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<br />11. Warranties. <br /> <br />a. The BORROWER warrants that by acceptance of the loan money pursuant to the terms of <br />this contract and by the BORROWER'S representation herein, the BORROWER shall be <br />estopped from asserting for any reason that it is not authorized or obligated to repay the <br />loan money to 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. <br />The execution and delivery of this contract and the performance and observation of its <br />terms, conditions and obligations have been duly authorized by all necessary actions of <br />the BORROWER. <br /> <br />c.- The BORROWER warrants that it has not employed or retained -any company or person, <br />other than a bona fide employee working solely for the BORROWER, to solicit or secure <br />this contract and has not paid or agreed to pay any person, company, corporation, <br />individual, or firm, other than a bona fide employee, any fee, commission, percentage, <br />gift, or other consideration contingent upon or resulting from the award or the making of <br />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. 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, shall <br />be an undivided one hundred percent (100%) interest in a certificate of deposit account <br />established by the BORROWER in the amount of one annual loan payment ($13,227.88), <br />hereinafter referred to as CD ACCOUNT. The STATE shall use the funds contained in the CD <br />ACCOUNT for the purpose of paying principal and interest due under this contract not <br />otherwise paid by the BORROWER. Any amount withdrawn by the STATE for this purpose shall <br />be replenished by the BORROWER within sixty days after such withdrawal. The STATE shall <br />not disburse any loan funds under this contract until the BORROWER has established the CD <br />ACCOUNT. <br /> <br />13. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, <br />transfer, mortgage, pledge, encumber, or otherwise dispose of the CD ACCOUNT provided as <br />security for this loan, or any of the assessment revenues pledged to repay the loan herein, so <br />long as any of the principal and any accrued interest on this loan which remain unpaid, <br />without the prior written concurrence of the STATE. <br /> <br />14. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes <br />of repayment of this loan revenues from assessments levied for that purpose as authorized <br />by the BORROWER'S resolution, and all of the BORROWER'S rights to receive said assessment <br />revenues from its shareholders (hereinafter collectively referred to as the "pledged property"). <br />Furthermore, BORROWER agrees that <br /> <br />a. Revenues For This Loan Are To Be Kept Separate. The BORROWER hereby agrees <br />that 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 /> <br />The Weldon Valley Ditch Company <br /> <br />Page 6 of 14 <br /> <br />Loan Contract <br />