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" ') withdrawal. The STATE shall not disburse any loan funds under this contract until the BORROWER has established the CD ACCOUNT. 9. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes of repayment of this loan revenues from assessments levied for that purpose in the amount of the annual payments due under this contract ("pledged revenues") as authorized by the BORROWER'S resolutions and all of the BORROWER'S rights to receive said revenues from its members (hereinafter collectively referred to as the "pledged property"). a. Revenues For This Loan Are To Be Kept Separate. The BORROWER hereby agrees to set aside and keep the pledged revenues in an account separate from other BORROWER revenues, and warrants that it shall not use the pledged revenues for any other purpose. b. Establish Security Interest. The BORROWER agrees that, in order to provide a security interest for the STATE in the pledged property so that the STATE shall have priority over all other competing claims for said property, except for the Borrower's loan from the United States Department of Agriculture Farmers Home Administration, dated April 18, 1967, which shall have superior lien, the Borrower has duly executed a Security Agreement, attached hereto as Appendix 6 incorporated herein, and an Assignment of Deposit Account as Security, attached as Appendix 7 and incorporated herein, prior to the disbursement of any loan funds. The BORROWER acknowledges that the STATE shall perfect its security interest in the BORROWER'S right to receive assessment revenues by filing a UCC-1 F9rm with the Colorado Secretary of State. c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, articles of incorporation and by-laws, and as authorized by its resolution, the BORROWER shall take all necessary actions consistent therewith to levy assessments sufficient to pay this loan as required by the terms of this contract and the promissory note. In the event the assessments levied by the BORROWER become insufficient to assure such repayment to the STATE, the BORROWER shall immediately take all necessary action consistent with its statutory authority, its articles of incorporation, bylaws and resolution, including, but not limited to, levying additional assessments to raise sufficient revenue to assure repayment of the loan to the STATE. d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory authority, articles of incorporation, by-laws, and resolutions, the BORROWER shall levy assessments from time to time as necessary to provide sufficient funds for adequate operation and maintenance, emergency repair services, obsolescence reserves and debt service reserves. BORROWER shall deposit an amount equal to one-tenth of an annual payment into its debt service reserve fund one year from the first loan disbursement, and annually thereafter for the first ten years of this loan. 14.Change of Use of Water Shares During Term of Contract. The BORROWER agrees to notify the STATE of any change of the use of the water rights represented by its shares from irrigation to municipal or commercial use, aI which time the STATE may, at its discretion, adjust the interest rate on that portion of the outstanding loan amount corresponding to the percentage of shares for which the use has been changed to the CWCS's municipal or commercial rate in effect at the time of the change of use of the water rights. The parties shall execute a contract amendment to effect said change in interest rate. 15. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer, mortgage, pledge, encumber, or otherwise dispose of the property provided as security for this loan, so long as any of the principal, all accrued interest, and late charges, if any, on this loan remain unpaid, without the prior written concurrence of the STATE. In the event of any such sale, Pine River Canal Company Page 6 of 12 Loan Contract