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<br />Linda J. Bassi, Esq. <br />September 12, 1997 <br />Page 8 <br /> <br />such water rights through its deed of trust. However, the State's security interest <br />cannot be allowed to encumber the funds distributed to Box Springs. <br /> <br />Section C - Mutual Agreements <br /> <br />* <br /> <br />In light of paragraph 4, which states that it is intended that the loan documents be the <br />integration of all understandings between the parties, it might be advisable to <br />incorporate all of the settlement agreement documents among the State, Box Springs, <br />Reed, Smith, and HCWUA. Some ofthese already are expressly incorporated into <br />the loan documents, but it may be prudent to incorporate all of them. <br /> <br />* <br /> <br />As discussed at the beginning of this letter, paragraph 5 should be expanded to <br />include all purposes for which the CWCB loan funds may be used by HCWUA. <br /> <br />* <br /> <br />Paragraph 6 should include language providing for partial releases, as discussed <br />above. <br /> <br />* <br /> <br />The address for H CWU A in paragraph 9 [and throughout the loan documents] should <br />be changed as discussed above. <br /> <br />Section D - Special Provisions <br /> <br />* <br /> <br />Several of these prOVlSlons, such as paragraphs 3 ("Bond Requirement"), 2 <br />("Discrimination and Affirmative Action"), .6. (Colorado Labor Preference) and <br />.8. (withholding certain debts owed to state agencies) really have no applicability to <br />HCWUA. We would request that these be deleted entirely, if possible. lfthis is not <br />possible, we would request that paragraph 5 be reworded to speak ofHCWUA as the <br />"BORROWER" and have the obligations imposed upon the "CONTRACTOR" apply <br />only to any contractors that HCWUA may employ. <br /> <br />Promissory Note - Appendix 2 <br /> <br />* <br /> <br />In addition to the applicable comments above, the promissory note should be revised <br />to include an opportunity for cure by HCWUA. The same comment applies to all of <br />the security instruments, some of which currently provide an opportunity for a cure <br />and some of which do not. <br /> <br />* <br /> <br />It may be appropriate to add a provision to the promissory note that, prior to the time <br />when an obligation to make payments of principal commences, i.e. one year after <br />