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<br />~ <br /> <br />" <br /> <br />directors, stockholders, or town council that authorize the borrower to enter into the ... <br />contract, to levy adequate assessments, to make the annual payments, to provide . <br />collateral, and to execute all documents necessary for the contract. (Paragraph A7, <br />page 4) <br /> <br />3. Pledge of property. By this provision, the borrower pledges revenues from <br />assessments, water rates or other income for repayment of the loan, conveys a <br />security interest to the CWCB in those revenues, and promises to levy assessments <br />or charge water rates in amounts sufficient to repay the loan, cover the costs of <br />operation and maintenance and emergency repairs, and maintain obsolescence <br />reserves. This provision also requires the borrower to deposit an amount equal to <br />one-tenth of its annual loan payment into a debt service reserve fund annually for the <br />first ten years of the loan, (Paragraph A, 13, pages 5-7) <br /> <br />4, Parity. This provision, used in accordance with the Board policy adopted at the <br />January 1998 meeting, sets forth the conditions for obtaining the CWCB's consent to <br />a parity lien on the revenues (or other collateral) that the borrower has pledged for <br />repayment of or as collateral for the loan, and sets forth the parity test. (Paragraph <br />A 13.e, page 6) <br /> <br />5. Collateral. This provision identifies the collateral and the method by which the <br />borrower will convey a security interest in the collateral to the CWCB, such as by <br />executing a deed of trust, security agreement, stock assignment, assignment of <br />certificate of deposit account, assignment of contract proceeds, or other. (Paragraph . <br />A12, page 5) <br /> <br />6. Security during repayment In this provision, the borrower agrees to not conveyor <br />otherwise encumber any of the collateral or the revenues pledged to repay the loan <br />without the CWCB's prior written concurrence. (Paragraph A 14, page 7) , <br /> <br />7. Remedies for default This provision lists the remedies available to the CWCB in the <br />event of a default by the borrower. Depending on the form of collateral taken, the <br />CWCB may accelerate the loan; exercise its rights (such as foreclosure) under the <br />promissory note, deed of trust, security agreement, or assignments; take possession <br />of the project facilities and repair, maintain, operate and/or lease them; or incur and <br />pay expenses for repair maintenance and operation of the project (with all costs <br />associated with the last two remedies added to the principal of the loan), (Paragraph <br />A15, page 7) <br /> <br />8. Insurance and indemnification requirements. Pursuant to these provisions, the <br />borrower must require construction firms and subcontractors hired for the project to <br />indemnify the CWCB and to name the borrower and the CWCB as additional insureds <br />on their insurance policies for amounts corresponding to those established by the <br />Colorado Governmental Immunity Act. For the full term of the contract, the borrower <br />must indemnify the CWCB from any liability it may incur relating to the project or the <br />collateral for the loan, and must name the CWCB as additional insured on its <br />commercial general liability insurance policy for amounts corresponding to those . <br /> <br />Page 2 of 3 <br />