STATE,
<br />
<br />14. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes of
<br />repayment of this loan revenues from annual dues and from assessments levied for that purpose
<br />as authorized by the BORROWER'S resolution, and all of the BORROWER'S rights to receive said
<br />dues and 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 that
<br />the pledged revenues shall be set aside and kept in an account separate from other
<br />BORROWER revenues, and warrants that these revenues shall not be used for any other
<br />purpose,
<br />
<br />Smith Irrigation Ditch
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<br />Page 6 of 13
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<br />Loan Contract
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