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a. By acceptance of the loan money pursuant to the terms of this contract and by its representations herein, the BORROWER shall be estopped from asserting for any reason that the BORROWER is not authorized or obligated to repay the loan money to the STATE as required by this contract. b. The DISTRICT and the BORROWER have full power and authority to enter into this contract. The execution and delivery of this contract and the performance and observation of its terms, conditions and obligations have been duly authorized by all necessary actions of the DISTRICT and the BORROWER. c. The DISTRICT and the BORROWER have not employed or retained any company or person, other than a bona fide employee working solely for the DISTRICT and the BORROWER, to solicit or secure this contract. The DISTRICT and the BORROWER have not paid or agreed to pay any person, company, corporation, individual, or firm, other than a bona fide employee, any fee, commission, percentage, gift, or other consideration contingent upon or resulting from the award or the making of this contract. d. The BORROWER is an enterprise legally created and maintained in compliance with 9 37-45.1- 101, et sea., C.R.S., and Article X, Section 20 of the Colorado Constitution, and has authority to enter into this contract with the STATE. The BORROWER and/or the DISTRICT shall immediately notify the STATE in writing if the circumstances which formulate the basis of this warranty change. e. The specific revenues to be pledged to repay the STATE under this contract shall be water user rates, charges and fees ("water system revenues"), the establishment of which have been authorized by resolution of the BORROWER. The DISTRICT and the BORROWER hereby pledge sufficient annual water system revenues to pay the annual installment amount pursuant to the Promissory Note attached to this contract, and hereby agree to establish a separate account into which all such moneys shall be deposited. 11. Pledge of revenues. The BORROWER hereby irrevocably pledges to the STATE, for purposes of repayment of this loan, water system revenues levied for that purpose as authorized by its resolutions, and any other funds legally available to the BORROWER, in an amount sufficient to pay the annual payment due under this contract ("pledged revenues"), subject only to the BORROWER'S pledges of funds for the repayment of its Water Revenue Refunding Bonds, Series 1995 and Series 1997, and its existing CWCB loans. Further, the BORROWER agrees to: a. Keep pledged revenues separate. The BORROWER shall set aside and keep the pledged revenues in an account separate from other BORROWER revenues, and warrants that these revenues will not be used for any other purpose. b. Security interest in pledged revenues. To provide a security interest to the STATE in the pledged revenues so that the STATE shall have priority over all other competing claims for said revenues, except for the liens of the BORROWER'S Water Revenue Refunding Bonds, Series 1995 and Series 1997, and its existing CWCB loans, the BORROWER has duly executed a Security Agreement, attached hereto as Appendix D and incorporated herein. c. Rate Covenant. Pursuant to its statutory authority and as permitted by law, the BORROWER shall take all necessary actions consistent therewith during the term of this contract to establish, levy and collect water rates, charges and fees in amounts sufficient to pay this loan as required by this contract and the promissory note, to cover all expenditures for operation and maintenance and emergency repair services, and to Ute Water Activity Enterprise and Ute Water Conservancy District Page 6 of 13