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<br />SECTION 7 - ADDITIONAL CONDITIONS & CONTRACT REQUIREMENTS <br />The CWCB approved the loan with the following conditions: <br />1. The BORROWER provide a copy of the executed USDA Conservation Program <br />Contract to verify that the USDA would provide engineering services and a grant <br />for 75 percent of the final construction cost. Copy of said contract included with <br />the above Feasibility Study referred to in Section 2 above. <br />2. Security for the loan includes (1) a pledge of assessment revenues backed by an <br />assessment covenant, (2) a debt service reserve fund equal to two annual loan <br />payments (one payment set aside at the time of contract execution and one third <br />of an annual payment set aside at the time the first three annual loan payments <br />are made), (3) a security interest in the BORROWER'S Funding Agreement, which <br />Funding Agreement shall include a "step-up" provision that requires the Funding <br />Agreement signatories to make the entire annual loan payment to the CWCB in <br />the event any of the members fail to pay their assessed share amount pursuant <br />to the Funding Agreement, and (4) a conditional assignment to the CWCB of the <br />Company's right to enforce said step-up provision in the event of a default. <br />3. Within ten (10) working days after receipt of the 75% cost share portion <br />reimbursement from the USDA, the BORROWER shall submit to the CWCB an <br />amount equal to the reimbursement. The USDA reimbursement will be applied to <br />the outstanding principal loan balance, and the Loan Contract shall be amended <br />to the reduced loan amount. <br />SECTION 8 - CONSTRUCTION FUND PROGRAM PROCEDURES <br />A. The BORROWER shall employ an engineer, registered in the state of Colorado to <br />prepare plans and specifications for the PROJECT. <br />B. The BORROWER'S and the Engineering Consultant's Agreements and the plans and <br />specifications must be submitted to the CWCB staff for verification of compliance <br />with the terms of this Contract when available prior to bidding. Any modifications to <br />the plans and specifications must be approved in writing by the CWCB staff. <br />C. For plans and specifications for all jurisdictional dams and reservoirs, as defined by <br />S 37-87-105 C.R.S., the BORROWER shall provide a letter of approval from the State <br />Engineer's Office prior to construction. <br />D. CWCB staff must be present at bid opening and must approve the award of the <br />construction contract. <br />E. The BORROWER shall contract for the construction of the work with responsible and <br />capable Construction Firms, which said Construction Firms shall be selected by the <br />BORROWER and found acceptable by the CWCB staff. <br />F. The BORROWER must provide a copy of the executed construction contract <br />documents consisting of the contractor's proposal, construction contract, <br />performance bond, payment bond, notice of award, notice to proceed, sample <br />change order, and sample field order, as well as the advertisement for bid and bid <br />bond at bidding. After the CWCB staff verifies that these documents comply with <br />the terms of this contract, the BORROWER may issue the notice to proceed to the <br />Construction Firms. <br />G. The BORROWER shall conduct a pre-construction conference at which time the <br />CWCB staff shall have the opportunity to revi'ew and approve the construction <br /> <br />Page 2 of 3 <br />