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the form attached as Appendix 5 and incorporated herein, shall be an undivided one hundred percent (100%) interest in any rights the Borrower holds in the Project, including approximately 7,000 feet of new pipeline and the associated access easement rights, as more particularly described in the attached Deed of Trust ("Collateral"). SECTION 7 - ADDITIONAL CONDITIONS & CONTRACT REQUIREMENTS The CWCB approved the loan with the following conditions: a. The BORROWER shall provide a copy to the CWCB of the executed USDA Conservation Program Contract to verify that the USDA would provide engineering services and a grant for the final construction cost. Copy of said contract included with the above Feasibility Study referred to in Section 2 above. b. Security for the loan includes (1) a pledge of assessment revenues backed by an assessment covenant, (2) a debt service reserve fund equal to two annual loan payments (one payment set aside at the time of contract execution and one third of an annual payment set aside at the time the first three annual loan payments are made), and (3) BORROWER'S Funding Agreement, which Funding Agreement shall include a "step-up" provision that requires the Funding Agreement signatories to make the entire annual loan payment to the CWCB in the event any of the members fail to pay their assessed share amount pursuant to the Funding Agreement. c. Within ten (10) working days after receipt of the cost share portion reimbursement from the USDA, the BORROWER shall submit to the CWCB an amount equal to the reimbursement. The USDA reimbursement will be applied to the outstanding principal loan balance, and the Loan Contract shall be amended to the reduced loan amount. SECTION 8 - CONSTRUCTION FUND PROGRAM PROCEDURES A. The BORROWER shall employ an engineer, registered in the state of Colorado to prepare plans and specifications for the PROJECT. B. The BORROWER'S and the Engineering Consultant's Agreements and the plans and specifications must be submitted to the CWCB staff for verification of compliance with the terms of this Contract when available prior to bidding. Any modifications to the plans and specifications must be approved in writing by the CWCB staff. C. For plans and specifications for all jurisdictional dams and reservoirs, as defined by 937-87-105 C.R.S., the BORROWER shall provide a letter of approval from the State Engineer's Office prior to construction. D. CWCB staff must be present at bid opening and must approve the award of the construction contract. E. The BORROWER shall contract for the construction of the work with responsible and capable Construction Firms, which said Construction Firms shall be selected by the BORROWER and found acceptable by the CWCS staff. Appendix 1 to Loan Contract C150234 Page 2 of 4