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<br />the pledged revenues in an account separate from other BORROWER revenues, and warrants
<br />that it shall not use the pledged revenues for any other purpose. . .
<br />
<br />b. Establish Security Interest. The BORROWER agrees that, to provide a security interest to the
<br />CWCB in the Pledged Property so that the CWCB shall have priority over all other competing
<br />claims for said property, it shall execute a Security Agreement, attached hereto as Appendix
<br />4, and incorporated herein. The CWCB shall perfect its security interest in the BORROWER'S
<br />right to receive assessment revenues by filing a UCC-1 Form with the Colorado Secretary of
<br />State.
<br />
<br />c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, articles of
<br />incorporation and bylaws, the BORROWER shall take all necessary actions consistent therewith
<br />to levy assessments sufficient to pay this loan as required by the terms of this contract and the
<br />Promissory Note. In the event the assessments levied by the BORROWER become insufficient
<br />to assure such repayment to the CWCB, the BORROWER shall immediately take all necessary
<br />action consistent with its statutory authority, its articles of incorporation and bylaws including,
<br />but not limited to, levying additional assessments to raise sufficient revenue to assure
<br />repayment of this loan.
<br />
<br />d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory
<br />authority, articles of incorporation and bylaws, the BORROWER shall levy assessments in
<br />sufficient amounts to provide funds for adequate operation and maintenance, emergency
<br />repair services, and obsolescence and debt service reserves.
<br />
<br />e. Debt Service Reserve Account. To establish and maintain the debt service reserve account,
<br />the BORROWER shall deposit an amount equal to one-tenth of an annual payment into its debt
<br />service reserve fund on the due date of its first annual loan payment and annually thereafter
<br />for the first ten years of this loan. In the event that the BORROWER applies funds from this
<br />account to repayment of the loan, the BORROWER shall replenish the account within ninety
<br />(90) days of withdrawal of the funds.
<br />
<br />8. Collateral. The collateral for this loan is described in Section 3 (Collateral) of the Project
<br />Summary. The BORROWER shall not sell, convey, assign, grant, transfer, mortgage, pledge,
<br />encumber, or otherwise dispose of the collateral for this loan, including the Pledged Propert~',
<br />so long as any of the principal, accrued interest, and late charges, if any, on this loan remain
<br />unpaid, without the prior written concurrence of the CWCB. In the event of any such sale,
<br />transfer or encumbrance without the CWCB's written concurrence, the CWCB may at any time
<br />thereafter declare all outstanding principai, interest, and late charges, if any, on this loan
<br />immediately due and payable.
<br />
<br />9. Release After Loan Is Repaid. Upon complete repayment to the CWCB of the entire principal,
<br />all accrued interest, and late charges, if any, as specified in the Promissory Note, the CWCB
<br />agrees to release and terminate any and all of the CWCB's right, title, and interest in and to the
<br />collateral and the property pledged to repay this loan.
<br />
<br />10. Warranties.
<br />
<br />a. The BORROWER warrants that, by accepting the loan money under this contract and by its
<br />representations herein, the BORROWER shall be estopped from asserting for any reason that
<br />it is not authorized or obligated to repay the ioan to the CWCB as required by this contract.
<br />
<br />b. The BORROWER warrants that it has not employed or retained any company or person, other
<br />
<br />West Rhone Lateral Ditch Company
<br />
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<br />Loan Contract
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